Cartodraft Australia Pty Ltd v CLC Deliveries Pty Ltd trading as Hunter Express

[2018] NSWCATCD 14

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Cartodraft Australia Pty Ltd v CLC Deliveries Pty Ltd trading as Hunter Express [2018] NSWCATCD 14
Hearing dates:	26 March 2018
Date of orders:	01 May 2018
Decision date:	01 May 2018
Jurisdiction:	Consumer and Commercial Division
Before:	P French, General Member
Decision:	(1) The respondent, CLC Deliveries Pty Ltd trading as Hunter Express is to return the packages identified by its consignment notes YY342269, YY342231, YY344177 and YY344195, to the applicant, Cartodraft Australia Pty Ltd, in undamaged condition by making them available for collection immediately. (2) The applicant may seek leave to renew this application before the Tribunal, as presently constituted, at any time before 13 May 2018 if Order 1 is not complied with.
Catchwords:	CONSUMER CLAIM – detinue - conversion – jus terti – bailee and sub-bailee – sub-bailment on terms – whether bailor consented to these terms - goods consigned for transport by on-line retailer - where application arises from a contract for the supply of transport services by an intermediary transport broker – where the intermediary contracts with the respondent to deliver the goods – where the intermediary owes the respondent a substantial debt and subsequently goes into liquidation – where the respondent refuses to deliver the goods as addressed or return them to the applicant – where the respondent purports to exercise a lien over the goods until the intermediary’s debt to it is paid
Legislation Cited:	Consumer Claims Act 1998: s 3A Fair Trading Act 1987: Part 6A
Cases Cited:	BIS Cleanaway (trading as CHEP) & Ors v Tatale & Anor; Brambles (trading as CHEP) v Tatale & Anor [2007] NSWSC 378 Brambles Security Services Ltd v. Bi-Lo P/L (1992) Aust Torts Report Butler v Hobson [1838] 4 Bing NC 290 Coggs v Barnard (1703) 2 Lord Raym 909 Edwards v Amos (1945) 62 WN (NSW) 204 Gilchrist Watt and Sanderson v York Products (1970) 1 WLR 1262 Henry Berry & Co Pty Ltd v Rushton [1937] St R Qd 109 Hill & Anor v Reglon Pty Limited [2007] NSWCA 295 Jelks v Haywood [1905] 2 KB 461 Jenkinson v Chaw [2015] NSWCATAP 127 Kahler v Midland Bank Limited [1950] AC 24 Penfolds Wines v Elliott (1946) 74 CLR 204 The Pioneer Container (1994) 2 AC 324 Westpac Banking Corporation & Anor v Royal Tongan Airlines & Ors (1996) Aust Torts Reports 81-403 WMC Engineering Services Pty Ltd v Brambles Holdings Ltd t/a Oilfield and General Transport Co (unreported, Supreme Court of Western Australia, Wheeler J, 31 October 1997)
Category:	Principal judgment
Parties:	Cartodraft Australia Pty Ltd (applicant) CLC Deliveries Pty Ltd trading as Hunter Express, (respondent)
Representation:	Mr Graham Keane, Managing Director, for the applicant Mr Mark Hunter, Chief Executive Officer, for the respondent
File Number(s):	GEN 17/50447
Publication restriction:	Nil

REASONS FOR DECISION

1. This is an application by Cartodraft Australia Pty Ltd (the applicant) for an Order from the Tribunal pursuant to sub-section 79N(f) or (a) of the Fair Trading Act 1987 (FT Act) that will require CLC Deliveries Pty Ltd trading as Hunter Express (the respondent) to either return four packages containing his goods to him in undamaged condition or otherwise pay him the sum of $1,793.00 in compensation for the loss of those goods. This application was made to the Tribunal on 27 November 2017 (the application).

2. For reasons that are set out following, the Tribunal has determined that the respondent must return the packages to the applicant in undamaged condition by making them available for collection immediately. If the respondent fails to comply with this order the applicant may seek leave to renew the application before the Tribunal at any time before 30 April 2018. The Tribunal will then determine if the applicant is entitled to compensation for any damage and loss of the packages as an alternative remedy.

