Brennan International Transport Hong Kong Ltd t/a Brennan International Transport v Blue Q Corp

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV-2008-404-004308

IN THE MATTER OF an Appeal from a Decision of the District
Court at Manukau dated 17 June 2008

BETWEEN BRENNAN INTERNATIONAL TRANSPORT HONG KONG LIMITED TRADING AS BRENNAN INTERNATIONAL TRANSPORT
Appellant

AND BLUE Q CORPORATION
First Respondent

AND MELRIC INTERNATIONAL LIMITED
Second Respondent

Hearing: 26 November 2008
Appearances: C Lucas for Plaintiffs
V Patterson for Defendants

Judgment: 18 December 2008

JUDGMENT OF ASHER J

This judgment was delivered by me on 18 December 2008 at 5:00 pm pursuant to Rule 540(4) of the High Court Rules

Solicitors:
Lucas & Mabin, PO Box 74 061, Auckland
Kennedys, PO Box 3158, Auckland

Table of Contents
Introduction [1]
Factual background [2]
The arguments [10]
District Court decision [13]
Issue [18]
Approach to the appeal [19]
The bill of lading [20]
Were the limitation clauses unreasonable? [27]
Was Mondiale Melric’s agent? [35]
Mondiale’s knowledge of the terms of the bill of lading [40]
Melric’s knowledge of the terms of the bill of lading [42]
Did paragraphs 19 and 20 bind Melric? [48]
Application for credit [56]
Conclusion [64]
Result [67]
Costs [70]

Introduction

[1] This is an appeal against a decision of the District Court at Manukau entering judgment in favour of the second respondent, Melric International Limited ("Melric"), against the appellant, Brennan International Transport Hong Kong Limited ("Brennan"), for damages, being the cost of non-delivered goods and a percentage refund for goods.

Factual background

[2] The parties filed an agreed statement of facts which was reproduced in the District Court judgment. There is no issue as to the events that unfolded.

[3] The first plaintiff in the District Court, Blue Q Corporation ("Blue Q"), is a company operating out of Pittsfield, Massachusetts, in the United States of America. Blue Q took no part in the hearing and no judgment was entered in relation to it in the District Court. The second plaintiff in the District Court and second respondent in this Court, Melric, is a company operating out of Auckland, New Zealand. It carries on business as an importer. The first defendant in the District Court, Mondiale Freight Services Limited ("Mondiale"), is a company also operating out of Auckland. It carries on business as a freight forwarder. Mondiale is no longer a party to this proceeding and no judgment was entered in relation to it in the District Court. The second defendant in the District Court and appellant in this Court, Brennan, is a company incorporated in Hong Kong. It carries on business as a carrier.

[4] On or about 13 August 1999, Melric and Mondiale signed a document described as an application for credit. This document set out their future contractual relationship and contained 15 conditions of contract ("the conditions of contract"). There was thereafter a regular course of dealing between Melric and Mondiale. Mondiale would arrange to freight to New Zealand goods purchased by Melric from overseas locations.

[5] There was also a regular course of dealing between Mondiale and Brennan. Mondiale arranged for Brennan to carry goods from overseas locations to New Zealand. When Brennan carried goods from overseas locations to New Zealand, it prepared and issued bills of lading following receipt of instructions from Mondiale to carry the goods.

[6] On 30 September 2005, Blue Q invoiced Melric for miscellaneous goods that Melric had ordered. Melric paid for the goods prior to their despatch, and property in the goods passed to Melric.

[7] In early October 2005, Melric contacted Mondiale and requested that it arrange for the carriage of the goods from Blue Q’s premises at Pittsfield, Massachusetts to Melric’s premises in Auckland, New Zealand. Mondiale agreed to freight the goods as requested. Mondiale then instructed Brennan to carry the goods. Following receipt of Mondiale’s instructions Brennan prepared and issued a bill of lading in standard form, being NYC/AKL/BO7635 ("the bill of lading"). The bill of lading specified that the consignment comprised three pallets of goods.

