Matthew Short & Associates Pty Ltd v Riviera Marine

Matthew Short & Associates Pty Ltd v Riviera Marine - [2001] NSWCA 281 - NSWCA 2001 case summary — Zoe

Mr N C Hutley SC/Mr I G Roberts (Appellant) COUNSEL : Mr B A J Coles QC/Mr J G Duncan (First Respondent) Mr L J W Aitken/Ms S A Lovett (Second Respondent) Minter Ellison (Appellant) SOLICITORS : Anderson & Sjoquist (First Respondent) Cowley Hearne Lawyers (Second Respondent) CATCHWORDS : Bailment - Sub-bailment - Possession of goods - Liability for damage to goods - Whether existence of legal relationship of bailment - Whether existence of "possession" sufficient to create legal relationship of bailment - Whether sub-bailment existed - Where boat manufacturer contracted with a company to transport a boat to a freighter, and the company sub-contracted with a sub-contractor which negligently damaged the boat - Contracts - Construction of exclusion of liability clause - Construction of indemnification for liability clause - Where boat manufacturer contracted with a company to transport a boat to a freighter, and the company sub-contracted with a sub-contractor which negligently damaged the boat - Where contract between company and sub-contractor contained exclusion of liability and indemnification of liability clauses - Contracts - Commercial Contract - Sale of Goods - Transfer of ownership of goods - Whether plaintiff had legal ownership of goods at time that goods were damaged so that plaintiff had standing to sue - Timing of transfer of property - Intention of parties re timing of transfer - Where boat manufacturer contracted with a company to transport a boat to a freighter, and the company sub-contracted with a sub-contractor which negligently damaged the boat - Sale of Goods Act 1923 (NSW), s 23 - D Carrier's Liability Act 1967 (Qld) LEGISLATION CITED : Law Reform (Miscellaneous Provisions) Act 1946 Sale of Goods Act 1896 (Qld) Sale of Goods Act 1923 (NSW) Arcweld Constructions Pty Ltd v Smith (McInerney J, Supreme Court of Victoria, unreported, 17 September 1968) Allison v Bristol Marine Insurance Co Ltd (1875) 1 App Cas 209 Browne v Hare (1859) 4 H & N 822 Carlos Federspiel & Co SA v Charles Twigg & Co Ltd [1957] 1 Lloyd's Rep 240 Colley v Overseas Exporters [1921] 3 KB 302 Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 Emery Air Freight Corporation v Merck Sharpe & Dohme (Australia) Pty Ltd (1999) 47 NSWLR 696 Galbraith and Grant Ltd v Block [1922] 2 QB 155 CASES CITED: Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 Metaalhandel JA Magnus BV v Ardfields Transport Ltd [1988] 1 Lloyd's Rep 197 Re An Arbitration Between Shipton, Anderson & Co and Harrison Bros & Co [1915] 3 KB 676 Re Anchor Line (Henderson Brothers) Ltd [1937] Ch 1 Stock v Inglis (1884) 12 QBD 564 Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 The Pioneer Container [1994] 2 AC 324 Wait v Baker (1848) 2 Ex Ch 1 Ward (RV) Ltd v Bignall [1967] 1 QB 534 DECISION : See para 103

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1 MEAGHER JA: I agree with Heydon JA. 2 HEYDON JA: Background This is an appeal from orders made by Mahoney DCJ on 19 May 2000, after a trial on 16-17 May 2000, that there be a verdict and judgment in favour of the plaintiff/first respondent ("Riviera") against the first defendant/appellant ("Short") and the second defendant/second respondent "(Campbell") in the sum of $112,632.81 and various related orders. The sum of money reflected the cost (with interest) of repairing a motor cruiser manufactured by Riviera and damaged while being moved on a truck owned by Campbell pursuant to a contract between Campbell and Short. 3 Riviera carried on business at Labrador, Queensland, as a manufacturer of motor cruisers. Many of its motor cruisers were exported through the Port of Botany in Sydney to overseas small ship brokers. One of these brokers was Mr Richard Boland, who conducted his business under the name Richard Boland Yacht Sales in California. 4 Where motor cruisers manufactured by Riviera were exported through the Port of Botany, a regular pattern of conduct operated. Riviera would procure Short to book space on a freighter leaving the Port of Botany. Riviera, using its own semitrailer driven by an employee, would transport the motor cruiser to a parking area some hundreds of metres from the gateway of the Port of Botany. By reason of industrial conditions within the Port of Botany, it was not open to Riviera to take the motor cruiser into the Port of Botany alongside the freighter which was to transport the motor cruiser overseas except at prohibitive expense. However, Campbell was permitted to use its low-loader and driver to transport the cruiser onto the wharf alongside the freighter much more cheaply. Hence Riviera would procure Short to arrange for a mobile crane operator (in the present instance Botany Cranes) to be at the parking area together with a low-loader and driver (almost invariably supplied by Campbell, as it was in the present instance). The mobile crane would unload the cradle from the truck, unload the cruiser from the truck and position it in the cradle, place the cruiser and cradle on a flat rack (which is a shipping container sized steel base), and then lift the cruiser, cradle and flat rack onto the low-loader. Short would provide the driver of the low-loader with an "export receivable advice" ("ERA"), in triplicate: this was needed so that the low-loader with its load could pass through the gate and onto the wharf alongside the freighter. 5 By a document dated 12 August 1996, Short as "Consignor" and Campbell as "Carrier" agreed on Conditions of Carriage in relation to goods transported from the parking area to the freighter from time to time. Clause 3(1) provided: "Subject to cll 18 and 20 hereof the carrier shall not be under any liability whether in tort or in contract for any loss of or damage to or misdelivery, delay in delivery, concealed damage, deterioration, contamination, evaporation, non-delivery of goods held in its care, custody or control, or any consequential loss arising therefrom howsoever caused including but not limited to any negligence or breach of contract by the carrier."

