Espresso Company Australia Pty Ltd v Savino Del Bene Australia Pty Ltd

Local Court of NSW|2019-12-16

Background

The plaintiff, Espresso Company Australia Pty Ltd ("Espresso Company"), ordered 53 'Anfim' coffee grinders ("Goods"), from the manufacturer in Italy, Anfim Milano SRL ("Anfim"). Anfim is not a party to the proceedings.
The First Defendant, Savino Del Bene Australia Pty Ltd ("Savino Australia") is a wholly owned subsidiary of the global company based in Italy. Savino Australia and/or Savino Italy was engaged by Espresso Company to arrange carriage of the goods from Italy.
The shipping from Milan to Australia was arranged by Savino Italy. The Goods were transported by ship between Italy and the port of Sydney, then by road to Savino Australia's warehouse in Mascot, Sydney. From Mascot the goods were transported in the truck of the third /fourth defendant to the Espresso's premises in Belrose, Sydney.
The Second Defendant, FRF Holdings Pty Ltd t/as FRF Couriers ("FRF Couriers") was engaged by Savino Australia to undertake the road carriage from the property of Savino Australia in Mascot, to the property of Espresso Company in Belrose. FRF Courier's trading terms, on which they contracted with Savino Australia in January 2013, contained the terms of their contract.
FRF sub-contracted with Dotrans Logistics Pty Ltd, third defendant, and/or Lam Vien Do t/as Dotrans Logistics, fourth defendant ("Dotrans") to carry the grinders to Espresso Company. The goods were damaged during transport from Mascot to Belrose, on 1 March 2018.
With respect to the Third and Fourth Defendants, Mr Do, who was the driver of the truck, operates as both a sole trader and has a company, Dotrans Logistics Pty Ltd. There is a contract between the Third and/or Fourth Defendants, and FRF Couriers ("FRF-Dotrans Contract"). This contract bears both Mr Do's sole trader ABN and the company's name. Neither Mr Do, nor Dotrans, filed an appearance or a defence.

The proceedings

This matter was listed for hearing on 16 December 2019. On that date each active party in the proceedings tendered affidavit evidence - there were lengthy annexures to the affidavits upon which the parties variously relied to establish the contracts said to have been made between the parties. As indicated above neither the third or fourth defendant filed an appearance or a defence.
Only one witness was cross-examined in the hearing, this was Mr Byron Winburn-Clarke, solicitor for the plaintiff.
The hearing of evidence concluded on 16 December 2019 and the matter was adjourned, part heard, and directions were made for the filing and service of written submissions.
The matter was listed for further submissions in reply, on 3 April 2020. Subsequently, given Covid 19 protocols, the hearing of 3 April was vacated and the timetable for submissions in writing was extended to 9 April 2020. Lengthy and detailed submissions in reply were received from the plaintiff on 14 April 2020. Correspondence from the first defendant on 15 April 2020 raised various issues and objections, and noted the plaintiff objected to the raising of those issues by the first defendant.
The court then made the following directions on 15 April 2020: 1) The court notes the complex and lengthy submissions of parties in this matter, and the number of authorities cited, and the number of legal issues raised. The presiding magistrate remains concerned, as was expressed earlier in the proceedings, of the potential for disproportionate costs in this matter, noting the amount of the claim. The parties are again invited to consider whether settlement is possible in order to reduce the risk of disproportionate costs. If the matter settles the court is to be advised as soon as possible. 2) The procedural fairness concerns of the second defendant [should read first defendant] are noted. 3) Given procedural fairness concerns, and the complexity and number of legal issues raised, and the number of authorities cited, then it is appropriate for this matter to be listed for closing submissions to be made orally by legal counsel. Noting the substantial written submission filed to date, and to reduce costs, there will be no further timetable for written submissions to be prepared and filed. 4) The matter is to be listed for submissions on 12 May 2020 (see direction 7 below). If this date is unsuitable to any party, then the parties are to confer as to availability and are to send to CMO by email their available dates. 5) The date of 8 May 2020 when this matter was listed for decision only, is vacated. 6) Hard copies of all legal authorities relied upon are to be delivered to the Chief Magistrates Office, level 5, Downing Centre Local Court, as soon as possible and marked "Attention Magistrate Huntsman" 7) Given the current Covid 19 situation, there will be arrangements in place on the hearing date to address distancing concerns. The parties may attend in person, or by teleconference. If the parties attend in person, physical spacing techniques will be employed in the court room. Instructing solicitors will not be seated at the bar table, but can attend and be seated in the body of the court room. Counsel will be spaced at the bar table, and it may be that only one Counsel will physically occupy the bar table at any time. The Presiding Magistrate will ensure such distancing techniques are maintained for those who attend in person on 12 May, and those who attend by telephone will participate by teleconference. 8) Any party attending by telephone must ensure that any written material is provided to the court and the parties prior to the scheduled date. However given there will be no further timetable for written submissions it is anticipated there will not be any further written material to be provided.
Subsequently, due to unavailability of Counsel on 12 May 2020, the matter was listed on 15 May 2020. On that date all active parties had the opportunity to make closing submissions. The court was supplied copies of authorities on which the parties relied on the morning of 15 May 2020. The court informed the parties that the intention of the directions made on 15 April 2020 - for authorities to be supplied by the parties as soon as possible - was to ensure that those authorities could be considered before the submissions hearing, and that the late provision, on the morning of the hearing, was not in the spirit of the directions of 15 April 2020, nor was it assisting the court to engage with the parties' submissions during the hearing.
On 15 May 2020, after a full day of oral submissions, the decision was reserved.

The evidence

As indicated above the evidence consisted of affidavit evidence and the oral evidence of Mr Byron Winburn-Clarke, solicitor for the plaintiff. The evidence will be further detailed below. The parties also settled a statement of agreed facts.
The focus of the parties' submissions were to the construction of contracts and Bills of Lading, bailment, and applicable legal principles. The parties' submissions as to these issues were lengthy and have been extracted and/or summarised below.

Agreed facts

The parties agreed on the following facts.
On 23 May 2017 the First Defendant notified the Plaintiff by email that it had accepted the Plaintiff's credit application and emailed the "Savino Del Bene Australia Pty Ltd - Terms and Conditions of Contract" to the Plaintiff.
The Plaintiff contacted the First Defendant to arrange for the ocean freight to Australia and for local delivery of the Goods and provided the following documents to the Plaintiff on or about the date they bear: 1. Express Bill of Lading dated 19 January 2018 issued by Savino Del Bene Italy (who is not a party to the proceedings) ("House Bill of Lading"); 2. Arrival Notice dated 5 February 2018 bearing the details of the First Defendant; and 3. Tax Invoice 230862 dated 12 February 2018 bearing the details of the First Defendant.
On 1 March 2018 the First Defendant engaged the Second Defendant to undertake and/or arrange the delivery of the Goods between the First Defendant's warehouse in Mascot to the Plaintiff's premises in Belrose.
The Second Defendant had previously entered into a contract with the First Defendant on 30 January 2013 to provide cartage services and which allowed for the Second Defendant to subcontract any part of the cartage services.
On 1 March 2018 the Goods were transported in a truck driven by Mr Do, who trades as the Fourth Defendant and who is also the sole director of the Third Defendant.
The Goods were damaged on 1 March 2018 whilst in transit on the road between the First Defendant's warehouse in Mascot to the Plaintiff's premises in Belrose, and to such an extent that they were rendered in a condition unfit for resale.
The Plaintiff notified the First Defendant of the damage to the Goods on 1 March 2018.
The First Defendant provided CCTV stills from the First Defendant's warehouse to the Plaintiff on 2 March 2018.
The First Defendant has sent documents titled "Notice of Intent to Claim" to the Second Defendant on 7 and 9 March 2018 and a Letter of Demand on 15 March 2018.
The Goods were unable to be repaired or salvaged and were disposed of.

The plaintiff's claims

The plaintiff makes the following claims: 1. As against the First Defendant: 1. a claim for money due on an account stated; 2. a claim for breach of contract; and 3. a claim for breaches of duties owed as a bailee. 1. as against the Second Defendant: 1. a claim for breaches of duties owed as a bailee; and 2. a claim in negligence for breach of a common law duty of care; and, 1. as against the Third and Fourth Defendants: 1. a claim for breaches of duties owed as a bailee; and 2. a claim in negligence for breach of a common law duty of care.

The claim of the cross claimant, FRF Couriers, against Savino Australia, cross defendant

In the cross claim by FRF Couriers against Savino Australia, FRF Couriers rely on an indemnity clause in the contract it has with Savino Australia, so it states if there is any liability for damage then it is indemnified under the contract.

The Evidence

The parties relied on agreed facts and affidavit evidence. The plaintiff's evidence consisted of an affidavit by the plaintiff's solicitor, Mr Byron Andrew Winburn-Clark who was also cross-examined at the hearing; and also the affidavit of Tye Joyce, Marine and Commercial Recoveries Consultant at National Transport Insurance Limited ("NTI"). The first defendant/cross defendant relied on affidavit evidence by Kathryn Julie Johnston and the second defendant/cross claimant relied on affidavit evidence of Sam Giannetto.
Only one witness was required for cross examination in the proceedings, this was Mr Byron Andrew Winburn-Clark. The affidavits of all other witnesses were received in evidence and were not challenged in cross-examination.
The affidavit evidence of the plaintiff's witnesses (and the annexures thereto) indicates that by email of 23 May 2017, Espresso Company was advised that the credit application by Espresso Company with Savino Australia had been approved. The letter attached to the email is on Savino Australia letterhead and contains the words "International Freight Forwarding Company", and "Head Office [Italian address]". The header to the letter also states the Sydney, Melbourne and Brisbane addresses. The letter informs that the credit application has been approved, and that the terms and conditions are attached, (the attached terms and conditions contain clauses 1-42.8, which are discussed below). Also attached to the email are the bank account details.
An email of 15 December 2017 (page 14 of court book) from Anfim to Espresso Company states "will you please ask your freight forwarder to get in touch with their Italian counterpart to organise pick up". An email from Anfim to Savino Australia, Espresso Company and others, dated 19/12/17 requests collection of the goods "give instructions to your local agent". In an email of 17/12/17 (p 12 court book) Savino Australia says they will contact their Milan office; and Savino Australia advises Anfim that they will give instructions "to our Milan office" (p118 of the court book/Exhibit 1) . An email of 18/12/17 to Anfim from Espresso says that "Savino is responsible for this shipment". The purchase price of the goods, was Euro 28,024.85 - as stated on an invoice issued by Anfim to Espresso Company dated 21 December 2017. This invoice states that Anfim's terms and conditions apply and that the goods remain the property of Anfim until payment.
On 19 January 2018 Savino (Italy) issued an Express Bill of Lading to Espresso Company for delivery of the goods. The Express Bill of Lading with terms and conditions is annexed to the affidavit of Mr Joyce (p 58 Court book). The document is issued by Savino Italy, and states that the shipper is Anfim, the Consignee is Espresso Company, and route instructions are Savino Australia, and "Insurance not covered by us" and shipping subject to terms and conditions on reverse. It also states: "READ CLAUSE CONCERNING EXTRA FREIGHT AND LIMITATION OF LIABILITY ON THE REVERSE SIDE HEREOF".
On 5 February 2018 Savino Australia issued an arrival notice to Espresso Company, with respect to the arrival of the goods at the Sydney port on 18 February 2018. The Arrival Notice records the details of the Ocean Bill of Lading, the House Bill of Lading and states that the goods are ready to be cleared by Savino Australia.
On 1 March 2018 Espresso Company sent an email to Savino Australia regarding the goods being discovered as damaged upon delivery to Espresso Company's premises at Belrose, New South Wales on 1 March 2018. Attached is a copy of the "Cartage Advice with receipt" containing a handwritten notation: "Arrived 100% damaged".
On 1 March 2018 the transport supervisor for Espresso Company, Nick Bowen, emailed employees of Savino Australia, advising of damage to the grinders/goods. Ms Aritsdiabel, of Savino Australia on 1 March 2018 emailed FRF Couriers attaching the CCTV stills of the goods prior to leaving Savino Australia's warehouse, stating the cargo was ok when it left the warehouse (p78 court book).
The email from Ms Aristizabal of Savino Australia to FRF Couriers, of 1 March 2018, states in the subject part of the email, "espresso company delivery damage intent to claim" and states: "as per earlier conversation we have received the attached photos for today's delivery to Espresso Company in Belrose. At this stage….the client is declaring that 100% of the goods are damaged. For your reference, we are attaching the pictures that the client sent, where is clearly visible that the cargo was not properly strapped and of course the pallets collapsed. This is a very disappointing issue, as we always trust your drivers to handle our cargo as their best, and much more when the boxes are clearly marked as "fragile". Following this email, you will receive our intent to claim, where we will include the information and the technical report sent from the clients".
The email from Ms Rea of Savino Australia, on 2 March 2018, to Nick Bowen of Espresso Company, copied to Ms Atkinson states: " hi Nick… I'm so sorry for what did happen to your cargo, what does really disappoint me is the fact that the truck driver did not follow basic rules to secure the cargo, more so the cargo was clearly marked fragile, putting our reputation on the line… As you know this is not the service that we been providing to your organisation. Nick the insurance will be involved in this matter, we'll send you shortly a letter you will need to lodge a formal intent claim .
The letter of 8 March 2018 from Savino Australia to Nick Bowen refers to the claim for alleged damage to goods and acknowledges receipt of the letter and advises that it will be processed in due course.
A letter of 9 March 2018 from Espresso Company to Savino Australia states their formal notice of intent that they will be making a claim against Savino Australia "in due course" and that they have notified their insurers of this claim. Suggestion is made that Savino Australia notify their insurer of this intent to claim. A letter of 15 March 2018 from Savino Australia acknowledges receipt of the letter and that it will be processed in due course.
On 7 March 2018 Savino Australia sent a notice of intent to claim letter to FRF couriers in relation to the damage to the goods.
The plaintiff's insurer, NTI, instructed Integra Technical Services to survey the coffee grinders and on 28 March 2018 the survey report was issued. The Survey Report (see p 81 court book) describes the Savino group as: " Savino Del Bene S.p.A is a logistics provider with a world wide network, specialising in supply chain management, offering freight forwarding services for ocean, air and surface transportation. The Savino Del Bene Group has over 3800 employees, 158 own branches and 102 subsidiary offices. The company's head office is located in Florence (Italy), while the wholly owned Australian subsidiary is located at 247 King Street, Mascot NSW 2020. In this case, Savino Del Bene was contracted by the insured to ship the object consignment from Milan (via Genoa) to the insured's warehouse in Belrose"
The Survey Report also states (page 83 court book) under the heading "Contract arrangement between the insured & Savino Del Bene": The insured has passed to us a copy of the Savino Del Bene Conditions of Contract shown on the reverse side of its House B/L no … dated 19 January 2018 (included at enclosure 4), which we understand govern the terms of the shipment of this consignment on a 'door to door' basis from Milan to Belrose.[my italics] We draw Insurer's attention in particular to clause 6 Liability [the report then sets out clause 6(b) and (c) and also clause 8 in relation to multimodal transport].
Mr Joyce's affidavit annexes the customer application for credit and carriage of goods and the Savino Australia terms and conditions of contract; and also annexes a document, under logo of the second defendant, FRF Couriers, titled "application for subcontractors".
The plaintiff's other witness, Mr Winburn-Clarke, details correspondence from 2 March 2018 onward between the parties. He states that from that correspondence he is aware that Savino Australia instructed Espresso Company to file a formal intent to claim. I observe that it is not clear from the email correspondence at page 5 of the annexures to the affidavit. That correspondence states "Nick, the insurance will be involved in this matter, we'll send you shortly a letter that you will need to lodge a formal intent to claim".
Mr Winburn Clarke further states that on or about 15 October 2018, on the instructions of Espresso's Company's insurer, NTI, he caused to be sent to Ms Atkinson, of FRF Couriers, a formal letter of demand setting out the nature of the claim and the quantum - this is annexed to his affidavit. On or about 15 November 2018, he forwarded a copy of his letter of 15 October 2018 to Ms Atkinson along with photographs of damaged cargo, as he had not received a response to the letter of 15 October 2018. He states that on 16 November 2018 Ms Atkinson sent his secretary an email advising enquiries would be conducted and that on or about 27 November 2018 he sent a further letter to Ms Atkinson advising of his instructions to issue proceedings. He states that on or about 29 November 2018 he received a further email from Ms Atkinson, addressed to his secretary, advising "compensation will take a few days to process". He states: "My understanding, which arose out of the email from Ms Atkinson that I refer to paragraph 9 above, was that the first defendant had accepted that it was liable to pay the plaintiff for the full amount claimed and would make that payment in the coming days. Accordingly, I refrained from issuing proceedings against the first defendant. On or about 12 December 2018 I received a letter from Holding Redlich on behalf of the First Defendant advising that if proceedings had not already been commenced at that stage, the First Defendant will be seeking to rely upon a time bar."
The cross-examination of Mr Winburn-Clarke was focused on this area of his affidavit evidence. Under cross examination he was referred to the email correspondence of 27 November 2018 annexed to his affidavit - this was an email to Ms Atkinson of Savino Australia from the lawyers for the plaintiff, SRB Legal. He agreed that the import of that letter was that the plaintiff would institute proceedings. He was referred to the email of 29 November 2018 (annexure G) and agreed it was by Ms Atkinson, for Savino Australia, and he agreed with the contention that no other document was referred to in that correspondence - it was put to him that, in this correspondence, there was no reference to the time bar, and no request to extend the time bar, and he agreed. He was referred to the words "compensation will take a few days to process" and he agreed with the contention that Ms Atkinson did not say in the email that FRS Couriers were paying compensation nor she did say that Savino Australia was paying compensation. It was put to him that Ms Atkinson did not say, in that correspondence, that Savino Australia is paying compensation, and he responded that this was not said, but added that "impliedly she does because it's a response to my letter of demand".
It was put that his position, on reading the words in the email, was that he assumed Ms Atkinson was referring to Savino Australia paying compensation and he agreed. It was put to him that he did not check that assumption with Ms Atkinson, and he agreed. It was suggested that he did not check his assumption with any other employee of Savino Australia and he responded that he did not feel the need to. It was put to him that he did not email anyone at Savino Australia to check his assumption was correct and he stated "no. I had it in writing they would pay" .
It was put that in saying the words "compensation will take a few days to process" Ms Atkinson had made no reference to any specific amount of compensation, and Mr Winburn-Clarke agreed this was so. It was further put to him that in saying those words about compensation Ms Atkinson had not stated that this was compensation in terms of the terms and condition of the Bill of Lading, or in the terms and conditions of Savino Australia's contract, and Mr Winburn-Clarke agreed. It was suggested that the words in the email did not say anything about full compensation being provided to Espresso Company, on those specified terms, and he agreed. However he added that it was his understanding that this was so, because he had confirmation in writing that they were going to pay. He stated he considered the email was an unequivocal agreement to pay. He also agreed that he relied upon the email of Ms Atkinson as being to that effect. It was put to him that he relied on that email as a promise to pay the plaintiff $52,724.02 and he agreed. It was put him that he did not rely on what Ms Atkinson said in the email, but relied on his own assumption as to what she said. He responded that he relied on a course of correspondence which gives context to that email.
Attached to Mr Winburn-Clarke's affidavit are copies of the email correspondence to which he referred in his affidavit, including the letter of 15 October 2018 addressed to Ms Atkinson indicating that Espresso Company had heard nothing since the letters of 7 and 9 March 2018. The correspondence noted that SRB Legal acted on behalf of Espresso Company, and their insurer, NTI. The correspondence notes that Espresso Company has not heard anything further since 15 March 2018, and queried whether an insurance claim had been lodged, and the current status of such claim, and Savino's position in respect of liability and quantum. The correspondence of 15 October 2018 sets out the way that quantum of the claim was calculated by Espresso Company, as including the cost of purchase of the coffee grinders, plus freight, plus customs and Sydney delivery related costs, less salvage. Correspondence from SRB Legal of 27 November 2018 refers to letter of 15 November 2018, advising that if there is no substantive response then on Thursday 29 November proceedings will issue. The email of 29 November 2018, annexure G, from Ms Atkinson states "in addition… we have addressed this matter with FRF Couriers, compensation will take a few days to process. We will monitor and keep you updated within the coming days ." A letter of 12 December 2018 from Holding Redlich states that if proceedings have not been commenced, any action is now time-barred by virtue of clause 17 of the conditions of contract.
Documents annexed to the affidavit of Mr Joyce include the tax invoice issued by Savino Australia to Espresso, dated 12/02/18 and the Express Bill of Lading issued by Savino Italy. It contains the terms and conditions of contract, clauses 1 through to 19.
The Express Bill of Lading issued by Savino Italy, states the shipper was Anfim, the consignee Espresso Company, the routing instructions are "for delivery apply to Savino Australia, Mascot". Conditions of the contract are attached to the express bill of lading - Clauses 1 through to 19. Clauses 6 and 8 provide for limitation of liability; clause 17 refers to a time bar. The contract defines the freight forwarder to include an agent of the carrier who issues the Bill of Lading; consignee is defined as the person entitled to receive the goods from the freight forwarder.
The email of 23 May 2017 from Savino Australia, to Espresso Company, confirmed the credit approval and attached the terms and conditions, and bank details. These documents form general contractual terms between Espresso Company and Savino Australia. In particular it provides for credit terms - the credit terms were for 30 days from invoice date, for freight and local charges, and duty disbursements. The Savino Australia Pty Ltd terms and conditions of contract were attached - clauses 1 through to 42.8. The contract defines various terms including that 'agent' is Savino Australia; 'subcontractor' as including any other person, firm or agent with whom the agent (being Savino Australia) may arrange for the carriage of any goods the subject of the contract. Clause 2.5 says the terms and conditions of contract are to be read in conjunction with the agent's consignment note, agreement, airway bills, manifests or other forms as provided by the agent to the customer. If there are any inconsistencies then the terms and conditions prevail. The services are as described on the invoices, consignment note, airway bills, manifests, sales order or any other forms as provided by the agent (Savino Australia) to the customer. The time for payment is set out in the contract clauses. Clause 6 provides that where the carriage called for by this agreement is combined transport, then the agent shall be liable for loss or damage occurring during the carriage to the extent set out below. Clause 9 limits any compensation for damage to US $2.50 per kilo of goods lost/damaged. Clause 10 provides for where the stage of carriage (of damage) is known - clause 10 refers to the operation of international conventions and national law as determinative of the agent's liability. These contractual terms are further discussed below.
An invoice from Anfim to Espresso Company for supply of the goods is dated 21 December 2017 for an invoice amount of 28,024.85 euro.
A copy of the application for subcontractor to FRF Couriers, dated 24 January 2018, from Dotrans Pty Ltd is annexed to the affidavit of Mr Joyce. A number of the documents are contained in the Survey Report attached to Mr Joyce's affidavit.
The affidavit of Ms Johnston was filed on behalf of Savino Australia. Ms Johnston is the financial controller of Savino Australia. She states that she has read the affidavit of Mr Joyce in the proceedings and its annexures. She states that Savino Del Bene is a global freight forwarder based in Italy. Savino Australia is a member of the Savino Del Bene group of companies and acts as the agent for, and representative of, Savino Italy in Australia. She states the local business is primarily directed at handling shipments to Australia carried under contracts evidenced by Bills of Lading issued by Savino in Italy. When Savino Australia receive inward shipments, they will usually contact the relevant consignee and offer to arrange carriage of the goods from the wharf or warehouse to the consignee's premises, which is what happened in the current case. She refers to the credit application between Espresso Company and Savino Australia, and its terms and conditions, and the making of that agreement. She notes email correspondence between the plaintiff's representatives and Anfim in Italy (the manufacturer of the coffee grinders) related to receiving the inward shipment of the goods in Australia and the transportation of the goods to the plaintiff's premises. She also attaches the Bill of lading and the terms and conditions applicable to the Bill of lading.
The affidavit of Mr Giannetto , relied upon by the second defendant and cross claimant, FRF Couriers, states that on 30 January 2013, FRF Couriers entered into a contract with Savino Australia to provide cartage services. It is stated that the contract included terms and conditions including an indemnity in clause 3. Clause 5 of the terms of contract is also referred to, that the second defendant/cross claimant shall be entitled to sub contract on any terms the whole or any part of the carriage. The witness also makes reference to other contractual terms.
The terms included that Savino Australia agrees to be bound by the terms and conditions , and agrees that the document is a complete and exclusive agreement between the parties.
Mr Giannetto notes on 24 January 2018, the third/fourth defendant completed an application for subcontractors with the second defendant (FRF Couriers). The affidavit of Mr Giannetto notes that the second defendant appointed the third/fourth defendant to provide carriage from the warehouse of the first defendant, to the plaintiff's premises. The application/contract between FRF Couriers and Dotrans sets out the requirement for carriers insurance "Part 7 Insurances" and Mr Do/Dotrans elects in the contract to use 'FRF provided carriers Insurance' and authorise payments for same.
Mr Giannetto details receiving notice on 7 March 2018 from Savino Australia alleging that FRF Couriers was responsible for loss, and advising of its intent to claim against FRF Couriers. On 15 March FRF Couriers received a letter from Savino Australia advising of its intention to claim against FRF Couriers "it was in your care and custody during transit, we are holding you responsible in our name and on behalf of cargo interests", demanding payment of the plaintiff's claim in a specified sum - the letter is annexure E to Mr Giannetto's affidavit.
Mr Giannetto states on 6 September 2018 he received an email from the Savino Australia requesting a copy of the distribution agreement between Savino Australia and FRF Couriers. On 29 November 2018 he received a letter from Savino Australia demanding payment of Espresso Company's claim, in a specified amount, and that if payment was not received they will commence legal proceedings to recover that sum (annexure G to affidavit). On 3 December 2018 he provided the contract to Savino Australia and on 4 December 2018 he received an email from Savino Australia requesting a copy of the whole of the contract and he responded to confirm what had been supplied included the terms and agreement. He states that on the 12 February 2019 he received the letter from Espresso Company serving FRF Couriers with the statement of claim. The terms and conditions of the contract between FRF Couriers and Savino Australia are annexed to Mr Giannetto's affidavit, as are other documents to which he refers.
The contract between FRF Couriers and Savino Australia provides for indemnities and exclusions from liability, particularly clauses 4,5,6, and 8. These clauses are further discussed below.

