Consolidated Transport Industries Pty Limited v Whirlpool (Australia) Pty Limited

[2003] NSWSC 1197

CITATION:	CONSOLIDATED TRANSPORT INDUSTRIES PTY. LIMITED v. WHIRLPOOL (AUSTRALIA) PTY. LIMITED & ANOR [2003] NSWSC 1197
HEARING DATE(S):	Wednesday 23 April 2003
JUDGMENT DATE:	17 December 2003
JURISDICTION:	Civil
JUDGMENT OF:	Greg James J at 1
DECISION:	Both the appeal against the verdict and costs dismissed.
CATCHWORDS:	Civil claims - appeal to Supreme Court from Local Court - question of law - terms of sub-bailment - conduct of proceedings before magistrate - proceedings turning on critical fact - whether appeal available - costs - what opportunity to be heard necessary.
LEGISLATION CITED:	Local Court (Civil Claims) Act 1970
CASES CITED:	N/A
PARTIES :	CONSOLIDATED TRANSPORT INDUSTRIES PTY. LIMITED v. WHIRLPOOL (AUSTRALIA) PTY. LIMITED & ANOR
FILE NUMBER(S):	SC No. 10775 of 2002
COUNSEL:	Plaintiff: S.T. White 1st Defendant: I.R. Pike 2nd Defendant: P.J. Gow
SOLICITORS:	Plaintiff: Freidman Reeves 1st Defendant: Phillips Fox 2nd Defendant: Holding Redlich

LOWER COURTJURISDICTION:	Local Court
LOWER COURT FILE NUMBER(S):	785/00
LOWER COURT JUDICIAL OFFICER :	C. Forbes

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

GREG JAMES, J.

WEDNESDAY 17 DECEMBER 2003

No. 10775 of 2002

CONSOLIDATED TRANSPORT INDUSTRIES PTY. LIMITED v. WHIRLPOOL (AUSTRALIA) PTY. LIMITED & ANOR

JUDGMENT

1 GREG JAMES, J: These are proceedings in which the plaintiff, Consolidated Transport Industries Pty. Limited (hereinafter CTI), the second defendant in the proceedings below, by summons appeals, pursuant to s.104 and s.109 of the Justices Act 1902 made, by s. 69 of the Local Court (Civil Claims) Act 1970 applicable to civil proceedings, the decisions of a magistrate in certain Local Court civil claims proceedings.

2 At the time of this appeal s.104(1) provided:-

“(1) A person against whom any conviction or order was made, or sentence was imposed, by a magistrate in summary proceedings may appeal under this Division to the Supreme Court on any of the following grounds:-
(a) a ground that involves a question of law alone,
(b) a ground that involves a question of mixed law and fact, but only with the leave of the Supreme Court,
(c) the ground that the conviction, order or sentence cannot be supported having regard to the evidence.
This subsection does not apply in respect of an order that is made in relation to committal proceedings or an interlocutory order.”

3 Section 109 provided:_

“The Supreme Court may, after hearing an appeal, determine the appeal by dismissing the appeal or by doing any one or more of the following:-
(a) confirming, quashing, setting aside or varying the conviction, order or sentence appealed against or any part of it,
(b) increasing or reducing the sentence appealed against,
(c) making such other orders as it thinks just,
(d) remitting the matter to the magistrate who made the conviction or order, or imposed the sentence, to hear and determine the matter of the appeal.”

4 At the time these proceeding were brought, these were the extant provisions of the Justices Act 1902 applicable to such appeals. That Act has subsequently been repealed. Nonetheless, this matter falls to be decided on the basis of those two sections as then enacted.

5 The plaintiff seeks that the order of the magistrate of 21 February 2002 finding a verdict against it in favour of the first defendant (Whirlpool), the plaintiff in the Local Court, in the sum of $41,353.91 be quashed or set aside; that the order the magistrate made that the plaintiff pay the costs of Whirlpool and the second defendant, J.R. Haulage Pty. Limited (hereinafter JRH; referred to in the Local Court as SWADS, ie., Sydney Warehousing and Distribution Services, a name under which that company traded) be quashed or set aside, including the order that the first defendant’s costs be paid on an indemnity basis. It is sought in lieu that the proceedings be dismissed as against the plaintiff; that the first defendant pay the plaintiff’s costs.

