Southpac Trucks Ltd v Ports of Auckland Ltd (CA)

IN THE COURT OF APPEAL OF NEW ZEALAND
CA355/2007
[2008] NZCA 573

BETWEEN SOUTHPAC TRUCKS LIMITED
Appellant

AND PORTS OF AUCKLAND LIMITED
Respondent

Hearing: 30 October 2008

Court: O'Regan, Robertson and Baragwanath JJ

Counsel: F R McLaren for Appellant
C A Carruthers QC and G Mercer for Respondent

Judgment: 22 December 2008 at 11.30 am

JUDGMENT OF THE COURT

A The appeal is allowed.

B The High Court was incorrect in holding:

(a) that Ports of Auckland Limited could avail itself of the statutory exemption from liability conferred by s 6 of the Carriage of Goods Act 1979; and

(b) that the operator of the fork hoist was exempt from liability under s 16(2) of the Act, with the consequence that Ports of Auckland Limited could not be vicariously liable.

C The respondent must pay the appellant costs for a standard appeal on a band A basis and usual disbursements.

REASONS

O’Regan and Robertson JJ [1]
Baragwanath J (Dissenting) [48]

Table of Contents
Para No
Introduction [1]
Background [2]
The legislative environment [10]
The contract in this case [16]
The appeal [18]
Submissions [22]
Discussion [26]

The s 2 definitions [29]

Conclusion [44]
Result [46]

O’REGAN AND ROBERTSON JJ
(Given by Robertson J)

Introduction

[1] On 26 June 2007 this Court granted leave to appeal (Southpac Trucks Limited v Ports of Auckland Limited [2007] NZCA 259) from a decision of the High Court ([2007] 2 NZLR 656) on two issues:

(a) Was the High Court correct in holding that Ports of Auckland Limited could avail itself of the statutory exemption from liability conferred by s 6 of the Carriage of Goods Act 1979?

(b) Was the High Court correct in holding that the operator of the fork hoist was exempt from liability under s 16(2) of the Act, with the consequence that his employer (Ports of Auckland Limited) could not be vicariously liable?

Background

[2] The appellant (“Southpac”) sued the respondent (“POAL”) in the District Court at Auckland to recover $60,201.64 spent on repairs to a Kenworth truck imported from Australia, for damage caused to the truck on the Bledisloe Wharf in Auckland on 15 July 2003.

[3] The central issue was the scope of the liability limitation provisions in the Carriage of Goods Act 1979 (“the Act”). Judge Joyce QC, in a reserved judgment, summarised the factual position, as far as is relevant, as follows:

Purchase, shipping and delivery arrangements

[5] Prior to July 2003, Southpac had ordered 6 Kenworth trucks from Melbourne for delivery in Auckland. A non-negotiable seaway bill was generated on 10 July 2003. The parties to that were Kenworth Trucks of Victoria and Southpac.

…

[8] The truck in question, along with the others in the order, was loaded on to the Rotoiti at the Port of Melbourne on 10 July 2003 with, in terms of the bill, Kenworth Trucks being consignor and Southpac consignee.

[9] Australia New Zealand Direct Line (“ANZDL”), a division of CP Ships (UK) Limited (“CP Ships”), undertook the carriage in terms of the bill, and the vessel arrived in Auckland on 15 July 2003.

[10] Southpac had arranged for a carrier, Carr and Haslam Transport Limited (“Carr and Haslam”), to collect the trucks from the Bledisloe Wharf and transport them to Southpac’s premises in Manukau.

Ports of Auckland Trading Division

[11] One of the trading divisions of Ports of Auckland is Axis Intermodal. Although there is also an incorporated company of that name, it has never been operated as such. So the name simply identifies a division of Ports of Auckland…

[12] Axis Intermodal provides stevedoring services at the Bledisloe Container Terminal to a number of vessels including the Rotoiti. The services are provided pursuant to a contract between Axis Intermodal and CP Ships.

[13] On 15 July 2003 Axis Intermodal was providing stevedoring services to CP Ships in respect of the discharge and loading of the Rotoiti which was moored at B2 Berth at the Northeast corner of the terminal.

Discharge/Delivery process

[14] The discharge process involved cargo, such as the truck here, being driven off the Rotoiti by stevedores and thence to the southwest corner of the terminal to await delivery to the consignee.

[15] The Southwest corner of the terminal is commonly used as a deposit and uplift area for vehicle cargo. In the ordinary course, once a truck was safely parked in the Southwest corner, it would remain there under the care of Ports of Auckland until released to the consignee.

…

Accident

[17] However, in this case, there was a collision between the truck and a forkhoist as the truck was being driven from the vessel to the Southwest corner parking area. The forkhoist, driven by an employee of Ports of Auckland, was carrying an oversized load of timber. The collision caused substantial damage to the truck.

[18] Southern Cross Stevedores Limited was subcontracted to Axis Intermodal to perform work of the kind referred to in the Ports of Auckland’s contract with CP Ships.

[19] In turn, Southern Cross had subcontracted the actual work to Wallace Investments Limited (“Wallace”). So, at the wheel of the truck that was damaged was a stevedore employed by Wallace.

[4] POAL filed a defence in which it admitted that its employee failed to keep a proper lookout while operating the fork hoist and to exercise sufficient care to avoid a collision. It also accepted that the employee had allowed the cargo carried on the fork hoist to come into contact with the truck, as a result of which the truck suffered damage.

[5] However, POAL contended that it was acting, through its employee as a “carrier” in terms of the Act, and was providing stevedoring and marshalling services in relation to the truck. Accordingly, its liability was limited under s 6 of the Act.

[6] Judge Joyce found the limitation was inapplicable to the negligent act of the fork hoist operator and that Southpac was entitled to summary judgment.