Terms of contract between Espresso Company and Savino Italy.

In this matter there was a contract between the plaintiff, Espresso Company, and Savino Italy. This contract was for the shipment of the particular goods subject of the current dispute.
The terms of that contract were detailed and subject of much argument in these proceedings as to whether it is a straight house bill of lading, or a port to port bill of lading. Savino Australia argues that is a house bill of lading, noting:

In the top left, there is a denotation that this is a straight house bill of lading i.e. it goes straight from Anfim to Espresso company, routed via Savino Australia's warehouse.
In the bottom right of the bill of lading it says … The goods to be delivered at the above mentioned port of discharge or place of delivery, whichever applicable, subject always to the exceptions, limitations, conditions and liberties set out on the reverse side hereof, which the shipper and/or consignee agrees to accepting this bill of lading. …READ CLAUSE CONCERNING EXTRA FREIGHT AND LIMITATION OF LIABILITY ON THE REVERSE SIDE HEREOF

The plaintiff argues that it is a port to port bill of lading and that the obligations under this contract were discharged when the goods reached the port of Sydney. The plaintiff in detailed written submissions in reply states: The Bill of Lading 20. The First Defendant's written submissions deal at length with the law relating to Bills of Lading. However, as was submitted by the Plaintiff (at [19]) of its earlier submissions, in this case there were two distinct stages of carriage: . a. port-to-port carriage by sea from Genoa, Italy to Sydney, Australia. This stage was the subject of the Bill of Lading at pages 110 and 111 of the Court Book; and b. road transport: i. from the Sydney port to the First Defendant's warehouse at Mascot, as stated in the Bill of Lading, and ii. from the First Defendant's warehouse to the Plaintiff's warehouse. 21. The road carriage was the subject of the Savino Australia Contract, as described at [4] of the Plaintiffs submissions in chief. That contract is at pages 37 to 39 of the Court Book. 22. The Court should reject the First Defendant's submission (at [40]) that the Bill of Lading governed all stages of carriage. 23. Bills of Lading can be "combined bills", which cover both ocean and road carriage, or "port to-port" bills, which cover only the carriage by sea from the loading port (Genoa) to the destination port (Sydney). This distinction is discussed below. 24. As the contract evidenced by the Bill of Lading ended when the Goods landed at Sydney port - or, for the reasons discussed below, at the very latest when the Goods landed at the First Defendant's warehouse in Sydney-that contract does not govern the terms of the agreement between the Plaintiff and First Defendant for the road carriage between the First Defendant's warehouse and the Plaintiff's warehouse, being the leg of carriage in which the damage occurred. The House BIii of Lading In this case was a Port-to-Port Bill 25. As noted above, Bills of Lading can be "combined bills" which cover both ocean and road carriage, or "port-to-port'' bills which cover only the ocean carriage from the loading port to the destination port. The submission in chief mistakenly referred to the First Defendant's property as being In Belrose. It is not disputed that it is In fact in Mascot. 26. The BIii of Lading in this case was a port-to-port bill of lading. It was the contract that governed the carriage by sea of the Goods, and the obligations under it were discharged at the port of discharge, being Sydney. 27. The House Bill of Lading can be found at page 110 of the Court Book. One third of the way down the page is a series of small boxes showing: a. Export Carrier as: Folegandros 2 7NNEANL-GOA b. Port of Loading: Genoa.IT c. Port of Discharge: Sydney, NS AU d. Place of Delivery: [BLANK] e. Place of Receipt: [BLANK} 28. In order for the Bill of Lading to be a "combined" bill of lading, the "place of delivery" box would be required to be·completed. It is not completed. 29. In Parlux SpA v M & U Imports Pty Ltd (2008] VSCA 161 (at [48]), the Court considered this point: "...nevertheless it seems to me that statements and notations of those kinds serve principally to make explicit what is really implicit in the very provision of separate, additional spaces for 'Place of receipt' and 'Place of delivery', namely that unless something is entered in at least one of those spaces, the bill should be understood as a port-to-port bill only." 30. In Parlux (at [47]), the Court referred to the statement of Carruthers Jin The Resolution Bay (10 Unreported, Supreme Court of NSW, 6 December 1994, BC9403463, 4-5) In which his Honour adopted the comments of Sheller JA in The Antwerpen: 11 "This case emphasises that if carriers wish to ensure that a bill of lading takes effect as a combined transport bill they must Insert a meaningful address fn the 'Place of Acceptance' and/or 'Place of Delivery' boxes on the face of the bill.(11 Glebe Island Terminals Pty ltd v Continental Seagram Pty Ltd (1993) 40 NSWLR 206.) 31. As the contract evidenced by the Bill of Lading in this case was discharged when the Goods landed at Sydney port, Its terms did not govern the road carriage leg during which the damage occurred . 32. Even if the Court determines that the Bill of Lading Is a "combined bill", then delivery (and discharge of the contract) in any event occurred at the First Defendant's warehouse. 33. Clause 12 of the Bill of Lading states (12 Court Book page 111): 12 Delivery of Goods a)Goods shall be deemed to be delivered when they have been handed over or placed at the disposal of the Consignee or his agent in accordance with this BL or when the Goods have been handed over to any authority or other party to whom, pursuant to the law or regulation applicable at the place of delivery, the Goods must be handed over, or such other place at which the FF Is entitled to call upon the Merchant to take delivery. 34. Reference to 'placed at the disposal' of the Plaintiff as the Consignee, in the context of a port to-port Bill of Lading, means the port of discharge, being Sydney. But If the Court finds that the Bill of Lading In this case is a combined bill, then the Goods were placed at the disposal of the Plaintiff as Consignee at the First Defendant's warehouse in Mascot. · 35. The Bill of Lading at page 110 of the Court Book (top right hand side) states in the box titled 'Routing Instructions':'For Delivery apply to: Savino Del Bene Australia Pty Ltd, Suite 1, Ground Floor, 247 King Street, Mascot." That required the Consignee (the Plaintiff) to apply to ("call upon") the First Defendant's warehouse premises to take deilvery. 36. It follows that the Goods were placed at the disposal of the Consignee (the Plaintiff) either at the Sydney port (if the Court accepts the Plaintiff's submissions that it was a "port to port" Bill of Lading) or at the First Defendant's warehouse in Mascot (if the Court determines it was a "combined" Bill of Lading). 37. In either circumstance, the transport of the Goods by road from the First Defendant's warehouse was performed under the Savino Australia Contract, and not the Bill of Lading.
In support of it's submission that the Bill of Lading is a straight Bill of Lading, Savino Australia notes the statement on the Bill of Lading on the front (bottom right of the Bill), which refers to the terms and conditions of the Bill applying to the carriage of the goods up to the place of delivery: … The goods to be delivered at the above mentioned port of discharge or place of delivery, whichever applicable, subject always to the exceptions, limitations, conditions and liberties set out on the reverse side hereof, which the shipper and/or consignee agrees to accepting this bill of lading. …READ CLAUSE CONCERNING EXTRA FREIGHT AND LIMITATION OF LIABILITY ON THE REVERSE SIDE HEREOF
On page 111 is the reverse side. Clause 8(f)(ii) provides that: 8 …ii. Unless the nature and value of the goods shall have been declared by the Merchant and inserted in this BL [Savino Italy issued bill of lading] and the ad volorem freight rate paid, the liability of the carrier, under COGSA [Carriage of Goods by Sea Act] where applicable, shall not exceed US$500 per package…
In relation to the limitation, there were two packages of goods, so the clause would provide a US$1000 limitation.
In relation to the Time bar, the contract states at clause 17: The FF [freight forwarder / Savino Italy] shall, unless, otherwise expressly agreed, be discharged of all liability under these conditions unless suit is brought within nine months after delivery of the goods, or the date when the goods should have been delivered, or the date when in accordance with clause 6.8(e) failure to deliver the goods would give the consignee the right to treat the goods as lost".
In relation to the time bar, the issue may be whether there is any "expressly agreed" waiver. The evidence indicates that the proceedings were commenced by the plaintiff after 11 months. There is no evidence of an express waiver of the time bar, however the plaintiff submits the defendants are estopped from relying on the time bar, this is detailed below.
Clause 10 is the Himalaya clause (i.e. the clause protecting subcontractors/carriers). The clause states: 10) Liability of Servants and Other Persons a)These conditions apply whenever claims relating to the performance of the contract evidenced by this BL [Savino Italy house bill of lading] are made against any servant agent or other person (including any independent contractor) whose services have been used in order to perform the contract whether such claims are founded in contract or tort, and the aggregate liability of the FF [Freight Forwarder /Savino Italy] and of such other servants agents or other persons shall not exceed the limits in clause 8. b) In entering into this contract as evidenced by this BL [Savino Italy house bill of lading], the FF [Freight Forwarder /Savino Italy], to the extent of these provisions, does not only act on his own behalf, but also as agent or trustee for such persons, and such persons shall to this extent be or be deemed to be parties to the contract.
Clause 16 provides: "save as otherwise provided herein, the agent shall in no circumstances whatsoever or howsoever arising be liable for direct or indirect or consequential loss or damage. The defences and limits of liability provided for in this agreement shall apply in any action against the agent for loss or damage or delay whether the action be founded in contract or in tort"
It is submitted by the first defendant, Savino Australia, that in any normal freight forwarding contract, the freight forwarder acts as agent for the shipper (in this respect Savino Australia relies on the detailed descriptions in the case Cro Travel PL v Australia Capital Financial PL [2018] NSWCA 153; at paragraphs 29 to 38, which describe house bills of lading and the liability of freight forwarders). It is submitted that that the shipper (Espresso Company) contracts with the carrier on the terms of the bill of lading; with an additional step that Savino Italy acts as agent for the carrier and the shipper. This means both the carrier and the shipper enter into these terms with Savino Italy as their agent.
Clause 6 provides for exemptions from liability: 6) Liability a) The FF [Freight Forwarder /Savino Italy] shall not be liable for the performance of a transport, his responsibility being involved only in the stipulation with the carrier of the contract of carriage in his own name, and on behalf of the merchant. However, when and if his responsibility is involved, all the provisions herein regulating and limiting the carrier's liability shall apply to the benefit of the FF. b) The responsibility of the carrier for the goods under these conditions covers the period from the time the carrier has taken the goods in his charge to the time of their delivery.
It is submitted that the bill is a receipt of 2 packages containing a total of 766.38kgs of coffee grinders. Under the Savino bill of lading term at clause 8(f)(ii), any liability of Savino Italy and all subcontractors (including all defendants in the present matter) is limited in amount to US$1000.
It is further argued that the house bill of lading was an authority for Savino Italy to contract with (or with and on behalf of) the ocean carrier 'Folegandros 257Nneanl-Goa', Savino Australia (to use its warehouse), FRF and Dotrans. Although each entity may have other contracts between themselves, they each take subject to the terms on the bill, unless the person with title to the goods (Espresso Company or Anfim) contracts with any of these other parties individually in relation to the relevant consignment, in which case the individual contract will usually apply.
Savino Australia submits that the straight house bill of lading contained the terms and conditions that governed the shipment from Anfim's premises (Milan) to Espresso's premises (Belrose).
It is submitted by Savino Australia, that -
A house bill of lading is a receipt for the goods by the freight forwarder i.e. the issuer of the house bill of lading is the freight forwarder.
A house bill of lading is an authority from the shipper, entitling the freight forwarder (as agent for the shipper) to enter into a contract of carriage (in the shipper's name) with the carrier/s on the terms set out in the authority. In other words, a house bill of lading sets out the terms and conditions upon which the freight forwarder will arrange transport of the goods, but also the terms and conditions the shipper (via its freight forwarder agent) will contract with carriers to actually take the goods. It is the basis upon which each of them agree to take the goods. It is submitted that this is the reason why Himalaya clauses exist i.e. because the terms of bill extend to everyone in the chain of carriers/bailees/sub-bailees/etc.
It is submitted that the Pioneer Container [1994] 2 AC 324 case goes further, because it allows reliance by a bailee or carrier on the Himalaya clause in a bill of lading (and thus also the protective clauses within the bill of lading), and also on any protective clauses in intermediate contracts (such as a contract between a bailee or sub-bailee). This may create a situation where more than one set of limitation clauses that exist. It is submitted that the Pioneer Container resolved that issue by stating that the person sued may decide what protection to rely upon: i.e. where this reasoning creates "two alternate regimes which the sub-bailee may invoke… the sub-bailee should be entitled to choose to rely upon one or other of them as against the owner of the goods" (at page 344; see also page 346). It is submitted that Savino Australia can avail itself of the protections in the Savino Australia terms and conditions and also of the Savino Italy bill of lading terms.
The plaintiff submits that if the Bill of Lading is the applicable contract, then the Hague Visby rules apply (detailed submissions on this point were made in the written submissions in reply and both parties made oral submissions on 15 May 2020 which have been fully considered by me). Savino Australia argues that the Hague Visby Rules cease to have effect "at the ships rail" that is, once the goods are unloaded from the ship. It is an agreed fact that the goods were damaged while being delivered from Mascot to Belrose.
The plaintiff also submits that the first defendant cannot rely on the contractual clauses excluding liability, because the first defendant was reckless so that the plaintiff's goods were damaged.
There is an issue as to Savino Australia's status in this contractual agreement. The evidence indicates that Savino Australia contacted its Italian office to arrange delivery of the goods. The parties have made submissions as to Savino Australia's status as principal, or agent for Savino Italy, in this contract.
I also note that this contract states it is governed by the law of Italy, clause 19 states "Jurisdiction and applicable law" and that "Actions against the FF [freight forwarder - Savino Italy] may be instituted only in Florence, Italy, and be decided according to the law of this country". I was not addressed on the effect of this clause on current proceedings. I note that the plaintiff proceeds against Savino Australia, a wholly owned subsidiary of the global company, and has not proceeded against Savino Italy. Given the findings I have made overall in this matter, I do not need to determine any issue arising from this clause.