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Clause 21 provided: "The Consignor will indemnify and keep indemnified the carrier or any other subcontractor, company, firm, person or body through whose hands the goods may pass against all claims for loss, damage, injury to any property or person arising from the carriage of the goods or the noncompliance with any special conditions and any laws, by-laws and regulations including but not being limited to those set out in clause 2 hereof and without limiting the generality of the foregoing will pay on demand to the carrier the full value of any other goods carried by or for the carrier and destroyed or damaged as a result of the carriage of the goods of the consignor or of any noncompliance as aforesaid." 6 In mid 1997 Mr and Mrs Bill Smith, residents of the United States of America, caused Mr Boland to procure Riviera to build a motor cruiser conforming to particular specifications stipulated by the Smiths. That motor cruiser came to be known as 34/18. The relevant order, in the form of a "Build List" dated 25 June 1997, was signed by Mr Boland on 29 June 1997. Dealings between Riviera and Short on the one hand and Mr Boland on the other, like dealings between Riviera and Short, followed a standard pattern to be examined more closely later. Events in relation to the performance of the 34/18 contract followed that standard pattern until 34/18 was damaged as described below. 7 On 3 July 1997 Mr Short informed Mr Boland that one of the options for shipping 34/18 to California would be to book space on the "Direct Currawong", leaving the Port of Botany on 12 August 1997. 8 On 4 July 1997 Mr Short informed Mr Boland, as was the fact, that he had booked 34/18 to be shipped on the "Direct Currawong" leaving on 12 August 1997. 9 On 16 July 1997 Mr Short again advised Mr Boland by fax that 34/18, together with another motor cruiser, was booked to be shipped on board the "Direct Currawong", the estimated departure date still being 12 August 1997. In some respects the terms of that fax are important: "Further to your fax of this afternoon, please find hereunder indicative costs to cover the 2 shipments as requested. (Riviera will be including transport to wharf Sydney/crane etc on their invoice as F.O.B.) Ocean freight A$13975/R34 on 40 ft fr A$19180/R43 USA terminals + US$380/40 ft flat +US$4050/R43 (Flat) (US$1250/M3) Surveyor A$450 A$450

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Marine insurance (if required from US) additional upon request. Both boats booked ex port Sydney per (ANZDL) Direct Currawong V322N ETD 12/8/97 with ETA 1/9/97 Oakland (water discharge)." 10 On 4 August 1997 Mr Short contacted Botany Cranes and requested them to supply a 28 tonne crane at 6am on 12 August 1997 at the parking area. On the same day he contacted Campbell and requested it to arrange for a flat rack to be present at 7am on 12 August 1997. 11 On 8 August 1997 Mr Boland arranged for funds for US$152,842.57, being the purchase price of 34/18, to be paid into an American bank account in the name of Riviera. 12 On 10 August 1997, 34/18 was loaded onto Riviera's truck at Labrador. Shortly before, Mr C A Jones, Production Manager of Riviera, had informed Mr Matthew Short as to when 34/18 would be leaving Labrador. 13 Shortly after 6am on 12 August 1997, a Riviera truck arrived at the parking area at the Port of Botany with 34/18. The Botany Cranes mobile crane lifted 34/18 from the truck and placed it in the cradle. Mr Short then assisted Mr Barry-Cotter (a director of Riviera) and Mr Andrews (the employee of Riviera who had driven the truck from Labrador) to secure 34/18 to the cradle. The driver of the Campbell truck then positioned it close to 34/18. The crane then lifted the cruiser onto the flat rack, and Messrs Short, Barry-Cotter and Andrews lashed the cradle to the flat rack. These operations were complete by 7.40am. 14 Mr Short then completed three copies of an ERA in relation to 34/18 (parts of which had already been filled in by Campbell) and gave them to the Campbell truck driver. (The usual procedure was for the three copies to be given to a wharf representative; one signed copy would be returned, and this would be sent by Campbell to Short as proof of delivery). The Campbell truck driver then drove off in the direction of the freighter. 15 The driver negligently drove the truck beneath an archway. The superstructure of 34/18 struck a large metallic sign attached to the archway. This caused considerable damage to 34/18. 16 At about 8am an employee of Campbell told Mr Short of the accident. Mr Short arranged for Botany Cranes to bring its crane back so as to avoid disruption to traffic coming into the terminal at the Port of Botany. Short paid for the services of Botany Cranes in this respect and did not seek to claim the cost either from Riviera or Campbell. 17 Mr Boland and the Smiths were advised of the damage to 34/18. The Smiths were irate and said they did not want the cruiser to have repaired items on it, only new ones. It was decided not to supply Mr Boland with 34/18, but with a replacement cruiser called 34/14. This was shipped from Sydney on 2 September 1997.