The grounds of appeal

6 The grounds upon which it is contended that such orders should be made were set out, in accordance with the Supreme Court Rules, in the summons. They were as follows:-

“1. The magistrate erred in law in finding that the contractual relationship between CTI and JRH required CTI to manoeuvre the subject container in such away so as to prevent theft which finding was made in the absence of such evidence or was against the weight of the evidence.
2. The magistrate erred in law in failing to take into account or give sufficient weight to the evidence of Mr. McCaw [apparently referred in the transcript and the magistrate’s judgment as Mr. McCorr] as to the inability of CTI to manoeuvre the subject container in such a way so as to prevent theft in circumstances where such evidence was not contested by Whirlpool and was not the subject of contrary evidence.
3. The magistrate in finding CTI liable to Whirlpool as sub-bailee failed to properly have regard to the duties owed by CTI to JRH and Whirlpool in circumstances were JRH and Whirlpool were aware that CTI was unable to manoeuvre the subject container in such a way as to prevent theft.
4. The magistrate in finding CTI liable to Whirlpool as sub-bailee imposed upon CTI a duty equivalent to that of strict liability contrary to the duty owed at law by sub-bailee to a bailor.
5. The magistrate erred in law in failing to have regard to the evidence or the weight of the evidence of JRH that it did not regard CTI as having acted contrary to the contract as between it and JRH particularly in circumstances where such matter was not contested by Whirlpool or the subject of contrary evidence.
6. The magistrate erred in law in failing to give CTI the opportunity of being heard in relation to the costs order that CTI pay JRH’s costs and disbursements as agreed in default of agreement within two (20) days (sic), the costs to be assessed under the Legal Profession Act.
7. The magistrate erred in law in failing to give reasons for making the order the CTI pay JRH’s costs and disbursements as agreed in default of agreement within two (2) days (sic), such costs to be assessed under the Legal Profession Act.”

The first cross-claim and notice of contention

7 By leave, JRH, was permitted to file an amended first cross-claim (the first cross-claim). That claim was made conditional upon the plaintiff succeeding and seeks to appeal, again pursuant to s.109, from so much of the decision of the magistrate as ordered costs.

8 In addition, JRH contended in that document that the decision of the magistrate that there be a verdict for JRH against Whirlpool should be upheld upon other grounds even if the magistrate’s decision were to be held erroneous as contended by Whirlpool. JRH sought in lieu of the orders made, an order that Whirlpool pay JRH’s costs of the proceedings on an indemnity basis from 23 May 2001 and that Whirlpool pay JRH’s costs of the cross-appeal.

9 The notice of amended cross-claim gave the following grounds for that appeal:-

“1. That her Worship erred in law in ordering that CTI pay JRH’s costs and disbursements when there were no proceedings as between CTI and JRH.
2. That her Worship erred in law in not ordering that Whirlpool pay JRH’s costs and disbursements when JRH obtained a verdict in the action against Whirlpool
3. That her Worship erred in law in not ordering that Whirlpool pay those costs and disbursements on an indemnity basis from 23 May 2001 pursuant to an offer of compromise served on Whirlpool by JRH on 22 May 2001.”

10 The following ground of contention was advanced:-

“1. That her Worship erred in law in that she should have found JRH as not a sub-bailee of the goods.”

The second cross-claim and notice of contention

11 A second cross-claim was filed by Whirlpool. In that second cross-claim, Whirlpool appealed against so much of the magistrate’s decision as ordered there would be verdict and judgment for JRH against Whirlpool. Whirlpool also contended that the verdict for Whirlpool against CTI should be supported on other grounds. It sought a quashing of the verdict for JRH against Whirlpool and that there be a verdict and judgment for Whirlpool against JRH in the sum of $41,353.91; that JRH be held jointly and severally liable for Whirlpool’s costs of the proceedings below and the appeal on an indemnity basis after 9 April 2001.

12 In that document, the grounds for the appeal and the grounds said to support the contention that the verdict for Whirlpool should be upheld are as follows:-

“Statement of Grounds pursuant to Part 51B Rule 8 of the Supreme Court Rules
1. The learned magistrate erred in law, having correctly found that the relationship between JRH and CTI was that of sub-bailee and sub-sub-bailee, that JRH was not liable for the want of care on the part of its agent, CTI.
Grounds of Contention against CTI
1. The learned magistrate erred in law in that she should have found that the security measures put in place by CTI were inadequate, insofar as CTI:-
(a) did not have in place over the period 3 October 1997 to 6 October 1997 appropriate security patrols;
(b) should have engaged a caretaker over the entirety of the period 3 October 1997 to 6 October 1997; and
(c) should have installed perimeter lighting around the entirety of its Wetherill Park warehouse and yard.
2. The learned magistrate erred in law in that she should have found, if CTI’s security system was adequate, that it was not observed in practice over the period 3 October 1997 to 6 October 1997, in that there was not random security patrols taking place at least four hourly over the period 3 October 1997 to 6 October 1997.”