The Savino Australia - Espresso contractual terms

There was a contract between the first defendant, Savino Australia, and the plaintiff. It is argued by Savino Australia that this was in the nature of an umbrella agreement between the parties. Espresso Company submits that this is the contract which applies to the shipment of these goods. Savino Australia submits that even if this is the applicable contract, it's terms would also operate to limit liability for damage to the goods during carriage.
That a contract was entered into between the parties is clearly evidenced. What is also clear is that the contract predates any purchase of the particular goods from Anfim, and predates the particular decision/agreement to ship those goods to Australia. However because it is a contract between the parties, and directly between Savino Australia and Espresso Company, it is important to closely examine its terms.
On page 35 of the larger court book (exhibit 1), is an e-mail from Savino Australia to Espresso Company dated 23 May 2017 (about 18 months before the delivery in issue). Attached to the e-mail are the terms of credit (page 36 exhibit 1/large court book) and general terms and conditions (pages 37-39) that form an agreement between the two parties.
Espresso Company says that this is the relevant contract. Savino Australia says that even if this is true, their claim is time barred and even if it was not time barred (which is denied) their claim is limited under the Savino Australia contract to AUD$2,700. Savino Australia's position was detailed in written submissions as follows:
Savino Australia's primary position is that the straight house bill of lading is evidence of the contract between each subcontractor and the shipper. It is submitted that Savino Australia's terms are similar in effect to Savino Italy's terms, the key terms being as follows.
Savino Australia submits that the idea of the umbrella agreement, which is common in shipping, is that each individual shipment can be organised over the phone or by e-mail without needing to ensure that all the terms are sent across and agreed every time.
Clause 2 (especially 2.1 and 2.5) sets out the umbrella nature of the agreement. In effect, the 23 May 2017 e-mail that contained the terms is set up as an offer, the acceptance of which is the placement of each delivery order. 2.1 Any instructions received by the Agent [Savino Australia] from the Customer for the supply of Services shall constitute acceptance of the terms and conditions contained herein.
It is submitted that limitation of liability (i.e. the payment of compensation) is set out in Clause 9: 9.3 Except as provided in clause 14, compensation shall in no circumstances whatsoever and howsoever arising exceed US $2.50 per kilo of the gross weight of the goods lost or damaged.
According to the straight house bill of lading 766.38kg was the shipment weight. 766.38 x $2.50 = $1915.95 USD (aprox. $2,700 AUD).
Clause 11 provides for the same 9 month time bar as the Savino Italy bill terms: Subject to any provision of clause 16 to the contrary the Agent shall be discharged of all liability under this Agreement unless suit is brought and notice thereof given to the Agent [Savino Australia] within nine months after delivery of the Goods or the date when the Goods should have been delivered.
Clause 23 is the Himalaya clause (i.e. the clause that protects each subcontractor). It is submitted that this clause also evidences the authorisation of the owner of the goods to sub-bail. 23 Nomination of sub-contractor The customer hereby authorises the Agent [Savino Australia] (if it should think it fit to do so) to arrange with a Sub-contractor for the carriage of any Goods the subject of the contract. Any such arrangement shall be deemed to be ratified by the Customer upon delivery of the said Goods to such Sub-contractor, who shall thereupon be entitled to the full benefit of these terms and conditions to the same extent as the Agent. In so far as it may be necessary to ensure that such Sub-Contractor shall be so entitled the Agent shall be deemed to enter into this contract for its own benefit and also as Agent for the Sub-Contractor.
The first defendant submits that clause 16 conforms with the common law position (that was set out in Cro Travel) as to the liability of the freight forwarder: 16 Scope of Application 16.1 Save as otherwise provided herein, the Agent [Savino Australia] shall in no circumstances whatsoever or howsoever arising be liable for direct or indirect or consequential loss or damage. The Defences and limits of liability provided for in this Agreement shall apply in any action against the Agent for the loss or damage or delay whether the action be founded in Contract or Tort.
Savino Australia observes in written submissions, that by way of counter argument Espresso Company says (at paragraph 19 of its submissions) that Clause 6.1 of the contract "expressly contemplates… [Savino Australia] may be liable for loss and damage occurring during such [road] carriage". It is submitted that what clause 6.1 does is say that the liability of Savino Australia is limited pursuant to the other clauses (eg clauses 16,23). Clause 6.1 says: 6.1 Where the carriage called for by the Agreement is combined transport then, save as is otherwise provided in this agreement, the Agent shall be liable for loss and damage occurring during carriage to the extent set out below.
I note that clause 6.1 does say that: "save as provided elsewhere in this agreement Savino Australia shall be liable for loss or damage occurring during carriage to the extent set out below" (ie in the terms of the agreement below 6.1). It is clear from the wording that clause 6.1 is to be construed in terms of the agreement as a whole, and subject to the clauses which follow clause 6.
The first defendant also submits, in response to the plaintiff's submission - (at paragraph 20 of its submissions) that the limitation in cl 9.3 only arises where the stage of loss is unknown - that clause 9 is not limited in that way according to its own text - it says "compensation shall in no circumstances whatsoever and howsoever arising exceed US $2.50 per kilo": these are the widest possible words of application. Further, to the extent any other part of the contract has that effect, that has not been argued. In any event, it is submitted that the alleged limitation to the effect of clause 9 does not affect the other limitation clauses, being clauses 11 and 16 .
I observe that clause 9(3) also includes the words "Except as provided in clause 14…" and clause 14 refers to an agreement between the parties stating the value of the goods and extra freight paid. It is not argued by the parties that clause 14 has any effect on the operation of clause 9 in the current proceedings.
The plaintiff in submissions makes clear that it's position is that Savino Australia is liable for breach of implied terms in the contract between Savino Australia and Espresso Company (entered into in May 2017). The plaintiff submits: The Plaintiff pleads (at [5] of its amended statement of claim filed on 17 May 2019) that they were implied terms of its contract with the First Defendant that the First Defendant, by itself, its servants or agents, would: exercise all reasonable skill, care and diligence in and when providing its Carriage Services (as defined in the statement of claim), and that it would ensure that the Goods would be delivered to the Plaintiff in a saleable condition. The First Defendant denies that those terms are implied in the contract. The Court should find that the contract contained the implied terms pleaded by the Plaintiff in its statement of claim. In Carter on Contract (Lexis Nexis), Professor Carter writes that, provided the implication is not shown to be unjust or unreasonable, a term may be implied at common law if it is: (a) an established and normal incident of the contract; or (b) a necessary term, in the sense that, unless the term is implied, the enjoyment of rights conferred by the contract would be rendered nugatory or worthless or seriously undermined. Established incidents of implied terms in commonly occurring contracts include: in contracts for the provision of services, that the service provider will exercise proper or reasonable care or skill in the discharge of its duties under the contract; and in bailment contracts, that the bailee will exercise reasonable care in relation to the goods, and not convert them. Here, the implied terms are consistent with the terms of the Savino Australia Contract. Indeed, clause 6.1 expressly contemplates that where the carriage called for by the contract is for Combined Transport - in this case, port-to-port shipment from Genoa to Sydney, and then road transport from the port to the First Defendant's warehouse at Belrose, as stated in the Bill of Lading, and then road transport from the First Defendant's property to the Plaintiff's property - then the First Defendant may be liable for loss and damage occurring during such carriage. The contract goes on to deal with loss and damage that occurs in two scenarios: the first is where the stage of carriage in which the damage occurs is not known; the second is where (as in this case) the state of carriage is known. In that context, the First Defendant's reliance on clause 9.3 of the contract to limit its liability is, with respect, misplaced. That limitation only arises where the stage of the carriage in which the loss occurred was unknown. The First Defendant admits in its defence (at [17]) that it had "possession or control of the Goods while the Goods were at [its] warehouse on 1 March 2018 whilst the truck was being loaded to carry the Goods" to the Plaintiff's warehouse. Ms Rea, on behalf of the First Defendant, contended that "the truck driver did not follow basic rules to secure the cargo." However, it was the First Defendant's obligation to exercise reasonable care, skill and diligence by taking steps to ensure the Goods were properly secured on the truck at a time when the Goods were, by its own admission, under its control. Further, the First Defendant had an obligation to instruct the truck driver as to the fragile nature of the goods, the handling requirements and the standard of care to be taken in transporting the goods, each of which it plainly failed to do in circumstances where the Goods were not properly secured, such that the Goods were delivered to the Plaintiff in their damaged condition. The Court should be satisfied that the First Defendant breached the implied terms of the Savino Australia Contract, as a result of which the Plaintiff suffered the loss and damage claimed by it.
Savino Australia denies any such implied terms and submits that the clear words of the contract should be given meaning. Savino Australia submits: The plaintiff pleaded implied terms. These, in effect, are a pleading that sets up a claim for contractual negligence: paragraph 5(a) says the first defendant owes a duty of care when 'providing the Carriage Services' and 5(b) says the first defendant guaranteed all goods would be delivered in a saleable condition. It must fail because: of its failure to comply with the Civil Liability Act on the principles of implied terms in contract law. Implied terms must comply with the strict test set out by the majority of the Privy Council (hearing an appeal from the Supreme Court of Victoria) in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.
At paragraphs 55 to 56 of written submissions, the first defendant sets out further arguments. In summary those are to the effect that it is not reasonable to imply a term that a freight forwarder will ensure and guarantee the safety of transported goods. (If a customer wants shipping insurance from a freight forwarder, they can arrange to buy that cover separately.) Further it is submitted that the contract is effective without the implied term because, this is not a contract of insurance, and almost all the cargo travels around the world on similar terms. It is argued that the term is not obvious, and it contradicts the express terms. The findings as to any implied terms are set out below.

The contract between FRF Couriers and Savino Australia

There was a contract between Savino Australia and FRF Couriers, for carriage. This contract is dated 30 January 2013 and states - "Customer application for credit and carriage of goods." It contains the terms and conditions of contract, clauses 1 through to 13.
Clause 6 provides: 6. Every exemption, limitation, condition… right, exemption from liability, defence and immunity… applicable to the carrier or to which the carrier is entitled to hereunder, shall also be available and extend to protect (a) all subcontractors; (b) every servant or agent of the carrier or of a subcontractor (c) every other person (other than the carrier) by whom the carriage or any part of the carriage is performed or undertaken; (d) all persons who are or maybe vicariously liable for the acts or omissions of any persons falling within subclauses (a)(b)(c) of this clause and for the purposes of this clause the carrier is or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all such persons and each of them shall to this extent be or be deemed to be parties to this contract".
Clause 8 notes that the carrier is authorised to deliver the goods at the address given to the carrier by the consignor for that purpose. The consignor is defined in the contract to be the person with whom the contract is made, that is Savino Australia. At clause 3 the contract states: "3. The consignor undertakes to indemnify the carrier in respect of any liability whatsoever and howsoever arising (including without limiting the foregoing from negligence or breach of contract or wilful act or default of the carrier or others) to any person (other than the consignor) who claims to have, who has or may hereafter have any interest in the goods or any part of the goods".
Clause 4 provides that subject only to clause 13: 4.… the goods are at the risk of the consignor and not the carrier, and the carrier shall not be responsible in tort or contract or bailment or otherwise for any, and the consequences of any, loss of or damage to or deterioration of goods or misdelivery or failure to deliver or delay in delivery of goods…… for any reason whatsoever (including without limiting the foregoing the negligence or breach of contract or wilful act or default of the carrier or others) and this clause shall apply to all, and the consequences of all, such loss of or damage to or deterioration of the goods or misdelivery or failure to deliver or delay in the delivery of goods beforementioned whether or not the same occurs in the course of performance by or on behalf of the carrier of the contract and/or the Consignoror in events which are foreseeable by them or eith of them or in events which could consititute a fundamental breach of the contract or a breach of a fundamental term of the contract."
Clause 5 provides the carrier and any subcontractor shall be entitled to sub contract on any terms the whole or any part of the carriage.
Clause 5(b)(i) provides: 5(b) "The consignor undertakes: (i) that no claim or allegation shall be made, whether by the consignor or any other person who is or who may hereafter be interested in the goods against any person (other than the carrier) by whom (whether it is a subcontractor, principal, employer, servant, agent, or otherwise) the carriage or any part of the carriage is performed… which imposes or attempts to impose upon such person any liability whatsoever and howsoever arising (including without limiting the foregoing from negligence or breach of contract or wilful act or default of the carrier or others) in connection with the goods and if any such claim or allegation should nevertheless be made to indemnify the carrier and the person against whom such claim or allegation is made against the consequences of it. [The clause continues that for the purposes of this clause the the carrier is taken to be acting as agent or trustees for others who have the benefit of this clause; and that those others are deemed to be parties to the contract]
Clause 5 (b)(ii) goes on to say that the consignor undertakes to indemnify the carrier against any claim or allegation made against it by any person in connection with any loss or damage to the goods occurring at any time during the carriage. The contract defines FRF Couriers as the carrier.
The plaintiff does not make any claim against FRF Couriers in relation to contract. It is the case that there was no separate contract between Espresso Company and FRF Couriers. The plaintiff's claims against FRF Couriers are in bailment and negligence. However if the plaintiff succeeds in those claims then FRF Couriers rely on an indemnity clause in their contract with Savino Australia. This is set out in the cross-claim.
FRF Couriers submit: FRF primarily relies on the indemnity stipulated by clause 3 of the FRF contract. The other grounds pleaded in the cross claim are not abandoned but are only relied upon to the extent necessary. If, in the event FRF has a liability to the plaintiff, the Court finds that FRF is entitled, pursuant to clause 3, to be indemnified in respect of that liability to the plaintiff then the other grounds need not be considered. To the extent there is there is a claim for indemnity and/or contribution in the event SDBA and FRF are both tortfeasors, that is pursuant to s 5 of the Law Reform (Miscellaneous Provisions) Act 1946, as pleaded in paragraph [10] of the cross claim. With reference to paragraph [9] of SDBA's submissions dated 6 March 2020, FRF does not seek to prosecute a case that SDBA was negligent, however, such a case is pressed by the plaintiff. If the Court finds that the plaintiff has established that both SDBA and FRF are tortfeasors then the issue of indemnity and/or contribution pursuant to s 5 arises.

The contract between FRF Couriers and Dotrans (and/or Mr Do)

There was a sub-contract between FRF Couriers and Dotrans (and/or Mr Do) - this is evidenced by the application for subcontract from Dotrans Pty Ltd, to FRF Couriers, dated 24 January 2018. By this sub-contract Mr Do/Dotrans was to perform the carriage on behalf of FRF Couriers. An issue for determination is whether the indemnity in the contract between FRF Couriers and Savino Australia also operates to indemnify Dotrans (and/or Mr Do) as subcontractor performing the carriage. The plaintiff's claims against the third and fourth defendant are in bailment and negligence. Another issue is whether the Himalaya clause operates to limit the liability of Dotrans/Mr Do.

Issues of negligence/recklessness

The plaintiff argues that there is no limitation of liability under the trading terms (in the Savino Australia/ Espresso Company contract of 2017) as the First Defendant acted recklessly; and submits: The First Defendant submits (at [41] and [46]) that if its trading terms apply, then its liability is limited to approximately AU$2,700.00. In its Reply, (Pleadings folder page 67 at [12.2]) the Plaintiff contends the limitation clause now relied upon by the First Defendant Is not available to it because it acted recklessly. That is so because clause 11.2 of the First Defendant's trading term s1 (Court Book page 37) provides: "The Agent shall not be entitled to the benefit of the limitation of liability provided for in clause 9 if it ls proved that the loss or damage resulted from an act or omission of the Agent done with intent to cause damage or recklessly and with knowledge that damage would probably result. The photographs taken from the CCTV footage at the First Defendant's warehouse (at pages 66 to 68 of the Court Book) show that the cartons were marked fragile, a matter that is not in dispute. Ms Rea, on behalf of the First Defendant, contended that "the truck driver did not follow basic rules to secure the cargo." (Court Book page 5, first paragraph of the email) However, as previously submitted by the Plainti ff, 17 (At [21] of Its earlier submissions) it was the First Defendant's obligation to exercise reasonable care, skill and diligence by taking steps to ensure the Goods were properly secured on the truck at a time when the Goods were, by its own admission, under Its control. Further, the First Defendant had an obligation to instruct the truck driver as to the fragile nature of the Goods, the handling requirements and the standard of care to be taken in transporting the Goods, each of which it plainly failed to do In circumstances where the Goods were not properly secured and were damaged. The First Defendant's submission at [66] - "how anyone but a blind man could miss the warning labels is a mystery" - is not a sufficient explanation for the First Defendant's failings. In Sellers Fabrics Pty Limited v Hapag-Lloyd Ag [1998] NSWSC 646, the Supreme Court considered whether conduct was performed "recklessly and with knowledge that damage would result", and determined that recklessness goes beyond mere carelessness. The Court also held that was is open to a court to make an inference as to the requisite knowledge. In Goldman v Thai Airways Limited [1983} 1 WLR 1186, the court determined that the defendant's employees acted recklessly (at page 1293): "The Inference is fairly open, as we have already held, that such servants or agents, including Mr Johnson and perhaps others, observed the marks on the cargo which indicated that it be stored in a dry environment, observed the poor state of the plastic wrapping later reported In Tokyo, observed that it was raining, and that a typical Sydney summer thunderstorm was likely, and left the cargo in the open without taking the steps that they knew would be essential to protect that cargo if it should rain heavily. On that basis such servants and agents must also have known that such 'deplorably bad handling' of the cargo would probably result in damage to the cargo." So here, it Is open to the Court to find, as the Plaintiff has submitted, that the First Defendant failed to take steps to ensure the Goods were properly secured on the truck at a time when the Goods were, by its own admission, under its control. Further, the First Defendant had·an obligation to instruct the truck driver as to the fragile nature of the Goods, the handling requirements and the standard of care to be taken in transporting the Goods, each of which it plainly failed to do In circumstances where the Goods were not properly secured, such that the Goods were delivered to the Plaintiff in their damaged condition. The Court should be satisfied that the First Defendant was reckless, and that clause 11.2 denies it of the benefit of the limitation of liability contained in the Savino Australia Contract.
Savino Australia submits that the claim is one of negligence which is pleaded as contract and bailment, and as such, the Civil Liability Act 2002 (NSW) applies, per s5A. At paragraphs 59 to 62 of written submissions the first defendant sets out relevant legal authorities, and submits that for the plaintiff to pursue any claim against the first defendant in negligence (whether directly, through contract or bailment), it must say (1) what risk of harm a freight forwarder (by either organising freight or temporarily warehousing it at a waypoint) should protect against - this must be pleaded, but it is not pleaded, (2) then it must be stated what precise precautions should have been taken - which was not pleaded, (3) then the first defendant has an opportunity to put on evidence and a defence to say why that is not a risk it should protect against or the said precautions are not reasonable or were in fact taken. It is submitted that the evil of the present pleading is there is no pleading as to what first defendant is alleged to have actually done wrong. (4) Finally, the scope of liability must be pleaded, and it must be pleaded why it is appropriate that liability extend to the first defendant so there is an opportunity to respond. It is submitted that this was not done at the pleadings or submissions stage. Therefore, it is argued, that neither contractual nor bailment negligence have been pleaded in line with the Act. It is also submitted that in any event recklessness is not made out on the evidence in this matter. At the oral submissions hearing of 15 May 2020 further submissions on this point were made by Savino Australia. The authorities relied upon, on the issue of recklessness, included Goldman v Thai Airways International Ltd [1983] 1 WLR 1186.
Espresso Company submits in reply: The First Defendant well understood the case it had to meet The First Defendant appears to submit (at [62]) that the Plaintiff's contractual and bailment claims are not maintainable because of alleged deficiencies in the pleadings which are said not to satisfy the provisions of the Civil Liability Act 2002 (NSW). If such a complaint was to be made by the First Defendant, it should have done so long before the making of its closing submissions. In Nepean Blue Mountains Local Health District v Starkey [2016] NSWCA 114, McColl JA commented (at [38]): "The LHD [the defendant] did not move to strike out the Statement of Claim, nor did it suggest to the primary Judge that it was unaware of the nature or details of the claim being made against It. Accordingly, this Court is entitled to assume that the LHD understood the case being made against it. This conclusion is reinforced by the fact that, at trial, counsel for the plaintiff did not open her case in any detail and counsel for the defendant (who did not appear on the appeal) did not protest the absence of such an opening." Here, the First Defendant did not seek to strike out the claim. No submissions were made on behalf of the First Defendant that it did not understand the case being made against it. The Court may assume that it well understood the case being made against it, and should reject the First Defendant's submissions.