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(d) the First defendant would give all necessary briefings and instructions to the Second Defendant so as to meet the First Defendant's obligation under (b) and (c) above including, but not limited to, briefing and instructing drivers of the Second Defendant's trucks to drive around the overhead road sign. 10. In the premises, the First Defendant owed a duty to the Plaintiff to deal with the Cruiser safely and not allow the Cruiser to be dealt with so as to endanger it or the Plaintiff's interest therein. 12. Pursuant to the Agreement, on 12 August 1997, the Plaintiff caused the Cruiser to be delivered to the First Defendant and the First Defendant accepted the Cruiser accordingly by removing the Cruiser from the vehicle of the Plaintiff. 17. In the premises, the First Defendant is in breach of the terms of the Agreement alleged in sub-paragraphs 9(b) and 9(c) and 9(d). 18. Further, and in the alternative, the First Defendant is in breach of the duty alleged in paragraph 10." 19 In short, paragraph 8 alleged a contract of bailment; paragraph 9 alleged four implied terms in that contract; and paragraph 10 alleged that "In the premises" - i.e. the terms of the contract of bailment - Short owed a duty not to allow the cruiser to be dealt with so as to endanger it. 20 Short's Defence put in issue the material allegations and denied any negligence on its part. 21 As against Campbell, Riviera claimed damages by reason of the following allegations: "11. Pursuant to the Agreement, on or about 4 August 1997, it was agreed ('the Sub-Agreement') between the First Defendant and the Second Defendant that the First Defendant would deliver to the Second Defendant the Cruiser to be transported from the point of delivery to the wharf at Port Botany. Particulars The Sub-Agreement was partly express and partly implied. The express part of the Sub-Agreement consists of a facsimile letter dated 4 August 1997 from the First Defendant to the Second Defendant and the documents referred to therein. To the extent that the Agreement was implied, the implication arises from: (a) the previous course of dealing between the First Defendant and the Second Defendant; and

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(b) that it did not at any time obtain physical possession of the cruiser, or that if it did, at most it obtained possession for a brief period which began when or soon after Botany Cranes lifted 34/18 off the Riviera launch and ended when or just before Botany Cranes lifted 34/18 onto the Campbell low-loader. 33 The first limb of the argument rested on the proposition that the only engagement upon which Short entered was to arrange for others to effectuate the movement of 34/18 from Riviera's truck to Campbell's low-loader. Once 34/18 had moved onto Campbell's low-loader, Campbell became bailee and it was open to the owner of 34/18 to sue Campbell for breach of its duties as bailee. Short submitted that the finding that it assisted with the lashing of the cruiser ignored evidence that it was Riviera whom Short was assisting. Short submitted that it did not at any time take physical possession of the cruiser. Physical possession of the cruiser changed a number of times during the transfer from Riviera's truck to the time of the accident as follows: Riviera was in possession while it carried the cruiser on its own semitrailer to the parking area; during the operation in which the mobile crane lifted the cruiser from the semitrailer to the ground and from the ground to Campbell's low-loader the crane operator had possession; when the cruiser was placed by the crane operator on Campbell's low-loader, possession passed to Campbell. 34 The second limb of the argument rested on the proposition that if, in the interval between the two periods when the crane was in operation and Botany Cranes had possession, Short had possession, that was a period of possession which was "fleeting", merely an "accidental" part of carrying out the contractual engagement to arrange the movement of 34/18, but, more importantly, a period which terminated before Campbell obtained possession (not as sub-bailee, but as bailee) and caused the damage. It submitted that the fact that it played a role in complying with procedures within the Port of Botany by issuing an ERA in no way established that it took possession of 34/18. Short also submitted that the ERA was not a document of title, and that the handing of that document to Campbell's driver was consistent with its role as a forwarding agent engaged to arrange carriage only. 35 Short further submitted that the trial judge fell into error by analysing Riviera's case against Short as a case based on "contract" (which failed with the rejection of the implied term as pleaded in paragraph 9(c)-(d) of the Amended Statement of Claim) and a distinct "claim in bailment". Short submitted that there was no distinct claim in bailment. The contract case alleged a "contract of bailment"; it alleged no more than an agreement by which Short "would arrange for the loading of" 34/18 on the "Direct Currawong"; that allegation was in effect demurrable because it did not allege a passing of possession; and there was no separate claim in bailment which did. 36 Riviera answered these submissions in two broad ways. First, it defended the trial judge's conclusion that Short, by reason of what it agreed to do and did on 12 August 1997, had possession. Secondly, it contended that it had engaged Short "to procure the carriage of the goods, not simply to arrange for other people to do that, albeit it on terms that the actual carriage was to be performed by others". Riviera cited Emery Air Freight Corporation v Merck Sharpe & Dohme (Australia) Pty Ltd (1999) 47 NSWLR 696 at [84]-[86] per Sheller JA. Riviera said that Short's true contractual obligation was not to organise others to transport the goods, but itself to transport them, albeit by employing sub-contractors. Riviera did accept that the Amended Statement of Claim referred to "arranging" and said "if one were held to that it would be a difficult matter". Riviera pointed to the following facts: there was no written agreement between Riviera and Short, Riviera did not seek to control which sub-contractors Short engaged or what they did, Short in fact selected and engaged the sub-contractors in its own name and did not advise Riviera of the terms of engagement. 37 Riviera further submitted: "It is apparent that Short contracted as principal with the supplier of the crane. The crane invoices were addressed to Short and paid by Short. Short did not on-charge Riviera for the face value of the crane invoices; Short did not attach copies of the crane invoices to Short's invoices to Riviera … ."