13 There had also been a first defendant in the proceedings below, Advanced Shipping Systems Australia Pty. Limited. However, no verdict was found against that party nor is that company party to the appeal or cross-claims since it had been de-registered.

The evidence and pleadings in the Local Court

14 Two voluminous affidavits were filed sworn by Mr. Scott Maurice Freidman, solicitor for the plaintiff, dated 21 May 2002 and 17 July 2002 respectively.

15 The affidavit of 21 May 2002 exhibited the transcript of the oral evidence, the reasons for the decision of the magistrate and the formal order of the Local Court. The affidavit of 17 July 2002 exhibited the amended ordinary statement of claim filed in the Local Court, the notices of grounds of defence and the documentary evidence before the magistrate.

16 The amended ordinary statement of claim pleaded that Whirlpool was the owner of some 377 cartons of microwave ovens which had been brought from Hong Kong to Sydney; that it had contracted with JRH for that company “to warehouse and store its goods” subsequent to the arrival of such goods in Sydney and prior to further delivery of the goods; that CTI collected the goods from the Port Botany terminal and carried the goods in a container from that terminal to a warehouse owned and/or operated by the second defendant at Wetherill Park. CTI, it was pleaded, did so as having been at all material times a bailee or sub-bailee for reward of the goods and under a duty to Whirlpool to deliver all the cartons to the warehouse nominated by Whirlpool in the same good order and condition as when CTI took possession of the goods.

17 It was further pleaded that some time after the goods had been picked up from Port Botany on 3 October 1997 and prior to 6 October 1997, 242 cartons of the goods were stolen or otherwise went missing from the second defendant’s warehouse.

18 It was contended CTI was in breach of the bailment. Particulars of which the breach were given. They asserted a failure to take any or adequate care of the goods whilst in the second defendant’s possession or at the second defendant’s warehouse; failing to provide any or adequate security to prevent theft; failing to take any steps to secure the goods while at the warehouse and “(e) res ipsa loquitur”.

19 In the alternative, a claim was made against JRH, that is, that the agreement already referred to between Whirlpool and JRH included an additional term that it was for JRH to store the container containing the goods at the plaintiff’s nominated warehouse which was JRH’s warehouse; that JRH was at all material times a bailee for reward and under a duty to re-deliver to Whirlpool all 377 cartons of the goods; that JRH sub-contracted with the CTI for CTI to collect the container from Port Botany and deliver the goods to JRH’s warehouse; that in part performance of JRH contract with the CTI, CTI collected the container on about 3 October 1997 and carried that container containing the goods to its own warehouse where they were stored at JRH’s instructions; that CTI was at that time under the duty which had already been pleaded; that the goods went missing as had already been pleaded and that that occurred by reason of a failure to deliver amounting to a breach of bailment as previously particularised.

20 It was pleaded against JRH that it had failed to deliver the undelivered goods to its own warehouse, and that further in the alternative that in breach of bailment JRH failed to ensure the plaintiff received the undelivered goods.

21 The particulars of the breach of bailment lay in assertions that JRH had failed to take any or adequate care of the goods while under its possession, custody or control; failed to ensure CTI had a proper security system in place at CTI’s warehouse; failed to provide any or any adequate security system to prevent theft of the undelivered goods from the second defendant’s warehouse; failed to take any or any steps to secure the goods whilst at the second defendant’s warehouse and “(e) res ipsa loquitur”.

22 In the alternative, as against each of CTI and JRH, a claim was pleaded in negligence asserting a breach of the duty of care to the plaintiff “by allowing the goods to be stolen through their negligence”. The particular of breach were the particulars including “res ipsa loquitur” given in respect of the asserted breaches of the bailment.

23 In its defence, CTI admitted collecting a container and delivering it to its warehouse and that it was at all material times a warehouse operator and provided land carriage services for goods within Australia. It admitted a quantity of goods stored in the container were stolen from the warehouse some time between 3 October 1997 and 6 October 1997, but otherwise made no admissions nor raised any special defences.