Procedural history

3. The application was first listed before the Tribunal for conciliation and hearing on 17 January 2018. Mr Graham Keane, Managing Director of the applicant, attended that listing of the application on behalf of the applicant. Mr Mark Hunter, Chief Executive Officer of the respondent, attended that listing of the application on the respondent’s behalf. In accordance with the Tribunal’s usual practice where both parties are present in person, prior to the case being called, the parties were provided with an opportunity to attempt to resolve the dispute cooperatively with the assistance of a Tribunal conciliator. Those efforts were not successful.

4. When the parties returned to the hearing room following conciliation the Tribunal adjourned the application for a special fixture hearing on a date to be fixed by the Registrar and issued directions to the parties in relation to the filing of the documentary evidence they intended to rely upon at the hearing.

Evidence before the Tribunal

5. Neither party initially complied with the Tribunal’s directions for the filing and service of evidence, which resulted in the Registrar issuing compliance reminders to the parties and in the Tribunal making further orders for the filing and service of the respondent’s evidence. However, as at the date of the hearing, both parties have filed and served their documentary evidence. In the absence of any further objection from either party, I admitted the documents filed into evidence. The applicant’s bundle was marked Exhibit A1. The respondent’s bundle was marked R1.

6. Mr Graham Keane attended the hearing on behalf of the applicant and gave oral evidence under oath. Mr Mark Hunter attended the hearing on behalf of the respondent and also gave oral evidence under oath. The parties’ representatives had the opportunity to present their cases, to ask each other questions, and to make final submissions to the Tribunal. The evidence of the parties will be referred to where relevant following.

Material facts

7. The material facts to emerge from the evidence may be stated as follows:

1. the applicant is an on-line retailer of various models of globes of the world which it despatches to customers in parcels as freight;

2. the respondent conducts a business that provides a variety of freight logistics services, including road and air delivery of parcels;

3. the applicant has no contractual or other direct relationship with the respondent;

4. at the material time for the dispute there was an agreement between the applicant and a company known as MLH Enterprises Pty Ltd trading as Freight Rite Logistics (Freight Rite). There was also a contract subsisting between Freight Rite and the respondent. These contracts are central to this dispute;

5. On the evidence before me I conclude that Freight Rite was an intermediary transport broker, at least in its relationship with the applicant and the respondent. Under its agreement with the applicant Freight Rite would collect parcels from the applicant when they were ready for despatch and arrange for them to be delivered to its customers. It would do so by on-selling the applicant’s business to the respondent, which provided the delivery services. Freight Rite invoiced the applicant for its services on a monthly basis;

6. The agreement between the applicant and Freight Rite was oral only. It is not evidenced in writing except for pages of a “Delivery Register” that was kept by the applicant and signed by a courier on behalf of Freight Rite when parcels were collected from it, and by the monthly invoices rendered on the applicant by Freight Rite;

7. The contract between Freight Rite and the respondent is in writing. It is in the form of a credit contract, and it is dated 27 June 2017. In these proceedings the respondent relies on two clauses of that contract, being clauses 9 and 20, which state as follows:

9. Where a Consignor is not the owner of the goods it tendered to CLC, it warrants its authority to act as agent of the owner of, or any other person having an interest in, the goods for all purposes in connection with the provision of Services and is authorised to accept and is accepting these Conditions not only for itself but as agent for and on behalf of the Consignor and any person having an interest in the goods.

20.   

(1) without limiting or prejudicing other legal and equitable rights and remedies available to it, CLC shall have both a general and a particular lien over the goods and/or any freight or other items of the Consignor (and any documents relating thereto) of the Consignor in the custody or under the control of CLC for any moneys owing to CLC by the Consignor whether in connection with the carriage of the goods or otherwise. CLC shall have the right to sell or dispose of any or all of the goods or other items as agent for and at the expense of the Consignor by public auction or private treaty without notice to the Consignor to satisfy that obligation and all costs incurred by CLC for storage or in relation to the sale, including legal costs on a full indemnity basis.

(2) Any such sale shall not prejudice or restrict the entitlement of CLC to recover moneys owing by the Consignor to CLC and not covered by the proceeds of sale.

(3) The lien conferred on CLC by 20(1) shall extend to allowing CLC without liability to withhold delivery and retain possession of the goods, other items and documents referred to therein pending payment of the moneys owing whether or not the goods, other items and documents are or reasonably appear to be the property of the Consignor.