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Riviera submitted that in this case it was Short's duty to take all reasonable precautions to convey the goods, and Short had entrusted it to Campbell. He submitted that that proposition was supported by Metaalhandel JA Magnus BV v Ardfields Transport Ltd [1988] 1 Lloyd's Rep 197 at 202-203; Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 at 229 and 242-3 and Palmer, "Quasi-Bailment and Possessory Title" (1995) 3 Tort L Rev 186 at 192-196. 43 The first of Riviera's two contentions that Short was liable - that accepted by the trial judge, namely that Short had possession by reason of the considerations referred to by the trial judge - is erroneous. The considerations relied on by the trial judge and Riviera did not point to Short having possession as distinct from having some other relationship with 34/18. The presence of Mr Short and the fact that he may have supervised the process of unloading and loading do not establish that he had possession of 34/18. While Mr Short may have ensured that the crane driver picked up the correct cruiser and re-loaded it onto the correct low-loader, the only period when he was in control, if he was ever in control, was while the cruiser was being strapped to the cradle. Even if he had possession during that interval, it does not follow that he had it earlier or later, nor that he had it when the Campbell driver caused the damage. Indeed it is not even clear whether he was in control in that interval, since Mr Andrews and Mr Barry-Cotter were also participating in the work. Mr Short's conduct after the accident does not establish that he had possession. That conduct was no more than a sensible attempt to overcome the consequences of the crisis caused by Campbell's driver: for this a crane was necessary, and it was Short which had been in contact with Botany Cranes. His failure to charge Riviera for the work is not significant in determining who had possession: it is capable of being explained as an attempt to preserve Riviera's commercial goodwill. 44 The second contention advanced by Riviera for Short being liable - that Short had not contracted with Riviera to arrange for others to carry the goods, but had contracted to procure that the goods would be carried - should be rejected. It was not pleaded by Riviera. Indeed Riviera pleaded a contrary case, which the trial judge accepted, that Riviera and Short agreed that Short "would arrange for the loading of" 34/18. Riviera in substance admitted this, instead urging that the pleadings be approached "with some degree of tolerance". Counsel for Short submitted that had the new case been pleaded, evidence might have been called at the trial which might possibly have answered it. He did not point to any specific evidence of that type, as distinct from arguments available on the existing evidence, but that is not uncommon when a fresh point is raised on appeal. Counsel for Short on the appeal had not appeared at the trial. It is entirely possible that had the new case been pleaded the factual circumstances relevant to its acceptance or rejection would have been more fully investigated. In answer to this, Riviera submitted that from a reference by the trial judge to Arcweld Constructions Pty Ltd v Smith, Metaalhandel JA Magnus BV v Ardfields Transport Co Pty Ltd and Hobbs v Petersham Transport Co Pty Ltd, together with the article by Palmer in 3 Torts L Rev 186, it could be inferred that the argument now advanced on appeal had been advanced at the trial. Speaking of the cases the trial judge said: "It seems to me that the difficulties I encounter in seeking to reconcile the various judgments … with respect to various pronouncements on the necessity for there being a possession before there can be a bailment, do not arise in this case." Since the trial judge treated the cases as being relevant to the issue of whether possession is necessary for bailment and not as supporting the submission now advanced, the citations do not point clearly to the proposition that the new case, which was not advanced in the pleadings, was in fact advanced as part of the trial. In any event, the citation of authorities in final address, after the evidence had been closed, does not necessarily point to the relevant issue as having been a live one before and at the time when evidence was tendered. Since it is possible that the new case might have been met by evidence, it cannot be advanced on appeal: Suttor v Gundowda Pty Ltd (1950) 81 CLR 418. 45 Accordingly, assuming Riviera to have been the owner of 34/18 at the time of the accident, the legal relationship between Riviera and Short at the time of the accident was not that of bailor and bailee. Campbell was bailee. Since Campbell was an apparently competent carrier, Short was not in breach of any duty to Riviera, and Riviera's case against it should have been dismissed. That leaves its potential liability to indemnify Campbell if Riviera succeeds against Campbell, which turns on the application of clause 21 of the Conditions of Carriage.