[8] On 5 October 2005 Brennan through its inland carrier in the United States, accepted the three pallets of goods. The pallets were delivered by the inland carrier to Brennan’s premises in New Jersey. Brennan then arranged for the pallets to be shipped to New Zealand in a container. When the container arrived in New Zealand the seal was broken. It was found that there were only two pallets of goods inside the container. One pallet was missing.

[9] In summary, Melric purchased goods from Blue Q in the United States. In accordance with its usual practice for such imports it arranged for Mondiale to freight those goods from Blue Q to New Zealand. In accordance with its usual practice Mondiale arranged for Brennan to carry the goods. On arrival there was a pallet missing. It is agreed that the pallet was not delivered and that Melric suffered loss as a consequence, for which it claims damages from Brennan.

The arguments

[10] Brennan sought in the District Court to deny liability on the basis of the terms of the bill of lading and also on the basis of terms contained in the conditions of contract in the application for credit between Melric and Mondiale.

[11] Brennan claimed in reliance on the terms of the bill of lading that the maximum that Melric can claim against it is US$500 per package or shipping unit. It claims also that the bill of lading required Melric to notify Brennan within three days, which it submits Melric did not do. Brennan further claimed in reliance on the conditions of contract that Melric was required to give written notice of claim within seven days, which it submits Melric did not do.

[12] Brennan argued that the terms in the bill of lading and conditions of contract were binding on Melric. Melric argued that it did not know of the terms in the bill of lading, that they are unreasonable, and that it was not bound by them. Melric further argued that Brennan cannot claim the benefit of the limitations in the conditions of contract in the application for credit, as that contract governs the relationship between Melric and Mondiale and has nothing to do with Brennan.

District Court decision

[13] The District Court Judge relied on a line of authority requiring exemption clauses to be brought specifically to the attention of customers in order to be binding. The Judge quoted from J Spurling Ltd v Bradshaw [1956] 2 All ER 121 at 125 where Lord Denning stated:

I agree that the more unreasonable a clause is, the greater the notice which must be given of it.

[14] He took the view that the effect of the limitation clauses was "disproportionate." His judgment indicates that he considered them unreasonable in the sense used by Lord Denning in Spurling. He decided that such clauses had to be communicated to Melric by Brennan before Melric could be bound by them.

[15] The District Court Judge found that Mondiale was acting as Melric’s agent. He held that Mondiale as an experienced "conveyor" should or would have been aware of the limitations in liability that arose in such transactions. He stated at [23]:

Clearly Mondiale is the agent of Melric and I so find Mondiale, as an experienced conveyor of such stock for its clients, should or would be aware of limitations in liability in a variety of circumstances e.g. statutory or limitations fixed by way of convention.

[16] Nevertheless, he considered at [27] that the relevant terms in the bill of lading were never brought to the attention of either Mondiale or Melric:

In referring to the exemption in the Bill of Lading, clauses 19-20 …, a real issue may arise, even if supplied to the plaintiff, whether or not they are legible. These clauses were never brought to the attention of the contracting agent, Mondiale and never to the attention of the plaintiff. I find in these circumstances this was unreasonable and specific notice was required.

[17] The Judge concluded that none of the terms relied on by Brennan had been communicated to Melric and that the terms were not binding on it. He ordered judgment to be entered in favour of Melric against Brennan in the amount of Melric’s loss in New Zealand dollars.

Issue

[18] The crucial issue is therefore whether the terms in the bill of lading and conditions of contract, which set down certain time for claim requirements and provide for a liability cap, are binding on Melric and limit any claim against Brennan.

Approach to the appeal

[19] The appeal is brought under s 72 of the District Courts Act 1947. By virtue of s 75 the appeal is by way of rehearing. This Court can make such orders as it thinks should have been made, (s 76(a)). The Supreme Court has observed in Austin, Nichols & Co Inc v Stichting Lodestar [2008] 2 NZLR 141 that an appellate court on an appeal by way of rehearing should not hesitate to substitute its own findings of fact: at [13] and [16]. The appellate Judge should not defer to the trial Judge’s conclusion when a different conclusion appears to be correct: at [16]. However, Austin, Nichols makes it clear that the onus is still on an appellant to show that the trial Judge was wrong: at [4].