(4) The Consignor shall indemnify and keep indemnified CLC from and against all liability whatsoever to any other person arising from any action taken by CLC pursuant to the provisions of this clause 20.

8. On 20 and 21 September 2017 a Freight Rite courier collected a number of parcels from the applicant. Later on those days, Freight Rite consigned four of the packages to the respondent for delivery to two addresses in Victoria, and one address each in South Australia and Queensland (the parcels). The respondent allocated each of those packages a unique consignment note identification number. At some time later, a representative of Freight Rite informed the applicant what those identification numbers were. The applicant wrote those identification numbers in its Delivery Register beside each record of the addressee of each parcel;

9. The respondent’s evidence includes copies of despatch dockets it generated in relation to each of the four parcels which are dated 20 and 21 September 2017. Those despatch dockets state that the sender of each parcel is “MLH Enterprises”. The addressee of each parcel and the consignment note unique identifiers match the records entered in the applicant’s Delivery Register as set out above;

10. At the time it consigned the applicant’s parcels to the respondent for delivery, Freight Rite owed the respondent a substantial debt of $71,380.21 and was in breach of its credit contract with the respondent. Although it received the parcels from Freight Rite on 20 and 21 September 2017, shortly afterwards, the respondent notified Freight Rite that it refused to deliver them (and it appears, a large quantity of other freight consigned to it by Freight Rite on behalf of other customers) until that debt was paid;

11. Freight Rite did not immediately pay its debt to the respondent and has not done so since. On 29 November 2017 Freight Rite went into voluntary external administration. On 4 January 2018, at a meeting of creditors, it was resolved that the company would be wound up. It is currently in liquidation;

12. On 22 September 2017, a representative of Freight Rite notified the applicant that it would not be providing any further transport brokerage service to it until further notice. On 24 September 2017 a Freight Rite representative notified the applicant that the respondent had refused to deliver the four parcels (and it appears, a large quantity of other freight consigned to it by Freight Rite on behalf of other customers);

13. On 27 September 2017, Mr Keane attended the office of the respondent and demanded that the parcels be returned to him. He met with the Mr Daniel McGillicudy, who is the respondent’s NSW Sales Manager. Mr McGillicudy refused to return the packages. Mr Keane says Mr McGillicudy told him all of the freight consigned by Freight Rite on behalf of various customers was being held in an attempt to force Freight Rite to pay its outstanding debt to the respondent;

14. Over the following weeks Mr Keane made further demands that the parcels be returned to him in telephone calls with Ms Ria Walker, who is the respondent’s NSW Operations Coordinator. Those demands were refused by Ms Walker. Mr Keane says Ms Walker told him that the parcels would not be returned and that he should take the matter up with Freight Rite. The respondent’s staff have subsequently refused to deal with Mr Keane;

15. In late September or early October 2017, when it became clear that the parcels would be held indefinitely by the respondent, the applicant despatched ‘replacement’ globes to three of its affected customers. The fourth customer had ordered a rare type of globe which was the only one in the applicant’s stock. It was therefore obliged to refund that customer the purchase price.

16. On 24 October 2017 Freight Rite rendered an invoice on the applicant for its services for the month of September 2017 in the total amount of $344.74. That invoice is not itemised. The applicant has not paid the invoice. In this respect Mr Keane told the Tribunal that he has requested Freight Rite to provide an itemised account before he processes any payment because he believes the amount claimed includes freight costs for parcels that were not delivered and which are being held by the respondent. Freight Rite has apparently not responded to Mr Keane’s request;

17. Mr Keane gave evidence that the combined retail value of the four globes that are contained in the parcels held by the respondent is $1,793.00;

18. In his oral evidence, Mr Hunter informed the Tribunal that the respondent continues to hold the four parcels which are the subject of this dispute (along with a significant quantity of other freight consigned to it by Freight Rite) under a general and particular lien pending the final outcome of the liquidation of Freight Rite, and separate proceedings that have been instituted by the respondent to enforce a directors guarantee provided to them by a director of Freight Rite. If the liquidation and guarantee enforcement proceedings do not result in the debt owed to the respondent by Freight Rite being paid, it is the respondent’s present intention to sell the freight in an attempt to recover its loss. Mr Hunter told the Tribunal that the respondent has the right to take this course because of clauses 9 and 20 of its credit contract with Freight Rite.