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Riviera's Case Against Campbell: Who Owned 34/18 When The Accident Happened? 46 If this question is answered "Mr Boland", then Riviera lacked any title to sue, and the Amended Statement of Claim and the Cross Claims should have been dismissed independently of the outcome on any other question. If this question is answered "Riviera", then Riviera was entitled to judgment against Campbell, subject to any other defence of Campbell. The trial judge answered the question: "Riviera". He said (Red 32O-34D): "… 34/14 was fitted out to the Smiths' specifications and shipped out of Sydney on 2 September 1997 on board the freighter Direct Eagle. 34/18 was repaired and sold to a retail subsidiary of Riviera. Short had not invoiced Riviera in respect of services associated with the abortive shipping of 34/18 and Riviera had not raised an invoice for it against Boland. After Direct Eagle sailed from Sydney the usual documentation and keys to 34/14 was sent to Boland. The invoice for that transaction contains the following details: INVOICE NO: 1455; DATE: September 5 1997; BOAT NUMBER: 34/14; DATE SHIPPED: 02/09/97; SHIPPED VIA: Direct Eagle; F.O.B. POINT: Sydney; TERMS: COD. Another one of the usual documents sent to Boland after Direct Eagle had sailed from Sydney is entitled: 'MANUFACTURER'S STATEMENT OF ORIGIN TO A BOAT OR MOTOR". The presently relevant portion of the document reads: 'The undersigned CORPORATION' (Riviera) 'hereby certifies that the new boat or motor described below, the property of said CORPORATION, has been transferred this 2nd day of September 1997 on Invoice No. 34/14 to RICHARD BOLLAND YACHT SALES…'. Short invoiced Riviera for $2318.50 in respect of its services associated with the shipping of 34/14. The presently relevant details of that invoice, dated 2 September 1997, which covered 'CRANE, F.I.D., WHARFAGE/AGENCY, CARTAGE/DELIVERY, 9 HOURS AT WHARF', read: 'RIVIERA 34/4 RICHARD BOLAND EX SYDNEY TO OAKLAND DIRECT EAGLE ETD 2-9-97 ON 40FT FLAT RACK'. INFERENCE AVAILABLE As there is no suggestion in the evidence that Short ever invoiced Riviera in advance of the services performed the irresistible inference, which I draw, from the usual course of dealings over the years between Riviera and Boland and from the details of the documents extracted and reproduced above is that 34/14 was swung 'over the rail' of Direct Eagle on 2 September 1997, and that both Riviera and Boland were of the one mind: namely that Riviera maintained ownership of 34/14 until it had gone 'over the rail' on 2 September 1997. Such an inference is consistent with one of the essential elements of an FOB contract, which is what both Riviera and Boland each understood they had entered."

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At one stage during the appeal Riviera suggested that this had caused Campbell to assume the burden of proving that the property passed to Mr Boland before the accident, but this appears unsound and the suggestion was indeed withdrawn. In consequence the onus lay on Riviera to rebut any relevant presumption arising under the applicable law of sale of goods. 49 The parties and the trial judge assumed the Sales of Goods Act 1923 (NSW) to be applicable. Since no plea of any applicable non-Australian law was advanced, and no proof of it was offered, and since the only other possible provision was the Sale of Goods Act 1896 (Qld), the provisions of which are not materially different from those of the NSW Act, there is no reason to treat the approach of the parties and the trial judge as wrong. 50 The Sale of Goods Act 1923 provides: "6. (1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price. There may be a contract of sale between one part owner and another. (3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale; but where the transfer of the property in the goods is to take place at a future time, or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled, subject to which the property in the goods is to be transferred. 21. Where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained. 22. (1) Where there is a contract for sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. (2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties, and the circumstances of the case. 23. Unless a different intention appears, the following are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer. Rule 1. Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery, or both, be postponed. Rule 2. Where there is a contract for the sale of specific goods, and the seller is bound to do something to the goods for the purpose of putting them in a deliverable state, the property does not pass until such thing be done and the buyer has notice thereof. Rule 3. Where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh measure test or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing be done and the buyer has notice thereof. Rule 4. Where goods are delivered to the buyer on approval or on 'sale or return' or other similar terms, the property therein passes to the buyer: (a) when he signifies his approval or acceptance to the seller, or does any other act adopting the transaction; (b) if he does not signify his approval or acceptance to the seller, but retains the gods without giving notice of rejection, then if a time has been fixed for the return of the goods, on the expiration of such time, and if no time has been fixed, on the expiration of a reasonable time. What is a reasonable time is a question of fact. Rule 5. (1) Where there is a contract for the sale of unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally appropriated to the contract either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made. (2) Where in pursuance of the contract the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract. 25. Unless otherwise agreed, the goods remain at the seller's risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyer's risk, whether delivery has been made or not: Provided that where delivery has been delayed through the fault of either buyer or seller, the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault: Provided also that nothing in this section shall affect the duties or liabilities of either seller or buyer as a bailee of the goods of the other party. 35. (1) Where in pursuance of a contract of sale the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, is prima facie deemed to be a delivery of the goods to the buyer. (2) Unless otherwise authorised by the buyer, the seller must make such contract with the carrier on behalf of the buyer as may be reasonable, having regard to the nature of the goods and the other circumstances of the case. If the seller omit[s] so to do, and the goods are lost or damages in course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself, or may hold the seller responsible in damages. (3) Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit under circumstances in which it is usual to insure, the seller must give such notice to the buyer as may enable him to insure them during their sea transit, and if the seller fails to do so, the goods shall be deemed to be at his risk during such sea transit."

