Domestic transport in New Zealand, by air, land and water, is governed by the Carriage of Goods Act 1979 ("COGA"). On 22 December 2008, the Court of Appeal rendered a majority decision (Ports of Auckland v Southpac Trucks) which has implications for all persons performing carriage in New Zealand.
COGA
The COGA creates an overall framework for all those who are involved in the carriage of goods in New Zealand. It applies to all modes of domestic carriage, including that part of the international voyage that is domestic (i.e. prior to loading and after discharge).
Section 6 of the COGA provides that a carrier shall not be liable in tort or otherwise than in accordance with the COGA and the contract of carriage. The circumstances in which parties can depart by contract from the COGA regime are limited and dependant on strict compliance with detailed requirements.
The COGA contains a wide definition of carriage, which includes services incidental to carriage (for example, stevedoring and warehousing). Under the COGA, liability for loss of or damage to cargo is channeled to the contracting carrier. The contracting carrier is the carrier who contracts for carriage with the shipper or consignee. Liability is limited to $1,500 per unit, unless damage is caused intentionally. The actual carrier is, in turn, liable to the contracting carrier for loss of or damage to goods occurring while he is responsible for the goods. Actual carrier is defined as:
"In relation to the carriage of any goods, means every carrier who, at any material time, is or was in possession of the goods, or of any container, package, pallet, item of baggage, or any other thing in or on which the goods are or were believed by him to be, for the purpose of performing the carriage or any stage of it or any incidental service; and includes the contracting carrier where he performs any part of the carriage".
Facts of the case
The ocean carrier, CP Ships, carried trucks, as cargo, by sea to Auckland, pursuant to a bill of lading naming Southpac as the consignee. CP Ships was accordingly the contracting carrier. CP Ships had contracted with the Ports of Auckland for stevedoring services and the Ports had subcontracted these services to stevedores. At the Ports of Auckland, the trucks were discharged from the ship by the stevedores. The stevedores drove the trucks off the ship and across Ports of Auckland’s premises, to be parked there to await collection by the consignee.
A forklift, operated by an employee of Ports of Auckland, accidentally collided with a truck while the truck was being driven across the Ports’ premises by the stevedores. Southpac sued Ports of Auckland in negligence for damage to the truck (approximately $60,000). Ports of Auckland admitted negligence but said that an action in negligence was not available, as its liability must be determined under the COGA, on the basis of section 6 of the COGA. The question for determination was whether Ports of Auckland was liable under the COGA as a carrier in the circumstances
Decision
The Court of Appeal decided, by majority, that Ports of Auckland could not rely on the COGA in the above circumstances. The majority reasoned that, to be able to rely on the COGA, the carrier must either be the contracting carrier or an actual carrier in possession of the goods. Essentially, the Court held that there can only be one actual carrier at any time in possession of the goods (in this case it was the stevedores, driving the truck). Accordingly, as Ports of Auckland was neither the contracting carrier, nor the actual carrier in possession, at the time of the damage, liability was in negligence, not under the COGA.
Comment
The COGA had previously been understood to constitute a code, whereby everyone involved in carriage could rely on the $1500 limit for cargo loss. The decision of the Court of Appeal has created uncertainty for carriers. Now, whenever cargo is damaged on premises used by two carriers, the issue will be “who was the carrier in possession of the goods?”. Only the contracting carrier and a single actual carrier in possession can rely on the $1500 per unit limit and their contract. All other actual carriers, no longer or not yet in possession, cannot rely on the statutory limit and accordingly face potentially unlimited liability in negligence.
On the approach of the majority, small factual variations will produce a very different result. What if the above truck had been parked by the stevedores on the Ports’ premises to await collection and the stevedores, driving a second truck across those premises, had accidentally collided with the parked truck? Clearly, the Ports render the incidental service of wharfage (and are therefore an actual carrier) and the stevedores render the incidental service of stevedoring (and are therefore an actual carrier) during the same time period. Which of them is the actual carrier in possession of the first truck on the latter set of facts? Any use of subcontractors, even to work in conjunction with one’s own employees, may expose a principal to unlimited liability for cargo loss or damage.
Baragwanath J, the dissenting Judge, emphasised the commercial purpose of the COGA regime, so that parties (and, importantly, insurers) can predict liability easily. The Judge held that there was a powerful argument that the Ports were so intimately involved with the goods that, for the purposes of the COGA, they should be treated as having been in possession of the truck, albeit jointly with their subcontractor: the Ports had agreed with CP Ships to perform services for the discharging of the ship, the truck was on the Ports’ premises and the subcontractor acted as the Ports’ agent. The Judge referred to section 5 of the Interpretation Act 1999, which requires a court of construction to heed not only the letter of a statute but its purpose. The Judge would not have confined the protection of section 6 of the COGA to the stevedores only by adopting a narrow concept of possession. Instead, he took the view that all those functionally engaged in carriage should receive the protection of the COGA.
The Ports of Auckland has been granted leave to appeal to the Supreme Court, New Zealand’s highest Court.
For further information on this topic please contact Barbara Versfelt at Wilson Harle by telephone (+64 9 915 5700) or by fax (+64 9 915 5701) or by email (barbara.versfelt@wilsonharle.com).
Is the Carriage of Goods Act 1979 a Code? —
byA specialist litigation firm