Bailment

The plaintiff also claims that each defendant is liable to the plaintiff under the law of bailment. The plaintiff characterises each of the defendants as bailees or sub-bailees/quai-bailees, and asserts breaches of the duty of bailment. Complex and detailed legal submissions were made by the plaintiff and the first and second defendants on these issues. All of those written legal submissions, and the detailed oral submissions made at the submissions hearing on 15 May 2020, have been considered by me and reference may be had to the transcript of proceedings and the written submissions on the court file. I will not summarise those submissions in these Reasons for decision but have carefully considered same. My findings on the bailment issues will be detailed below.

Issue 1 - which is the governing contact?

The parties arguments as to which is the applicable contract are set out above and have been carefully considered. In relation to the transport of the goods to Espresso's premises, the governing contract must be the contract which governs the transport of the particular goods. A related issue is the terms of the contract - whether it covered carriage of the goods between Mascot and Belrose.
I find that the contract between Savino Australia and Espresso (of May 2017) was an umbrella agreement which would apply to various subsequent shipments/transport of goods. It provided for credit payment terms in respect of freight and port fees etc (30 day payment terms). It was a relevant agreement between the parties.
It is worth observing that Savino Australia is acknowledged to be a wholly owned subsidiary of the global company. The evidence also indicates that Savino Australia contacted its "Italian agent" to arrange carriage.
The Bill of Lading, issued by Savino Italy, was a contract which specifically applied to carriage of the goods from Italy to Sydney. For reasons which follow, I find that the Bill of Lading was the contract which governed the shipment and carriage of these particular goods. The question to be resolved is whether its terms extended to the road carriage from Mascot to Belrose, or whether the Savino Australia contract applied to that part of the carriage. This must be resolved on the terms of the particular agreements.
Firstly, I will decide whether the Bill of lading applies to the carriage of the goods from Savino Australia warehouse in Mascot to the premises of Espresso Company in Belrose.
The Bill of Lading defines the following parties: "freight forwarder" - (FF) means Multimodal Transport operator, agent of the carrier….who issues this Bill of lading and is named on the face of it and does not assume liability for the performance of the Multimodal transport contract as a carrier".
"Carrier" includes the contracting carrier with whom the FF stipulates a contract of carriage and all carriers that carry or undertake the goods hereunder or perform any other service incidental to such carriage. "Merchant" means and includes the shipper, the consignor, the consignee, the holder of this BL, the receiver and the owner of the goods. "Consignor" means the person who concludes the Multimodal transport contract with the FF. "Consignee" means the person entitled to receive the goods from the FF. "Taken in charge" means that the goods have been handed over to and accepted for carriage by the FF at the place of receipt evidenced in this BL.
Clause 1 provides: "Applicability. Notwithstanding the heading "house Bill of lading" (or otherwise nominated) these conditions shall also apply if more than one mode of transport is used".
Clause 2 provides: "by issuance of this BL, the FF undertakes, in his own name and on behalf of the merchant, to procure through the designated carriers the performance of the entire transport, from the place which the goods are taken in charge at place of receipt evidenced in this BL to the place of delivery designated in this BL. The FF assumes liability as set out in these conditions." [Subclause 2(b) provides] "subject to the conditions of this BL, the FF shall be responsible for the acts and omissions of his servants or agents acting within the scope of their employment, or any other person of whose services he makes use for the performance of the contract evidenced by the BL, as if the acts and omissions were his own".
Clause 13 provides for freight and charges, clause 6 provides for liability, as does clause 10 and clause 9 provides for liability to actions in tort, and clause 8 provides for limitation of liability.
The front page of the Bill of lading states it is an express Bill of lading, and not negotiable. The shipper is named as Anfim, the "Consignee (Addr 2)" is Espresso Company with the street address in Belrose, set out. The carrier, being the ship/vessel is named; as are the port of loading and port of discharge. The bill is issued in Italy and has a document number SDB04S030917. It further states "Routing instructions (Addr 1) - for delivery apply to Savino Australia Pty Ltd", with street address at Mascot stated. The Bill of lading further states "insurance not covered by us". The port of loading is specified as Genoa, the Port of discharge as Sydney, and the "place of delivery" is left blank. However the Bill also specifies "forwarding agent (reference)" with the reference "QV0028" specified, and under that, the bill states "for delivery apply to: Savino Del Bene Australia".
The front page of the bill indicates: "received by carrier for shipment by ocean vessel between Port of loading and port of discharge, and for arrangement or procurement of pre-carriage from place of receipt and on carriage to place of delivery, where stated above, the goods as specified above in apparent good order and condition unless otherwise stated. The goods to be delivered at the above-mentioned port of discharge or place of delivery, whichever applicable, subject always to the exceptions, limitations, conditions and liberties set out on the reverse side hereof, to which the shipper and/or consignee agrees to accepting this Bill of lading."
The issue is whether the Bill of lading is for delivery to the consignee address, being Espresso Company at Belrose. It is clear that this address, being the street address at Belrose is specified on the Bill of lading as "Consignee (addr[ess] 2)". Under forwarding agent id "Routing instructions for delivery apply to Savino Australia (Addr[ess] 1)" with the street address of Mascot specified. It is clear that the wording of the Bill has the address of Belrose and specifies for delivery/routing instructions to apply to Savino Australia. This detail about delivery arrangements, and specified addresses beyond the port of Sydney, indicates that the Bill covers delivery from discharge at port to the Consignee at Belrose, as per routing delivery instructions provided by Savino Australia.
This construction of the terms of the Bill of lading is consistent with other documentation - in particular (refer page 113 of court book) the receipt for delivery to the plaintiff at the Belrose premises of Espresso Company - on this document the plaintiff has endorsed "arrived 100 percent damaged - complete consignment". The document on which Espresso Company has so endorsed is the document for shipment S00207522, House Bill of Lading SDB04S030917. The document is called "cl arrival shipment cartage advice with receipt" and states "consignor Anfim; consignee, Espresso Company Australia Pty Ltd", and delivered to Espresso Company Australia Pty Ltd, Belrose. The endorsement by the plaintiff, that the consignment arrived hundred percent damaged, on this document, appears to be an acceptance that the end of the delivery of the house Bill of lading named on the document, being house Bill of lading SDB04S030917, is the plaintiff's premises at Belrose.
Further, such an interpretation is consistent with the general characterisation in shipping law of the role of a freight forwarder and an express Bill of lading which is nonnegotiable, as set out in the submissions of the first defendant, and authorities referred to.
I therefore find that the contract, being the express Bill of lading, and its contractual terms, applied to the shipment and delivery to the plaintiff's premises at Belrose.
I do note however that there was a concurrent contract between the first defendant and the plaintiff which was a general umbrella agreement, which provided for terms of credit, and this was in place between the first defendant and the plaintiff. If any of the terms in one contract, conflict with the other contract, issues may arise. However, as detailed above, it is clear that the house Bill of lading applied to the specific shipment during which the goods were damaged, and as such, unless there is a good argument that there is some conflict with other contractual terms, the terms in the Bill of lading should apply. This finding will determine a number of the issues which I have set out for determination below. I also note the case The Pioneer Container provides that where there are two contracts, the carrier (sub-bailee) may choose to rely on clauses in either contract.
The Bill of Lading, on its terms, is for delivery to Espresso Company, the consignee, at Belrose, and is also for delivery as arranged by contacting Savino Del bene Australia. The Bill is subject to the words on the front of the Bill, which indicate that the terms of delivery and/or carriage are always subject to the exceptions, limitations, conditions and liberties set out on the reverse side. The front of the Bill also provides for declared value of goods and refers "read clause concerning extra freight and limitation of liability on the reverse side hereof". It is clear that there was no declared value to bring into operation the clauses concerning extra freight, therefore the standard limitation of liability clauses would ordinarily apply.

Issue 2 - What are the terms of the contract?

The plaintiff states that terms are implied in the contract and the defendant states that the express terms between the parties are clear. It needs to be decided whether there are implied terms as urged by the plaintiff. I am mindful of the plaintiff's submissions that such terms are implied in the Savino Australia/Espresso Company (contract of 2017). As detailed above I have found that the relevant contract is the Bill of Lading. However I consider it appropriate to consider and determine the plaintiff's argument in relation to implied terms.
There is clear authority indicating the matters which should be considered when deciding, where there are written contractual terms, whether there are also implied terms. Those are usefully summarised in the majority decision of the Privy Council (hearing an appeal from the Supreme Court of Victoria) in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283: Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.
The plaintiff states the implied terms were that the First Defendant, by itself, its servants or agents, would (a) exercise all reasonable skill, care and diligence in and when providing its Carriage Services (as defined in the statement of claim), and (b) that it would ensure that the Goods would be delivered to the Plaintiff in a saleable condition. The plaintiff submits that, in Carter on Contract (Lexis Nexis), Professor Carter writes that, provided the implication is not shown to be unjust or unreasonable, a term may be implied at common law if it is: (a) an established and normal incident of the contract; or (b) a necessary term, in the sense that, unless the term is implied, the enjoyment of rights conferred by the contract would be rendered nugatory or worthless or seriously undermined.
I agree with the submissions of the first defendant that the contract between the parties is not a contract of insurance, indeed the Bill of lading clearly states that insurance is not covered by the freight forwarder. It is not reasonable to imply a term that a freight forwarder will insure and guarantee the safety of transported goods. (If a customer wants shipping insurance from a freight forwarder, they can arrange to buy that cover separately.) For such reasons I am not satisfied that it is a normal and established incident of such a contract. In making this finding I have applied the guidance provided by the legal authorities set out and discussed below. For similar reasons I consider that the contract is effective without the implied term because, this is not a contract of insurance, and I accept the submission of the first defendant that it is not an established and normal incident of such a contract given shipping cargo commonly travels around the world on similar terms. Therefore, it is also the case that without such implied terms, the contract is not rendered worthless or seriously undermined. Indeed, appellate decisions recognise that in various categories of commercial contract, the contracting parties contract out of risk/liability, given that it is expected that a party will address same through purchasing insurance. An example is the case - Life Savers (Australasia) Ltd v Frigmobile Pty Ltd & Another [1983] 1 NSWLR 431, ("LifeSavers") a decision of the Court of Appeal, New South Wales. The case involved a contract for carriage of goods, and also an exemption clause excluding liability.
The court in LifeSavers noted that the construction of exclusion clauses in contracts has had a troubled history. The court noted the words of Lord Diplock in Photo Production Ltd v Securicor Ltd that the basic principle of the common law of contract, is that the parties to a contract are free to determine for themselves what primary obligations they will accept. Whilst in practice a commercial contract never states all the primary obligations of the parties in full; many are left to be incorporated by implication of law from the legal nature of the contract into which the parties are entering. But if the parties wish to reject or modify primary obligations which would otherwise be so incorporated, they are fully at liberty to do so by express words. The decision noted that a number of arguments had been advanced in the case seeking to alter that principle.
The court found "in my opinion, the contract evidenced by the invoice should be construed according to its terms."
The court observed that there was an exemption clause which made it absolutely clear that the carrier was accepting no liability for any event, even due to its own wilful act or default, for any loss or damage to the goods during carriage, which began with the delivery of the goods to the carrier. The court observed that this was not a provision which destroyed the existence of the contract, and that the court could see no reason why the term was not given effect according to its terms. The court observed "if the exemption clause is clear, there is no reason why it should not be given effect to. As stated above, any ambiguity in accordance with the contra proferentem rule has to be interpreted as against the carrier, but I am unable to see any ambiguity at all".
The court went on to observe: "the carrier is a company which will be operating through employees and subcontractors, I see nothing unreasonable or even calculated to frustrate the purpose of the contract for a person offering a service to stipulate that the goods committed to it will be wholly at the consignor's risk ". (page 436).
In relation to the issue of whether it might be reasonable to imply a term given the context, the commercial and practical context within which the contract operates, the observations of the court are relevant: "… Where a clause excluding or limiting liability derives from identifiable economic factors rather than from, e.g., a mere desire to extract an unfair advantage. There are no doubt, as was suggested in argument, cases in which there are alternative "at risk" and "no risk" contracts or rates in cases in which insurance against the kind or degree of risk to which the exemption clause is directed is commercially available and the parties have chosen their form of contract accordingly. The reference in the present case to insurance may suggest that this was such a case. In such circumstances, it is not appropriate, with a view to avoiding the effect of an exemption clause, to give the words of the contract a meaning that otherwise they would not bear."
Similarly, I consider that the references on the Bill of lading, particularly on the front page, "insurance NOT covered by us" and the reference to the "exemptions, limitations… set out on the reverse side" make clear that the rates charged, are for a carriage contract without insurance, and the consignee is on notice that if they are not accepting of that risk, then insurance should be obtained.
It is noted that the arguments about an implied term were made by the plaintiff in respect of the May 2017 contract between Savino Australia and Espresso Company, and not the express Bill of lading. However it is my view, for the reasons detailed above, that the express words in the contract between Savino Australia and Espresso Company (the May 2017 contract) would also be construed according to their clear terms, for the same reasons. That is, the contract of carriage (the 2017 contract), if it applied to the current delivery, also contained exclusion clauses and for the reasons set out above, given the context of it being a carriage contract where the parties are free to contract on terms which minimise costs and minimise risk, and obtain insurance to protect themselves against risk, then the contract would be given its express terms rather than the implied terms asserted by the plaintiff.

Issue 3 - Is there any breach of the contract by Savino Australia? Can Savino rely on the clauses limiting liability and/or time bar?

For the reasons already detailed there is no breach of implied terms asserted by the plaintiff to apply in the contract with Savino Australia. The goods were damaged while being transported by Mr Do/Dotrans from Mascot to Belrose. The terms of the contract provide for a time bar, and other terms limiting and excluding liability, and apply to any claim for damage to goods sustained during carriage. A number of the specific terms are set out above in these Reasons for Decision, and will be further discussed below.
One of the terms of the contract provides for a time bar beyond which proceedings cannot be commenced by the plaintiff. In this case there is no dispute that the plaintiff commenced proceedings outside of the applicable time bar. The argument of the plaintiff is that, due to communications between the parties, the defendants are estopped from relying on the time bar. The plaintiff submits: Estoppel 33. The First Defendant relies on clause 11 of the Savino Australia Contract to contend that the Plaintiff's claim is time barred. That clause requires a claim to be made "within nine months after delivery of the Goods" - that is, within nine months after 1 March 2018. 34. The chronology of the correspondence between the Plaintiff and the First Defendant in respect of the claim is set out above at paragraph 12 of these submissions. Following receipt of Ms Atkinson's email of 29 November 2018, the Plaintiff's solicitors proceeded on the basis that the First Defendant had accepted liability for the full amount claimed and would pay that amount in the coming days, and on that basis, Mr Winburn-Clarke "refrained from issuing proceedings against the First Defendant". 35. Yet on 12 December 2018, the solicitors for the First Defendant, Holding Redlich, wrote to the solicitors for the Plaintiff to advise: "If you have not commenced proceedings any action is now time barred …". 36. The Plaintiff contends that in the circumstances of this case, the First Defendant should be estopped from relying on that defence. The applicable principles were summarised be Brereton J in Moratic Pty Ltd v Gordon 13 BPR 24,713 (at [32]-[33]) as follows: "In equitable promissory estoppel, it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of a legal relationship with the defendant; (2) thatthe defendant has induced or acquiesced in the plaintiff's adoption of that assumption; (3) that the plaintiff has acted in reliance on its assumption; (4) that the defendant knew or intended that the plaintiff so act; and (5) that it will occasion detriment to the plaintiff if the assumption is not fulfilled. In common law conventional estoppel, it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship on the basis of that mutual assumption; (4) that each party knew or intended that the other act on that basis; and (5) that departure from the assumption will occasion detriment to the plaintiff. The similarities between the two doctrines should not be allowed to mask their differences, which reflect the disparate origins of promissory estoppel and conventional estoppel. Promissory estoppel, a creature of equity, is, typically, focussed on the conscience of the defendant: it operates when the defendant has induced or acquiesced in the adoption by the plaintiff of an assumption that the defendant will not assert its strict legal rights, so to prevent unconscionable (or unconscientious) insistence by the defendant on its strict legal rights. On the other hand, conventional estoppel, a creature of the common law, is focussed on the consensual basis of the parties' relationship: it operates when both parties have adopted the same assumption as the basis of their relationship, often without appreciating that any departure from the strict legal position is involved, so as to hold both parties to their common understanding. 37. Here, it was the common understanding of both the Plaintiff and the First Defendant that liability for the damaged Goods was not in issue, and that "compensation will take a few days to process". Further, acting on that basis, and on the First Defendant's representation, the Plaintiff refrained from commencing proceedings against the First Defendant. If the First Defendant is now permitted to depart from that position, and to rely on the time bar in its contract, then the Plaintiff will suffer serious detriment.
Savino Australia submits: Estoppel This issue is raised in the plaintiff's reply pleading, in Tab 6 of the smaller appeal book. The pleaded estoppel case relies on two and only two e-mails, being one dated 27 November 2018 and another dated 29 November 2018: SRB Lawyers writes on 27 November 2019 "we refer to our letter of 15 November 2018 in which we provided you with seven days' notice of our intention to issue proceedings… Savino have been aware of this matter since 7 March 2018, further delays are not acceptable. Unless we hear your substantive response by 5pm (WST) on Thursday 29 November 2019, proceedings will be issued". Rhonda Atkinson of Savino Australia client services says on 29 November 2018 "In addition to my response yesterday we have addressed this matter with FRF Couriers, compensation will take a few days to process. We will monitor and keep you updated in the coming days". There are three points to make: 1) there is no time bar raised on the facts, 2) no time bar can be raised through inference or assumption, and 3) there is a contractual limitation to modifying the contractual time bar which has not been met. No time bar on the facts There was no promise to not enforce a contractual time bar. There is not even a single reference to the time bar in the correspondence (from either party), which Mr Winburn-Clarke conceded in cross-examination. Moreover, there is no reference to what compensation is contemplated. Is it compensation under the Savino Italy contract (US$1000), under the Savino Australia contract (US$1916), the statement of claim amount or some other amount? A court cannot say a time bar was extended by inference or assumption The Court can take judicial notice of the ordinary practice of lawyers. It is common for a lawyer to seek the extension of a time bar, particularly in maritime matters where time bars are almost always short. The way in which a time bar is extended is invariably by an e-mail such as 'Dear Z, We note that there appears to be a 9 month time bar under the contract (cl 11) which expires on 1 December 2017. Can you please confirm that you agree to extend that time bar by 2 months to 1 February 2019? Please reply to my e-mail no later than Y date. Regards'. This is not just good practice; it is required practice under the authorities. Where a party wishes a contractual time bar to be waived, no less when a lawyer seeks to have it waived, it is to be said clearly and expressly. As the High Court (per Mason and Deane JJ) quoted with approval in Legione v Hateley (1982-1983) 152 CLR 406 at 435 "Every estoppell, because it concludeth a man to alleadge the truth, must be certaine to every intent, and not to be taken by argument or inference". In China Ocean Shipping Co Ltd v PS Chellaram & Co Ltd (1991) 28 NSWLR 354 one party told another party that it would not be necessary for the other to commence proceedings until settlement was fully explored. The Court of Appeal unanimously found that this did not create an estoppel. Gleeson CJ said at page 367 I find myself unable to accept that the communications from the solicitors for the appellants contained any promise or representation, express or tacit, or manifested any common assumption, of the kind upon which the respondent now finds it necessary to rely. Indeed I am still not entirely clear as to the exact nature and content of the representation or assumption said to have been relied upon. It was expressed in argument in this Court as being a representation that it would not be necessary for the respondent to commence proceedings until settlement had been fully explored. A representation of that kind is hardly unequivocal. What exactly it means as to the nature of the modification of the time bar which is being effected or offered is far from clear. In any event, for the solicitors for the appellants to inform the solicitors for the respondent that the former hoped that the latter would not find it necessary to commence proceedings until settlement negotiations had been fully explored neither states nor suggests, nor justifies the conclusion, that nothing further need be said or done about the limitation period, and that mere inactivity will suffice to produce the result that the contractual provisions will be treated as modified in some unspecified fashion. The same statement applies with equal force in this case. Kirby P made an additional point at page 385 … But if it is claimed that the assumption was common, this implies that the respondent's solicitors consciously considered the time bar and, in company with their colleagues for the appellant, assumed that it would be inapplicable. One is therefore forced to ask why that assumption was not, out of ordinary prudence, recorded in clear terms. If there had been such a clear understanding, one would have expected a cry of outrage when the defence of the time bar was eventually relied upon. It is not shown in the correspondence. … In fact, within a fortnight Mr Farnsworth (acting for Savino) told Mr Winburn-Clarke that his client would rely on the time bar if any proceedings were brought. Not only is there no evidence of any cry of shock or outrage, but no proceedings are filed at all until February the next year. Further, on the facts, the estoppel claim in the present case is even weaker than in China Ocean Shipping. In that case, one party told the other party that it was not necessary to commence proceedings until settlement had been fully explored. Here, my client did not even mention proceedings or that her e-mail would have any effect whatsoever on proceedings.
I agree with the first defendant's submissions on the authorities set out above. I note also the High Court of Australia, in Legione v Hateley (1982-1983) 152 CLR 406 (per Mason and Deane JJ) also observed that whether there was a promissory estoppel depends upon whether the suggested representation was made, and whether it was acted upon - with the result that material disadvantage will be caused if departure from the representation was permitted (see page 437). Their Honours also observed that the requirement, that a representation as to existing fact or future conduct, must be clear if it is to found an estoppel, does not mean that the representation must be express: "Such a clear representation may properly be seen as implied by the words used or to be adduced from either failure to speak where there was a duty to speak or from conduct. Nor is it necessary that a representation be clear in its entirety. It will suffice if so much of the representation as is necessary to found the propounded estoppel satisfies the requirement. "Thus, a representation that a particular right will not be asserted for at least x days is not rendered, for the purposes of promissory estoppel, unclear or equivocal merely because the words used are equivocal as to whether the relevant period is x days, x plus one day or x +2 days. If what is said or done amounts to a clear and unequivocal representation that the particular right will not be asserted for a period of at least x days, a representation to that effect can be relied on to found an estoppel." (pages 438, 439).
Their Honours indicated that the representation needed to be clear. I consider relevant authorities further, below.

