Transtext Network New Zealand Ltd v Greaney
IN THE HIGH COURT OF NEW
ZEALAND
AUCKLAND REGISTRY
AP19-SWO1
BETWEEN TRANSTEXT NETWORK
NEW ZEALAND LIMITED (IN LIQUIDATION)
Appellant
AND
KENNETH BARRY GREANEY (T/A KNIGHT TRAIN HAULAGE)
Respondent
Date of Hearing: 11 April 2001
Counsel: DJG Cox (for
appellant)
D Heaney & S Macky (for respondent)
Judgment: 30 April 2001
RESERVED JUDGMENT OF HAMMOND J
Solicitors:
Rennie Cox Garlick & Sparling, Auckland.
Heaney & Co, Auckland
INTRODUCTION
[1] This is an appeal from a decision of Hubble DCJ in the District Court, in a carriage of goods case.
[2] Two issues are raised.
-
Whether that statutory warranty in the Carriage of Goods Act 1979 extends beyond claims for damages to the goods themselves, to claims for consequential loss with respect to the vehicle which was actually carrying the goods.
[3] Both these issues are said to be devoid of authority, and to raise distinct matters of principle for carriers in New Zealand.
THE FACTS
[4] The facts are not in dispute, and can be shortly stated.
[5] Mr Greaney was an independent freight transporter. He had his own fleet of trucks and drivers. He undertook work for his own clients as well [as] referral work from other transporters when the opportunity arose.
[6] Mr Greaney's business did not involve any handling of goods at container terminals or wharves in the North Island. His business was simply arranging for his drivers to uplift containers and deliver them to a specified place.
[7] In early May 1997, Transtext Network New Zealand Ltd ("Transtext") advised Mr Greaney that it had a container which needed to be hauled from the Port of Auckland to the Fergusson container terminal in Wellington.
[8] A contract was entered into on 2 May 1997 between the parties. It provided that Mr Greaney was to haul the designated container between these two locations. This container was identified as containing approximately 20 tonnes of glass. It was to be transhipped under Customs Bond. Both parties accepted that, because of the provisions of the Customs & Excise Act 1966, this container could not to be opened and its load could not to be checked between Auckland and Wellington. The significance of this fact for both Mr Greaney and Transtext is that there was no possibility of intermediate examination of the contents of the container by either party.
[9] In the events which transpired, this proved to be important. The container had come to New Zealand on a P&O vessel. It had been packed in Thailand. The glass had not been properly secured to the frame inside the container. The load became insecure and caused the transporting truck to overturn whilst that truck was making a left-hand turn on the Taupo town waterfront. This accident occurred without any fault on Mr Greaney's part.
[10] The loss to Mr Greaney was accepted for the purposes of the case as being $113,894.29. This was made up principally of the costs of repairing Mr Greaney's truck, and hiring an alternative truck whilst those repairs were being effected. There were also some small miscellaneous items in that total sum.
THE PLEADINGS
[11] Mr Greaney originally framed his pleadings both in contract and in negligence. The claim in negligence did not proceed. The contract claim pleaded that there was an implied term in the contract, pursuant to s17 of the Carriage of Goods Act 1979 that "the goods are fit to be carried ... in the manner in which they are tendered for carriage...".
[12] Transtext put Mr Greaney to proof on some matters. And it raised two alternative defences. First, it was pleaded that the implied term relied on by Mr Greaney did not apply, since it would be contrary to the express terms of the contract. And secondly, there was an alternative defence of contributory negligence. Given that the negligence cause of action had been abandoned, the plea of contributory negligence seems to have assumed that such a plea could be maintained in contract. However, that issue is now irrelevant, because the trial Judge found against Transtext on that issue on the facts and it has not been pursued on the appeal before me.
[13] There was no plea that the damage to the truck was too remote. The pleading and the argument was put on a much narrower footing, namely that the consequential loss could not be recovered per se under the Carriage of Goods Act 1979.