[7] In the High Court, Allan J allowed the appeal. He held that POAL could avail itself of the Act’s limited liability regime because at the time the damage occurred the contract of carriage was on foot, and the actual carrier, Wallace, was the sub-sub-contractor of POAL. The Judge said:

[39] In my opinion the proper interpretation of the phrase [“liable as such”], consistent with the manifest purpose and scheme of the Act, is that a carrier will be exempt from liability under s 6 if at the time when the loss or damage occurred, the party concerned was acting in its capacity as a “carrier” of the goods concerned, and not in some other capacity unconnected with its work as a “carrier” of those goods.

[40] The statutory limitation on liability extends to all those carriers who play a role in the carriage of the goods, as contemplated by the contract of carriage, for the whole of the duration of the contract of carriage. Such carriers are acting in their capacity as parties undertaking obligations contemplated by the contract of carriage (in this case the sea way bill). Various carriers will undertake the carriage of the goods at different points in time. Some will be involved in physically moving the goods from place to place; others may simply provide incidental services. But provided in each instance they were performing a role falling within the s 2 definition of the term “carrier” in connection with the carriage of the goods, they will be acting as carriers “as such”.

[8] He later said:

[70] In my view, POAL is entitled to avail itself of the statutory exemption from liability conferred by s 6. So is its fork hoist driver, pursuant to s 16(2). There can accordingly be no question of vicarious liability.

[9] The High Court refused Southpac’s application for leave to appeal to this Court, but special leave was subsequently granted by this Court.

The legislative environment

[10] For more than 200 years, there have been various regimes designed to deal with the inherent risks associated with the carriage of goods and activities incidental to such carriage.

[11] New Zealand’s current Act had its immediate genesis in a report of the Contract and Commercial Law Reform Committee presented to the Ministry of Justice in April 1968. From that report emerged the Carriage of Goods Bill 1977 which was the subject of further analysis and evaluation by a working party, which reported to the Minister of Justice in November 1978. When it was enacted in 1979, the Act reflected in large part the working party’s recommendations.

[12] Looking at this legislation as a comprehensive scheme, it is clear that it constitutes a regime for all domestic carriages of goods. The common law fault principle, by which negligent carriers could be sued in tort, has been legislatively overridden. Under the Act, carriers are strictly liable up to $1,500 in respect of each package or unit that is damaged. The Act applies to those actually involved in the carriage of goods or services incidental thereto, and to persons who procure contracts of carriage.

[13] Section 2 of the Act provides several definitions. Relevant to the question of statutory interpretation upon which this appeal turns are:

Actual carrier, in relation to the carriage of any goods, means every carrier who, at any material time, is or was in possession of the goods, or of any container, package, pallet, item of baggage, or any other thing in or on which the goods are or were believed by him to be, for the purpose of performing the carriage or any stage of it or any incidental service; and includes the contracting carrier where he performs any part of the carriage:

Carriage includes any incidental service; and carry has a corresponding meaning:

Carrier means a person who, in the ordinary course of his business, carries or procures to be carried goods owned by any other person, whether or not as an incident of the carriage of passengers; and, except in sections 21 to 24 of this Act, includes a person who, in the ordinary course of his business, performs or procures to be performed any incidental service in respect of any such goods:

Contracting carrier, in relation to a contract of carriage, means the carrier who, whether as a principal or as the agent of any other carrier, enters or has entered into the contract with the contracting party:

Incidental service, in relation to any goods, means any service (such as that performed by consolidators, packers, stevedores, and warehousemen) the performance of which is to be or is undertaken to facilitate the carriage of the goods pursuant to a contract of carriage.

[14] Liability is dealt with in ss 9 and 10 and relevant to this case in s 10 are the provisions which provide:

10 Liability of actual carrier

(1) The provisions of this section apply, subject to the other provisions of this Act, where a contract of carriage is to be or is performed wholly or partly by 1 or more actual carriers other than the contracting carrier (whether or not the contracting carrier himself performs part of the carriage).

(2) In any case to which this section applies where 1 actual carrier is involved, that carrier is, subject to the terms of his contract with the contracting carrier, liable as such to the contracting carrier for the loss of or damage to any goods occurring while the actual carrier is separately responsible for the goods in accordance with subsection (6) of this section, whether or not the loss or damage is caused wholly or partly by the actual carrier.

(3) In any case to which this section applies where more than 1 actual carrier is involved,—

(a) Subject to subsection (4) of this section, the actual carriers are, subject to the terms of their respective contracts, jointly liable as such to the contracting carrier for the loss of or damage to any goods occurring while the actual carriers are jointly responsible for the goods in accordance with subsection (5) of this section, whether or not the loss or damage is caused wholly or partly by the actual carriers or any of them:

(b) Each actual carrier is, subject to the terms of his contract, separately liable as such to the contracting carrier for the loss of or damage to any goods occurring while he is separately responsible for the goods in accordance with subsection (6) of this section, whether or not the loss or damage is caused wholly or partly by the actual carrier.

(4) No actual carrier is liable under subsection (3)(a) of this section if he proves that the loss or damage occurred otherwise than while he was separately responsible for the goods in accordance with subsection (6) of this section.

…

(6) For the purposes of subsections (2) to (4) of this section, each actual carrier is separately responsible for the goods from the time when the goods (or the container, package, pallet, item of baggage, or any other thing in or on which the goods are believed to be) are accepted by him for carriage until the time—

(a) When they are duly tendered by him to the next actual carrier in accordance with the contract of carriage; or

(b) In the case of the last actual carrier, when the contracting carrier's responsibility ends in accordance with subsection (3) or subsection (4) of section 9 of this Act.

[15] Otherwise of importance to this case are ss 6 and 16, which provide:

6 Other remedies affected

Notwithstanding any rule of law to the contrary, no carrier shall be liable as such, whether in tort or otherwise, and whether personally or vicariously, for the loss of or damage to any goods carried by him except—

(a) In accordance with the terms of the contract of carriage and the provisions of this Act; or

(b) Where he intentionally causes the loss or damage.