Jurisdiction

8. The applicant seeks to pursue this claim before the Tribunal as a consumer claim in reliance upon Part 6A of the FT Act. The respondent puts the Tribunal’s jurisdiction to deal with the claim in issue. It contends in this respect that it has no contractual relationship with the applicant and did not provide its services to the applicant. It contends that its contractual relationship was with Freight Rite and that its services were provided to Freight Rite. It contends on this basis that the applicant has no standing to bring proceedings against it under Part 6A of the FT Act.

9. By letter to the Tribunal dated 23 January 2018 the respondent sought an order in chambers summarily dismissing the applicant’s claim on the grounds set out above. That application was referred to me by the Registrar on 27 February 2017 and I made an order refusing that application. In my reasons for that decision also issued on that date I stated that no ground for summary dismissal was made out because it is not fatal to the applicant’s claim that there is no direct contractual relationship between it and the respondent, citing Jenkinson v Chaw [2015] NSWCATAP 127 as authority for that proposition.

10. However, in refusing to summarily dismiss the applicant’s claim for want of jurisdiction I did not finally determine that the Tribunal did have jurisdiction to deal with the claim. That remains a live issue for determination in my consideration of the case as a whole. I deal with that issue now.

11. Section 79E of the FT Act defines the meaning of a consumer claim:

79E MEANING OF "CONSUMER CLAIM"

(1) For the purposes of this Part, a "consumer claim" means a claim by a consumer, for one or more of the following remedies, that arises from a supply of goods or services by a supplier to the consumer (whether or not under a contract) or that arises under a contract that is collateral to a contract for the supply of goods or services:

(a) the payment of a specified sum of money,

(b) the supply of specified services,

(c) relief from payment of a specified sum of money,

(d) the delivery, return or replacement of specified goods or goods of a specified description.

(2)    For the avoidance of doubt, a reference in this Part to a consumer claim includes a reference to a claim by a consumer against a supplier (for example, a manufacturer or wholesaler) who is not the direct supplier of goods or services to the consumer if the claim arises from or in connection with the supply of those goods or services by the direct supplier to the consumer.

12. Section 79D of the FT Act defines the term “consumer” to mean any of several persons or bodies to whom or to which a supplier has supplied or agreed to supply, goods or services (whether or not under a contract), or with whom or with which a supplier has entered into a contract that is collateral to a contract for the supply of goods or services. This includes a small proprietary company (within the meaning of the Corporations Law 2001 of the Commonwealth). Section 79H provides that for the purpose of Part 6A of the FT Act a person or body claiming to be a consumer is presumed to be a consumer until the contrary is proved: subsection 79H(a). In legal proceedings before the Tribunal the onus of proving that a person or body claiming to be a consumer is not a consumer is on the party who seeks to establish that fact: subsection 79H(a).

13. In this case there is no issue that the applicant is a small propriety company. The respondent has not put in issue the applicant’s status as a consumer. I am therefore satisfied the applicant has standing to bring a consumer claim in reliance upon Part 6A of the FT Act

14. Section 79F of the FT Act defines the meaning of “services” as that term is used in Part 6A of the FT Act. Relevantly to this case, a reference to “services” is a reference to the performance of work (including work of a professional nature), whether with or without the supply of goods: subsection 79F(1)(a). Section 79G of the FT Act defines the meaning of “supply” as that term is used in Part 6A of the FT Act. Relevantly to this case, a reference to the “supply” of services includes a reference to providing or rendering services for valuable consideration: subsection 79G(2)(a). The term “supplier” is defined in section 79D of the FT Act to mean a person who, in the course of carrying on (or purporting to carry on) a business, supplies goods or services.

15. In this case the applicant’s claim arises from the supply of transport brokerage services to it by Freight Rite based upon a per parcel fee billed monthly on account. There is no issue that this was a “supply” of “services” to the applicant by a “supplier” as defined in Part 6A of the FT Act.

16. The respondent is correct in asserting that it was not a party to that contract or agreement for supply. However, this is not fatal to the applicant’s claim because of the breadth of the words used subsection 79E(1) of the FT Act. The claim need only “arise” from a supply of services by a supplier to the consumer. A consumer is not strictly limited to pursuing a claim against the “supplier” party.