The bill of lading

[20] The bill of lading is not signed but it is recorded to be "by" Brennan as "carrier". The "shipper/exporter" is shown as Blue Q and the "consignee" is Melric. It stated in the "document presentation" box, "present documents" to Mondiale. The front page of the bill of lading states that the shipment is subject to the terms and conditions appearing on the face and back of the document. There are 22 terms on the back of the document in small print.

[21] Those terms include the following limitations:

a) At paragraph 19: Except as otherwise provided in this clause or elsewhere in this bill of lading, in cases of any loss or damage to or in connection with cargo exceeding in actual value the equivalent of $500 or for money of the United States, per package, or in the case of cargo not shipped in packages per shipping unit, the value shall be deemed to be $500 per package or shipping unit.

b) At paragraph 20: As to any loss or damage presumed to have occurred during the carrier’s period of responsibility, the carrier must be notified in writing of any such loss or damage or claim before or at the time of discharge by removal of the goods by the merchant, or if the loss or damage has not been apparent within three consecutive days after discharge by delivery …

[22] The terms and conditions set out in the bill of lading are also found in the terms and conditions on Brennan’s website, www.brennanusa.com.

[23] Mr Mallia, an employee of Mondiale based in New Zealand, was called by Brennan under a witness summons. A reading of his brief and his oral evidence reveals him to be knowledgeable of shipping practice. He described the bill of lading as "express release". This means that it was not necessary physically to present the bill of lading in order to obtain the goods once freighted. Thus, contrary to traditional shipping practice, express bills of lading are not sent with consignments of goods. Rather, Brennan retains the bill of lading at the place of origin and forwards copies to Mondiale and other customers by email and facsimile.

[24] A bill of lading is not easily susceptible to an analysis in terms of offer and acceptance as it is usually prepared and signed by one party only, if at all, and handed to the other party after the goods have been put on board: Ardennes (Cargo Owners) v Ardennes (Owners) [1951] 1 KB 55. That is why generally the bill of lading is not in itself considered to be a contract. Rather, the bill of lading follows the conclusion of the contract of carriage. As is stated in Hill Maritime Law (6ed 2003) at p 243:

The bill of lading is evidence (only) of the contract of carriage. It is never the contract. A simple practical reason why it is not, as is a ship charter party, is that it is only signed by one party – the master, as agent for the owner or somebody representing the carrier. It is the best available evidence and very likely to be the only written documented evidence, but the actual entering into the contract could have pre-existed the bill and consist merely of a verbal agreement between the parties, ie the carrier and the shipper.

[25] Generally, then, the terms of the bill of lading are taken to be a part of, or evidence of, the antecedent contract of carriage: Carver on Bills of Lading (2ed 2005) at para 3-001. A course of dealing may result in the incorporation of the terms of the bill of lading by way of an implied term to that effect: Scrutton on Charterparties (21ed 2008) at Article 33. Nevertheless as was pointed out in Crooks v Allan (1879) 5 QBD 38 at 40-41, very unusual clauses set out in small print may not be regarded as binding. It was stated at p 40:

If a shipowner wishes to introduce into his bill of lading so novel a clause, as one exempting him from general average contribution … he ought not only to make it clear in words, but also to make it conspicuous by inserting it in such type and in such part of the document that a person of ordinary capacity and care could not fail to see it. A bill of lading is not the contract, but only evidence of the contract, and it does not follow that a person who accepts the bill of lading which the shipowner hands him, is necessarily and without regard to circumstances, bound to abide by all its stipulations.

[26] There appears to be no argument as to what the limitation of liability terms in the bill of lading mean. It was not argued that the terms did not limit Brennan’s liability to a maximum of US$500, or nothing if the time limits were not complied with. The question here is whether in these circumstances Melric is bound by those terms. Were the limitation clauses unreasonable?

