Gvi Logistics Ltd v Goat Nz Ltd Hc

JurisdictionNew Zealand
CourtHigh Court
JudgeFogarty J
Judgment Date07 Dec 2011
Neutral Citation[2011] NZHC 1773
Docket NumberCIV 2011-;404-;004407

[2011] NZHC 1773

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2011-;404-;004407

BETWEEN
Gvi Logistics Limited
Appellant
and
Goat Nz Limited
Respondent
Counsel:

P Rzepecky and B Howe for Appellant

P Barratt for Respondent

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.

At issue was whether or not s9(1) CGA (liability of contracting carrier) applied.

Held: Under s9(1) CGA a contracting carrier was liable “for the loss of or damage to any goods occurring while he is responsible for the goods … whether or not the loss or damage is caused wholly or partly by him or by any actual carrier”. The Supreme Court judgment in Ports of Auckland Ltd v Southpac Trucks Ltd set out the correct approach to the section. The purpose of the CGA was to impose absolute liability but absolute upwards limits on the liability. It did away with concepts of fault. Proof of loss or damage was the principal precondition for liability, provided that the damage occurred in NZ.

In respect of the damage issue, the decision in Ranicar v Frigmobile Pty Ltd (SC Tasmania) was widely followed and was correct. The examination was as to whether or not the physical alteration of the goods had impaired their value or usefulness. The value of commodities was directly related to the ability to trade them. The trading of perishable commodities took place in regulatory environments and where regulatory standards were not met, the value would usually be lower. Goat meat was a consumable and its shelf life was necessarily a quality that would affect its value.

The CGA left undisturbed the usual insurance policies taken out by exporters and shippers for offshore risk (s5 CGA, application of Act). Liability was limited in s15 CGA (limitation of amount of carrier's liability). The whole of s9(1) CGA had to be read as one test. There was no reason not to take a literal interpretation of s9(1) CGA that it was intended to identify and confine liability to loss or damage occurring in NZ (and the de minimus test was unnecessary because of this). Ranicar was consistent with this approach. Damage to the product occurred as per s9(1) because the temperature setting changed the physical composition of the meat causing it to age faster than the rate set for commercial reasons which lessened its commercial value. No loss of value was proved and so there could be no order under s15 CGA (Limitation of carrier's liability). The finding did no insulate GVI from the consequences of loss or damage during the expected journey. The CGA did not allow GVI to limit its liability outside NZ, for the consequences of the incorrect temperature setting in NZ.

JUDGMENT OF Fogarty J

Introduction
1

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.

2

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.

3

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.

4

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.

5

The quantum of the appellant's loss as a result of the rejection is NZ$108,012.27.

6

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.

7

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.

8

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.

9

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.

10

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.

11

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.

12

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

13

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.

14

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 proper approach to interpreting the Act
15

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.

16

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...

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