16 Liability of carrier’s employee

(1) Every employee of a carrier who, in the course of his employment, intentionally causes the loss of or damage to any goods being carried by the carrier shall be liable to the owner of the goods for that loss or damage.

(2) Subject to subsection (1) of this section, no employee of a carrier shall be liable as such, whether under this Act or otherwise, to the owner of any goods being carried by the carrier for the loss of or damage to any of those goods.

The contract in this case

[16] The contractual arrangements governing the carriage of the truck in this case are detailed above, and are not in dispute. Although the seaway bill covered the truck’s international carriage by ship, there was (inevitably) some domestic carriage involved. For the purposes of the current dispute, the domestic sector of the carriage involved the truck being driven from the ship to a spot on Bledisloe Wharf, from where it was to be picked up by a carrier engaged by Southpac to transport the truck to Southpac’s South Auckland premises.

[17] It was in the course of this part of the carriage that the damage to the truck occurred. Allan J held:

[41] Turning to the present case, the collision between POAL’s fork hoist and the Kenworth truck occurred during the currency, and in the course of performance of, the contract of carriage made between the contracting party and CP Ships. At the very time of the accident POAL was engaged in the provision of incidental services. It was contractually responsible to CP Ships for the provision of stevedoring services which were, at the moment of the collision, being carried out by the party contracted to POAL’s subcontractor. Furthermore, POAL was providing wharfinger services and had set aside warehousing facilities for which the truck was bound at the time of the collision. In a temporal sense, the contract of carriage was on foot at the time of the collision and POAL was directly involved in carrying out its obligations to CP Ships, for the purpose of enabling CP Ships to carry out its contractual obligations to its contracting party.

The appeal

[18] It is common ground that, if the fork hoist had belonged to and had been driven by an employee of someone who was not a party to the carriage of the truck, then, as the damage was the fork hoist operator’s fault, liability would not have been excluded by the Act. In such a case, there would have been no connection, either contractual or physical, between the fork hoist driver and the carrier. The crucial issue before us is whether the Act applies to a particular class of “carrying” activities, or whether it essentially creates a general charter for parties that are engaged in a contract of carriage whereby there is limited liability for all acts of all their employees, by virtue of one or all of geographic, temporal or “institutional” connectedness to the actual carriage of the goods that are within the contract of carriage.

[19] In the present case, we consider that it is not decisive that the fork hoist driver was geographically proximate to the location of the carriage (ie on POAL’s premises), that the damage occurred during the currency of the contract of carriage, or that the fork hoist driver was a POAL employee. What matters is the capacity in which POAL was acting at the time of the collision, and that the collision occurred because of the negligence of someone occupied in an activity wholly independent from the actual carrying activities of POAL.

[20] The phrase “liable as such” appears in the critically important s 6. Allan J considered that those words mean that a carrier will be within the scope of s 6 if at the time of the damage it is acting in its capacity as a carrier. In the present case Allan J reasoned that since POAL was providing stevedoring and wharfinger services when the collision occurred, it was within the Act’s definition of “carrier”.

[21] During the course of the hearing, Mr Carruthers QC acknowledged that, whatever the scope of the Act’s limited liability regime, there had to be at least a sensible connection between the cause of the damage and the particular physical carriage of the goods in question. He submitted that the present case clearly met this “connectedness” test, but he did not elaborate in detail the principle to be applied in determining the bounds of the Act’s application.

Submissions

[22] Ms McLaren submitted that the words “liable as such” are critical to the scheme of the Act and delimit the capacity in which a particular person or body corporate must be acting in order to be classified as a “carrier”. Mr Carruthers contended that this contextual reading of the Act is contrary to its purpose, and that the Act was intended to be an umbrella statutory scheme rather than one the application of which depends on the particular capacity in which the carrier was acting at the time the damage occurred.

[23] In Ms McLaren’s submission, the logical implication of the Act’s definition of “carrier” is that POAL could be within the limited liability framework only if it was acting pursuant to a contract relating to Southpac’s truck when the collision occurred. Where the High Court erred, Ms McLaren submitted, was in expanding the scope of carriage “as such” to include acts that are “wholly collateral” either to actual carriage or to acts in furtherance of the contract of carriage. Since the fork hoist driver was neither an actual carrier, nor performing an aspect of the contract of carriage, the Act does not, she submitted, apply.

[24] Mr Carruthers contended that it is not important that the fork hoist driver was not working in furtherance of the carriage of Southpac’s particular truck. It is enough that he was working so as to facilitate POAL’s carriage duties generally, and that the contract of carriage between POAL and its sub-sub-contractor was still current. The words “as such”, Mr Carruthers submitted, should be interpreted so as to protect any carrier performing a service to facilitate the contract of carriage during the currency of that contract.

[25] Mr Carruthers further submitted that POAL was, at the time of the damage, an “actual carrier”, as it was in constructive possession of Southpac’s truck through its sub-sub-contractor. He emphasised that in any event POAL was at least a “carrier”, and therefore entitled to the protection of s 6 of the Act. Discussion

[26] The central point which requires clarification is the meaning of, and relationship between, the material definitions in s 2 of the Act, namely “carrier”, “actual carrier” and “contracting carrier”, and the circumstances in which a “carrier” will be “liable as such” under the Act.

[27] In essence Southpac seeks to hold POAL vicariously liable for the negligence of its employee involved in an unrelated activity not as a carrier of the truck. The facts of this case are complicated by the fact that POAL was contractually connected to the Wallace stevedore, who was in possession of the truck at the time of the collision.