12. This was explained by the Appeal Panel of this Tribunal in Jenkinson v Shaw [2015] NSWCATAP 127. The Appeal Panel in that case was dealing with the Consumer Claims Act 1998 which is the legislative predecessor of Part 6A of the FT Act. However, the meaning of a “consumer claim” then contained in section 3A of the Consumer Claims Act 1998 is identical to that now contained in section 79E of the FT Act. At paragraph 28 of their decision the Appeal Panel held:

Rather than being limited to a claim against a supplier, a “consumer claim” is defined in the CCA by reference to the nature of the relief sought by the consumer and a causative relationship between the claim and the supply. A consumer claim is not defined by reference to the identity of the party sued. The causative relationship is expressed in words of broad import, namely that the claim “arises from” a relevant supply.

18. In this case there is clearly a causative relationship between the applicants claim against the respondent and the supply of services to it by the Freight Rite. This is because it was the supply of services to the applicant by Freight Rite that led to its parcels being placed in the custody and control of the respondent from which is seeks to retrieve them, or be compensated for their loss. I am thus satisfied that the applicant is entitled at law to pursue a consumer claim against the respondent in reliance upon the provisions of Part 6A of the FT Act.

19. I am otherwise satisfied that the Tribunal has jurisdiction to deal with the claim under Part 6A of the FT Act. The impugned “supply” of services was provided to the applicant in NSW as required by section 79K of the FT Act. The application has been made to the Tribunal within the three year time period permitted from the cause of action arising as required by section 79L of the FT Act, and the claim is within the monetary limit on the Tribunal’s order making power imposed by section 79S of the FT Act.

Applicable law

20. In its application the applicant does not identify the cause of action upon which its claim relies. Section 79N of the FT Act simply sets out the order making power of the Tribunal. It does not itself create a cause of action. A cause of action must be found elsewhere in the law. Having considered the applicant’s claim, I am satisfied that the appropriate causes of actions are in tort for detinue and conversion of goods.

21. In general terms, the tort of detinue is committed by a respondent’s wrongful refusal to return goods belonging to an applicant on the applicant’s demand. It is not committed until the demand has been made by the applicant and the respondent has refused to surrender the goods. An applicant must be able to establish an immediate right to possession of the goods at the time of the defendant’s refusal to surrender them to the applicant. Damages in detinue are assessed at the date of judgement. It is open to an applicant to seek recovery of the goods in specie either in lieu of or in addition to damages.

22. In general terms, the tort of conversion is committed by the respondent’s unlawful interference with the applicant’s title in goods. The respondent must be found to have dealt with the goods in a manner which is so seriously inconsistent with the applicant’s right to possession of it that it amounts to a denial of that right. The tort of conversion compensates an applicant for the loss of the right to obtain possession of the goods. The applicant must be able to establish an immediate right to possession of the goods and that the defendants conduct was a denial of that right. It requires a positive act of denial by the respondent. Damages in conversion are assessed at the time of commission of the tort.

23. The respondent asserts the right to exercise a general and particular lien over the parcels, both of which are possessory liens. In general terms a possessory lien is the right of a creditor to retain possession of a debtor’s goods until paid the debt owing. A particular possessory lien is the right of a creditor to retain goods until a debt associated with those particular goods is paid. A general possessory lien in the right of a creditor to retain the goods of a debtor until all debts owed by the debtor are paid. A lien may arise voluntarily, for example, as a term of a contract between parties or it may arise involuntary, for example, by imposition of a statute or a court.

24. The respondent also asserts that Freight Rite is the owner of the parcels and not the applicant. In effect, this raises the defence of jus tertii to the applicant’s claim: cf Edwards v Amos (1945) 62 WN (NSW) 204. In order to resist the applicant’s claim in this way the respondent must establish that the applicant does not have a right to immediate possession of the parcels because Freight Rite has a better title to them than the applicant does.

Consideration

25. Having regard to the applicant’s causes of action, the material facts, the contentions of the parties, and the applicable law, the questions the Tribunal must pose and answer in order to determine the outcome of this application may be stated as follows:

1. Is the applicant the applicant the owner of the parcels?

2. If so, at the material times for the dispute, did the applicant have an immediate right to possession of the parcels?

3. If so, at the material times for the dispute, did the applicant demand that the respondent surrender the goods to it, and did the respondent refuse to do so?