[27] The learned District Court Judge did not express a conclusion on whether the terms of the bill of lading generally were binding on Melric. What he did find was that the lack of express knowledge of the limitation of liability terms in the bill of lading by either Melric or Mondiale meant that Melric was not bound by them. His reasoning rested on his conclusion that the limitation of liability clauses were unusual and unreasonable so that express notice of them was required, relying on Lord Denning’s statement in J Spurling Ltd v Bradshaw. He stated at paragraph [25]:

I find these provisions are such that, in the circumstances of this case, they are so disproportionate in limiting value, and the timeframes so tight, that in a contract of this particular nature, evidenced by non-delivery, that there was an obligation falling on Brennan to ensure that the consignee was aware of its position so that it had the opportunity to protect itself.

[28] There is no doubt that if a clause is not ordinary or reasonable in a bill of lading it may be necessary to draw attention to it: Crooks v Allan at 40. Further, if an agent agreed to a clause on behalf of its principal that was totally unreasonable and unusual there may be a question as to whether there was any actual or ostensible authority to agree to such a term.

[29] However, there is no indication that the limitation of liability terms in this case come into that category. There was no evidence given indicating that the terms in the bill of lading were anything other than standard terms. Given the evidence that this was a form of bill of lading that had been in use by the parties for some time, it can be assumed that the terms were standard in bills of lading of this type. They are printed terms and displayed on the Brennan website. Mr Mallia of Mondiale commented in his evidence that the terms and conditions of the seacarrier’s bill of lading govern the contracts that Mondiale created as agent. He confirmed that the carriage of goods was undertaken pursuant to those terms, and that Melric had used Brennan’s services on 46 occasions. He stated that from his point of view, the time limits involved in shipping contracts governed how he did his job. The effect of this evidence was that there was nothing unusual in the terms of the bill of lading, or that they were other than standard. Indeed, Mr Vaughan for Melric while claiming that Mondiale never forwarded any of Brennan’s shipping documents to Melric, did not suggest that terms and conditions were unusual.

[30] In DHL International (NZ) Ltd v Richmond Ltd [1993] 3 NZLR 10 at 17:

In international commercial arrangements of this kind involving major commercial organisations, it would be unsafe to approach the interpretation of their contract on the footing that it was the product of unequal economic power or to regard standard terms and limitation provisions as somehow suspect and so give them a strained construction to protect the shipper. Such provisions are to be given their natural plain meaning read in the light of the contract as a whole. Only in that way will the reasonable expectations of the party as expressed in the contract be fulfilled.

[31] In that case the Court of Appeal determined that a term in an airbill limiting liability was not unreasonable or unexpected and therefore applied. The airbill created a comprehensive regime covering all aspects of the transaction, and openly allocated risk and responsibility. Although there was evidence about the availability of insurance that was not adduced in this case, DHL International (NZ) Ltd is a strong indication that limitation clauses in contracts of carriage between commercial parties will be enforced on their terms. In Dairy Containers Ltd v Tasman Orient [2005] 1 NZLR 433 at [12], a term in a bill of lading limiting liability to £5,500 was found not to be unreasonable.

[32] International transactions are agreed and priced on the basis that liability will be limited. The Court should be most reluctant to interfere with such terms and thereby the reasonable expectations of the parties. Such intervention can damage the certainty on which parties involved in international commerce rely. There is much to be said for leaving cases to be decided straightforwardly on the basis of the words of the contract: DHL International (NZ) Ltd at [17].

[33] Of course, a party who excludes or limits liability must do so in clear words, and any ambiguity is resolved against the party seeking to claim the benefit of it: DHL International (NZ) Ltd at [18]. There was no submission that there was any ambiguity in these clauses. The meaning of paragraphs 19 and 20 in the bill of lading are clear.

[34] Thus I conclude that paragraphs 19 and 20 were not unusual or unreasonable in the bill of lading context. However, the question still arises, whether they were binding on Melric.

Was Mondiale Melric’s agent?

[35] It is necessary first to consider the relationship between Melric and Mondiale and whether Mondiale had the ability to bind Melric by contracts it entered into.

[36] Mondiale has been associated with Melric since 13 August 1999 when the application for credit was signed. It is stated at paragraph 1.1:

… the relationship between the customer [Melric] and the forwarder (Mondiale) shall be that of principal and agent only.

