Pacifica Shipping Ltd v Peter Baker Transport Ltd

IN THE HIGH COURT OF NEW ZEALAND
CHRISTCHURCH REGISTRY
A2&3/00

BETWEEN
PACIFICA SHIPPING LIMITED
Appellant

AND
PETER BAKER TRANSPORT LTD
Respondent

Hearing: 4 August 2000

Counsel: G M Brodie for Appellant
P R Rzepecky for Respondent

Judgment: 5 September 2000

JUDGMENT OF JOHN HANSEN AND CHISHOLM JJ

[1] Goods belonging to customers of the respondent ("Baker Transport") were damaged while they were being shipped by the appellant ("Pacifica Shipping") from Wellington to Lyttelton pursuant to a limited carrier's risk contract between the parties. Having settled claims brought by its customers, Baker Transport brought a claim against Pacifica Shipping under the Carriage of Goods Act 1979 on the basis that the goods had been damaged whilst they were the responsibility of Pacifica Shipping. Pacifica Shipping counterclaimed for the costs arising from the need to decontaminate its vessel. 

[2] Prior to hearing Baker Transport sought leave to introducing a new defence based on a time limit specified in the contract between the parties for the bringing of claims. By reserved decision delivered on 18 May 1999 ("the first decision") leave was granted for an amended statement of defence to be filed and Baker Transport was also granted leave pursuant to the Act to commence proceeding beyond the time limit specified in the contract. The substantive hearing extended over four days. In a further reserved decision delivered on 30 November 1999 ("the second decision") Baker Transport was given judgment for the full amount claimed and the counterclaim by Pacifica Shipping was dismissed.

[3] Pacifica Shipping appeals against both judgments which were delivered by different Judges. Baker Transport contends that it is no longer open to Pacifica Shipping to appeal against the first decision because it constituted an interlocutory order and the necessary leave to appeal was not obtained. Assuming that an appeal lies, the only issue arising from the first decision is whether the District Court had power to grant leave for Baker Transport to proceed outside the time limit specified in the contract. If the first decision is upheld it will be necessary to consider Pacifica Shipping's challenge to a number of conclusions expressed in the second decision. An application by Pacifica Shipping to adduce further evidence on appeal was refused.

Was Pacifica Shipping Entitled to Appeal Against The First Decision Without Leave?

[4] Proceedings were issued by Baker Transport on 4 April 1996 which was within the 12 month period specified in s 19(2) of the Act for bringing a claim against a carrier. Interlocutory procedures were duly completed and a fixture was allocated. A few days before the substantive hearing was to commence Pacifica Shipping applied to amend its statement of defence by pleading the following affirmative defence:

"14. THAT it was a condition of the carriage of goods that: 

"The carrier shall be under no liability in respect of loss of or damage to the goods during the period of the carriage unless -

 i. …

ii. An action against the carrier has been commenced within 6 months after the delivery of the goods or in the case of non-delivery, within 6 months and fourteen days after the date of dispatch of the goods.

The condition referred to appears according to the Conditions of Carriage as printed on the reverse side of the plaintiff’s bill of lading/invoice, such condition having been incorporated into the contract during the course of dealing between the plaintiff and defendant.

15. THE proceedings herein were not commenced within six months and 14 days and are accordingly time barred. "

This triggered an application by Baker Transport for directions including "if necessary leave to the plaintiff to apply for leave to bring an action under the Carriage of Goods Act pursuant to s19". Leave to amend the statement of defence was granted and in the same decision (the first decision) the Court also granted leave pursuant to s19(4) for Baker Transport to bring its claim outside the period of six months and fourteen days stipulated in the contract.

[5] Relying primarily on the recent decision of this Court in Campbell-White v Prattley [1999] 3 NZLR 449, Mr Brodie claimed that the order granting leave for Baker Transport to bring the action constituted a final order and no leave to appeal was required. Both the first and second decisions having been sealed at the same time, it is common ground that if Mr Brodie's submission is upheld the appeal against the first decision was within time. Mr Rzepecky rejected any suggestion that the order granting leave constituted a final order. He noted that even if the Court had refused leave under sl9(4) Baker Transport would have still challenged the limitation clause at trial on the grounds that such a clause was not part of the contract, or that it had been waived, or that Pacifica Shipping was estopped from relying on it.

[6] Section 71 of the District Courts Act 1979 relevantly defines "final order" and "interlocutory order" in the following terms:

 "In this Part of this Act, unless the context otherwise requires,--

"Final order", in relation to a District Court, means any non-suit or final determination or direction of the Court:

"Interlocutory order", in relation to a District Court,--

(a) Means a decision or order made by the Court in relation to an interlocutory application; but

(b) Does not include-- …".

Section 2 relevantly defines "interlocutory application": 

"Interlocutory application" – (a) Means any application to the Court in any proceeding or intended proceeding for an order or a direction relating to a matter of procedure or for some relief ancillary to that claimed in a pleading; and

(b) Includes--… "

For present purposes there is no suggestion that the context is capable of influencing the "final order" and "interlocutory order" definitions.

