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Limited liability of carriers re-affirmed

11 December 2009

Carriers of goods, including those who use sub-contractors to provide incidental services, have had their entitlement to the limited liability protections of the Carriage of Goods Act 1979 (the Act) confirmed by the Supreme Court.

 

The confirmation, which overturns an earlier Court of Appeal decision, restores certainty to an important legal protection for the cartage and stevedoring industries because liability under the Act is limited to $1,500 per unit (unless the loss or damage is intentional or the parties agree otherwise).

 

This Brief Counsel looks at the case and at the Supreme Court’s interpretation of the Act.

 

The case

The case - Ports of Auckland Limited v Southpac Trucks Limited [2009] NZSC 112 – concerned $60,000 of damage to a Kenworth truck, caused by a collision with a fork hoist negligently driven by an employee of Ports of Auckland Ltd (POAL).  The employee was not involved in the carriage of the Kenworth at the time but was engaged on other POAL business. 

 

The supplier of the truck had contracted with CP Ships (UK) Ltd to transport and deliver it to Southpac.  CP Ships contracted POAL to unload the truck from the vessel on arrival in Auckland and to transfer it to a storage area on POAL’s wharf.  The accident occurred as the truck was being driven between the vessel and the storage area by POAL’s sub-sub-contractor.

 

Rather than claiming against CP Ships (the “contracting carrier”) as the Act envisages, Southpac sought damages against POAL for the negligence of its employee.  Southpac argued that its claim was outside the Act because it was not made against POAL as a carrier “as such”.  POAL responded that its role in the contract of carriage brought it within the Act, limiting its liability to $1,500 and then only to CP Ships.

 

The issue

The case hung on section 6 of the Act which states:

 

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

 

(a) In accordance with the terms of the contract of carriage and the provisions of this Act; or(b) Where he intentionally causes the loss or damage.

 

Decision provides welcome clarification

The case wound its way through the District Court, the High Court and the Court of Appeal before ending up in the Supreme Court, collecting a variety of interpretations of the Act in the process - so the Supreme Court’s ruling provides a welcome clarification.

 

All four Courts readily agreed that POAL was a “carrier” (as it had procured its sub-sub-contractor to carry and perform stevedoring services in relation to the truck).  Where they differed was on the meaning and implications of the words “as such” in section 6 in circumstances where POAL was not, at the relevant time, in physical possession of the truck (and so not acting as an “actual carrier”).

 

The Supreme Court was emphatic:

 

Given that POAL was at the relevant time a carrier, s 6 applied to it.  That section is expressed to apply notwithstanding any rule of law to the contrary.  It says that no carrier is “liable as such”, which must mean when acting as a carrier, whether in tort or otherwise (so excluding the law of negligence and the law of bailment) and whether personally or vicariously (so excluding liability for anything done by an employee in the course of his or her employment) for the loss of or damage to any goods carried by the carrier... 

 

Section 6 makes only three exceptions to the removal of liability of a person acting as a carrier.  The first is where the terms of the contract of carriage say otherwise, the second is where the other provisions of the Act apply so as to create a statutory liability and the third, paralleled for an employee in s 16(1), is where the carrier has intentionally caused the loss or damage, which is not alleged in the present case. 

 

In reaching that conclusion, the Court looked to Parliament’s intention when passing the Act.  Parliament was concerned at the amount of insurer-driven litigation which was occurring under the existing law as insurers sought to establish where liability for damages lay – a task which, when a succession of different carriers were involved in a single transaction, often required pinpointing exactly when, how and in whose hands the damage had occurred.

 

The Law Reform Committee on whose work the new Act was based had identified the aim of the law change as to provide “much needed certainty” by creating a limited liability which was to apply “regardless of whether the carrier was at fault in causing or contributing to the loss or damage”. 

 

When the Act is approached from this perspective and not from the perspective of the common law, its meaning becomes plain,” the Court said.

 

Conclusion

In our view, the decision of the Supreme Court is plainly correct and accords not only with the purpose of the Act (to provide certainty to all persons involved in a carriage of goods to enable insurance arrangements to be made and lessen the need for complex factual inquiries as to cause and fault) but also to commercial reality.

 

It should not matter whether the fork hoist drove into the truck or the truck drove into the fork hoist.  Nor should it matter that POAL engaged a sub-contractor to move the truck from the vessel to the storage area.

 

The question is simply whether a person is a carrier of the relevant goods at the time they are damaged.  Fault and cause are irrelevant unless the damage is done intentionally.

 

For further information, please contact the authors on the right.

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