Findings of fact as to asserted representation/shared understanding, said to give rise to estoppel

The evidence of the communications between the parties is set out in detail above. The main points include that on 8 March 2018 Savino Australia acknowledged a claim for alleged damage goods arriving in Sydney on 1 March 2018. The letter states "we acknowledge receipt of your letter dated 8 March 2018 which will be processed in due course. We will notify you of all the updates as they are received and ask that you notify your insurance underwriters for immediate settlement ."
A letter of 9 March 2018 from Espresso Company, notes their intention to claim: "re-: notice of intent to claim against Savino Del Bene… Per HBL SDB04S030917"- [the letter itemises the claim and then says] "for completeness, we have notified our insurers of this claim. Notwithstanding this however, and as before, we suggest you notify your insurers of this intent to claim, and request that you provide us with their acknowledgement of this notice within the next seven days."
A letter from Savino Del Bene of 15 March 2018 to Espresso Company "without prejudice" states: "we acknowledge receipt of your letter dated 9 March 2018 which we process in due course. We will notify you of all updates as they are received and asked that you notify your insurance underwriters for immediate settlement".
On 24 April 2018 Espresso Company notified its insurer, NTI Ltd, of acknowledgement of authority/release in respect of the damages (refer Court book page 145). There is no evidence of any communications between Espresso Company and Savino Australia from March 2018 until October 2018. Nor is there evidence of correspondence between NTI and Savino Australia in this period. On 15 October 2018 correspondence was sent from the lawyers for Espresso Company and their insurers, NTI, to Savino Australia, noting that there had been nothing further heard since 15 March 2018, and confirming the claim and requesting a response within seven days. One month later, on 15 November 2018, SRB Legal on behalf of Espresso Company and their insurer NTI, wrote a further letter to Savino Australia noting there had been no response to their letter of 15 October 2018. The letter of 15 November 2018 states that they take the view that Savino is responsible for the damage. They advise that unless a response is heard within seven days, proceedings will be issued which may incur additional costs. Ms Atkinson of Savino Australia, by email of 16 November 2018, stated that she would follow through further with Danielle Rea, and come back.
By letter dated 27 November 2018 the plaintiff's lawyers wrote to Ms Atkinson at Savino Australia referring to prior correspondence and noting that they had not heard anything further since the communication of 16 November 2018. The letter advises that unless there is a substantive response by Thursday 29 November 2018, proceedings will issue. An email of 28 November 2018 from Ms Atkinson at Savino Australia states that the matter will be escalated. A further email on 29 November 2018 states: "in addition to my response yesterday, we have addressed this matter with FRF Couriers, compensation will take a few days to process. We will monitor and keep you updated within the coming days".
By affidavit evidence, Mr Winburn-Clarke states that this was a representation by Savino Australia that they would pay the plaintiff's claim in full. The plaintiff argues that relying on this representation, proceedings did not issue, and therefore Savino Australia should not be able to rely upon the time bar. The plaintiff also argues that the parties shared a common understanding that liability was not in issue, and operated on the basis of this understanding, as well as the representation made. Mr Andrew Winburn-Clarke does depose in his affidavit that, based on this understanding which he had, he refrained from issuing proceedings against the first defendant. On 12 December he received communication from Savino Australia's lawyers that they would be relying on the time bar in the conditions of contract. The same correspondence requests that if proceedings have been commenced, then they be provided with a copy.
Mr Winburn-Clarke was cross-examined about his understanding, as deposed to in his affidavit evidence. Under cross examination, as detailed above, he agreed that in the correspondence there was no reference to the time bar, and no request made to extend the time bar. He also agreed that the words "compensation will take a few days to process" made no reference to Savino Australia paying compensation, nor to any specific amount of compensation. He also agreed that he did not check his assumption that Ms Atkinson was referring to Savino Australia paying compensation. He also agreed under cross examination that Ms Atkinson had not stated that compensation would be paid in terms of the terms and conditions of the Bill of lading, or in the terms and conditions of Savino Australia's contract, and nor did the email say anything about compensation being provided to Espresso Company on specified terms. However Mr Winburn-Clarke maintained it was his understanding that this would be so.
I find as a fact, on the basis of the evidence detailed above, that there was no undertaking or representation communicated to the plaintiff's legal representatives, or to the plaintiff directly, that Savino Australia would not rely on the time bar. Nor was any representation made that Savino Australia had accepted responsibility for the amount claimed by the plaintiff. As such there was no representation made by Savino Australia, to the plaintiff, that the time bar term was waived. Given there was no such representation made, then it cannot be said that the plaintiff relied on such representation in delaying instituting proceedings. Nor does the evidence support a conclusion that Savino Australia and Espresso Company operated on a shared understanding that liability for the damage was accepted by Savino Australia.
On the evidence in the current matter the delay between March and October 2018 is unexplained. Given the time bar in the relevant contracts (both the Bill of lading and the May 2017 contract) then a prudent lawyer would have sought an undertaking to extend the time bar, given the delay, from March to October, which had already been occasioned and which is unexplained. The plaintiff's legal representatives kept advising that they would commence proceedings, in correspondence of October and November 2018, but did not do so despite the presence of the time bar in the contracts. It is not established on the evidence that the delay in commencing proceedings in October, November or December was due to a representation by the first defendant that the plaintiff's claim would be paid by the first defendant, nor was there a representation that the time bar was waived. As such there is no factual basis on which to find that the first defendant is estopped from relying on the time bar in the contract, having regard to the guidance of the authorities in relation to estoppel, discussed above.
In this context I also note the findings of the Supreme Court in the decision, China Ocean Shipping Co Ltd v PS Chelloram Co Ltd (1990) 28 NSWLR 354, in dealing with a time bar provision in a contract with a term very similar to the current matter. The case involved terms and conditions in a Bill of lading, which provided that the carrier would be discharged of all liabilities under the Bill of lading unless suit is brought and written notice thereof given to the carrier within nine months after the delivery of goods. The court held that the time limit requirement was to be construed according to its ordinary meaning as set out in the terms of the Bill. In relation to estoppel, at page 367 the court observed: "I find myself unable to accept that the communications from the solicitors for the appellants contained any promise or representation, express or tacit, or manifested any common assumption….I am unable to accept that the evidence justified the conclusion that the solicitors for the respondent relied and acted to their detriment upon the supposed representation or common assumption.….I find it extremely difficult to accept that, if the solicitors had been aware of the time bar, and were relying upon what they understood to be a willingness in their opponents not to use it to their disadvantage, they would not have even mentioned the matter in the course of the correspondence.[The court noted the argument that the solicitors were operating under the belief that it would not be necessary to commence proceedings until settlement negotiations had been fully explored, but the court noted that belief might have resulted from at least three different sources] "it could have resulted from a lack of awareness of the time bar or a lack of advertence to it. It could have resulted from a mistaken belief that the time bar did not apply to the circumstances of the present case. Or, of course, it could have resulted from an assumption that the time bar would not be invoked by the carrier. If the last mentioned assumption were made, the natural course would be to ask for the matter to be recorded in writing.…….Against that background of competing possibilities, it is to be noted that no evidence was called from the respondent's solicitor to prove any reliance by them as is now alleged…"
I note that whilst in the current matter evidence was adduced from the plaintiff's solicitor as to his assumptions and beliefs, that evidence did not satisfy me that representations were made by the first defendant that they were going to pay the plaintiff, nor that a representation was made that the time bar would not be relied upon by the defendant, as detailed above. Nor am I satisfied that the communications evidence that the parties were operating from a shared understanding, or common assumption.
The court also observed in relation to international contracts and the estoppel argument, at page 386: "there are special reasons for requiring care before relieving a party from the obligation of the prompt commencement of proceedings against a carrier where those rules (Hague Visby rules) or the Bill of lading so provide. This is because the rules and the bills of lading are international in character. They are designed to operate in legal systems of great variety….The rules of estoppel, developed by the courts… in England… are by no means universal.
The court went on to express that the evidence did not amount to establish a common assumption founding an estoppel. The court observed: "but if it is claimed that the assumption was common, this implies that the respondent's solicitors consciously considered the time bar and, in company with their colleagues for the appellants, assumed that it would be inapplicable. One is therefore forced to ask why that assumption was not, out of ordinary prudence, recorded in clear terms." [The court also observed, at page 379] "in order for there to be a promissory estoppel, it is necessary that the promise should be clear and unequivocal".
I note the similarity between the time bar clause in the case before the Supreme Court and the current proceedings, and I see no reason to not to apply the reasoning and approach of the Supreme Court. On the facts that I have found, as detailed above, there was an assumption made by the solicitor which was not founded on a representation made by Savino Australia; the reason for delay in commencing proceedings from March 2018 until December 2018 is not adequately explained, nor is it clear that any representation in relation to the time bar was made by Savino Australia as detailed above. Therefore for the reasons already detailed I am not satisfied that estoppel operates to prevent reliance on the time bar term of the contract.
The result of this finding, is that the first defendant may rely on the time bar in the contract, in relation to the current claim. This time bar was present in both contracts, namely the Bill of lading and also the 2017 contract between the parties, and the same reasoning would apply in respect of both time bars.

Savino Australia contract with Espresso Company (2017 contract)

If I am wrong in my conclusion that the Bill of Lading is the applicable contract, then I would find that the 2017 contractual terms applied. Those terms included a time bar and a Himalaya clause in similar terms to the Bill of Lading. Clause 23 is the Himalaya clause (it is set out above in these Reasons for Decision). I find, as detailed above, and below, that the time bar clause (which operates to prevent proceedings after expiration of the time bar), and the liability limitation clauses, and the Himalaya clause, operated to restrict liability for damage to the goods, for both Savino Australia and subcontracted carriers. This is further explained below.