THE JUDGMENT IN THE DISTRICT COURT
[14] Hubble DCJ held, " there is ... a term implied in this contract that the glass was fit to be carried i.e. safety [sic] and properly secured. It was not. This caused the accident to occur and the damage which is claimed".
[15] There being no dispute as to quantum, the Judge entered judgment for the amount claimed together with interest at 11% for a period of 3 years and 25 days, amounting to $38,443.29. Orders were made as to costs in Mr Greaney's favour.
THE CONTRACT POINT
[16] It is convenient to begin by setting out s17 of the Carriage of Goods Act 1979, in full:
Contracting party to warrant condition of goods, etc.-(l) In every contract of carriage there shall be implied on the part of the contracting party a term-
(a) That, except as disclosed in accordance with subsection (2) of this section, the goods are fit to be carried and stored in accordance with the contract in the condition and packed in the manner in which they are tendered for carriage:
(b) That, except as disclosed in accordance with subsection (2) of this section, the provisions of every other enactment (if any) that he is required to comply with relating to the consignment for carriage of the goods to be carried pursuant to the contract have been complied with.
(2) If, before the goods are accepted for carriage, the contracting party notifies the contracting carrier or the first actual carrier of any material particular that would otherwise constitute a breach of either of the terms specified in subsection (1) of this section, the carrier may refuse to carry the goods, or undertake to carry them subject to such reasonable terms and conditions as be may require having regard to the circumstances of the case.
(3) Notwithstanding anything in section 7 of this Act, the provisions of this section apply, with the necessary modifications, to contracts of carriage between contracting carriers and actual carriers, and between actual carriers, subject to any express term in the contract.
[17] Mr Cox argued that this was a contract under which, by its express terms neither party could examine the interior of the container because it was bonded. He said this was inconsistent with the statutory warranty in s17. Given that there was not an express term in this contract negativing the statutory warranty, Mr Cox submitted that s17(3) does not require there to be an express term unequivocally contracting out of the s17(1) warranty or an express term limiting liability under s17(l). He said "s17(3) only requires that there be an express term of the contract which is inconsistent with the implication of the warranty".
[18] Mr Cox referred me to two English cases, Miller v Emcer [1956] All ER 237; and Lynche v Thorne [1956] 1 All ER 744. However, in my view, neither of those two cases is of assistance in this instance because they were concerned with the question of whether a judicially imposed implied term could be read into a contract, contrary to the express provisions of the contract.
[19] Mr Heaney said, "what the appellant is really contending for here is that there should be another implied term in the contract of carriage that the implied term contained in s17(1)(a) should not be implied when it is not possible for one or both of the parties to inspect the contents of the container".
[20] Hubble DCJ held, on this issue:
It is in the nature of a carriage of goods that there are successive carriages, that it is customary for carriers to accept containers without inspection, and on the assumption that carriage can taken place [sic] in a safe manner. It is for this reason that s17 imposes the responsibility and risk on every carriage, irrespective of whether or not there is opportunity for inspection. It is by that means that liability is passed down the chain to the original consignor. The only exception is if there is a clear and unequivocal express term indicating a different contractual arrangement or limiting liability in some way (s17(3)).
[21] In my view, the Judge was correct in his conclusion. The starting point must be that this case concerns a statutory warranty. It applies, by an Act of Parliament, in every case "subject to any express term in the [particular] contract" (s17(3)). The onus of proof therefore, on the civil standard, is upon a party asserting that the statutory warranty does not apply. In this case, it was not ever asserted that there was any agreed term (i.e. an express term) contradicting the application of the statutory warranty. Mr Cox was therefore driven, as he did, to asserting that it was somehow a necessary implication of the admitted fact that the container could not be inspected, which must necessarily lead to a conclusion that the statutory warranty was not to apply. The Judge refused to draw any such implication, or inference, and so do I. It may be arguable, as I said to Mr Cox during the course of the argument, that the drawing of any such implication is a question of fact and hence not reviewable on the usual appellate principles. But whether that be so or not, in my view the Judge was correct to reject Transtext's argument for the simple reason that the displacement of the statutory warranty must, in the words of the statute, be "express".