[28] We hold, however, that the sphere of POAL’s role as a “carrier” of Southpac’s truck was bounded by its contractual relationship with the actual carrier, Wallace. To the extent that it is the fork hoist driver’s negligence, and not any action of the Wallace driver, that founds Southpac’s cause of action, POAL is not in fact being held liable as a carrier. POAL cannot claim the Act’s protection because the kind of liability for which it is being sued is not the kind of liability contemplated by the Act. However, we consider in addition that POAL was not acting as a carrier “as such” when the collision occurred and therefore that it cannot be limited in its liability “as such”. We discuss this next.

The s 2 definitions

[29] We accept Mr Carruthers’ submission that POAL was at the time of the collision a “carrier”, because it procured the performance of an incidental service (the stevedoring of the truck) by its sub-sub-contractor, Wallace. In this context, we are satisfied that procurement extends to a sub-sub-contractual relationship. Indirect procurement of services is commonplace in contracts of carriage, and must therefore be sufficient for the purpose of the Act.

[30] As well as the bare definition of “carrier”, the Act provides for two particular classes of “carrier”, “actual carriers” and “contracting carriers.” Actual carriers are those that are in possession of the goods for the purpose of performing a stage of their carriage, or an incidental service. A contracting carrier is one which has entered into a contract with a contracting party (the consignor or consignee of the goods).

[31] Allan J held that POAL was within the ss 6 and 16 regime because at the time the damage occurred POAL was a carrier by virtue of its sub-sub-contractual relationship with the actual carrier, Wallace. On this analysis, POAL’s contractual link to the truck’s actual carriage made it a carrier, which for Allan J meant that its liability “as such” was limited under s 6.

[32] The problem with this interpretation is that if POAL’s liability is limited under s 6 by virtue only of its being a carrier, then there is no meaning for the phrase “no carrier shall be liable as such” in the section (emphasis added). If all carriers are within the limited liability regime, the Act would simply provide that “no carrier shall be liable”. The Act, read as a whole, provides that carriers are “liable as such” only when they are actual or contracting carriers, not when they are mere carriers without more.

[33] POAL was not in a contractual relationship with Kenworth (the contracting party), and was not therefore a contracting carrier. Nor do we accept Mr Carruthers’ submission that POAL was an actual carrier of the truck at the time of the damage. We agree with Ms McLaren that actual carriage requires physical possession and that the Act envisages that only one carrier can be in possession of goods at any one time.

[34] Section 10, for example, provides that contracting carriers that are sued for damage to goods may seek reimbursement from any of the actual carriers involved in any stage of the goods’ carriage. If actual carriage did not require physical possession, then there would be no distinction between a person who physically carried goods and one who procured their carriage. The impact of that in the present case would be that CP Ships, POAL, Southern Cross and Wallace would all have been actual carriers of Southpac’s truck when the accident happened.

[35] In our view, the s 10 regime supports the contention that only one party can be an actual carrier of goods at any one time. The use of the terms “each actual carrier” (subs (3)(b)), “[actual carrier] is separately responsible for the goods” (subs (3)(b) and (4)), and “last actual carrier” (subs (6)(b)) indicate that the status of actual carrier passes from one party to another. Under subs (6), this occurs when the goods “are accepted by [the carrier concerned] for carriage” until they “are duly tendered by [the carrier concerned] to the next actual carrier”. That is consistent with there being one actual carrier at a time, and the status of actual carrier being determined by reference to actual, rather than constructive, possession. The liability regime in subs (7) uses as a basis of calculation the consideration paid to each actual carrier for the carriage performed by it which implies that an actual carrier has to physically carry goods (requiring actual possession) to be an actual carrier. Subsection (9) deals with the situation where one actual carrier undertakes part of the carriage under contract with another actual carrier. It does not create any exception to the regime provided for earlier to determine when a party becomes the actual carrier (on handover of the goods). Rather, it provides a way of applying the subs (7) calculation to those actual carriers.

[36] We conclude that an actual carrier of goods must have physical possession of the goods: being the head contractor of the party in possession of the goods is not enough to qualify as an actual carrier. While we accept the point made by Baragwanath J that “possession” can sometimes be interpreted as something less than physical possession, we do not consider that that is the case in the present statutory context. In this case, Wallace, not POAL, was in possession of the truck when the fork hoist collided with it. At that moment, Wallace, and no other party, was the actual carrier of the truck.

[37] The words “liable as such” in the Act limit the sense in which a carrier is protected from liability for damage to goods in the course of a particular carriage. If damage occurs, then the party seeking the Act’s limited liability cover must be in a position where it can be liable for the damage to the goods as a carrier under the Act at the material time. To trigger the application of s 16 of the Act (which deals with the vicarious liability of carriers’ employees and is simply the vicarious equivalent of s 6) the fork hoist driver would need to have been acting as an actual carrier of the Southpac truck. Plainly he was not. His fork hoisting work was neither in furtherance of, nor incidental to, the truck’s carriage, but wholly unrelated to it. It just so happens that he was a POAL employee, and that coincidence is not sufficient to trigger the Act’s application.

[38] We are not persuaded that there is any reason to read down the words “liable as such” as Allan J did. For large companies like POAL, which provide myriad services, that would carve out a significant zone of limited liability, contrary to the letter and purpose of the Act (see Paul Myburgh “Shipping Law” [2007] NZLRev 749).

[39] Allan J accepted that acts wholly disconnected from the contract of carriage are not covered by the Act. It is therefore difficult to rationalise including the fork hoist driver within the Act simply because he was an employee of POAL which was a carrier at the time. In this case the fork hoist driver was not acting as an actual carrier, but was involved in an unrelated activity. We do not consider it problematic that this distinction involves a factual enquiry, and nor did Allan J reject the appropriateness of a factual enquiry as his “grandstand” example illustrated (see his judgment at [45]). The unrelatedness of the fork hoist driver’s activity vis-à-vis the carriage of the truck highlights the capacity in which POAL is being sued by Southpac, which is not as a carrier but as the employer of a negligent fork hoist driver.