It is stated at paragraph 1.3 that Melric authorises Mondiale as agent to:

… enter into contracts for the carriage and/or handling of the goods by any route or means with, and to entrust the goods to, any contractor or subcontractor on terms agreed between such persons and the forwarder [Mondiale] and agrees that such terms will bind the customer [Melric] as principal. [emphasis added]

[37] Mondiale has agency arrangements with freight forwarders and carriers throughout the world. Melric is a customer. Brennan is Mondiale’s agent in the United States for all sea freight cargo. Brennan deals with consignments of goods that are carried by land in the United States, and by sea from the United States to New Zealand. As Mr Mallia explained it, the customer in New Zealand (in this case, Melric) advises Mondiale that it is importing goods from the United States. Mondiale then prepares an order placement form, which includes all the information supplied by the customer. This information is then passed on to Brennan, and Brennan contacts the shipper to confirm the details of the shipment and when it is ready for shipment. Brennan then arranges the carriage of the goods from the United States to New Zealand.

[38] Mr Vaughan, the managing director of Melric, acknowledged that Mondiale was authorised to enter into carriage of goods contracts on behalf of Melric.

[39] Thus it is clear from the terms of the conditions of contract and the course of dealing as described by Mr Mallia and Mr Vaughan that the District Court Judge was entirely correct when he concluded at [23] that Mondiale was Melric’s agent. Further, in terms of paragraph 1.3 of the conditions of contract, Melric is expressly bound by any terms of contract agreed between Mondiale and other persons that are parties to a carriage of contract entered into by Mondiale on Melric’s behalf. Under this clause Melric expressly agrees that such terms will bind it as principal.

Mondiale’s knowledge of the terms of the bill of lading

[40] The Judge made a specific finding of fact at [23] that Mondiale would not have been aware of the clauses limiting liability. This was an error. Mr Mallia of Mondiale specifically observed in his evidence that Mondiale was aware of Brennan’s terms and conditions as set out in the bill of lading. He stated at paragraph 18 of his evidence:

Mondiale’s practice and indeed that of any other freight forwarder is that the terms and conditions of the sea-carrier’s bill of lading govern the contract Mondiale creates as agent for and on behalf of Melric.

He described how the first pages of the bills of lading are forwarded to Mondiale with their customs clearance document. All his evidence under cross-examination was premised on the fact that he knew of the terms.

[41] I put to one side as an error his statement to the contrary at [27]. Mondiale utilised Brennan’s services on 46 occasions between March 2000 and February 2008. I have no doubt that all the terms of the bill of lading were known and understood by Mondiale as an experienced international freight forwarder, and accepted by it as governing its contract of carriage with Brennan.

Melric’s knowledge of the terms of the bill of lading

[42] Mr Vaughan of Melric acknowledged that there was a substantial course of dealing between Melric and Mondiale. He asserted, however, that Mondiale never forwarded any of Brennan’s shipping documents to Melric. Rather, Melric would just receive an invoice from Mondiale for the freight once the goods arrived in New Zealand. Melric has never dealt with Brennan directly. Mr Vaughan asserted that Melric never received a copy of Brennan’s bill of lading or a copy of the terms and conditions on the rear of it. He did not say that Melric was unaware that Brennan and Mondiale used bills of lading.

[43] Mondiale’s records show that the customs broker involved sent a facsimile to Melric on 4 November 2004 requesting the commercial invoices in relation to the transaction. It stated: "no original bill of lading required." The facsimile also quoted the bill of lading number NYC/AKL/BO7635 for the specific consignment. The commercial invoice was subsequently sent by facsimile by Melric to Mondiale on 7 November 2005. Mr Mallia of Mondiale confirmed that Melric had notice of the existence of the bill of lading as it is specifically identified on the Mondiale invoice. It is clear therefore that Melric had notice from Mondiale that the shipping transaction involving the goods purchased from Blue Q would be subject to a bill of lading.

[44] Despite the undoubted fact that Melric was aware of the existence of the bill of lading, the District Court Judge appears to have found that Melric never received a copy of it. The issue is a matter of fact, and Mr Vaughan was subject to extensive cross-examination on the point. I did not receive a submission from Mr Lucas for Brennan that the Judge’s conclusion was wrong. There is a basis for the Judge’s conclusion in the evidence. I therefore conclude that Melric, while aware of Brennan’s bill of lading, did not receive a copy of it.