CONSEQUENTIAL LOSS
[22] The issue here is whether Mr Greaney can recover the damage to his vehicle, as opposed to the damage to the glass in the container (which was not in issue in this proceeding).
[23] Mr Cox's submissions under this head can conveniently be divided into two parts.
[24] First, Mr Cox noted that the scheme of the Carriage of Goods Act 1979 is that there are consistent references throughout the Act to the type of loss for which damages can be claimed under that Act. These are to loss or damage "to the goods". His argument ran that the scheme of the Act itself does not lend itself to the kind of loss being claimed.
[25] Secondly, Mr Cox submitted that there is no specific provision in this statute to cover the nature of Mr Greaney's claim against Transtext. He said s15 does not allow the claim. He suggested that, by contrast, the equivalent legislation in the United Kingdom makes express provision for a claim for consequential loss pursuant to s1 of the Carriage of Goods by Road Act 1965 [UK] (see, Halsbury's Laws of England 4 th ed. Vol. 5(1), Carriers, para. 553):
The sender is liable to the carrier for damage to persons, equipment or other goods and for any expenses due to defective packaging of the goods, unless the defect was apparent or known to the carrier at the time when he took over the goods and he had no reservations concerning it.
[26] Section 15 of the statute provides as follows:
Limitation of amount of carrier's liability
(1) For the purposes of this Act,-
(a) The liability of the contracting carrier to the contracting party; and
(b) The separate liability of any actual carrier to the contracting carrier; and
(c) The joint liability of any actual carriers (where there are more than 1) to the contracting carrier; and
(d) The joint and several liability of every successive carrier under a contract to which section 13 of this Act applies,-
is limited in amount in each case to the sum of [[$1,500]] for each unit of goods lost or damaged or, in the case of a contract "at declared value risk", the amount specified in the contract.
(2) The limitation of amount for the time being specified in subsection (1) of this section does not apply to-
(a) Any liability for the loss of or damage to any goods intentionally caused by the carrier; or
(b) Any liability arising out of the terms of the contract for damages other than for the loss of or damage to the goods; or
(c) Any liability arising out of the terms of the contract for damages consequential upon the loss of or damage to the goods.
[27] In the District Court, the Judge held that, if the terms of the contact allow a claim for losses independent of the value of the goods, then that claim can "proceed without [the] limitation of liability imposed by s15. The issue here is therefore whether or not the 'terms of the contract' included a term that the goods were in a safe and proper condition for the contract of carriage to be completed". The Judge held in favour of Mr Greaney.
[28] The submissions which were made to me on this head of the appeal really covered three areas: the general scheme of the Act; the commercial implications of the competing constructions of the legislation; and the particular construction of s15.
[29] Turning to the scheme of the Act, some short general observations are necessary to understand the evolution of our law. New Zealand inherited the common law of the carriage of goods. This included the tortuous path of identifying "common carriers" and "private carriers" and the application of the law of bailment. By the late 18th century - and I am thinking here of Forward v Pittard (1785) 1 T.R.27; 99 ER 953 - Lord Mansfield had concluded that as a matter of custom, a carrier was in the nature of an insurer. This created real problems for the common carrier, who could be hoisted on pikes of negligence liability or insurance liability. The outcome of this legal reasoning was strenuous attempts by carriers to negative or limit their liability.
[30] In the 19th century there were a number of legislative attempts to reform the law of carriers, both in the United Kingdom and New Zealand. The New Zealand Parliament first moved into this subject area by the Carriers Act of 1866, which attempted to implement the Railway and Canal Traffic Act 1854 (17 & 18 Vict c31). Further legislative developments followed in New Zealand through the Mercantile Law Act 1880, and the Mercantile Law Act 1908. Half a century or so later came the Carriers Act 1948. But it too created its own difficulties. The monetary limits for liability were raised, but not by much. And in particular, only common carriers were covered by the Act, and then only in respect of contracts for carriage wholly within New Zealand.