[40] Allan J considered it to be significant that the contract between CP Ships and POAL was “on foot” at the time that the damage occurred. We do not agree.

[41] It is not the existence of the contract that determines the position under s 6, it is the question of whether POAL was the actual carrier of the goods. For this reason, we consider it to be crucially relevant that the accident involving the fork hoist occurred while a person other than POAL was the actual carrier. That is the effect of the words “as such” in ss 6 and 16, which recognise that different activities give rise to different risks. The risks inherent in acts of carriage (which are the mischief addressed by the Act) arise from a particular kind of activity. It is only where the particular kind of person, a carrier, is also either the contracting carrier or is performing (or is responsible vicariously or contractually as a contracting carrier for the performance of) a particular kind of activity, actual carriage, that the limited liability applies. It is not enough for the application of the Act that POAL offers services as a carrier or that it was the principal of the party which was the actual carrier of the goods at the time of the collision.

[42] Putting to one side the position of contracting carriers, what is critical for the application of s 6 is that at the time of the damage the actual carrier is in possession of the goods and responsible for them as an actual carrier. What is required by s 6 is that the liability be that of an actual carrier, which means a carrier that is in physical possession of the goods at the time the damage occurs. It does not matter, for the application of s 6, whether the damage is caused by the actual carrier, or (as in this case) by an unrelated third party. Section 6 simply limits the liability of actual carriers when the goods in their possession are damaged. To this extent, the Act provides for general limitation of actual carriers’ liability. What the Act does not provide for is general limitation of all carriers’ liability, whether or not they are in actual possession of the goods at the time of the damage. Actual possession is a precondition to the application of s 6.

[43] We are not persuaded that the policy of the Act is advanced by extending the limited liability regime to include all acts or omissions of all employees, of every party to a carriage of goods, and in all circumstances while the contract for the particular carriage is operative. Where the party sued for the damage to the goods is not the actual carrier, there is no principled reason to extend the Act’s protection to them, since it is actual carriers that bear the risks inherent in the carriage of goods. An all-encompassing interference with normal property rights and responsibilities is unsustainable on the words of the legislation, and would transform the Act from a regime that is responsive to the particular risks borne by carriers of goods to a general charter. Certainty and simplicity are desirable, but the words of the Act do not, we consider, justify such an extensive regime as that contended for by Mr Carruthers which will create anomalies and unjust consequences.

Conclusion

[44] It follows that we answer the two issues upon which leave was granted to appeal in the negative. The High Court Judge was in error when he held that POAL could avail itself of the statutory exemption from liability conferred by s 6 of the Act. POAL was not, in respect of Southpac’s truck, a carrier as such and does not therefore come within the purview of s 6.

[45] Nor was the High Court correct in holding that the fork hoist operator was exempt from liability under s 16(2) of the Act. Section 16(2) is the vicarious equivalent of s 6, and cannot apply since POAL was not a carrier acting as such in respect of Southpac’s truck. The collision between the fork hoist and the truck occurred when Wallace, not POAL, was the truck’s actual carrier, and the Act does not therefore apply to limit POAL’s liability for its employee fork hoist driver.

Result

[46] The appeal is accordingly allowed. The judgment of Judge Joyce QC in the District Court is restored as to liability only. It was common ground before us that, notwithstanding comment to the contrary, there is an unresolved issue as to quantum.

[47] The respondent must pay the appellant costs for a standard appeal on a band A basis and usual disbursements.

BARAGWANATH J (Dissenting)

Perspective

[48] Southpac Trucks Limited’s truck was damaged by a Ports of Auckland Limited (“POAL”) fork hoist driven carelessly by one of POAL’s employees. POAL, through the driver employed by its sub-sub-contractor, was discharging the obligations of its principal, CP Ships (UK) Ltd, under a contract with Southpac to carry the truck from Melbourne to the southwestern corner of the POAL wharf. The question is whether POAL’s liability to Southpac is as a carrier, in a manner which would afford it limited liability protection under the Carriage of Goods Act 1979 (COGA).

The facts

[49] Kenworth Trucks had contracted with Southpac under a tripartite contract (Kenworth/Southpac/CP Ships) for the carriage of trucks from Melbourne to Auckland by CP Ships in terms of a CP Ships seaway bill. From the fact that it was CP Ships and not Southpac which contracted with POAL to unload the trucks it may be inferred that the obligation of CP Ships under the seaway bill was to get the trucks to a point on the wharf at Auckland from where Southpac could collect them.

[50] CP Ships’ contract with POAL required POAL to provide services, including unloading the trucks from the ship to the wharf at Auckland:

1.4 The Operator [POAL] shall provide services for the loading and/or discharging of ships, for the handling of containers, for the transport of containers between the wharf and the marshalling area and all other services referred to in the contract.

…

1.6 The Operator may subcontract any of its obligations under these conditions but shall nevertheless be entitled to enforce these conditions and be liable for their performance as if it had not subcontracted such obligations. POAL’s obligation was to shift the trucks from the ship to the southwestern point of the wharf near the road, from where they would be collected by Southpac.

[51] POAL delegated to Southern Cross Stevedores Ltd the physical task of shifting the trucks and Southern Cross in turn sub-contracted that work to Wallace Investments Ltd, whose driver was at the wheel at the time of the collision with POAL’s fork hoist. But, by cl 1.6, POAL retained the responsibility to CP Ships to discharge its obligations to Southpac.

The COGA

[52] The COGA applies to every domestic carriage of goods performed by a “carrier” pursuant to a contract, whether by land, water or sea, or by more than one and whether or not the aircraft or ship is at the same time also engaged in international carriage (s 5(1) and (3)).