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(c) a Bill of Lading provided by the owner of the freighter to Short, which passed it on to Riviera with a view to its being forwarded to Mr Boland. 60 Riviera submitted that this method of carrying out and documenting the transaction revealed that only once the Riviera motor cruiser was placed on board the freighter and the freighter had sailed did Riviera communicate to Mr Boland that the relevant events had occurred, and enclose a certificate that the property in the motor cruiser had passed. The Manufacturer's Statement of Origin did not say that property passed on the day, usually four days before shipment, when the price was paid, or on the day, two days before shipment, when the motor cruiser left Labrador. It said that property was transferred on the day the motor cruiser was loaded onto the freighter. It did not say expressly that it passed when the motor cruiser was loaded on the freighter, and this left open the possibility that it passed earlier that day. But it was no part of this aspect of Campbell's argument that property passed earlier that day: the choice posed was between property passing on loading and property passing at or about the time of payment. 61 These arguments of Riviera based on the contemporary practices and documents employed have considerable force. 62 Riviera also relied, however, on certain categories of testimony as follows. One category was evidence that the contract was an FOB contract. First, there were Mr Hardie's non-responsive answers in cross-examination to the effect that the sale was FOB: he was the financial controller of Riviera. Next there was Mr Short's statement in cross-examination that Riviera's terms of trade with its dealer was to sell on an FOB basis. Thirdly, Mr Boland gave evidence in chief that his purchases were FOB. Fourthly, the evidence of Mr Barry-Cotter, a director of Riviera, was to the effect that the transaction was FOB, not COD. Another category of testimony consisted of answers by Mr Barry-Cotter to the effect that Mr Boland had no power of disposition over the motor cruiser until it was loaded onto the freighter and that he had no intention that the motor cruiser be at Mr Boland's disposal once it was paid for. 63 The testimony relied on is insufficient to sustain the conclusion for which Riviera contended. First, so far as the evidence consisted of assertions that the contract was an FOB contract, Mr Short was speculating about the terms of dealings between Riviera and Mr Boland to which his company was not a party; all the evidence went to questions of law; and, with respect to the witnesses, there seemed to be a shared view that it was important to the case that the terms be FOB and that that proposition be communicated to the court whether in response to questions asked or not. Though Mr Barry-Cotter's answers about the power of disposition were responsive, they too rested on conclusions of law, and the trial judge eventually stopped the line of questioning on that ground. These items of testimony were, if strictly admissible at all, of extremely doubtful weight when contrasted with the contemporary business documents. 64 However, there is one piece of contemporary evidence that does support characterisation of the contract as an FOB contract. A fax of 16 July 1997 from Short to Mr Boland makes it plain that while Mr Boland would be paying for the cost of freight from Sydney to the United States of America, and for the cost of insurance for that voyage if desired, Riviera would be paying for the cost of transport to Sydney: "Riviera will be including transport to wharf Sydney/crane etc on their invoice as F.O.B.". As indicated above, the invoice of 5 September 1997 to Mr Boland described the "F.O.B. point" for 34/14 as Sydney. The contract was "FOB" in the sense that the seller delivered the goods to the freighter at its own expense, the risk of loss was transferred to the buyer upon loading and the seller was discharged of obligation at that point; the freighter owner and the buyer at that point became responsible for the carriage of the goods. The contract was not a "CIF" contract, since the entitlement of Riviera to payment did not depend on sending the invoice, the bill of lading and an insurance policy over the goods while they were on the freighter to the buyer: Riviera's entitlement to payment arose earlier a few days before shipment of the freighter. 65 The conclusion for which Campbell contended is not advanced by the posing of the question of what would have happened if Riviera had gone into liquidation after Mr Boland had paid for the boat. Even if Mr Boland were not entitled to 34/18 and took the risk of Riviera's insolvency over the four days from 8 to 12 August, that circumstance alone cannot prevail against the force of the transaction documents. 66 If Campbell's submissions were sound, Mr Boland would be owner from at least the time when the journey from Labrador started. Prima facie the risk would pass to him at that time: s 25. Yet Mr Boland was not in the habit of insuring motor cruisers he bought until the time when they were on board the freighters shipping them from Australia. The fact that Mr Boland did not do this points to the conclusion that he did not intend to take title or believe that he had taken title until the motor cruisers were shipped onto the freighter. His subjective intention in isolation is not crucial, but it supports the inference to be drawn from the contemporary documents. In any event it may be inferred that that intention was shared by the Australian parties: when on 16 July 1997 Short sent Mr Boland a fax stating the freighter costs, informing him that Riviera would be paying the costs of transport to Sydney, and saying that marine insurance could be arranged at additional cost, its silence about insurance between the time when 34/18 was loaded on the truck at Labrador and the time when it was loaded onto the "Direct Currawong" points to Short's perception that that insurance was not a matter for Mr Boland. 67 In Allison v Bristol Marine Insurance Co Ltd (1875) 1 App Cas 209 at 229 Blackburn J said: "Merchants, according to my experience, attach very great weight to a stipulation as to who is to insure, as shewing who is to bear the risk of loss … ."