[45] Nevertheless, the conditions of contract between Mondiale and Melric expressly referred at paragraph 12.6 to the forwarder (Mondiale) being entitled to the benefit of any restrictions on its liability contained in a "bill of lading, consignment note or other document". Melric as an experienced importer must therefore have been aware that the terms of bills of lading would govern any contract of carriage entered into on its behalf, even if it was not aware of the details of those terms.

[46] This knowledge of the existence of a bill of lading is relevant to a consideration of the nature of Mondiale’s authority as agent to enter into contracts involving bills of lading on Melric’s behalf. Melric was aware that there were bills of lading which Mondiale negotiated with Brennan. Clearly Mondiale had authority to negotiate such bills on Melric’s behalf.

[47] It is now necessary to consider whether paragraphs 19 and 20 were, in these circumstances, binding on Melric.

Did paragraphs 19 and 20 bind Melric?

[48] The Judge found that these terms were not expressly brought to the attention of Melric by Mondiale. It was Mondiale that had the detailed knowledge of the terms. Mr Mallia for Mondiale gave evidence of a general familiarity with the terms of the bill of lading, and an acceptance of the time limits which governed his work.

[49] The contract negotiated by Mondiale between Brennan and Melric, including and as evidenced by the terms of the bill of lading, was the contract between the principal, Melric, and the other contracting party, Brennan. As was stated in Montgomerie v United Kingdom Steamship Association [1891] 1 QB 370 at 372:

The contract is the contract of the principal, not that of the agent, and prima facie at common law the only person who can sue is the principal and the other person who can be sued is the principal.

As a general rule the principal is bound by the terms of contracts entered into on its behalf within the ostensible authority of the agency agreement: Bowstead and Reynolds on Agency (18ed 2006) at paras 8-001 to 8-002.

[50] On the agency principles already referred to, Mondiale’s knowledge and acceptance of the limitations bound Melric, whatever Melric’s knowledge. Even if the clauses were unusual or unreasonable, Mondiale’s agreement to them bound Melric if Mondiale or Melric had notice of them. Even if Melric was inexperienced in shipping, (which it does not appear to be on the evidence), it would in any event be bound by what its agent agreed. The only exception to this would be if the term were so unusual as to be out of the agent’s actual or ostensible authority. For the reasons given, I have concluded that they were not unusual or unreasonable.

[51] Ms Patterson for Melric submitted that Mondiale did not enter into the contract of carriage with Brennan on Melric’s behalf, but rather that it was entered into directly between Brennan and Melric, and that the terms of the bill of lading were not part of that contract. She submitted that Mondiale was not Melric’s representative in relation to the contract of carriage but "simply facilitated the contract which was later formed directly between Melric and Brennan".

[52] This argument overlooks the proposition that the facilitation of contracts is exactly what agents do. In contracts where the agent is disclosed, the contract is always between the principal and the other contracting party. If the principal and the other contracting persons are the parties, the agent can never be a party. Mr Mallia must have been correct when he stated in his evidence that freight forwarders such as Mondiale enter into contracts of carriage with carriers as agent on behalf of a principal. That is part of their function as a freight forwarder.

[53] Further, as a matter of general principle, the knowledge of an agent acquired in the course of carrying out an agency duty is knowledge of the principal, whether or not it is actually transmitted to the principal: see Halsbury’s Laws of England"Agency" at para 137; Blackley v National Mutual Life Association of Australasia Limited [1972] NZLR 1038 (CA) at 1049. Thus, Melric is imputed to have knowledge of what Mondiale knew, and the terms agreed to by Mondiale on its behalf.

[54] Therefore, the fact that Mondiale was Melric’s agent and had notice of the terms of the bill of lading including the limitation of liability terms meant that Melric was bound by those terms.

[55] There was thus no basis for those terms of the bill of lading to be put to one side by the Judge simply because they had severe consequences for Melric and were not specifically drawn to its attention by Brennan. Melric as the principal was bound by those terms. It was bound because the contract was entered into by its agent Melric on its behalf, acting within its authority.