4. If so, has the respondent committed the tort of detinue?

5. And/or, has the respondent committed the tort of conversion?

6. If so, what remedy is the applicant entitled to?

Is the applicant the owner of the parcels?

26. Throughout the proceedings Mr Hunter on behalf of the respondent has asserted that the applicant has not proved that it is owner of the parcels. This is because the consignor of the parcels to the respondent was Feight Rite and not the applicant. That fact is recorded on the despatch dockets for each parcel, which are in evidence.

27. However, the evidence establishes to my comfortable satisfaction that the applicant in the owner of the parcels. They were produced as a result of individual contracts for the sale of the globes of the world contained in each parcel that had been entered into between the applicant and four of its customers. Completion of those contracts required consideration to pass between the parties to those transactions. The applicant had already received the purchase price for the globes from its customers, but completion of the contract required the applicant to deliver each of the globes to its customers. Until the customer took ownership and possession of each globe, the applicant remained its owner.

28. The applicant’s Delivery Register records the unique identifier for each parcel assigned to it by the respondent when it took receipt of the parcels from Freight Rite. That unique identifier appears on the despatch dockets which are in evidence. I am satisfied that this is sufficient to establish the applicant’s title to the parcels and their contents. I consider it vexatious for Mr Hunter to suggest otherwise. Having heard his oral evidence I am satisfied that he asserts this proposition independent of any belief in its reality. I am satisfied that at all material times the respondent knew that Freight Rite was consigning parcels to it for delivery as a transport broker on behalf of various customers, including the applicant.

29. As the applicant is out of possession of the parcels it is open to the respondent to defend the applicant’s claim by raising the defence of just tertii; that is, by asserting that Freight Rite has better title to the parcels and their contents than the applicant. The law permits the respondent to do so even without the authority of Freight Rite (or its administrators): Henry Berry & Co Pty Ltd v Rushton [1937] St R Qd 109. However, the respondent bears the onus of establishing that Freight Rite has a better right to possession than the applicant: Butler v Hobson [1838] 4 Bing NC 290 [at 300]; BIS Cleanaway (trading as CHEP) & Ors v Tatale & Anor; Brambles (trading as CHEP) v Tatale & Anor [2007] NSWSC 378 [at 47].

30. In this respect, apart from Freight Rite being the entity that consigned the parcels to the respondent for delivery there is no evidence to support the proposition that it had or acquired any title in the parcels and their contents at any material time for the dispute. Freight Rite’s administrators have not asserted it has title to the parcels, nor has it confirmed the respondent’s claim that it has title to the parcels. The respondent has made no inquiries of Freight Rite’s administrators in an effort to establish Freight Rite’s title to the parcels. Nor has it actually examined the parcels or their contents in an effort to discover their origin and ownership.

31. When Freight Rite picked up each parcel from the applicant on 20 and 21 September 2017 it became a bailee of each parcel. When Freight Rite delivered the parcels to the respondent on those days for ultimate delivery to the applicant’s customers the respondent became the sub-bailee of the goods: Gilchrist Watt & Sanderson Pty Ltd v York Products Pty Ltd (1970) 1 WLR 1262. These were bailments for mutual benefit and reward: that is, the applicant’s contract with Freight Rite required it to pay a delivery charge for each parcel on monthly terms. Freight Rite’s contract with the respondent also required Freight Rite to pay it a delivery charge for each item on terms. As bailee and sub-bailee of the parcels, Freight Rite and the respondent had possession of the parcels and their contents, but they acquired no title to them. Their duty as bailee and sub-bailee was to take reasonable care of the parcels and their contents while they were in their possession and to fulfil the terms of their respective delivery contracts: Coggs v Barnard (1703) 2 Lord Raym 909. Title to the parcels remained with the applicant as bailor under the bailment until each parcel was delivered to the applicant’s customers in consideration of the purchase price they paid for them.

At the material times for the dispute, did the applicant have an immediate right to possession of the parcels?

32. The terms of the bailment of the parcels to Freight Rite as bailee and to the respondent as sub-bailee did not anticipate that the parcels and their contents would ever be delivered back to the applicant because they were to be delivered to the applicant’s customers in completion of its sales contracts with them. The bailment was thus intended to terminate on the safe delivery of the parcels to the applicant’s customers.