[90]

(d) It is possible that Riviera retained possession until 34/18 crossed the side of the freighter. 73 Proposition (a) must be rejected. It is inconsistent with the conclusion reached in [43] above to the effect that Short never obtained possession. If it never obtained possession, it never became a "carrier or other bailee". 74 If proposition (d) were sound, by itself it would prevent s 23 r 5 operating until the motor cruiser were loaded onto the freighter; but it is probably not sound: see [45]. 75 It is not, however, necessary to decide which of these possibilities is correct. That is because there are three reasons why the only person who was a "carrier" within the meaning of s 23 r 5 was the freighter owner. 76 First, delivery to the relevant "carrier or other bailee" must have "the purpose of transmission to the buyer". If there were a series of bailments - bailment to Botany Cranes, bailment back to Short (or delivery back to Riviera), bailment to Botany Cranes again, and bailment to Campbell - the successive transfers of possession point against there having been delivery of "the goods … to a carrier or other bailee … for the purpose of transmission to the buyer". Botany Cranes was not a carrier, Short was not a carrier, Riviera was not a bailee, and Campbell was only to be a carrier for a short distance and a short time. The successive acts were acts preparatory to transmission of the goods to the buyer, rather than being part of the transmission. The only reason why this series of bailments, if they were bailments, had to take place is that they were necessitated by industrial conditions in the Port of Botany. Had industrial conditions in the Port of Botany not had the particular characteristic that it was financially unattractive for Riviera to deliver the motor cruiser to the freighter, thus making it necessary to use Campbell, presumably Riviera would have delivered 34/18 to the side of the freighter, and there would be no doubt that the freighter owner was the "carrier or other bailee" referred to in r 5(2). 77 Secondly, it is highly significant that the practice of Short was to inform Mr Boland of the freighter on which a particular motor cruiser was to be taken from Australia to the United States of America; its estimated date of departure; the "indicative costs" for the freighter to be paid by Mr Boland; and the availability of insurance to be paid by Mr Boland. But it was not Short's practice to inform Mr Boland of the identity of the modes of transport from Queensland, and in particular the details of which crane company would unload at the parking area and which company would transport the cruiser from that point to the side of the freighter the details of which crane company would unload at the parking area and which company would transport the cruiser from that point to the side of the freighter. Mr Boland knew that the motor cruisers had to be transported to either Brisbane or Sydney. Mr Boland was told by fax from Short on 16 July 1997 that there would be costs of transport to Sydney and costs of the crane at the wharf, but that Riviera would be paying those costs. That accorded with the practice after the time when a particular contract of sale with Riviera was made. Mr Boland described it thus: "(ii) The plaintiff would then proceed to manufacture the cruiser to the specifications set out in the Build List. (iii) The purchase price always incorporated all costs and expenses to get the cruiser on board the vessel for shipment to USA. Sometimes the plaintiff would arrange for such shipment to occur from Brisbane and on other occasions from Sydney. (iv) Towards the completion of the manufacture process, I would receive advice from the plaintiff of such and there would be communication between myself and the first defendant, as shipping agent on behalf of the plaintiff, as to the details of shipment, including the vessel name and date of departure. (v) I had no separate contract or arrangement with the first defendant. I would never advise the first defendant as to how, when, where or why it ought to provide its services in relation to securing the placement of a cruiser on board the vessel for shipment. I never paid the first defendant for any such service. (vi) I would only insure the cruisers which I purchased at this time from the plaintiff from the time when the said cruisers were on board the vessels for shipment. I treated all such purchases as 'free on board' (F.O.B.), and all documentation I received from the plaintiff for such purchases reflected this understanding. (vii) With each of these purchases, I would transfer into a bank account of the plaintiff in the USA clear funds for the full purchase price of the cruiser. This was a requirement of the plaintiff as it would not deliver the cruiser on board the vessel of shipment until it had cleared funds for the purchase price. Indeed, such practice accorded with my experience in relation to all similar commercial dealings." 78 From Mr Boland's point of view, the carriage of the motor cruiser to the United States of America only commenced when the freighter was loaded. From Mr Boland's point of view, the freighter owner was the person responsible for bringing the motor cruiser to it and the person whom it was to pay. 79 Parke B described the basis of the common law rule now embodied in s 23 r 5 as follows in Wait v Baker (1848) 2 Ex Ch 1 at 7; 154 ER 380 at 383: "if goods are ordered by a person, though they are to be selected by the vendor, and are to be delivered to a common carrier to be sent to the person by whom they have been ordered, the moment the goods, which have been selected in pursuance of the contract, are delivered to the carrier, the carrier becomes the agent of the vendee, and such a delivery amounts to a delivery to the vendee … ."

[91]