[7] Although judicial opinion is divided about whether the focus should be on the nature of the application or the nature of the outcome of the application, we consider that it is appropriate, at least in this instance, to take both factors into account. At the very least we believe that it would be appropriate to use the result as a cross check as discussed in Baron Enterprises v Pomeroy (High Court, Auckland, CP71/98, 12 June 1998) and Campbell-White v Prattley. Regardless of the approach adopted we are satisfied that the order granting leave was an interlocutory order, not a final order. That conclusion reflects: first, the application giving rise to the order was made within the framework of an existing proceeding which had been legitimately commenced within the statutory time limit; secondly, the application sought directions which carries procedural rather than substantive connotations; and, thirdly, regardless of the outcome the application would not finally determine the issue between the parties and would not, therefore, readily fit into the definition of "final order".

[8] Campbell-White v Prattley is distinguishable. In that case Giles J considered that an application for leave to bring a claim under the Matrimonial Property Act 1976 out of time did not fall within the words "in any proceeding or intended proceeding" used in the definition of "interlocutory application". He also found it significant that the outcome of the application would result in a "rather final order". Those factors can be contrasted with the situation under consideration where the proceedings had already been commenced and the outcome of the application would not necessarily determine the proceeding. For the same reasons the line of authorities mentioned by Giles J¹ in which it has been doubted that a substantive application for leave to bring proceedings out of time pursuant to s4 of the Limitation Act 1950 is an interlocutory application, can also be distinguished.

[9] Although we are satisfied that the order granting leave was an interlocutory order and that failure to obtain leave is fatal to the appeal, we acknowledge that it can be difficult to draw the line between an interlocutory order and final order. Even if our conclusion is incorrect the outcome would be the same because the appeal would have failed on its merits. Under the next heading we summarise our reasons for concluding that the appeal would have failed on its merits. 

Power To Grant Leave Pursuant to Section 19(4)

[10] Section 7 of the Carriage of Goods Act, which authorises parties to a carriage of goods contract to contract out of the Act, provides:

"The parties to a contract of carriage are free to make their own terms in respect of any matter to which any of sections 10, and 18 to 27 of this Act apply; and, where they do so the relevant section or sections shall, in relation to that matter, have effect subject to those express terms.

Thus it was possible for the parties to contract out of the twelve month limitation period for bringing an action imposed by s19(1) and (2) of the Act. For present purposes we entirely disregard any possibility that the clause was not part of the contract or that waiver/estoppel issues might arise.

[11] The only issue is whether s 19(4) conferred the necessary power to extend the period of six months and 14 days stipulated by the parties. That subsection provides:

"Where the carrier does not consent, application may be made to the Court, after notice to the carrier, for leave to bring the action at any time within six years after the relevant date referred to in subsection (1) or subsection (2) of this section. "

The Judge in the Court below reasoned that any component of s19 not expressly altered by the contract remained in force and that the agreed term truncating the limitation period did not restrict the power conferred on the Court to grant leave in terms of s19(4). But he accepted Pacifica Shipping's argument that if subs (4) was to be rendered capable of conferring that power on the Court in this situation the words "or any other time limit agreed upon by the parties" would have to be implied at the end of the subsection. While Mr Rzepecky supported the overall conclusion of the Judge, he did not accept that it was necessary to imply any words in the subsection.

[12] We agree with the conclusion reached by the Judge except to the extent that he felt that it was necessary to imply words at the end of subs (4). When the parties specified their own terms as to the time within which any claims were to be brought they did not attempt to otherwise confine the operation of sl9. Their modification went no further than substituting the period of six months and 14 days for the statutory period of 12 months. Thus for the purposes of subs (4) the substituted date became the "relevant date referred to in ... subs (2)". It follows that the subsection remains perfectly functional without the implication of any words.

[13] That interpretation is also entirely consistent with the scheme of the Act which, as the Judge noted, provides a statutory scheme of liability in respect of every contract of carriage to which it applies: Fletcher Panel Industries Ltd v Ports of Auckland Ltd [1992] 2 NZLR 231, 233. While the statutory scheme specifies a period within which claims are to be brought, it also allows the Court to grant leave for an action to be brought outside that period so long as the application is made within six years from the relevant date. If the parties go no further than adjusting the "relevant date" there is no logical reason why the residual power of the Court to grant leave should be affected except, of course, to the extent that the period of six years for the bringing of such an application will run from the adjusted date.

The Second Decision

[14] Before considering the appeal against this decision - the substantive decision - it is helpful to briefly traverse the events giving rise to the claim. Goods were stored in three large road trailers with "curtain" sides. These trailers had been detached from their tractor units for the voyage from Wellington to Lyttelton. Each trailer was lashed to the deck of the ship by chains and the front of each trailer was supported by a pedestal. When the vessel encountered heavy weather one of the fixing eyes on the chassis of trailer R1258 failed and the front of the trailer toppled from its pedestal, spilling a significant proportion of its load which included hazardous chemicals. While the other two trailers (20NYA and 10NCQ) remained chained to the deck and the front of each unit remained on its pedestal, some of their contents were damaged when they spilled through the curtain sides.

