Gvi Logistics Ltd v Goat Nz Ltd Hc
| Jurisdiction | New Zealand |
| Judge | Fogarty J |
| Judgment Date | 07 December 2011 |
| Neutral Citation | [2011] NZHC 1773 |
| Docket Number | CIV 2011-;404-;004407 |
| Court | High Court |
| Date | 07 December 2011 |
[2011] NZHC 1773
CIV 2011-;404-;004407
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
Appeal from District Court decision finding the Carriage of Goods Act 1979 (“CGA”) did not apply — container of goat meat shipped to Japan — input air temperature of refrigerated container incorrectly recorded by freight forwarder — Port followed the incorrect booking instruction and changed input temperature from —1.5 degrees Celsius to +1 degree Celsius — whole container rejected in Japan because meat had deteriorated — appellant did not dispute liability but maintained liability was limited by CGA — whether or not s9(1) CGA (liability of contracting carrier) applied.
P Rzepecky and B Howe for Appellant
P Barratt for Respondent
JUDGMENT OF Fogarty J
Goat NZ exported 648 cartons of goat meat to Japan by sea in May 2009. It engaged GVI Logistics, which trades under the name Priority Fresh, as a freight forwarder, to arrange the transport of the cartons. The cartons were intended to be sent in a single refrigerated container (known as a reefer) with an input air temperature set at -1.5°C. This would also produce the same temperature of the meat. The cartons were packed into such a container, set at the correct temperature.
GVI then arranged for the container to be picked up from Te Kuiti Meat Processors and taken to Auckland Metro Port, which is the Auckland cargo station operated by Port of Tauranga. The written booking instructions provided by GVI to Auckland Metro Port incorrectly recorded that the input air temperature to the contained should be set at +1°C. Metro Port followed that incorrect booking instruction and altered the container's correct input air temperature to +1°C.
When Cap Preston arrived in Japan the containers were unloaded and stored but they were not cleared customs for eight days due to a delay in health certificates arising. When the container was opened by the buyer much of the meat was found to have deteriorated. It was smelling, and the whole container was rejected.
The four temperature monitors placed inside four separate cartons within the container duly recorded that the temperature of the meat in the container had increased to +1°C before the containers were loaded on board the vessel Cap Preston on 2 June 2009. The temperature also spiked on several occasions before the container was emptied.
The quantum of the appellant's loss as a result of the rejection is NZ$108,012.27.
GVI does not dispute its liability to Goat NZ for the loss of the cargo. But it says it was liable for the loss under the Carriage of Goods Act 1979 and therefore its liability was limited to $1,500. This was its only defence. It is agreed that if GVI cannot bring itself within the terms of the Carriage of Goods Act then it will be liable for the full figure of $108,012.27.
The District Court (Judge M-E Sharp) on 20 June 2011 rejected GVI's argument that the Act applied and so found it liable for the full amount. This is an appeal against that decision.
The Carriage of Goods Act applies only to domestic carriage in New Zealand. It does not extend to GVI's responsibility for the off-shore leg of the transportation of the container from New Zealand to Japan.
Counsel are agreed that the question is whether or not s 9(1) applies. Section 9(1) provides:
9 Liability of contracting carrier
(1) Subject to the other provisions of this Act, a contracting carrier is liable as such to the contracting party for the loss of or damage to any goods occurring while he is responsible for the goods in accordance with the succeeding provisions of this section, whether or not the loss or damage is caused wholly or partly by him or by any actual carrier.
It may be noticed immediately that s 9(1) draws a clear distinction between the loss or damage of any goods, on the one hand, and whether or not the loss or damage is caused wholly or partly by the contracting carrier, or by any actual carrier on the other.
This distinction is reinforced by the scheme of the Act. The scheme of the Act is to impose absolute liability on the contracting party (GVI) obviating the need for an examination of whether or not GVI is the cause of the damage in whole or in part, but, in return, fixing the liability at Si,500 for each unit of goods. It is agreed that as the cartons were packed by Goat NZ's agent the unit in this case is the single container. See s 15 of the Act.