The same principle would apply where the goods were not selected by the vendor but, as here, manufactured by the vendor. Benjamin's Sale of Goods (5th ed, 1997) para 5-097 says: "The carrier is prima facie constituted the buyer's agent for the purpose of taking delivery; but if the terms of the contract or appropriation show that the carrier is the agent of the seller, the property will not normally pass until the goods are actually delivered to the buyer or his agent." 80 If Riviera retained possession until Campbell obtained it, or even until 34/18 was to be moved over the rail of the "Direct Currawong", it would not be a "carrier": Galbraith and Grant Ltd v Block [1922] 2 QB 155 at 156. If Riviera lost possession, either when 34/18 was lifted off its truck or when 34/18 was lifted onto Campbell's truck, the persons who had possession thereafter until 34/18 was placed on the freighter were certainly not the agents of the buyer Mr Boland. The owner of the freighter was its agent - not in the sense of having a capacity to create legal relationships between Mr Boland and third parties, but in the sense of an actor carrying out a function for Mr Boland. The owner of the freighter transported the motor cruiser, it was to be paid by Mr Boland for doing so, and the risk of its damaging the motor cruiser was a matter which Mr Boland was to insure against and did insure against. On the other hand, while Short, Botany Cranes and Campbell were not strictly agents of Riviera - they were not authorised to make contracts binding on Riviera with third parties - they were persons who were agents in the sense of actors carrying out a purpose desired by Riviera. That purpose was to deliver the motor cruiser to the freighter owner. 81 The presence of Riviera's officers, Messrs Andrews and Barry-Cotter, during the process of unloading and loading, point to Riviera having a supervisory role over the activities of Short and the sub-contractors engaged by Short for whose services Riviera, but not Mr Boland, was going to pay. That supervisory role is suggestive of conduct by the seller anterior to the moment when transmission of goods to the buyer by a carrier or other bailee who is independent of the seller begins. The short period in which Campbell was to move 34/18 from car park to wharf was not a period of supervision by Riviera's officers, but it immediately followed it. It would be artificial to treat Campbell, rather than the freighter owner, as the carrier or other bailee who was to have possession of 34/18 for the purpose of transmission of it to Mr Boland. The role of Campbell was much more closely connected with the other activities arranged by Short at Riviera's request than it was with the activities of the freighter owner. 82 Thirdly, in Carlos Federspiel & Co SA v Charles Twigg & Co Ltd [1957] 1 Lloyd's Rep 240 at 255-256 Pearson J said: "usually but not necessarily, the appropriating act is the last act to be performed by the seller. For instance, if delivery is to be taken by the buyer at the seller's premises and the seller has completed his part of the contract and has appropriated the goods when he has made the goods ready and has identified them and placed them in a position to be taken by the buyer and has so informed the buyer, and if the buyer agrees to come and take them, that is the assent to the appropriation. But if there is a further act, an important and decisive act to be done by the seller, then there is prima facie evidence that probably the property does not pass until the final act is done."

[104]

Short said that if clause 21 were construed to render Short liable to indemnify Campbell for damage to the goods caused by Campbell, then clause 3 would not be necessary - it "would lead to a complete circularity". It "would render absolutely unnecessary the exclusion clause". 97 Campbell argued that the words in clause 21 before "and without limiting the generality of the foregoing" were very general. Short promised to indemnify Campbell "against all claims for loss, damage, injury to any property … arising from the carriage of the goods … ." Any property included the goods it carried. The words after "and without limiting the generality of the foregoing", if they consisted of the totality of the clause, would be consistent with Short's argument, because they obliged Short to pay Campbell the value of "any other goods carried by or for the carrier and destroyed or damaged as a result of the carriage". But clause 21 stipulated that those concluding words were not to limit the generality of the opening words. Campbell relied on the principle of construction stated for exclusion and limitation clauses by the High Court in Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510, which is that: "the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity." 98 The construction propounded by Campbell is the sounder for the following reasons. 99 First, the use of the words "any other goods carried" in the latter part of clause 21 stands in contrast to the generality of "any property" in the first part, and suggests that the expression "any property" is wide and has its natural and ordinary meaning of "any property, whether the goods carried or not". The words "any other goods carried" cannot be used as a means of reading down the first part of the clause. 100 Secondly, if Short's argument that clause 21 had to be read so as to avoid any overlap with clause 3 were correct, it would require the words "(except the goods carried)" to be inserted after "any property". To do that is to do some violence to the words "any property". 101 Thirdly, the overlap between clause 3 and clause 21 on Campbell's construction is not complete. For one thing, if the trial judge's construction of clause 3 (supported by Short) is correct, clause 3 applies only to liability "in tort or in contract", not "in bailment" or on any other basis, whereas clause 21 applies quite generally. Further, clause 3 applies to non-delivery, while clause 21 does not. There is thus work for clause 3 to do in areas where clause 21 does not operate, and work for clause 21 to do in areas where clause 3 does not operate. Campbell's construction does not, contrary to Short's submission, "lead to a complete circularity" or "render absolutely unnecessary the exclusion clause". There is some overlap, but clause 3 is not "absolutely unnecessary". While Short's submission would have force if in the areas where clause 3 and clause 21 overlap they conflicted, in fact they do not conflict: the provisions operate harmoniously, not discordantly. While clause 3(1) is expressed to be subject to clause 18 and clause 20, and clause 21 is not so expressed, in fact both clause 18 and clause 20 are expressed to apply to the totality of the conditions, i.e. including clause 21. (Clause 18 requires the conditions, in respect of contracts made in Queensland, to be read subject to the carriage of goods by land (Carrier's Liability) Act 1967 (Qld). Clause 20 requires the conditions to be read subject to specified legislation.) That in itself is a piece of untidy drafting which suggests that the Conditions of Carriage are not to be read with pedantic precision. 102 Hence the trial judge's conclusion that clause 21 applied is correct.

At a glance

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Judgment (123 paragraphs)

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Legislation Cited (5)

Cases Cited (4)

Cited By (1)