[53] In terms of s 5 the Act applies to the carriage to be performed by a “carrier” which is defined in s 2:

Carrier means a person who, in the ordinary course of his business, carries or procures to be carried goods owned by any other person, whether or not as an incident of the carriage of passengers; and …, includes a person who, in the ordinary course of his business, performs or procures to be performed any incidental service in respect of any such goods:

…

Incidental service, in relation to any goods, means any service (such as that performed by consolidators, packers, stevedores, and warehousemen) the performance of which is to be or is undertaken to facilitate the carriage of the goods pursuant to a contract of carriage:

[54] Section 2 also contains definitions of more specific roles: “contracting carrier” and “actual carrier”:

Contracting carrier, in relation to a contract of carriage, means the carrier who, whether as a principal or as the agent of any other carrier, enters or has entered into the contract with the contracting party:

The “contracting party” is the consignee or consignor of the goods. Here CP Ships was the “contracting carrier”, under its contract with Kenworth (the consignor) and Southpac (the consignee).

[55] The definition of “actual carrier” is:

Actual carrier, in relation to the carriage of any goods, means every carrier who, at any material time, is or was in possession of the goods…, for the purpose of performing the carriage or any stage of it or any incidental service; and includes the contracting carrier where he performs any part of the carriage:

[56] Here, CP Ships was the “contracting carrier” under its contract with Kenworth and Southpac. The identity of the “actual carrier” is a mixed question of fact and law. There is a difficult and important question as to whether POAL was an “actual carrier”.

[57] There is no question that “carriage” includes the kind of stevedoring service provided by POAL in this case. The term is defined as including any incidental service (s 2, see the definition of “incidental service” at [53]).

[58] The scheme of the COGA is to provide that the contracting parties – the seller and the buyer of the product in question – will contract with the contracting carrier in one of four ways. Failing specific agreement to the contrary, the default provision, which applies in this case, is for:

(a) strict liability of the contracting carrier to the contracting parties for due delivery of the goods;

(b) limitation of the contracting carrier’s liability to the contracting parties to a maximum of $1500 per package;

(c) exemption from liability of the actual carriers, as distinct from the contracting carrier, in respect of suit by the contracting parties within the constraints of the crucial s 6 (set out below at [66]); and

(d) potential liability of the actual carrier to indemnify or contribute to the payment due by the contracting carrier.

[59] Liability of the actual carrier under the default regime is the subject of s 10:

10 Liability of actual carrier

(1) The provisions of this section apply, subject to the other provisions of this Act, where a contract of carriage is to be or is performed wholly or partly by 1 or more actual carriers other than the contracting carrier (whether or not the contracting carrier himself performs part of the carriage).

(2) In any case to which this section applies where 1 actual carrier is involved, that carrier is, subject to the terms of his contract with the contracting carrier, liable as such to the contracting carrier for the loss of or damage to any goods occurring while the actual carrier is separately responsible for the goods in accordance with subsection (6) of this section, whether or not the loss or damage is caused wholly or partly by the actual carrier.

(3) In any case to which this section applies where more than 1 actual carrier is involved,—

(a) Subject to subsection (4) of this section, the actual carriers are, subject to the terms of their respective contracts, jointly liable as such to the contracting carrier for the loss of or damage to any goods occurring while the actual carriers are jointly responsible for the goods in accordance with subsection (5) of this section, whether or not the loss or damage is caused wholly or partly by the actual carriers or any of them:

(b) Each actual carrier is, subject to the terms of his contract, separately liable as such to the contracting carrier for the loss of or damage to any goods occurring while he is separately responsible for the goods in accordance with subsection (6) of this section, whether or not the loss or damage is caused wholly or partly by the actual carrier.

(4) No actual carrier is liable under subsection (3)(a) of this section if he proves that the loss or damage occurred otherwise than while he was separately responsible for the goods in accordance with subsection (6) of this section.

…

(6) For the purposes of subsections (2) to (4) of this section, each actual carrier is separately responsible for the goods from the time when the goods (or the container, package, pallet, item of baggage, or any other thing in or on which the goods are believed to be) are accepted by him for carriage until the time—

(a) When they are duly tendered by him to the next actual carrier in accordance with the contract of carriage; or

(b) In the case of the last actual carrier, when the contracting carrier's responsibility ends in accordance with subsection (3) or subsection (4) of section 9 of this Act.

[60] Liability of employees is dealt within in s 16:

16 Liability of carrier’s employee

(1) Every employee of a carrier who, in the course of his employment, intentionally causes the loss of or damage to any goods being carried by the carrier shall be liable to the owner of the goods for that loss or damage.

(2) Subject to subsection (1) of this section, no employee of a carrier shall be liable as such, whether under this Act or otherwise, to the owner of any goods being carried by the carrier for the loss of or damage to any of those goods.

Discussion

[61] The COGA responds to the inevitability that in carriage of goods there will be risk of loss or damage, which the law must allocate. Since there are various interests at stake it is sensible to approach the language of the statute without predisposition as to what result might be expected. But regard may also be had to the commercial context which Lord Wilberforce termed the “factual matrix”. As Lord Mansfield stated in Raynard v Chase (1756) 1 Burr 6 at 7, 97 ER 155 at 158 (KB) “the general usage and practice of mankind ought to have weight in determinations of this sort affecting trade and commerce”.

[62] In considering whether POAL should receive the protection afforded by the COGA, it may be noted that the contractual arrangements in this case are perfectly conventional. In a note by the Secretariat of the United Nations Commission on International Trade Law for Working Group III (Transport Law) (31 January 2003) A/CN.9/WG.III/WP.28 at 36 there was reproduced a submission by the International Group of P & I Clubs, which insure some 90 per cent of the world’s ocean-going tonnage. It stated:

Traditionally sea carriers contracted tackle-to-tackle, their responsibility under relevant maritime conventions being limited to the sea carriage, although they were free to assume responsibility for ancillary movements of the goods prior to loading and post discharge, normally within the confines of the loading and discharge ports. Current commercial and insurance practice as well as existing maritime conventions is generally structured to provide for this traditional type of carriage … the majority of bulk and break cargoes are still moved in this way and continue to predominate in tonnage terms … .