Application for credit

[56] Mr Lucas also submitted on behalf of Brennan that the conditions of contract in the application for credit between Mondiale and Melric were of relevance. Mr Lucas argued that various terms in the conditions of contract requiring notice of any loss within a certain period and the commencement of proceedings within a certain period bound Melric in its contract of carriage with Brennan.

[57] I have found that Brennan has established that Melric was bound by the terms of the bill of lading so it is not strictly necessary to address this issue. Nevertheless, I will do so briefly.

[58] Paragraph 12.6 of the conditions reads:

Where the service provided by the forwarder [Mondiale] is international carriage for which a bill of lading, consignment note or other document having contractual effect has been issued, notwithstanding any other provision in these conditions, the forwarder [Mondiale] shall be entitled to the benefit of any restrictions on its liability contained in such document

In addition paragraph 13 requires written notice of loss or damage within seven days after delivery of goods.

[59] Mr Lucas for Brennan suggested that the word "forwarder" could, in addition to Mondiale, include Brennan. He relied on paragraph 15(f), the interpretation clause, which states:

The "forwarder" means Mondiale Freight Services Limited and, where appropriate, all other persons entitled to the benefit of these conditions.

[60] I do not accept this interpretation. Brennan cannot be described as a person "entitled to the benefit of the conditions". Brennan had no role or entitlement in relation to a contract of agency between Melric and Mondiale. The clause is designed to give Mondiale the protection of restrictions of liability in shipping documents, and a notice provision. While it might be seen as for the benefit of certain specific agents that assist Mondiale, Brennan as the carrier is not in that category. There is no evidence that the terms in the conditions of contract were ever communicated to Brennan, or that it was ever envisaged by Melric and Mondiale that Brennan would have the benefit of such clauses.

[61] Further, Brennan cannot invoke s 4 of the Contracts (Privity) Act 1982, which gives third parties the right to utilise contractual provisions inserted in contracts for their benefit. Section 4 provides:

4 Deeds or contracts for the benefit of third parties

Where a promise contained in a deed or contract confers, or purports to confer, a benefit on a person, designated by name, description, or reference to a class, who is not a party to the deed or contract (whether or not the person is in existence at the time when the deed or contract is made), the promisor shall be under an obligation, enforceable at the suit of that person, to perform that promise:

Provided that this section shall not apply to a promise which, on the proper construction of the deed or contract, is not intended to create, in respect of the benefit, an obligation enforceable at the suit of that person.

[62] The conditions of contract do not refer to Brennan either by name, description or class. On a proper construction they cannot be seen as creating an obligation enforceable at Brennan’s suit. Brennan is a third party which has contracted with Melric through its agent Mondiale. The specific terms of the Mondiale conditions of contract with Melric do not concern Brennan, and there is nothing to suggest that the conditions of contract were intended to benefit Brennan.

[63] I conclude that the conditions of contract do not bind Melric in its contract with Brennan. This argument for Brennan does not succeed.

Conclusion

[64] Mondiale was Melric’s agent and within its authority concluded a contract of carriage with Brennan on behalf of Melric. That contract of carriage included the terms contained in Brennan’s standard bill of lading. The terms were not unreasonable in the context of the commercial contract of carriage. Melric is bound by those terms.

[65] While Melric is bound by the terms of the conditions of contract, these terms apply only as between Melric and Mondiale and Brennan cannot rely on them.

[66] Brennan is accordingly entitled to rely on the limitations of liability and quantum contained in the bill of lading. This means that Melric’s claim may be out of time and in any event will be limited to US$500. However, I have not had any specific submissions on whether, in the event of the appeal being allowed, there should be any judgment in Melric’s favour at all given the time limits, and if so whether it is limited to the $500 referred to in paragraph 19, or some other sum. It is not clear whether the pallet is to be treated as one or more packages. Thus the final outcome of the appeal must await further submissions, if necessary.

Result

[67] The appeal is allowed.

[68] The judgment in favour of Melric against Brennan is vacated.

[69] Leave is reserved to the parties to apply to this Court further for consequential orders.

Costs

[70] Brennan as appellant has been successful, and is awarded costs against Melric on a 2B basis.