Bailment issues

Complex arguments were relied upon by all parties in the case in relation to bailment. The plaintiff relies upon Savino Australia being a bailee of the goods, and states that its obligations continue and were present and operative at the time that the goods were loaded on to the third/fourth defendant's truck at the warehouse of Savino Australia in Mascot. The plaintiff states that the second defendant, FRF Couriers, is liable in bailment as a sub-bailee. Clearly there was a contract between Savino Australia and FRS Couriers for carriage. Dotrans/Mr Do was a subcontractor of FRS Couriers. It is argued by the plaintiff that the third/fourth defendant were sub-bailees or quasi-bailees.
The plaintiff makes the following submissions in relation to breach of bailment duties by the first defendant: Bailment A bailment arises when one person (the bailee - here, the First Defendant) is voluntarily and knowingly in possession of the goods of another (the bailor - here, the Plaintiff). In Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220, Windeyer J (at 238) defined a bailment as follows: "A bailment comes into existence upon a delivery of goods of one person, the bailor, into the possession of another person, the bailee, upon a promise, express or implied, that they will be re-delivered to the bailor or dealt with in a stipulated way." In The Laws of Australia, the authors state that this definition, while emphasising the requirement of possession, includes two further elements common to most bailments: "These are delivery of the goods to the bailee, and an express or implied promise by the bailee to return the goods to the bailor or deal with them as instructed. Although these elements are present in most standard bailments, they are no longer essential to the relation. The modern emphasis is on the voluntary nature of the possession gained. The mere fact of voluntary and knowing possession is sufficient for the possessor to constitute a bailee. Neither delivery to the bailee nor any specific undertaking by the bailee to hold on behalf of the bailor is necessary if the bailee consents to having possession. Such a party becomes a bailee regardless of the machinery by which his or her possession was acquired. Accordingly, a bailment can arise unilaterally and the consent of the owner or other person residually entitled to possession is not essential to bailment." They are admitted facts in this case that: the Goods were discharged from the ship at Sydney port on about 18 February 2018; the Goods were then carried by road to the First Defendant's warehouse in Mascot in the period between 18 February 2018 and 1 March 2018; and on 1 March 2018, the Goods were loaded on to a truck at the First Defendant's warehouse yard. The Court should be satisfied that the First Defendant came into possession of the Goods, that its possession was both voluntary and informed, and that from the moment of delivery of the Goods to its warehouse, the First Defendant was a bailee of the Goods. As a bailee under a bailment for reward, the First Defendant was under a duty to take reasonable care of the Goods, and to restore the Goods to the Plaintiff as bailor in the condition in which it had received them. Further, by accepting the goods, the First Defendant impliedly undertook to use reasonable care and skill to protect the Goods from third-party wrongdoing. The First Defendant is also required to answer for the acts or defaults of the Second Defendant, to whom it had delegated some of its responsibilities in relation to the Goods. As was acknowledged by the First Defendant in the correspondence referred to above, the Goods were not properly secured while they were being loaded onto the truck while it was parked on the First Defendant's property - that is, at a time when by its own admission the First Defendant had control of the Goods - which caused the damage and rendered the Goods "unsaleable" when they were delivered to the Plaintiff as bailor. In Ms Atkinson's own words, "the truck driver did not follow basic rules to secure the cargo, more so the cargo was clearly marked fragile, putting our reputation on the line." Once the Goods have been shown to have been lost or damaged in the First Defendant's possession as bailee, then the First Defendant is liable, without further proof from the Plaintiff as bailor, unless it can be affirmatively established by the First Defendant that it took proper care of the goods, or that any want of proper care on its part did not cause or contribute to the Plaintiff's loss. In The Laws of Australia, the authors state: "The bailee's burden is normally justified on the ground that, as the bailee had possession at the time of the adverse event, the circumstances surrounding that event are within his or her peculiar knowledge; it is therefore reasonable to require the bailee to exculpate himself or herself. A further reason is the need to ensure that bailees do not become complacent about their precautions or unduly dependent on insurance. The bailee's burden has been described as "the ultimate onus". Accordingly, if the bailor proves the contract and the non-delivery of the goods, or the delivery in a damaged condition of goods which were not damaged when bailed, and the bailee leaves it in doubt as to whether the non-delivery or the damage was his or her fault, the bailor should succeed." The Court should be satisfied that the First Defendant, as bailee of the Goods: failed to exercise reasonable care of the Goods when it allowed the Goods to be loaded on to the truck without "basic" precautions being taken to secure the Goods at a time when it had "control" of the Goods; failed to deliver up the Goods to the Plaintiff in the same condition that they were bailed to the First Defendant. In Ms Atkinson's email of 2 March 2018, she said that she had viewed CCTV footage which showed that "the cargo was ok when [it] left our warehouse." However, it is not disputed that when the Goods were delivered to the Plaintiff, they were "severely damaged and/or in a condition unfit for sale"; and failed to transport the Goods - or to ensure their transport - in a manner that was fit and proper for the purpose of the contract. As a result of the First Defendant's breaches of its contract of bailment, the Plaintiff has suffered the loss and damage that is the subject of this claim.
In relation to the second defendant, FRF Couriers, the plaintiff argues: Bailment The Plaintiff also claims against the Second Defendant for its breaches of its sub-bailment or "quasi-bailment". The Second Defendant's evidence is that it first contracted with the First Defendant to provide "cartage services" in 2013. Clause 3 of the FRF Couriers Contract expressly acknowledges that, in the context of the businesses carried on by the first and second defendants, there may be another party (such as the Plaintiff) "who claims to have, who has or may hereafter have an interest in" any goods accepted by the Second Defendant for delivery. Clause 6 in turn expressly contemplates that the First Defendant may be in possession of the Goods as a bailor. Mr Giannetto's evidence was that on 1 March 2018, the Second Defendant was engaged by the First Defendant "to arrange and/or provide carriage of two pallets of Anfim coffee grinders from the warehouse of the First Defendant to the Plaintiff's premises at unit 3, Niagala Close, Belrose NSW." The Court should be satisfied that, given the nature of the business performed by the First and Second Defendants, and the terms of the contract between those parties, the Second Defendant was aware that title in the Goods was in a third party (here, the Plaintiff) who had authorised the First Defendant to have possession of the goods to arrange for the carriage of them. That was sufficient for a sub-bailment to arise. As a sub-bailee (or quasi-bailee), the Second Defendant owed the same duties to the Plaintiff as those owed by the First Defendant as bailee. After the hearing commenced, the Second Defendant sought and was granted leave to amend its defence to, in effect, attempt rely on the limitations contained in the Savino Australia Contract between the First Defendant and the Plaintiff. However, despite its very late amendments, the Second Defendant is not entitled to rely upon any limitations of liability in the Savino Australia Contract. The relevant clause 23 that is relied upon is of a type generally referred to as a "Himalaya clause". The principles applicable to circumstances where the Second Defendant may rely on such a clause were set out by Lord Reid in Midland Silicones Ltd v Scruttons Limited [1962] AC 446, which was cited with approval by the NSW Court of Appeal in Life Savers (Australasia) Pty Ltd v Frigmobile Pty Ltd (1983) 1 NSWLR 431. The four conditions that were there said to be required in order for a Himalaya clause to be effective to protect a third party in the position of the Second Defendant are that: the relevant contractual document - that is, the Savino Australia Contract - must make it clear that the intention is to protect the third party: In this case, the element is satisfied by clause 23.1; the Savino Australia Contract must also make it clear one party is contracting as agent for the other in regard to the exempting provisions: In this case, the element is satisfied by clause 23.1; the contracting party (the First Defendant) is authorised by the third party (here, the Second Defendant) to enter the Savino Australia Contract, or alternatively the action is to be ratified by the Second Defendant: Here, the Second Defendant's contract with the First Defendant did not authorise the First Defendant to enter into a separate contract with the Plaintiff on its behalf. Indeed, the FRF Couriers Contract expressly provided in clause 2 that the Goods are carried by the Second Defendant "subject only to these Terms and Conditions". Further, the Second Defendant sought to rely exclusively on the terms of that FRF Couriers Contract in its defence filed on 27 March 2019 and in its cross claim filed on 4 November 2019, and thereby elected not to ratify the First Defendant's action in purporting to enter into the Savino Australia Contract on its behalf. It follows that there is no evidence that the Second Defendant authorised the First Defendant to enter into the Savino Australia Contract on its behalf. Accordingly this requirement is not satisfied; and any difficulties about consideration moving from the Second Defendant must be overcome: Here, the Second Defendant subcontracted carriage of the goods to another party, such that there was no consideration given by the Second Defendant vis a vis the Plaintiff. This element is therefore also not satisfied. In all of the circumstances, the legal requirements necessary to enable the Second Defendant to rely on the limitations contained in the Savino Australia Contract are not satisfied. Accordingly, the Second Defendant cannot rely upon any of the exclusions and limitations of liability in that contract.
In relation to the third/fourth defendants, the plaintiff relied upon breach of bailment in similar terms to the second defendant.
I do not propose to give detailed findings on the nature of each bailment in these reasons for decision. All active parties in the proceedings made detailed submissions and provided a number of relevant authorities which I have considered. I will not summarise those authorities in these Reasons for Decision but have carefully considered same.
Relevant bailment principals include: the essence of bailment is possession. The doctrine is confined to personal property and denotes a separation of the actual possession of the goods from some ultimate or reversionary possessory right. Whereas possession is the salient feature of bailment, the mere fact of possession does not necessarily constitute the possessor bailee. An owner cannot be a bailee. A bailment cannot arise without a certain mental element on the part of the putative bailee. The precise nature of this mental element is one of the most contentious questions in the law of bailment. The view of the learned author of the text on Bailment, Professor Palmer, is that a bailment comes into existence when a person is knowingly and willingly in possession of goods which belong to another.(Bailment, N.E. Palmer, 2nd edition, The Law Book Company Limited, 1991, pages 2,3)("Palmer"). A recognised form of bailment is the carriage of goods for reward, this is the bailment relied upon by the plaintiff in the current matter, against each of the defendants.
In Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 ("Hobbs") the High Court provided relevant guidance as to bailment. The judgement recognised that there was a well-established category of bailment of goods carried for reward. The High Court observed that a bailment established a duty to take reasonable care to keep the goods safe, and that duty could not be delegated to a servant. "If the goods are lost or damaged, while they are in his possession, he is liable unless he can show - and the burden is on him to show - that the loss or damage occurred without any neglect or default or misconduct of himself or any of the servants to whom he delegated his duty".
The High Court observed that the well-established rules did not constitute a carrier, such as the defendant, an insurer; he escapes liability if he can show that the non-delivery of goods entrusted to him for carriage was not due to his fault, notwithstanding that he does not show how the loss actually occurred. In this, his obligation is less onerous than that imposed by law upon a common carrier who is, of course, responsible for the safety of the goods entrusted to him.
The case, Hobbs, involved engagement by the plaintiff of the defendant to carry goods between two points. The defendant contracted with Hobbs to undertake the carriage. The defendant never had custody of the goods, and during the journey the vehicle in which the goods were being transported sustained a broken axle. The evidence showed that the axle broke and that this was not due to any negligence by the defendant or the defendant's subcontractor. The court observed that in an action for breach of contract of carriage the onus of establishing the breach rests on the plaintiff; while non-delivery furnishes prima facie evidence of breach, it does not place an onus on the defendant to disapprove negligence - once the defendant provides an explanation of the non-delivery which destroys the inference of negligence, he is not required to establish that he could not have prevented the occurrence causing the non-delivery by any exercise of due care. In Hobbs, the defendant had established that the cause of the failure to deliver was the fracture of the axle, which was not proved to have occurred due to any negligence of the defendants. There were some observations of the High Court, in the decision, that the defendant, not having had possession of the goods, was not under a bailment duty. This was particularly the view of Justice Windeyer. He observed that although the Hobbs brothers were independent subcontractors, the defendant is, by well-established common law rules, liable for their negligence in relation to the carriage of the plaintiff's goods. That is because the defendant impliedly promised the plaintiff that the goods would be carried to their destination with due care. If the defendant procures someone else to perform the carriage for it, it became liable for the subcontractor's negligence. (Pages 242, 243).
Prof Palmer states that a true sub- bailment may be defined as that relationship which arises whenever a bailee of goods transfers possession to a third party for a limited period or a specific purpose, on the understanding (express or implied) that his own position as bailee is to persist throughout the subsidiary disposition. A sub-bailee, is one to whom actual possession of goods is transferred by someone who is not himself the owner of the goods but has a present right to possession of them as bailee of the owner. The third party, by taking possession by consenting to the limit set upon it, assumes the role of a special class of bailee. He will owe to the original bailor all the common law duties which traditionally arise upon a direct bailment of the kind in question. He will owe these duties in addition to the principal bailee, except in so far as they are modified by the terms of any contract between them. To this extent, both bailor and principal bailee may be said to enjoy concurrently the rights of a bailor against a sub bailee; the former although he possesses no direct contract with the sub bailee, and the latter notwithstanding that he does not own the goods and cannot be made liable for their loss to the bailor. Thus the principal bailee's rights are comparable to those of an ordinary bailee where the goods are damaged by third party who does not acquire possession; except that in the latter case the bailee would enjoy no advantage as to burden of proof and the tortfeasor would not be subjected to further potential duties peculiar to bailment. The principal bailee's rights of action against the sub bailee arguably support the proposition that an action for negligent impairment of goods can be brought by someone having a mere right to possession of the goods, as distinct from possession itself (Palmer at p 1283).
Professor Palmer notes that quasi-bailment is a loose and indefinite term, which has occasionally been used as a repository for all kinds of bailment arising otherwise than upon a direct delivery. Such quasi-bailment may include bailment which arises by theft; cases in which a person takes possession of goods upon instructions or at the request of an intermediary. "The commonest example of a commercial quasi-bailment occurs when a forwarding agent (without acquiring possession of the goods) arranges for delivery to be taken by a third party, for the purposes of carriage to a consignee. The quasi-bailee owes the owner the traditional duties associated with a bailment of the kind he has undertaken, viz. to take care of the goods and to abstain from converting them, whether personally or through the instrumentality of any servant or deputed performer. As with the sub bailee, the quasi-bailee enjoys no direct contract with the bailor. But whereas in the case of a sub- bailment or a springing bailment there is an intervening possessor, in the quasi-bailment there is none, the quasi-bailee will not, in other words, receive possession direct from the intermediary itself.…… the existence of the quasi-bailment may affect the liability of the intermediary, who will not have acquired possession but who may nevertheless be answerable for the defaults of his subcontractor. ….However, it may not be irrelevant that the intermediary has never been, personally, a bailee of the property in question. With this in mind, it may aid the clarity of our exposition if we provisionally designate him the quasi-bailor". (Palmer at pp1292,1293)
I observe that the plaintiff, in written submissions in reply, and also in oral submissions on 15 May 2020, relies upon the statements of Professor Palmer extracted above in relation to quasi-bailment, and also in relation to issues of whether the goods are in the possession of the bailee or quasi-bailee. The second defendant has also provided hard copies of Palmer's text on this point.
Even if it is assumed that all defendants, were at the relevant time, subject to bailment duties as either bailee, sub bailee, or quasi-bailee, the issue is the interaction between the concurrent contracts, the exclusion clauses in the contracts, the Himalaya clause, and bailment. I have reviewed and carefully considered the parties' submissions and the authorities on bailment.
A number of the authorities, to which I was referred, demonstrate that relevant to assessing liability in bailment is also the status of any concurrent contract. This is because a bailment can be a bailment on terms; and the exclusion clauses in the concurrent contract can apply to exclude damages for breach of bailment. I will refer to the authorities which provide guidance on these issues below. Important in the current matter is the interrelationship between bailment and the exclusion/liability limitation clauses in the concurrent contract. The contract is the Bill of Lading and its terms and conditions apply between Savino Australia and Espresso Company. However, if the Himalaya clause has effect on the evidence in this case, then the contractual clauses would also operate between Espresso Company and FRF Couriers; and the subcontractors of FRF Couriers, Dotrans/Mr Do.
It is necessary therefore to determine the interrelationship between the bailment duties/liabilities and the contractual terms. In so doing I have been guided by the approach taken by appellate courts, in the authorities to which I have been referred by the parties.
In relation to the authorities, Savino Australia submits: The Pioneer Container [1994] 2 AC 324 case goes one step further, because it allows reliance by a bailee or carrier on the Himalaya clause in a bill of lading (and thus also the protective clauses within the bill of lading), and also on any protective clauses in intermediate contracts (such as a contract between a bailee or sub-bailee). This of course may create a situation where there are more than one set of limitation clauses that exist. The Pioneer Container resolved that issue by stating that the person sued may decide what protection to rely upon: i.e. where this reasoning creates "two alternate regimes which the sub-bailee may invoke… the sub-bailee should [] be entitled to choose to rely upon one or other of them as against the owner of the goods" (at page 344; see also page 346). Put another way, Savino Australia can avail itself of the protections in the Savino Australia terms and conditions and also of the Savino Italy bill of lading terms.
I have carefully reviewed The Pioneer Container and other relevant authorities on this issue. The Pioneer Container case involved a sub-bailment of goods by a shipper. The first two groups of plaintiffs had engaged carriers to ship goods by sea under bills of lading which gave the carriers authority to subcontract the whole or part of the carriage of the goods "on any terms". The goods were sub-bailed, by the carriers, to the defendant shipowners, for carriage on-board their vessel. There was a collision and the vessel sank. The Bill of lading had an exclusive jurisdiction clause (as to jurisdiction for any litigation). The issue was whether the sub bailee could invoke the terms including the exclusive jurisdiction clause. The decision discusses the relationship between the sub-bailee and the owner of the goods, the importance of the sub-bailee being aware of ownership in another, and the sub-bailee voluntarily accepting the goods, and the consent of the owner to the sub-bailment.
Principles governing the relationship between the sub-bailee and the owner of the goods are set out in the decision. The court went on to look at the interaction between the contracts, including particular clauses in the Bill of lading, and the liability of the sub-bailee for damage. The court sets out the Bill of lading in the case. The court observed "this is a case where goods have been shipped under bills of lading. Bills of lading are documents which operate as receipts for the goods, and which contain or evidence the terms of the contract of carriage. Such terms include provisions relating to the shipowners' obligations in respect of the goods while in their care, and so regulate their responsibility for the goods as bailee's. In these circumstances, their lordships find it difficult to believe that a clause providing for the governing law and for exclusive jurisdiction over claims should be held not to be apt to cover claims by the cargo owners against the shipowners framed in bailment rather than in contract, simply because the clause refers to claims under the Bill of lading contract as opposed to claims under the Bill of lading.…… Shipowners who are sub bailees of the goods may similarly be able to invoke such a clause against owners of the goods seeking to hold them liable as bailee's and who have consented to the inclusion of the clause in the Bill of lading.
The court continued: "…The next point taken on behalf at the plaintiffs was that shipowners form of Bill of lading, like many others, contained a "Himalaya" clause which, following the decision of the Privy Council in [case cited] may be effective to provide protection for subcontractors of carriers by enabling them to take advantage of exceptions in the Bill of lading on the basis that the carrier has contracted for the exceptions not only on his own behalf but also as agent for the subcontractors. The submission of the plaintiffs in the present case was that the "Himalaya" clause gives sufficient effect to the commercial expectation of the parties, and that to allow a sub-bailee to take advantage of the terms of his own contract with the bailee was not only unnecessary but created a potential inconsistency between the two regimes. In their lordships opinion, however, this argument is not well-founded. They are satisfied that, on the legal principles previously stated, a sub-bailee may indeed be able to take advantage of, as against the owner of goods, the terms on which the goods have been sub-bailed to him. This may, of course, occur in circumstances where no "Himalaya" clause is applicable; but the mere fact that such a clause is applicable cannot, in their lordships opinion, be effective to oust the sub-bailee's right to rely on the terms of the sub-bailment as against the owner of the goods. If it should transpire that there are in consequence two alternative regimes which the sub-bailee may invoke, it does not necessarily follow that they will be inconsistent; nor does it follow, if they are inconsistent, that the sub-bailee should not be entitled to choose to rely upon one or other of them as against the owner of the goods….Their lordships are therefore satisfied that the mere fact that a "Himalaya" clause is applicable does not of itself defeat the shipowners argument on this point.….Their lordships turn to the basic question which arises on this aspect of the case which is whether, in the case of a sub-bailment, the owners of the goods who seek to hold the sub-bailee liable to them as a bailee will be bound by an exclusive jurisdiction clause which forms part of the contract governing the sub- bailment. [Their lordships went on to consider that the bills of lading in issue gave a very wide authority to subcontract the whole or any part of the carriage of the goods "on any terms"]. Since the subcontracting of any part of the carriage to another will ordinarily involve a bailment (or sub-bailment) to that carrier, it must follow that [both sets of plaintiffs] had expressly consented to the sub- bailment of their goods to another carrier on any terms. It further follows that no question arises in the present case of implied consent, the only question relating to the scope of express consent so given. [The court went on to note the wide language used in relation to subcontracting on any terms and continued -] ….The incorporation of the relevant clause in the sub- bailment would be in accordance with the reasonable commercial expectation of those who engage in this type of trade, and that such incorporation would generally lead to a conclusion which is eminently sensible in the context of carriage of goods by sea, especially in a container ship, in so far as it is productive of an ordered and sensible resolution of disputes in a single jurisdiction, so avoiding wasted expenditure on legal costs and an undesirable disharmony of differing consequences where the claims are resolved in different jurisdictions"
I am satisfied that The Pioneer Container is authority for the position that where the contract between the owner of the goods and the shipper, as evidenced by the Bill of lading, provides for subcontracting of the carriage, then a sub-bailee may rely on the terms in the Bill of lading. To apply this principle to the current case I must have regard to the terms of the applicable contract between Savino Australia and Espresso company, being the Bill of lading.
Clause 10 is the Himalaya clause (i.e. the clause protecting subcontractors/carriers). The clause also provides the authorisation of the owner of the goods to sub-bail and the terms of those sub-bailments. 10) Liability of Servants and Other Persons a)These conditions apply whenever claims relating to the performance of the contract evidenced by this BL [Savino Italy house bill of lading] are made against any servant agent or other person (including any independent contractor) whose services have been used in order to perform the contract whether such claims are founded in contract or tort, and the aggregate liability of the FF [Freight Forwarder /Savino Italy] and of such other servants agents or other persons shall not exceed the limits in clause 8. b) In entering into this contract as evidenced by this BL [Savino Italy house bill of lading], the FF [Freight Forwarder /Savino Italy], to the extent of these provisions, does not only act on his own behalf, but also as agent or trustee for such persons, and such persons shall to this extent be or be deemed to be parties to the contract.
Given the terms of the Bill of Lading in this matter, as discussed above, I am satisfied that Savino Italy acted as the freight forwarder , as agent for the shipper (as set out in Cro Travel). This means that the shipper (Espresso Company) contracts with carriers on the terms of the bill of lading. Savino Italy acts as agent for the carrier and the shipper. This means both the carrier and the shipper enter into these terms with Savino Italy as their agent. I am satisfied on the authority of The Pioneer Container, as discussed above, that the Himalaya clause operated to give the benefit of other terms in the Bill of Lading to agents, sub-contractors and sub-bailees involved in the carriage of the goods pursuant to the Bill of Lading. This included Savino Australia. It also included FRF Couriers and Dotrans/Mr Do as detailed below. Even if Savino Australia was agent for Savino Italy, or Savino Italy was agent for Savino Australia in issuing the Bill of Lading, the terms would apply to Savino Australia, as detailed.
A further issue for determination is whether the second and third/fourth defendants may benefit from the exclusion clauses in the Bill of Lading/Contract. Again I have been referred to a number of authorities on this point.
The decision of LifeSavers (Australasia) Ltd v Frigmobile Pty Ltd and Another (1983) 1 NSWLR 431 provides some guidance. The case involved a contract for carriage which was evidenced by an invoice signed by the driver who accepted the goods for delivery. It was for a load of chocolate from Sydney to Brisbane by refrigerated van. The decision sets out the exclusion clauses which were set out in the contract of carriage. The court observed that the construction of exclusion clauses in contracts has had a troubled history (refer to discussion of case above in these Reasons for Decision). After upholding the effect of the exclusion clause, as set out above, the court went on to consider the position of the second respondent - a subcontractor who had supplied the prime mover, and employed the driver, which hauled the consignment to Brisbane. The court observed that this respondent came within the definition of a subcontractor in the exclusion clauses. The court observed that the form of the contract precisely followed the form of contract embodied in other cases dealing with Bills of lading which held the terms of the Bills were adequate to give protection to the stevedore in shipping cases [cases cited] (refer p 436 of LifeSavers). The court noted the four conditions which must exist for the subcontractor to obtain the contractual immunity of the carrier, as set out by Lord Reed in Scruttons Ltd v Midland Silicones Ltd [1962] AC 446 at 47: "The Bill of lading makes it clear that the stevedore is intended to be protected by the provisions in it which limit liability, (secondly) the Bill of lading makes it clear that the carrier, in addition to contracting these provisions on his own behalf, is also contracting as agent for the stevedore that these provisions should apply to the stevedore, (thirdly) the carrier has authority from the stevedore to do that, or perhaps later ratification by the stevedore would suffice, and (fourthly) that any difficulties about consideration moving from the stevedore were overcome"
Indeed it is the plaintiff's submission in the present matter that these four conditions must be satisfied and are not satisfied (refer to plaintiff's written submissions).
In LifeSavers, the court went on to consider whether the principles and reasoning should be restricted to shipping cases, and also considered whether the four conditions were satisfied. It was observed by the court that the second respondent had accepted the chocolate for carriage on an invoice which purported to confer immunity upon him and there was no reason to believe that this was not important to him: "when he accepted the goods for delivery, it was pursuant to a form of contract drawn so as to appear to protect him. He should be taken to be accepting the goods on those terms and the consignor making an offer to him direct. His position is stronger than that of the stevedore, as he is present at the time and the agent by whom the contract of carriage is in fact made. The consignor, as it were, said to him directly that if he carried the goods he would be under no liability, which offer he accepted by taking the goods into his custody. I see no necessity for ratification, though I consider that it I am wrong there was.
In relation to the four conditions (and in particular ratification and consideration) the court observed: "I am unable to see when the consignor sends goods by his vehicle a contract giving him immunity is not brought into existence immediately on delivery. The fact that payment is to be received by the second respondent from the first respondent alone does not prevent there being a bargain. …… Where, as here, the contract documents on their face purport to create immunities for a class of persons, one of whom has done his part, I can see neither justice nor reason in denying him capacity to ratify the contract negotiated for his benefit."
Another relevant authority which also dealt with the Himalaya clause was a decision of the Privy Council in 1996, The Mahkutai [1996] AC 650. In that case the Privy Council considered a complicated shipping dispute. A Bill of lading was issued to the shippers containing a Himalaya clause. The Bill of lading also provided that any disputes should be determined exclusively by Indonesian courts. Some of the cargo was damaged by seawater and this was ascertained on arrival at port. Proceedings were instituted by the cargo owners against the shipowners claiming damages for breach of contract, breach of duty, or negligence. The High Court of Hong Kong stayed the proceedings holding that the shipowners, although not parties to the Bill of lading, were entitled to invoke the exclusive jurisdiction clause in it, either as a contractual term or as one of the terms on which the goods had been bailed to them. The Court of Appeal of Hong Kong reversed that decision, which was upheld on appeal to the Privy Council. The court, on construction of the terms of the Himalaya clause, upheld that the Himalaya clause provided that shipowners and subcontractors were expressly entitled to the benefit of some of the terms in the Bill of lading, but not the exclusive jurisdiction clause, as that clause was not an implied term on which they had taken goods into their custody, and was not a term of the bailment on terms. Because subcontractors were not parties to the Bill of lading, the exclusive jurisdiction clause could not be invoked by the subcontractors. While the relevant Bill of lading provided for the Himalaya clause, at clause 4, the exclusive jurisdiction clause was contained at clause 19.
At page 658 the Privy Council reviewed the pendulum of judicial opinion in relation to stevedores claiming the benefit of exceptions and limitations in bills of lading, and also shipowners claiming the protection of such terms. The Privy Council observed that much of the judicial acceptance of claims was concerned with the principle of bailment on terms. The court observed that in recent years judicial authority had swung back again to recognition of their commercial desirability, notably in the two leading cases concerned with claims by stevedores to the protection of a Himalayan clause [cases cited, see p658]. The Privy Council noted that in the present case the shipowners, carrying cargo shipped under bills of lading, are seeking to claim the benefit of a Himalaya clause in the Bill of lading, or in the alternative, to invoke the principle of bailment on terms; and observed: "However they are seeking by these means to invoke not an exception or limitation in the ordinary sense of those words, but the benefit of an exclusive jurisdiction clause. This would involve a significantly wider application of the relevant principles……". [The Privy Council then undertook a review of the cases (refer pages 659 -665). The Privy Council then what went on to observe]…"the law is now approaching the position where, provided that the Bill of lading contract clearly provides that (for example) independent contractors such as stevedores are to have the benefit of exceptions and limitations contained in that contract, they will be able to enjoy the protection of those terms as against the cargo owners. This is because (1) the problem of consideration in these cases is regarded as having been solved on the basis that a bilateral agreement between the stevedores and the cargo owners, entered into through the agency of the shipowners, may, though itself unsupported by consideration, be rendered enforceable by consideration subsequently furnished by the stevedores in the form of performance of their duties as stevedores for the shipowners; and (2) the problem of authority from the stevedores to the shipowners to contract on their behalf can, in the majority of cases, be solved by recourse to the principle of ratification; and (3) consignees of the cargo may be held to be bound on the principle in [case cited]" (p664. [The Privy Council observed that these solutions were effective but their technical nature is all too apparent, noting the law may evolve to recognise a category of exception to the doctrine of privity of contract, pp664,665]
The Privy Council observed that most Himalaya clauses incorporate the Hague Visby Rules in which the responsibilities and liabilities of the carriers, are segregated from his rights and immunities, the latter being set up primarily in the articles of the rules, exempting the carrier and shipper from liability or responsibility for loss of, or damage to, the goods in certain specified circumstances; as well as the limitation on liability per package or unit, or by time bars: "Terms such as these are characteristically terms for the benefit of the carrier, of which sub contractors can have the benefit under the Himalaya clause as if such terms were expressly made for their benefit. It however by no means follows that the same can be said of an exclusive jurisdiction clause, here incorporating, as is usual, a choice of law……
The Privy Council went on to observe: "The lordships draw support from for this view from the function of the Himalaya clause. That function is, as revealed by the authorities, to prevent cargo owners from avoiding the effect of contractual defences available to the carrier (typically the exceptions and limitations in the Hague Visby Rules) by suing in tort persons who perform the contractual services on the carrier's behalf. To make available to such a person the benefit of an exclusive jurisdiction clause in the Bill of lading contract does not contribute to the solution of that problem."
The court went on to observe that servants, agents subcontractors and those performing the carriage role, were intended to be protected by a Himalaya clause. The court distinguished the position of the exclusive jurisdiction clause from the findings of the case in the Pioneer container [1994]: "that case was however concerned with the different situation, where a carrier of goods subcontracted part of the carriage to a shipowner under a "feeder" Bill of lading, and that shipowner sought to enforce an exclusive jurisdiction clause contained in that Bill of lading against the owners of the goods. The Judicial Committee held that the shipowner was entitled to do so, because the goods owner had authorised the carrier so to subcontract "on any terms", with the effect that the shipowner as sub-bailee was entitled to rely on the clause against the goods owner as head bailor. The present case is however concerned not with a question of enforceability of a term in a sub-bailment by the sub-bailee against the head bailor, but with the question whether a subcontractor is entitled to take the benefit of a term in the head contract. The former depends on the scope of the authority of the intermediate bailor or to act on behalf of the head bailor in agreeing on his behalf to the relevant term of the sub-bailment; whereas the latter depends on the scope of the agreement between the head contractor and the subcontractor, entered into by the intermediate contractor as agent for the subcontractor, under which the benefit of a term in the head contract may be made available by the head contractor to the subcontractor. It does not follow that a decision in the former type of case provides any useful guidance in the case of the latter type."
The court also went on to conclude that the terms of the bailment did not extend to an exclusive jurisdiction clause and noted that this was inconsistent with the express terms of the Bill of Lading (refer page 668).
I consider that the case The Mahkutai provides useful guidance for understanding the interrelationship between bailment and Himalaya clauses in bills of lading, and the intersection of bailment and contractual law principles. It is clear that the contractual term of the Bill of lading before the court in that case, which provided for exclusive jurisdiction, was not part of the benefits and defences and limitations provided for in the Himalaya clause in the Bill of Lading.
After review of the authorities I am satisfied that a sub-bailee can avail itself of the protection afforded by a Himalaya clause, as can a subcontractor (refer LifeSavers case). I have found, as detailed above, that the Bill of lading was the applicable contract and that it applied to the carriage between Italy and the plaintiff's premises in Belrose. As such the first defendant, second defendant and the third and fourth defendants have the benefit of the provisions of the Himalaya clause. The Himalaya clause is in clear terms.
I also observe the authorities indicate that a time bar, and liability limitation clauses are the kind of clauses in a Bill of Lading to which Himalaya clauses apply.
As such, the defendants, pursuant to the Himalaya clause who perform the role of carriage under the Bill of Lading up to delivery at Belrose, have conducted the carriage (consideration) on the basis of the limitations of liability and benefits in the Bill of Lading. Indeed the evidence indicates that the plaintiff received from the carrier, upon delivery at Belrose, the 'cartage advice with receipt' referring to the Bill of Lading, indicating the subcontractor (Dotrans) was performing carriage pursuant to the Bill of Lading and its terms (similar to the situation in the LifeSavers case). I agree with the submissions of the first defendant (set out above) that the authority to contract for the benefit of subcontractors is provided in the terms of the Himalaya clause in the current case. The defendants acting in the role of carriers under the Bill of Lading, have the benefit of the time bar clause in addition to the limitation of liability clauses. Clause 6 was a relevant liability limitation clause: 6) Liability a) The FF [Freight Forwarder /Savino Italy] shall not be liable for the performance of a transport, his responsibility being involved only in the stipulation with the carrier of the contract of carriage in his own name, and on behalf of the merchant. However, when and if his responsibility is involved, all the provisions herein regulating and limiting the carrier's liability shall apply to the benefit of the FF. b) The responsibility of the carrier for the goods under these conditions covers the period from the time the carrier has taken the goods in his charge to the time of their delivery.
The bill of Lading is a receipt of 2 packages containing a total of 766.38kgs of coffee grinders. Under the Savino bill of lading term 8(f)(ii), the liability of Savino Italy and all subcontractors (including all defendants in the present matter) is US$1000.
The bill of lading was an authority for Savino Italy to contract with (or with and on behalf of) the ocean carrier 'Folegandros 257Nneanl-Goa', Savino Australia (to use its warehouse), FRF and Dotrans. I am satisfied that although each entity may have other contracts between themselves, they each take subject to the terms on the bill.
On the contractual terms which apply to the carriage of these particular goods, as set out above, the relevant contract carriage is the Bill of lading, as detailed above. Given this finding then I must find that the bailment to the first defendant was a bailment on terms. Those are the terms of the contract. As such the liability limitation/exclusion clauses in the contract (Bill of Lading) can operate to exclude liability arising from the bailment relationship. The authorities, discussed above, make this clear.
Given the terms of the Himalaya clause in the contract, I am satisfied that the time bar clause, and the limitation of liability clauses, apply to limit the liability of FRS Couriers and the third/fourth defendant, for reasons previously detailed, having regard to the authorities discussed and the terms of the Bill of Lading in the current case.
If I am wrong in my finding that the applicable contract is the Bill of lading, so that the applicable contract is the 2017 contract between Savino Australia and Espresso Company, then I would find that the exclusion clauses and the Himalaya clauses in that contract would also operate to similar effect, given the similar terms. In particular, given the finding I have made in relation to whether there is an estoppel, then the time bar in the 2017 contract would also apply to preclude the current proceedings; and the Himalaya clause in the 2017 contract would similarly apply to give the protection of the time bar to FRF Couriers and the sub-contractor, Dotrans/Mr Do.