33. This was not a bailment under which Freight Rite or the respondent acquired any right of use of the parcels or their contents for a specified period or on any other terms. The bailment arose from contracts for the carriage of the parcels only. The applicant thus always retained an immediate right to possession of the parcels and their contents. It was thus a bailment at will: cf Jelks v Haywood [1905] 2 KB 461; BIS Cleanaway (trading as CHEP) & Ors v Tatale & Anor; Brambles (trading as CHEP) v Tatale & Anor [2007] NSWSC 378 [at 42].

34. When the respondent refused to provide carriage of the parcels to their ultimate destination, it repudiated the bailment. Subject to the discussion that follows, both Freight Rite (as bailee) and the applicant (as bailor) thus had the right under the terms of the bailment to demand the immediate return of the parcels and their contents in undamaged condition: Kahler v Midland Bank Limited [1950] AC 24 [at 56]; Penfold’s Wines Propriety Limited v Elliott (1946) 74 CLR 204 [at 227]; Hill & Anor v Reglon Pty Limited [2007] NSWCA 295 [at 41].

35. This was a sub-bailment on terms. That is, when it received the parcels from Freight Rite, the respondent did so subject to terms and conditions set out in its contract with Freight Rite. The decisive issue in this case is whether the applicant was and is deprived of an immediate right of possession of the parcels because of the general and specific lien the respondent purports to exercise over them pursuant to clauses 9 and 20 of its contract with Freight Rite. If those clauses are legally effective, the applicant did not and does not have an immediate right to possession of the parcels unless and until Freight Rite’s debt to the respondent is paid.

36. As outlined above, a lien may arise voluntarily under the terms of a contract (for example) or it may by imposed involuntarily by operation of law. In this case the liens asserted by the respondent do not arise involuntarily by operation of law; that is, they are not imposed by any statute or order of a court. The liens purport to be based upon consent, in that they arise from the respondent’s contractual terms of trade.

37. There is no contract between the applicant and the respondent of any description whatsoever. There is therefore no direct or express contractual basis upon which the respondent is able to exercise a lien over the applicant’s parcels.

38. The question is then whether Freight Rite had any actual or ostensible authority of the applicant to enter into a contract with the respondent that would permit the respondent to exercise a lien over the applicant’s parcels.

39. There was no written contract between the applicant and Freight Rite. Its terms were entirely oral. Mr Keane denies that the applicant ever granted Freight Rite the authority to allow its parcels to be used as security under Freight Rite’s credit contract with the respondent or that the potential for this was ever communicated by Freight Rite to the applicant. The respondent has not taken the Tribunal to any evidence that establishes or suggests that Freight Rite entered into such a contractual arrangement with the applicant. There is an inherent improbability that the applicant would agree to such a term, which is so clearly contrary to its interests. Despite clauses 9 and 20 of the contract between Freight Rite and the respondent, I am therefore satisfied that Freight Rite never had actual or ostensible to enter into a contract with the respondent that would allow the applicant’s goods to be used as security for Freight Rite’s debt to the respondent.

40. The remaining question to determine is whether the applicant is bound by the respondent’s terms of trade because it has impliedly or constructively consented to them: Westpac Banking Corporation & Anor v Royal Tongan Airlines & Ors (1996) Aust Torts Reports 81-403; WMC Engineering Services Pty Ltd v Brambles Holdings Ltd t/a Oilfield and General Transport Co (unreported, Supreme Court of Western Australia, Wheeler J, 31 October 1997): both discussing and applying The Pioneer Container (1994) 2 AC 324. This requires that the applicant was on notice as to the respondent’s usual terms of trade, either specifically, or generally, because those terms are commonplace for a service provider of that kind. And it requires that the applicant contracted with Freight Rite knowing that its business would be brokered to the respondent subject to the respondent’s terms of trade.

41. In this case, it appears that the applicant did know, or at least could have discovered with very little inquiry, that Freight Rite was brokering some of its business to the respondent. However, the respondent has not put any evidence before the Tribunal that is capable of proving that the applicant was on actual or constructive notice as to the respondent’s terms of trade. The respondent’s contract with Freight Rite required Freight Rite to notify the applicant of these terms, but I have found that this never occurred in fact.