[31] By the 1960's it had become only too clear that New Zealand law was quite inadequate to address the age of containerisation, and the more modern transport systems which were coming into being. The Contract and Commercial Law Reform Committee (Chaired by the late Colin Paterson) presented a Report to the Minister of Justice, in April 1968.
[32] The principal recommendations of that report were that:
(a) The distinction between common carriers and private carriers be abolished;
(b) The same rules apply to domestic sea and air carriage, and road and rail land carriage;
(c) Persons who procure contracts of carriage should be included in any definition of carrier;
(d) The fault principle be dispensed with;
(e) Risk of loss of, or damage to, goods should lie where the balance of convenience places it, namely (within certain limits) with the carrier;
(f) Carriers' liability should be absolute (with certain exceptions) up to $1,000, with no liability beyond that limit;
(g) Contracting out of liability should continue to be possible although only to the extent justified by the special circumstances of the case;
(h) The $1,000 limit should apply in respect of each package or unit;
(i) Where a carrier supplies or packs a container or pallet, each item in or on it constitutes a separate unit, but where the owner of the goods supplies the container or pallet then (unless the carrier packs it) the container or pallet and its contents constitute one unit;
(j) A time limit of 12 months from delivery (or expected delivery) be imposed within which to claim against a carrier;
(k) Successive carriers should be jointly and severally liable except for those who can prove that the loss or damage complained of did not occur whilst they were in possession of the goods.
[33] It took Parliament over a decade to enact those recommendations. By then, updating the law with respect to multi-modal transport operations had become an urgent matter. In the result, the Carriage of Goods Act 1979 embodied virtually all of the recommendations made by the Contract and Commercial Law Reform Committee. (For a review of the Act, see Garrow & Fenton, Law of Personal Property, 5,047 to 5,070).
[34] Having said all of this, on my appreciation of the scheme of the Act, as suggested by the law reform body and as enacted by Parliament, there is nothing inherent in it which would, or perhaps should, preclude the possibility of claims on a contract for consequential loss independent of the statute. Indeed, such claims would be entirely consistent with everyday mercantile practice.
[35] 1 turn therefore to s15(2). Clearly that section does leave open what might be termed "common law claims" for amounts greater than $1,500 in respect of intentional loss or damage; damages other than for simple loss or damage; and, as I see it, for any consequential loss arising out of the terms of the contract.
[36] In my view, the Judge was correct to proceed as he did in first identifying a specific term of the contract - here, the statutory warranty - giving rise to a claim for damage to the goods. Once that had been ascertained, s15 itself authorises damages "consequential upon the loss of or damage to the goods". The usual limiting factors in contract law as to damages (causation, and remoteness) would then apply, but no such pleadings were ever advanced in this case.
[37] Section 15(3) would have enabled Transtext to include an "express term" in the contract between the parties that it was not liable for consequential loss - but it did not do so in this instance. It did not therefore displace the statutory warranty, and the consequences flowing from a breach of it, under s15(2).
[38] Strictly speaking, the issue before me is one of statutory construction. Nevertheless, courts are reluctant, unless they are compelled to do so, to adopt a construction which makes little commercial sense. But nothing in what was said before me persuades me that the construction relied upon by Mr Heaney is inappropriate in commercial terms.
[39] The remedy for this problem really lay in Transtext's hands. It could have limited its liability, as the Act provides for. Or it can in turn - itself relying on the warranty in the statute - recover what it has to pay, back up the chain of consignees, until the fault for this defective stowage in the container comes to rest with the party ultimately responsible for it.
CONCLUSION
[40] The appeal is dismissed.
[41] Mr Heaney suggested that there might have been some correspondence between the parties on costs. If the parties have not agreed on costs, Mr Greaney will have costs of $3,000, together with his disbursements on this appeal.
Appeal dismissed.