The Hague Visby Rules

I note the plaintiff has also argued that the Hague Visby Rules apply (refer plaintiff's submissions in reply and also oral submissions of 15 May 2020). I am satisfied that the authorities establish that the Hague Visby Rules, in general, apply to ships rail, and do not apply to damages sustained by land carriage after the goods are discharged from the ship. Accordingly the Hague Visby rules would have no application to the damages caused to the goods when transported from Mascot to Belrose on the evidence in the current matter. A relevant authority is the decision Kamil Export (Aust) Pty Ltd v NPL (Australia) Pty Ltd [1996] 1 VR 538 ("Kamil"), a decision of the Victorian Court of Appeal, which held that the Hague Rules only applied to the carriage of goods by sea, or when the goods passed from ship's rail to ship's rail. The Hague Rules did not apply to the parts of the contract where goods were carried after discharge from the ship. In Kamil Export (Aust) Pty Ltd v NPL (Australia) Pty Ltd [1996] 1 VR 538, Marks J, with whom Fullager J agreed, stated, at p554: Chellaram was a time bar case. Kirby P was of the opinion that the time bar in the Hague Rules applied to a loss of goods after discharge. It is not clear however that this was the view of other members of the court. Gleeson CJ, with whom Samuels AJ agreed, rested his decision on the operation of cl10(2) being independent of the Hague Rules and it was this opinion which was followed by the court. Gleeson CJ found it unnecessary to decide the reach of Art III R6. The Hague Rules are expressed to apply only to the sea-carriage of the goods, that is, to the period after the goods pass the ship's rail on loading to the time they pass it on unloading. Thus the expression "from ship's rail to ship's rail". CL1 of the bill incorporated the Hague Rules (which comprise the schedule to the Sea Carriage of Goods Act 1924 (Cth)) into the contract of carriage. The Hague Rules are expressed to apply only to the sea-carriage of the goods, that is, to the period after the goods pass the ship's rail on loading to the time they pass it on unloading. Thus the expression "from ship's rail to ship's rail". CL1 of the bill incorporated the Hague Rules (which comprise the schedule to the Sea Carriage of Goods Act 1924 (Cth)) into the contract of carriage. Article I of the Hague Rules defines "carriage of goods" to cover the period "from the time when the goods are loaded on to the time when they are discharged from the ship". A "contract of carriage" is defined to apply only to contracts of carriage covered by a Bill of Lading or any similar document of title, INSOFAR AS SUCH DOCUMENT RELATES TO THE CARRIAGE OF GOODS BY SEA ... (Emphasis added.) Article II is subtitled "Risks" and provides: Subject to the provisions of Article VI, under every contract of carriage of goods by sea, the carrier, in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods, shall be subject to the responsibilities and liabilities, and entitled to the rights and immunities hereinafter set forth. Under Art III r6: ... the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. It was submitted on behalf of the appellant that the time bar in Art III r6 does not apply to loss and damage which occurs, as it did in the present cases, after the goods have been discharged from the ship. The weight of authority favours the Hague Rules being confined in their application to the contract of carriage by sea, that is, during the time between which the goods pass from "ship's rail to ship's rail".
The decision of Kamil is therefore authority for the applicability of the Hague Rules only from "ship's rail to ship's rail". Therefore, in the absence of any clause in the Bill of Lading in the current case which provides otherwise, the time bar in the Hague Rules would not apply over the time bar in the Bill of Lading, in the current case, to damages caused during delivery by land to the plaintiff's premises in Belrose. I consider that the terms of the Bill of Lading in the current case do not provide for the Hague Rules to apply beyond the carriage of goods at sea, or for the Hague Rules to apply post-discharge from the ship. Therefore the time bar in the Hague Rules does not apply in the current matter. This is supported by the terms of the time bar in the Bill of Lading, as discussed further below.
I have considered whether, upon construction of the Bill of Lading, the Hague Visby rules time bar applies instead of the time bar clause in the Bill of Lading, in this case. The Hague Visby Rules (which are incorporated into domestic law by the Carriage of Goods by Sea Act 1991 (Cth) provide for a 12 month time bar, - see Schedule 1A to 1991 Act, at Article 3, clause 6) whereas the Bill of Lading in this case provided for a nine month time bar. There is authority directly on point. The case of China Ocean Shipping Co Ltd V Chellaram & Co Ltd (1991) 28 NSWLR 354 ("China Shipping case"), involved a case where the Bill of Lading provided for a nine month time bar, but the Hague Rules provide for a one year time bar. The Bill of Lading time bar clause in the case before the NSW Court of Appeal, provided, cl10(2): 2)Subject to sub-clause (3) below, the Carrier shall be discharged of all liabilities under this Bill of Lading unless suit is brought and written notice thereof given to the Carrier within nine months after delivery of the goods. In the case of total loss of the goods the period shall begin to run two months after the goods have been received for transportation.
In consideration of the applicability of the specific term in the Bill of Lading, in the context of the general term in the Hague Visby Rules, Chief Justice Gleeson (with whom Justice Samuels agreed on this issue) stated at page 363: So far as possible, cl 7 of the bill of lading,which incorporates the Hague Rules, and cl 10, which deals with the time bar, must be read together and in such a way as to avoid repugnancy. There are two possible ways of satisfying this requirement, both of which lead in the present case to the same result. One way is to treat cl 10 as a special provision dealing with time bars, and to allow it to prevail over the more general provision incorporating the Hague Rules, applying the maxim generalia specialibus non derogant: cf Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat & Livestock Corporation (No 2) (1980) 44 FLR 555; 29 ALR 333. Another is to read the bill of lading in the light of art VII of the Hague Rules and to treat cl 10 as a provision included to deal with events prior to loading or after discharge. My preference is for the former line of reasoning. The latter is difficult to reconcile with the language of cl 10.However, whichever line is adopted the result in this case is the same. Whatever arguments there might be otherwise about the scope of the Hague Rules, where they are incorporated by reference into a contract which also contains a provision dealing specifically and somewhat differently with time bars and which deals with that subject in a manner that clearly operates after discharge and up to delivery then the arguments about the scope of art III,r 6 become irrelevant. It should be added that cl 6 of the bill of lading, by defining the carrier's period of responsibility as a time extending up to delivery, eliminates the possibility of an argument that cl 10, as a matter of construction, ceases to have effect after discharge.
The China Shipping case is authority for the proposition that if the Bill of Lading has a specific term providing for a specific time bar, then the more general provisions of the Hague Visby Rules will not override the term. I note that in the current matter, as in the Bill of Lading in the China Shipping case, the Bill of Lading also specifically refers to the Hague Visby Rules and their application to carriage by sea or inland waterways (refer clause 7 of Bill of Lading). I also observe that in the current matter, both clause 17 and clause 6 of the Bill of Lading also applied to the carrier's responsibility as extending up to delivery (see for example cl 6(b)); and as set out above in these Reasons for Decision the Bill of Lading applied to delivery to the plaintiff's premises in Belrose. The terms of the Bill of Lading are clear as to the non-applicability of the Hague Rules to the carriage after discharge from the ship, and as to the nine month time bar. Accordingly on construction of the clauses in the Bill of Lading, and having regard to the reasoning in the China Shipping case, I am satisfied that the Hague Visby rules time bar did not apply instead of the Bill of Lading Time bar, given the specific terms of the Bill of Lading.
For all the above stated reasons I am not of the view that the time bar in the Hague Visby rules applied in the current matter, in lieu of the time bar clause in the Bill of Lading.

Negligence/Recklessness claims

I note the terms of the Bill of Lading, given the findings made above, operate to limit liability in negligence. The time bar also applies to preclude proceedings in negligence once the time bar elapsed, as it has in this case. I am satisfied given that the time bar clause applies to the benefit of all defendants, as detailed above, that the plaintiff cannot proceed with the negligence claim. As such I do not need to determine all the arguments in relation to the Civil Liability Act and negligence/recklessness.
For completeness I note that if the 2017 Savino Australia contract was the applicable contract, the liability limitation clauses may not apply to a finding of damage due to recklessness, however the time bar clause would continue to have application. Without determining whether the plaintiff's claim of recklessness would succeed, I note my finding that the time bar in the 2017 contract, coupled with the clause 23 Himalaya clause, would also operate to prevent the plaintiff's claim, as it is outside the nine month period. Given the findings I have made in relation to the time bar, then I do not need to further consider and determine the recklessness issue.

Can FRF rely on the indemnity in its contract with Savino?

Given the clear terms of the indemnity in the FRF Couriers - Savino Australia contract (set out above) then I find that FRF Couriers could rely on the indemnity clause, so that Savino Australia would indemnify FRF Couriers for any damages caused to the goods by FRF Couriers or it's subcontractors (in this case Dotrans/Mr Do). The words of the indemnity clause are clear and unambiguous and they would entitle FRF Couriers to be indemnified by Savino Australia. I will not spend further time on this issue given the clear words of the contractual term of indemnity. I make this finding for the purposes of determining the cross-claim. Given my findings that there is no liability, because of the Himalaya clauses, for the second defendant, FRF Couriers, and also the third/fourth defendant, then the question of the indemnity does not arise. However if I had found FRF Couriers liable for damage then I make clear that the second defendant would have succeeded on its cross claim on the basis of the indemnity clause.

Is there title in the goods in the plaintiff?

It is concerning that in litigation seeking an award of damages, which requires proof of loss, that the plaintiff has not provided evidence to prove that it paid the invoice issued by Anfim. This is a concern given the terms on the invoice document, that ownership remains Anfim's until payment is received. I also note that the 2017 contract provides for 30 day payment terms, and indeed the invoice issued by Savino Australia, of 12 February 2018, gives a payment date of mid-March 2018, which is after the date of the loss claimed. No evidence has been led that any of these invoices were paid. I suspect this is an oversight in the evidence of the plaintiff. I am asked to draw the inference from the invoice and all the communications asserting the amount lost, that this loss was actually occasioned. Given the findings of fact I have made in this matter, I have decided not to make a finding that loss was not made out by the plaintiff, and to accept the inference as to the invoice having been paid.

Is there an account stated?