[63] While the evidence did not detail trade practice, there is no reason to think that the techniques of:

(a) the contracting carrier, often the principal party to a seaway bill, subcontracting to a stevedore the task of unloading the vessel on arrival; and

(b) the stevedore employing sub-contractors; are unorthodox.

Nor it is likely that Parliament would contemplate a patchy regime of protection of those engaged in the carriage. Rather it is to be expected that the regime will be commercially sensible, with clear and practical lines of demarcation, so that parties – and importantly, insurers – may be able to predict where protection will lie. It is incumbent on the Court to interpret and apply the regime in a manner that makes commercial sense.

[64] The underlying policy of simplifying the law in order to promote certainty was explained in the Contracts and Commercial Law Reform Committee Report on the Law Governing the Carriage of Goods (April 1968) at 7:

We have approached this question in the knowledge that every carriage of goods involves the risk of loss of, or damage to, the goods carried and that, in part at least, our function is to recommend where that risk should lie in any given case.

The common law allocated the risk of such loss on the basis partly of fault and partly of strict liability. Whatever its justification in the past, the use of the fault principle for this purpose has, we believe, serious disadvantages. It encourages unnecessary litigation, it leads to difficulties of proof, and it is uncertain in its application. We would prefer that in a commercial transaction like the carriage of goods, the risk should lie where the balance of convenience places it. Since the risk of loss or damage is readily insurable, the question becomes one of which party should be expected to effect insurance.

… Within certain limits, it is more convenient that the carrier shoulder the risk but, for insurance purposes, it is necessary that absolute upward limits should be placed on his liability.

(Emphasis added.)

[65] There is nothing unusual about mishaps on board a ship or on the wharf between unloading and collection. While the former will often occur during an international carriage which falls outside the COGA, the latter are necessarily within it (see Fletcher Panel Industries Ltd v Ports of Auckland Ltd [1992] 2 NZLR 231 at 233 (HC)). So this case has important precedent value.

Section 6

[66] Section 6 is expressed broadly:

6 Other remedies affected

Notwithstanding any rule of law to the contrary, no carrier shall be liable as such, whether in tort or otherwise, and whether personally or vicariously, for the loss of or damage to any goods carried by him except—

(a) In accordance with the terms of the contract of carriage and the provisions of this Act; or

(b) Where he intentionally causes the loss or damage.

(Emphasis added.)

[67] Does it apply to POAL in this case? Certainly it does if POAL was an “actual carrier”, which is the issue addressed by the majority.

Was POAL an “actual carrier”?

[68] As there is no question that the transfer across the wharf was an “incidental service”, the critical question that arises in relation to POAL’s status is whether it was “in possession of the goods” in terms of the definition of “actual carrier” in s 2 (set out above at [55]). The majority reads narrowly the concept of possession, which is crucial to the definition of “actual carrier”, a definition which bestows limited liability.

[69] In Harris “The Concept of Possession in English Law” in Guest (ed) Oxford Essays in Jurisprudence (1961) at 71 – 72, Mr (now Professor) DR Harris QC argues that:

English judges have not adopted any consistent approach to the meaning of possession. They have used ‘possession’ in the various rules of law as a functional and relative concept, which gives them some discretion in applying an abstract rule to a concrete set of facts. When a [party] has claimed the benefit of a rule expressly based on possession of a chattel at a certain time, the judge has tended subconsciously to ask himself a question like this: ‘Do the facts show that before or at the relevant time the [party] had entered into a sufficiently close relationship with the chattel that he ought to be given the benefit of this particular rule against this particular [opponent]?

He lists the factors which I summarise below as informing, rather than dictating, the result (at 74 – 780[sic]):

Physical control

(1) The degree of physical control over the chattel which the party actually exercises or is immediately able to exercise;

(2) The degree of control actually or potentially exercised by another person.

Knowledge and intention

(3) The party’s knowledge of (a) the existence of the chattel and (b) its major attributes and (c) its location;

(4) The party’s intention in regard to the chattel;

(5) Another person’s knowledge;

(6) That other person’s intention.

The possession of premises

(7) The possession of the premises where the chattel is;

Other legal relationships

(8) Other legal relationships between the parties, or between one of them and a third party (such as the master-servant relationship, where a servant’s possession is that of the master).

The policy behind the rule

(9) The judge’s concept of the social purpose of the particular rule of law relied on by the party.

He concludes (at 80):

The judges seem sub-consciously to be asking themselves whether the facts before them are sufficiently analogous to the perfect pattern of possession for the [party] to be given the particular remedy he desires. … The approach of the judges seems to be essentially functional and empirical … . The fact that a particular rule of law is based on ‘possession’ permits a judge to exercise some discretion to achieve justice on the merits … .

These ideas shed light on how to approach the question of what sense of the concept of possession best fits the context of the COGA.

[70] No doubt Wallace was an “actual carrier”, being in immediate possession of the truck its employee was driving. But the work was being done under cl 1.6 of POAL’s contract with CP Ships in performance of CP Ships’ obligations under its seaway bill with Southpac.