It is agreed that the consequence of the change of the input air temperature to the container at the Auckland Metro Port caused a change in the meat as a commodity before it left New Zealand. The question, however, is whether or not this change amounts to loss or damage to the goods occurring while GVI is responsible for the goods, to paraphrase the core of s 9(1), Note s 9(6) provides:
(6) Notwithstanding any of the foregoing provisions of this section, the responsibility of a contracting carrier who contracts for the carriage of goods to a destination outside New Zealand ends for the purposes of this Act at the time when the international carriage of those goods begins.
(Emphasis added) The District Court decision
The District Court held that although the meat changed by reason of the change in temperature, the change only reduced what would normally be a 60 day shelf life of the product by one and a half days. The Court held that this was de minimis and so did not count as damage occurring in terms of s 9(1), therefore, s 9(1) did not apply. Strict liability did not apply. The limit of damage of $1,500 did not apply. Therefore, the plaintiff was entitled to judgment for the full sum.
The District Court also rejected reliance by GVI on exception clauses in its terms of trade. This was on the basis there was inadequate notice of the terms. There is no appeal against that finding.
The Supreme Court has recently given clear guidance as to the correct approach to interpreting this statute. This is the decision of Ports of Auckland Ltd v Southpac Trucks Ltd [2010] 1 NZLR at 363. I do not intend to unduly lengthen this judgment by quoting exhaustively from the unanimous reasons of the Court, given by Blanchard J. It is sufficient to summarise the reasoning by saying that the purpose of the Act was to remedy the common law which had imposed an almost absolute liability on common carriers. The common law had allocated the risk of loss on the basis partly as fault and partly as strict liability. But the use of the fault principle was seen by the law reformers as having serious disadvantage: encouraging unnecessary litigation, leading to difficulties of proof and being uncertain in its application. The purpose of the reform was to impose absolute liability but absolute upward limits on the liability. It was intended that a common set of rules be enacted relating to the liability of all domestic carriers. The new rules would apply to all who procure contracts of carriage whether or not they take any part in the carriage itself; that liability to loss or damage of goods during carriage should lie where the balance of convenience places it irrespective of fault.
The Supreme Court said:
The Act must be read with those principles firmly in mind and with regard also to its long title, which shows that its purpose was “to restate and reform the law relating to the carriage of goods within New Zealand”. [4]
The facts of that case do not assist here.
In this case GVI is the contracting carrier and under the scheme of the Act is the person to whom the shipper of goods claims.
One can also take into account that the Contracts and Commercial Law Reform Committee, whose work was the foundation for this statute, was composed of experienced practitioners who would be aware that many domestic contracts of carriage were but the first step in the export of primary perishable commodities being exported to the other side of the world.
Mr Rzepecky noted that it is more common place than not for private contracts of insurance to impose liability on a fault basis rather than in the first instance on damage.
This is a statute intending to do away with any examination of fault. It adopts the proof of loss or damage as the principal precondition for liability, provided that the damage occurs in New Zealand. It goes out of the way to spell out in subs (1) that this liability is imposed without regard to questions of fault;
… whether or not the loss or damage is caused wholly or partly by him or by any actual carrier.
Mr Rzepecky's argument was that once the wrong temperature had been entered on the reefer the damage was inevitable. He argued for a meaning of damage which was satisfied when two elements were present:
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1. There was a physical change in the goods.
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2. In a context which rendered the goods losing some commercial value or usefulness.
He relied upon a decision of the Tasmanian Supreme Court which has been followed widely in the common law world since it was decided in 1986. This is the decision of Ranicar & Anor v Frigmobile Pty Ltd (1983) 2 ANZ Insurance cases 60-525, Green CJ. Ranicar were fish exporters who had contracted to sell frozen scallops to a Canadian company. Frigmobile took possession of the scallops and delivered them to a wharf in Melbourne with a view to them being loaded on a ship bound for Canada. At the wharf the scallops were found to be at a temperature between -6°C and -12°C. The Export Fish Regulations of the Commonwealth of Australia require a temperature to be no higher than -18°C. Thus they were rejected for export. Ranicar were able to sell the scallops on...
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