This is a case where the plaintiff asserts an amount in damages, being damage to goods, and the alleged damages claim was investigated in a survey report by NTI, the plaintiff's insurer.
The plaintiff submits that there is an account stated, submitting that the debt was admitted. The plaintiff submits: Account stated In Court Forms, Precedents & Pleadings NSW (Butterworths), the authors make the following comments about an action on an account stated: "An action upon accounts stated lies when a defendant absolutely acknowledges to a plaintiff that a debt of a certain sum is due and payable by the defendant to the plaintiff. An account stated may arise in two ways. First, the plaintiff and the defendant may, through their dealings with each other, have claims against each other. In such a case it is open to the parties to agree to set their accounts off against each other leaving one party to pay the balance to the other. An arrangement of that type is in the nature of a compromise in which the mutual promises to go through the set-off process and abide by the result constitute a fresh consideration. Accordingly, the result of the set-off process is binding on the parties: see Precedent 380.80 - Claim on account stated where the plaintiff and the defendant have agreed to set off their demands against each other. In the absence of such an arrangement, an acknowledgment by a defendant that a sum is owing to the plaintiff will amount to a promise not supported by consideration. In this second type of account stated, the acknowledgment is not regarded as absolutely binding but is regarded as sufficient to support an action for accounts stated in which the acknowledgment is treated as prima facie evidence of indebtedness. It is open to a defendant in such a case to contest the account stated. The defendant could assert, for example, that the account was stated in respect of a debt void for illegality or one for which the consideration had failed. However, it seems that where the relevant debt arises under a contract which is merely unenforceable due to a failure to comply with a formal statutory requirement, such as a Statute of Frauds provision, an account stated will lie in respect of such debt. This second type of account stated is often pleaded as an alternative count to an action founded on a contract." The current state of the law in respect of a claim for money due on an account stated was the subject of consideration by the NSW Supreme Court in Webster v Strang [2018] NSWSC 495. In that decision, Kunc J made the following observations (at [245] to [246]) in respect of that form of an action for money due on an account stated where an admission is so framed as to be merely an acknowledgement of indebtedness, in which case although it supplies evidence of the debt, that evidence may be rebutted by proof that no debt in fact existed: "In the case of this form of account stated, the first requirement is the existence of an admission or acknowledgement by A to B that A owes a certain amount of money to B. The specific question which arose for determination in Lewis v Wilson was whether that admission needed to be absolute and unqualified. It was in that context that Sperling J reviewed the authorities and held that a "bare" admission was sufficient, even if qualified by a condition or reservation, provided that it was an admission or acknowledgement of a sum certain (at 232). The consequence of the existence of a "mere admission of liability" is to give rise to a cause of action in B against A for the admitted amount: Drury v Dulhunty (1921) 21 SR (NSW) 514 at 520 per Ferguson J. Here, the Acknowledgement plainly satisfies the requirements of an acknowledgement of indebtedness for a sum certain. Secondly, once B has established that an admission or acknowledgement has been made, the burden of proof is then cast upon A to rebut the facts on which the admission is predicated: see Lewis v Wilson at 233; see also Burmester v Hogarth (1843) 11 M & W 97 at 101; 152 ER 730, per Parke B; Camillo Tank Steamship Co Ltd v Alexandria Engineering Works (1921) 38 TLR 134 at 141, per Viscount Finlay, 143, per Viscount Cave; Lockyer v Macready [1965] NSWR 801 at 805 per Brereton J; (1965) 66 SR (NSW) 369. It follows from my factual findings that the Acknowledgement has not been rebutted by proof that no debt in fact existed. Accordingly, I find that the defendants' claim in debt on an account stated succeeds."
The first defendant submits: Account stated Again, it is important to start with the amended statement of claim. Paragraph 13 says On or about 2 March 2018 and 29 November 2018 admissions were made by the First Defendant to the effect that it: Is liable for the loss that is claimed by the Plaintiff at paragraph 23 below; Acknowledged its indebtedness to the Plaintiff; and Would pay the account stated between the Plaintiff and the First Defendant. The first point is that this is a very narrow claim. The 'admission' must be in either the 2 March 2018 e-mail or the 29 November 2018 e-mail. Before embarking on an analysis of the e-mails, it is important to state the law. The law is well summarised in Bullen & Leake, Precedents of Pleadings, 13th ed (1990) at 7, "For the claim to an account stated to lie there must be an absolute acknowledgment (or admission) made by the defendant (or his agent) to the plaintiff (or his agent) of a debt (or a sum) due from the defendant to the plaintiff and payable at the time of action brought" The issue is that the admission would have to be from 1) Savino Australia, to 2) Espresso Company, 3) for precisely $52,274.12 (i.e. the Amended Statement of Claim amount) i.e. the absolute acknowledgement (or what is sometimes referred to the specific acknowledgment of the amount of indebtedness), 4) which was due to the plaintiff at the time the action was brought. (The plaintiff does not appear to dispute that these are the elements.) Items 1 and 2 are made out (i.e. a communication went from Savino Australia to Espresso Company). Items 3 and 4 are not made out (i.e. there is no admission). Two statements are said to give rise to an account stated. The first is in an e-mail from a business development manager of Savino Australia, Ms Daniele Rea, who says in an e-mail dated 2 March 2018 I am so sorry… this is not the service that we've been providing to your organisation… Nick the insurance will be involved in the matter, we'll send you shortly a letter you will need to lodge a formal intent to claim. There is no acknowledgement of any specified sum, and no acknowledgment of the liability being due and payable by Savino (ever). In fact, it is really just an apology and an invitation to make a claim that will be assessed by Nick from the insurance company. In any event, an apology (though not itself inadmissible) cannot be used to prove liability: Civil Liability Act s 69 (1) An apology made by or on behalf of a person in connection with any matter alleged to have been caused by the person: (a) does not constitute an express or implied admission of fault or liability by the person in connection with that matter, and (b) is not relevant to the determination of fault or liability in connection with that matter. (2) Evidence of an apology made by or on behalf of a person in connection with any matter alleged to have been caused by the person is not admissible in any civil proceedings as evidence of the fault or liability of the person in connection with that matter. The second statement is from Rhonda Atkinson, a client services person from Savino Australia, who said by e-mail on 29 November 2018, In addition to my response yesterday we have addressed this matter with FRF Couriers, compensation will take a few days to process. We will monitor and keep you updated within the coming days. Again, there is no admission that a specified sum is due (whether 'compensation' is a reference to the amount claimed in letters of demand, the ~USD$1900 in Cl 9.3 of the Savino Australia contract, the US $1000 in the Savino Italy contract or something else is entirely unclear). There is also no admission as to a due date for payment. In fact, what this e-mail is, is a confirmation that Savino blamed FRF, were 'addressing' the matter with them i.e. were chasing FRF to pay compensation, and were promising their customer to update them once that enquiry progressed. This is confirmed by the letter of demand that Savino sent to FRF on 29 November 20181 demanding payment within 7 days.
In reply the plaintiff submits: Account stated 61. The First Defendant's written submissions (at [78]), relying on the 13th edition (1990) of Bullen & Leake's Precedents of Pleadings, suggest that the Australian law of an account stated requires an absolute acknowledgement by the First Defendant that a ebt in the precise amount $52,274.12 was due. The Court should reject that submission. 62. In Webster v Strong [2018] NSWSC 495, cited by the Plaintiff in its earlier submissions, the court stated (at [243]): "In essence, the parties agree that the decision of Lewis v Wilson remains an accurate statement of the law to be applied in this area (see especially at 229-230). 63. In Lewis v Wilson (1997) 42 NSWLR 228, at pages 231C-232E, the Court considered earlier authorities on what constituted an acknowledgment under Australian law and discussed the content of the 13th edition (1990) of Bullen & Leake21 on which the First Defendant relies: "In Taylor v Nicholls {1876) 1 CPD 242, the statement 11 will call at your office in the early port of next week, ...and hope to make some satisfactory arrangement for the payment of Mr Taylor's claim' was held to be a sufficient admission to support an account stated. "In Wheaton v Macgeorge (1876) 10 SALR 29, the defendant's statement 1 hove not a cheque with me, or I would pay you at once' was enough to constitute on account stated. There was nothing about the admission having to be absolute. 'The word 'absolute' or its equivalent is not to be found in the Australian authorities on the topic. I return to the passage from Bullen & Leake & Jacob's, Precedents of Pleadings, to which I referred. As I have shown, of the two decisions cited by the authors as support for the stated requirements of the cause of action, Hughes v Thorpe does not mention that the admission must be absolute and Day v William Hill (Park Lane) Ld [1949] 1 KB 632 merely picks up substantially the same formulation from an earlier edition of the same work. I conclude that the distinction between an absolute admission or acknowledgment of a debt and a bare admission or acknowledgment of a debt is one without a difference. It seems to me that all that has been intended by those Judges who have used the expression or any similar expression is that there must be an admission or acknowledgment of a debt for a sum certain. Otherwise, there could be no basis for a judgment on the cause of action requiring the defendant to pay a specified amount. "It further appears from the authorities - as one would expect - that the certainty of the sum admitted may be established by the express terms of the admission or by other evidentiary material such as a bill that has been sent which is expressly or impliedly referred to in the admission. But, however the certainty of the amount admitted to be owing is to be established, it must be established by the admission one way or another. 64. The chain of correspondence identified by the Plaintiff (at [12] of its earlier written submissions) evidences an admission or acknowledgement by the First Defendant of the specific amount of $52,274.00 that was expressly stated in the correspondence from SRB Legal dated 15 October 2018. The chain concludes with the correspondence of 29 November 2018 from Ms Atkinson, an employee of the First Defendant, stating that: "..we have addressed this matter with [the Second Defendant], compensation will take a few days to process." The reference to "this matter'' is plainly the subject matter of the SRB Legal letter of 15 October 2018. 65. The Court should be satisfied, on the basis of that chain of correspondence, that the parties were only ever referring to the full amount claimed by the Plaintiff, and that the First Defendant acknowledged its indebtedness for that full amount. 66. Such a finding is further supported by the evidence that the First Defendant sought to recover from the Second Defendant the value of the Goods, the freight charges, the custom charges and the disposal fees.
I note the plaintiff's reliance upon the decision of Webster v Strang; Steiner v Strang [2018] NSWSC 495 ("Webster v Strang"), as well as statements by the learned authors of the texts cited. The decision in Webster v Strang involved a dispute over an estate, between children of the deceased, with a history of complex prior litigation. The particular issue was whether there was an account stated in the context of a loan and acknowledgment of debt/obligation to repay. However, general observations were made and it is relevant to extract the summation of the law, as stated by Kunc J in Webster v Strang, at paragraphs 233-246: Debt on an account stated Defendants' submissions The defendants submitted that the decision of Sperling J in Lewis v Wilson is an accurate statement of the law in this area. In Lewis v Wilson, Sperling J held that a bare admission of a sum certain may be sufficient to found a cause of action; the ultimate question, however, is whether the debt is truly owing. The defendants refer to Sperling J's statement at 229-230 that there are two distinct forms of an action for money found to be due on an account stated. As to those two forms, at 230, his Honour quotes the remarks of Jordan CJ in Commonwealth Dairy Produce Equalisation Committee Ltd v McCabe at 401 that: "An action for money found to be due on accounts stated may take one of two forms. It is always essential in such an action that there should have been before action brought an admission by the defendant or his agent to the plaintiff or his agent that the sum claimed is due by the defendant to the plaintiff. … But this admission may be so framed as to be merely an acknowledgement of indebtedness, in which case although it supplies evidence of the debt the evidence may be rebutted by proof that no debt in fact existed. Or it may take the form of an account stated and agreed to between two parties, by which it is in effect agreed that the items on both sides shall be set-off and the balance paid. In the latter type of case, the agreement for set-off supplies good consideration for the promise to pay the amount of the balance; and the account stated is itself an agreement for valuable consideration constituting a cause of action, and not merely evidence of liability." The defendants rely upon the first form, where the admission is so framed as to be merely an acknowledgement of indebtedness, thus supplying evidence of the debt which may be rebutted by proof that no debt in fact existed. John's submissions John also referred to Lewis v Wilson as an accurate statement of the law in this area, and directed the Court's attention in particular to Sperling J's observation at 232 that: "It is also to be noted that the admission may be rebutted by other evidence. If other evidence is led, the ultimate issue is, on authority, whether the defendant is truly indebted to the plaintiff as alleged. The ultimate issue cannot be different in the absence of other evidence. Thus, it will always be a question for the court as to whether the court is persuaded that the indebtedness truly exists. … The court must decide in every case whether the admission, in terms and context, is sufficient to support the ultimate finding of indebtedness." John submits, in effect, that the Court has received John's evidence about his conversations with Dorothy, and that the Court's task is to determine in light of that evidence (if it is accepted) whether there was an underlying debt. John relied upon his evidence that he and Dorothy proceeded upon the basis either that the "loan" was something that could be forgiven, or that the Acknowledgement was simply there as a backstop to placate John's guilt towards his mother, and not to be called upon, arguing that this precluded an action in debt on an account stated. Determination An action in debt on an account stated may be categorised as a "common money count", as may an action for moneys had and received. As the defendants raised both of these counts (in the alternative) it is appropriate to make some preliminary comments about the legal foundations of such claims. The common money counts have their background in the era when the forms of action ruled what we now refer to as the law of obligations; when the writs of debt, covenant, account and assumpsit were relied upon as quasi-contractual claims: Mason, Carter and Tolhurst, Mason and Carter's Restitution Law in Australia, 3rd ed, 2016, [112]-[114]. Claims in debt on an account stated and for moneys had and received were pleading devices which, along with the other assumpsit counts, permitted the pleading of claims in general terms, with the specific details of the debt sought to be recovered left to the evidence: Mason, Carter and Tolhurst, [115], [2923]-[2924]. As Lindsay J noted in Steiner v Strang [2016] NSWSC 9, the continuing availability of these claims, and of "account stated" in particular, has been the subject of some criticism (see at [40]). In Lewis v Wilson, Sperling J considered that there were "strong reasons" for abolishing the cause of action in account stated altogether (at 233); and see also, Katelis v Adalia Pty Ltd [2002] VSC 497 at [39]; Julian Bailey, "Lewis v Wilson: Account stated rears its ugly head" (1997) 12 JCL 160. Lindsay J was of the view, however, that the present proceedings demonstrated the "continuing utility" of the common money counts which, according to his Honour, facilitate "a practical, but principled" application of the law: at [41]. His Honour noted that the availability of debt on an account stated had been confirmed at an appellate level (in Commonwealth Dairy Produce Equalisation Committee v McCabe) and that it remained part of the stock-in-trade of modern litigation: see, eg, Lewis v Lamb [2011] NSWSC 873 at [17]; Champion Homes Sales Pty Ltd v JKAM Investments Pty Ltd [2014] NSWSC 952 at [70]. There is no reason to doubt that the common money counts remain part of the common law of Australia, and the weight of authority confirms this. Recent confirmation that indebtedness on an account stated remains a basis for liability in Australian law (in addition to those authorities cited by Lindsay J) may be found in Gove Sport Fishing and Diving Charter Pty Ltd v Yeend [2017] QSC 148 at [14]-[18]; Perpetual Ltd v Myer Pty Ltd [2018] VSC 2 at [148]-[156]. In any case, in New South Wales at least, UCPR r 14.12 expressly permits the old common money counts to be used as such. In essence, the parties agree that the decision of Lewis v Wilson remains an accurate statement of the law to be applied in this area (see especially at 229-230). The defendants rely on the first form of debt on an account stated identified in Commonwealth Dairy Produce Equalisation Committee Ltd v McCabe, namely, where an admission is so framed as to be merely an acknowledgement of indebtedness, in which case although it supplies evidence of the debt the evidence may be rebutted by proof that no debt in fact existed (at 401). In the case of this form of account stated, the first requirement is the existence of an admission or acknowledgement by A to B that A owes a certain amount of money to B. The specific question which arose for determination in Lewis v Wilson was whether that admission needed to be absolute and unqualified. It was in that context that Sperling J reviewed the authorities and held that a "bare" admission was sufficient, even if qualified by a condition or reservation, provided that it was an admission or acknowledgement of a sum certain (at 232). The consequence of the existence of a "mere admission of liability" is to give rise to a cause of action in B against A for the admitted amount: Drury v Dulhunty (1921) 21 SR (NSW) 514 at 520 per Ferguson J. Here, the Acknowledgement plainly satisfies the requirements of an acknowledgement of indebtedness for a sum certain. Secondly, once B has established that an admission or acknowledgement has been made, the burden of proof is then cast upon A to rebut the facts on which the admission is predicated: see Lewis v Wilson at 233; see also Burmester v Hogarth (1843) 11 M & W 97 at 101; 152 ER 730, per Parke B; Camillo Tank Steamship Co Ltd v Alexandria Engineering Works (1921) 38 TLR 134 at 141, per Viscount Finlay, 143, per Viscount Cave; Lockyer v Macready [1965] NSWR 801 at 805 per Brereton J; (1965) 66 SR (NSW) 369. It follows from my factual findings that the Acknowledgement has not been rebutted by proof that no debt in fact existed. Accordingly, I find that the defendants' claim in debt on an account stated succeeds.
I have carefully considered the parties' submissions in the context of the evidence in the current matter and I am also guided by the reasoning in Webster v Strang set out above. The plaintiff is arguing that there was an admission of debt by the first defendant. The decision in Webster v Strang indicates that: the first requirement is the existence of an admission or acknowledgement by A to B that A owes a certain amount of money to B. The specific question which arose for determination in Lewis v Wilson was whether that admission needed to be absolute and unqualified. It was in that context that Sperling J reviewed the authorities and held that a "bare" admission was sufficient, even if qualified by a condition or reservation, provided that it was an admission or acknowledgement of a sum certain (at 232)
Therefore, the evidence needs to indicate that there is an admission of owing a certain amount of money, or acknowledgment of a sum certain (by the first defendant to the plaintiff).
I note the evidence relied upon, as to the asserted admission of debt, is, in part, some of the same evidence as was relied upon for the estoppel argument, which I have considered above in these Reasons for Decision. To the extent relevant to the account stated argument, I rely on the findings of fact I have made. In relation to estoppel, what was submitted was that there was an agreement to pay the amount, so the defendants were estopped from relying on the time bar. On the estoppel argument I found there was no statement indicating that there would be payment of the specific compensation sought by the plaintiff (as detailed above).
In relation to the question of admission of debt - to found an account stated there needs to be a clear acknowledgment/statement of the account/amount owing which is accepted, or the debt which is admitted or acknowledged. This is so whether it is an absolute acknowledgment, or a bare acknowledgment, there must be an acknowledgment of a specified sum. The communications relied upon by the plaintiff do not amount to an acknowledgement by the first defendant of an account/debt owed to the plaintiff. What they do evidence was that in response to the demands of the plaintiff, the first defendant was referring those demands to the second defendant - in effect deflecting responsibility for the claim asserted by the plaintiff in the plaintiff's correspondence. That does not amount to an admission by the first defendant to the plaintiff of a debt owed to the plaintiff by the first defendant. Further, on the important issue of whether there is an admission of a debt of a specific amount, I am not satisfied that the evidence supports a conclusion the first defendant acknowledged to the plaintiff that it owed the plaintiff the specific sum claimed by the plaintiff.
I also note that this is not a case where the plaintiff issued the first defendant an invoice for a specified amount, rather the plaintiff advised the first defendant of an amount it would claim in damages. Nor is it a case where there is evidence of agreement by the first defendant that there is a debt owed to the plaintiff in a certain amount. There is no evidence in the correspondence relied upon by the plaintiff, of an admission by the first defendant, to the plaintiff, of the first defendant owing the plaintiff a debt in a specified amount.
For the reasons detailed, the evidence in this case is not evidence of an admission of an amount owing, and as such does not support an account stated.

Judgment

For all the reasons set out above, I find that the plaintiff has not proved, on the balance of probabilities, on the evidence, it's claim. The Statement of Claim is accordingly dismissed.
Given the findings I have made on the Statement of Claim I do not need to make an order in relation to the indemnity claimed in the Cross Claim. However, for completeness I make the following order on the Cross Claim - the cross claimant succeeds against the cross-defendant in establishing the indemnity claimed in the cross-claim, but given the orders made in relation to the Statement of Claim, no further order on the cross claim is required.

ORDERS 1. The Statement of Claim is dismissed. 2. The cross-claimant succeeds against the cross-defendant in establishing the indemnity claimed in the Cross Claim, but given the orders made in relation to the Statement of Claim, no further order on the Cross Claim is required.

I will now hear from the parties on the issue of costs. Magistrate Huntsman 3 July 2020 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 August 2022

Sea Carriage of Goods Act 1924(Cth)

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