[71] In terms of the Harris criteria, there is a powerful argument that POAL was so intimately involved with the goods that for the purposes of the COGA it should be treated as having been “in possession of the [truck]”, albeit jointly with its sub-subcontractor:

• by cl 1.4 it was providing services for the discharging of the ship in performance of the seaway bill;
• by cl 1.6 it was deemed personally liable in relation to the services;
• in terms of factor (1) it was in physical control of the vehicle through its agent, Wallace;
• in terms of factor (2) no other party had control (Wallace under factor (8), while not a servant, was POAL’s agent);
• in terms of factor (3) POAL knew of the existence of the truck, its attributes and its location;
• in terms of factor (4) POAL’s intention was to carry out its personal obligation to CP Ships;
• in terms of factors (5) and (6) the only other relevant party was Wallace, POAL’s agent;
• in terms of factor (7) the location was POAL’s wharf;
• the policy behind s 6 and related provisions is to limit the liability of those who are so close to the contract of carriage and its performance that others must insure if they wish to claim more than limited damages. POAL is clearly within that category.

[72] The argument of the majority is that such construction is inconsistent with the scheme of s 10. The contention is that there can be no more than a single “actual carrier” at a time, even though successive actual carriers are contemplated. The argument is simple and elegant. But in my respectful view the alternative view is to be preferred. Section 5(1) of the Interpretation Act 1999 requires a court of construction to heed not only the letter of a statute but its purpose. Section 6 allows change of circumstances to be taken into account. In the present case that must include how stevedoring is actually done.

[73] Certainly the COGA would work well if there were simply a succession of actual individual carriers. The same is the case where the successive actual carriers are legal rather than natural persons. And while the overwhelming success of the limited liability company model makes the prospect unlikely, there can be no impediment to the actual carrier for a particular stage, entitled to the statutory protection, being an unincorporated body such as a partnership.

[74] Here, the question is whether there can be concurrent carriage by a principal (here POAL) and its sub-contractor (Southern Cross) and sub-sub-contractor (Wallace). There is nothing in s 10 that excludes such construction. While s 10 employs the singular, the Interpretation Act presumes that the singular includes the plural (s 33). Nor in my view is there any policy reason limiting the scope of application. The Roman maxim qui facit per alium facit per se (he who acts through another acts himself) continues to mark the practical reality that there can be vicarious performance of an obligation; the market practice is that stevedoring services are delivered in that way. Why should not the COGA give legal effect to the joint enterprise in this case as it would if the work were performed by a partnership?

[75] The wisdom of the common law of statutory construction has been to prefer the construction that accords with common sense. The best measure of common sense is how the practitioners in a field choose to operate. Since each of the three parties in this case – POAL, Southern Cross and Wallace – was contributing to the joint activity of carriage of the truck from the ship to the southwest corner of the wharf, there can in my view be no reason not to treat them as each liable for its due performance and entitled to the statutory protection accorded by s 6.

[76] The majority’s construction would fragment what is, in terms of commercial reality, just as much a joint operation as one operated by a partnership.

[77] It is worth noting that the bulk of the contract of carriage was performed under the Hague-Visby Rules (see Schedule 5 of the Maritime Transport Act 1994), which totally limited liability for loss or damage resulting from any “act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship” (art IV, r 2(a)). While the scope of r 2(a) has come under question, the rule, like the proposals to repeal it, illustrates the kind of broad approach to the incidence of risk and consequent liability to insure which underlay the thinking of the Contracts and Commercial Law Reform Committee.

[78] To confine the protection of s 6 to Wallace and adopt a narrow concept of possession would exclude POAL from protection until the moment its driver took over the wheel from Wallace’s driver, even though at all stages from the commencement of the unloading, it was POAL which was the stevedore responsible for carrying out the “incidental service” of driving the trucks out of the ship and across to the southwest corner of the wharf. That makes no commercial sense.

[79] I prefer the alternative, that so long as POAL was party to the process of unloading the trucks it satisfied both the physical and mental elements of possession and, critically, what I regard as the policy of the COGA: that those functionally engaged in carriage should receive protection.

[80] I do not regard Allan J’s interpretation of the words “liable as such” as reading down that phrase. Rather he was, in my view, construing it in a commercially realistic manner.

[81] Paul Myburgh’s comment that the COGA does not “generate a limited liability zone that applies to entire organisations or areas while the carriage of goods is occurring in the vicinity” (see above at [38]) in my view places too little weight on the presumption that legislation is to be read in a manner that will conduce to a sensible and practical result. To refer again to the purpose identified by the authors of the measure (see above at [64]):

We would prefer that in a commercial transaction like the carriage of goods, the risk should lie where the balance of convenience places it. Since the risk of loss or damage is readily insurable, the question becomes one of which party should be expected to effect insurance.

[82] The majority’s careful analysis of s 10 operates perfectly satisfactorily by treating Wallace as POAL’s agent, which in fact it was.

Are there carriers protected by s 6 other than contracting carriers and actual carriers?

[83] While, on my construction of s 6, POAL was an actual carrier, read literally the general language of s 6 could arguably give rise to a further option: that POAL, as a carrier, is protected by it even if neither contracting carrier nor actual carrier. That raises the question whether in terms of s 6 its liability was as a carrier “as such”. While not expressly stated, I consider that the careful definition of the respective liabilities of “contracting carrier” and “actual carrier” exclude any argument that s 6 could exonerate POAL if it was neither of those. It would be inconsistent with the scheme of the measure for a third class of carrier, not entitled to the $1500 limit of the contracting carrier or falling within the other carefully defined specific class of actual carrier, to receive the protection of s 6.

[84] Because in my opinion POAL was, concurrently with Southern Cross and Wallace, an actual carrier for the final stage of the carriage for which CP Ships was contracting carrier, it is entitled to the protection of s 6.

[85] I would answer the questions posed:

The High Court was correct in holding:

(a) that Ports of Auckland Limited could avail itself of the statutory exemption from liability conferred by s 6 of the Carriage of Goods Act 1979; and

(b) that the operator of the fork hoist was exempt from liability under s 16(2) of the Act, with the consequence that Ports of Auckland Limited could not be vicariously liable.

[86] The appeal should be dismissed with costs.

Solicitors: Fortune Manning, Auckland, for Appellant
Gevert Ivanson, Auckland for Respondent