[15] The affirmative defences advanced by Pacifica Shipping relied on s14 of the Carriage of Goods Act which provides:

 "Notwithstanding any of the other provisions of this Act, a carrier is not liable as such for the loss or damage to goods occurring while he is responsible for them under a contract of carriage to the extent that he proves that the loss or damage resulted directly and without fault on his part from -

(a) inherent vice; or

(b) Any breach of either of the terms implied in the contract by s 17 of this Act.

First it was alleged that Baker Transport was in breach of a term implied in the contract by s 17(1)(a) of the Carriage of Goods Act:

"(1) 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.

 Two breaches of that implied term were alleged: the contents of the three trailers were without any or sufficient means of restraint; and (in the case of trailer R1258) the trailer's fixing eyes were inadequate for the purpose of providing effective restraint during normal seagoing operations. The second affirmative defence, which was restricted to trailer R1258, was that the fixing eyes were inadequate to provide sufficient effective restraint during normal seagoing operations and such inadequacy constituted an "inherent vice" in terms of s14(a). The Judge's assumption that the "goods" included the trailer itself was not challenged in this Court.

[16] As already mentioned, the hearing extended over four days. Numerous witnesses, including expert witnesses, gave evidence and were cross-examined. All the defences raised by Pacifica Shipping were rejected. The Judge considered the situation relating to each trailer separately and it is convenient to summarise his conclusions by reference to each trailer.

[17] The contents of trailer R1258 were found by the Judge to have been properly secured and he was not persuaded that there was a design fault or other inadequacy in the trailer's fixing eye, or that failure of the fixing eye caused the damage. Thus Pacifica Shipping failed to establish a breach of the statutory implied term. The Judge found that even if a breach of the statutory implied term had been established, the s14 defence would still have failed because Pacifica Shipping had not discharged the onus of showing that the damage had arisen without fault on its part. That conclusion was prompted by the Judge's finding that only four of the six fixing eyes available on trailer R1258 had been used and that the lateral movement of the trailer and consequential "shock loading" of the eye could and should have been significantly diminished if lashing chains had also been fixed to the two eyes that were not used and those chains had been kept taut. He also found that Pacifica Shipping had failed to adequately check the chains for tightness and security.

[18] The Judge concluded that there was no evidence to establish any breach of the implied term in relation to trailer 20NYA and that conclusion was not challenged in this Court. On the other hand he found that there were no binders holding the contents of trailer 10NCQ in place. Having reached that conclusion the Judge then proceeded to consider, first, whether the damage to its contents arose from that breach of the implied term and, secondly, whether Pacifica Shipping had established an absence of fault on its part. He concluded that trailer 10NCQ and the trailers stowed on each side of it had moved laterally and that such movement contributed significantly to the shifting of the goods packed in the trailer. He also found that the lashings were inadequate and/or were not kept taut and that the lateral movement could have been prevented or minimised had the trailers been more securely fastened to the deck. Under those circumstances he concluded that he was unable to find absence of fault on the part of Pacifica Shipping.

[19] Virtually all the Judge's findings are challenged on appeal, but the appellant faces several obstacles. First, the statutory trade-off under the Carriage of Goods Act between limitation on the amount of a carrier's liability, on the one hand, and prima facie liability for damage to goods for which the carrier is responsible, on the other, meant that this case turned on the pleaded defences in respect of which Pacifica Shipping carried the onus of proof. Secondly, all the findings challenged by Pacifica Shipping are findings of fact. Finally, it is not for us to engage in a factual retrial and we will only intervene if the conclusions reached by the Judge were not open to him on the evidence or we conclude that he was plainly wrong. Rae v International Insurance Brokers (Nelson Marlborough) Limited & Anor [1998] 3 NZLR 190. 

[20] Having considered the evidence we are satisfied that each finding was open to the Judge on the evidence before him. Perhaps Baker Transport could regard itself as a little fortunate in relation to trailer 10NCQ, but, as Thomas J noted in Rae at p198:

"... notwithstanding that it mav have been a decision that could have gone either way .... it cannot be reversed if it was one that the trial Judge was ‘entitled to reach’. "

We are satisfied that the Judge's decision in relation to trailer 10NCQ was one that he was "entitled to reach". Our conclusion relating to the claim by Baker Transport means that the appeal against dismissal of the counterclaim is also bound to fail.

Outcome 

[21] The appeal is dismissed. Pacifica Shipping is to pay costs to Baker Transport in the sum of $2,000.

Solicitors: Anthony Harper, Christchurch for Appellant
McElroys, Auckland for Respondent

¹ Outfox Total Security (New Zealand) v NZ Security Industry Association Inc [1995] 3 NZLR 122; Van Grinsven v Penter (High Court, Christchurch, M21/90, 6 March 1990, Holland J) and Jerkovich v Fortune (High Court, Auckland, M303/87, 17 July 1987, Wylie J).