42. Nor has the respondent submitted any evidence that is capable of proving that the terms of trade in the freight industry generally involve the carrier exercising a lien over the goods of a third party which are consigned to it for carriage by an intermediary and that the applicant was on notice of this. Even if it had done so, on the evidence before me I am not satisfied that the applicant and its staff were sufficiently familiar with the freight business generally to be aware of such terms as a matter of course: WMC Engineering Services Pty Ltd v Brambles Holdings Ltd t/a Oilfield and General Transport Co (unreported, Supreme Court of Western Australia, Wheeler J, 31 October 1997).

43. There is therefore no basis upon which the applicant’s consent to the respondent’s terms of trade can be implied or construed. I am satisfied that the applicant was wholly ignorant of those terms and was taken completely by surprise when they were asserted against it. The applicant is therefore not bound by those terms and those terms cannot be enforced against it. Clauses 9 and 20 of the respondent’s contract with Freight Rite therefore do not operate to deprive the applicant of an immediate right to possession of the parcels and their contents.

Did the applicant demand that the respondent surrender the goods to it, and did the respondent refuse to do so?

44. The evidence establishes to my comfortable satisfaction that the applicant has made a demand that the respondent deliver up possession of the parcels to it and that the respondent has refused to do so. Mr Keane made the first demand for the return of the parcels on 27 September 2017 when he attended the respondent’s offices. That request was refused by Mr McGillicudy, the respondent’s NSW Sales Manager. Mr Keane made subsequent demands that the respondent return the parcels to him in telephone conversations with Ms Ria Walker, the respondent’s NSW Operations Manager during October 2017. Ms Walker refused to do so. Mr Keane has maintained his demand that the parcels be returned to him up to the date of the hearing. On behalf of the respondent Mr Hunter has refused to do so.

Has the respondent committed the tort of detinue?

45. It follows from the analysis set out above that the respondent has committed the tort of detinue by refusing to deliver up possession of the parcels and their contents to the applicant. At all material times for the dispute the applicant has had an immediate right to possession of the parcels. It has made repeated demands that the respondent deliver up possession of the parcels to the respondent’s senior officers. The respondent has refused to do so.

Has the respondent committed the tort of conversion?

46. It also follows from the analysis set out above that the respondent has committed the tort of conversion with respect to the applicant’s parcels. The applicant had an immediate right to possession of the parcels and the respondents positive acts in refusing to return the packages were and are a denial of that right. Moreover, the respondent’s purported exercise of a lien over the packages and its expressed intention to sell the contents of the parcels in an attempt to recover the debt owed to it by Freight Rite amounts to such a serious interference with the applicant’s right to possession of the parcels that it is a denial of that right.

What remedy is the applicant entitled to?

47. The applicant’s preferred remedy is for the parcels to be returned to it in specie. The applicant is entitled to that remedy in its action in detinue. In his oral evidence to the Tribunal Mr Hunter told the Tribunal that the respondent continued to have possession of the parcels in its warehouse and that he believed them to be in undamaged condition, although he has not inspected them himself. The respondent thus appears capable of complying with an order that it immediately deliver up possession of the parcels to the applicant. I will therefore make that order pursuant to sub-section 79N(f) of the FT Act.

48. If it eventuates that the respondent is unable to deliver up possession of the parcels to the applicant in undamaged condition, or if the respondent otherwise fails to comply with this order, the applicant will be entitled to an order for compensation as a result of its actions in both detinue and conversion. The applicant may seek leave to renew the application before me at any time before 13 May 2018 if the respondent cannot or does not comply with the order for the return of the parcels to it.

Conclusion

49. For the foregoing reasons the applicant is entitled to an order pursuant to section 79N(f) of the FT Act that will require the respondent to immediately make available for the applicant’s collection parcels with consignment notes YY342269, YY342231, YY344177 and YY344195 in undamaged condition. If the respondent does not comply with this order by 30 April 2018, the applicant may apply to the Registrar to renew this application before me. I will then determine if and if so in what amount the applicant is entitled to be compensated for the loss of these parcels and their contents.

P French

General Member

Civil and Administrative Tribunal of New South Wales

1 May 2018

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 03 August 2018