24 In its defence, JRH either did not admit or denied all but formal matters asserted against it.

25 At the hearing before the magistrate, the following facts were agreed by the parties (Exhibit SMF2 to the affidavit of Scott Maurice Freidman sworn 21 May 2002) (SWADS was the trading name of JRH; Advance the de-registered company, the first defendant before the magistrate):-

“(i) Advance had an arrangement with Whirlpool since at last 1990 whereby Advance was responsible for the shipment of Whirlpool products from Whirlpool’s head office in Hong Kong, to a warehouse maintained by SWADS in Sydney for the distribution of Whirlpool’s products as requested by Whirlpool;
(ii) since at least 1993, an arrangement existed between Advance and SWADS whereby SWADS, on behalf of Advance, would arrange for the collection of Whirlpool’s products from the wharf in Sydney and transport those products to the SWADS warehouse in Wetherill Park, Sydney. On occasions, SWADS would in turn sub-contract the transport of Whirlpool’s products to CTI;
(iii) 377 microwave ovens were ordered by Whirlpool in Australia from Whirlpool in Hong Kong. The contract was FOB Hong Kong. In accordance with the usual arrangements, Advance was notified of the order, and directed to arrange transportation. Advance arranged for the shipment on the vessel “Luo He’ which berthed in Port Botany, Sydney on or about 30 September 1997. In accordance with the usual arrangements, SWADS was responsible for collecting the goods from Port Botany and delivering them to the Wetherill Park warehouse of SWADS. SWADS sub-contracted the task to CTI. On 3 October 1997, CTI collected the goods from Port Botany. The goods were to be delivered to SWADS’ Wetherill Park warehouse.
(iv) the goods were not delivered to SWADS’ warehouse on 3 October 1997, but were stored over the long weekend at CTI’s premises at Redfern Street, Wetherill Park. The goods remained in the shipping container on the trailer parked behind a mesh fence;
(v) sometime over the long weekend, CTI’s yard was broken into by unknown persons, and 242 of the microwave ovens were stolen from the container. It would appear the theft was not notified until Tuesday morning (7 October 1997). Whirlpool was not notified of the theft until the morning of 7 October 1997;
(vi) at the time of the theft, Whirlpool was the owner of the microwave ovens. As such it had title to sue for the loss;
(vii) 242 of the microwave ovens were not delivered to Whirlpool.”

26 In addition, certain limited oral evidence was given as to the terms of the agreement between CTI and JRH and as to what security measures could be and were adopted so as to comply with that agreement.

The judgment

27 The learned magistrate gave judgment on 21 February 2002. She referred to the first defendant as having been “excused as that company had become deregistered”. As far as that defendant was concerned, the proceedings were marked dismissed with no order as to costs.

28 In her judgment, the learned magistrate made a number of findings of fact. She referred to the context in an opening passage of her judgment. (Again, the reference to “Advanced” is to the first defendant; that to SWADS is to JRH):-

“The plaintiff, Whirlpool, sues to recover the value of 242 microwave ovens stolen whilst they were located at the premises of the second defendant, CTI, some time over the long weekend of 3 to 6 October 1997. The first defendant, Advanced, had an arrangement with Whirlpool that existed since at least 1990, whereby Advanced was responsible for the shipment of Whirlpool products from Whirlpool’s head office in Hong Kong to a warehouse maintained by the third defendant, Swads, in Sydney for the distribution of Whirlpool’s products as required by Whirlpool.
Since at least 1993, an arrangement existed between Advanced and Swads whereby Swads on behalf of Advanced would arrange for the collection of Whirlpool’s products from the wharf in Sydney and transport those products to the Swads warehouse at Wetherill Park. On occasion, Swads would in turn subcontract the transport of Whirlpool products to CTI.
In the present case three hundred and – I can’t read my writing – 377 or 373 microwave ovens were ordered by Whirlpool in Australia from Whirlpool in Hong Kong. The contract was FIB Hong Kong. In accordance with the usual arrangements, Advanced was notified of the order and directed to arrange transportation. Advanced arranged for the shipment on the vessel Luo Hai which berthed in Part Botany, Sydney on or about 30 September 1997. In accordance with the usual arrangements then prevailing, Swads was responsible for collecting the goods from Port Botany pursuant to a contract with the first defendant, and delivering them to the Wetherill Park warehouse of Swads. Swads subcontracted this task to CTI.
On 3 October 1997, CTI collected the goods from Port Botany. The delivery note is in Exhibit 2. The goods were to be delivered to Swads’ Victoria Street, Wetherill Park warehouse. The goods were not delivered to Swads’ warehouse on 3 October 1997 but were stored over the long weekend at CTI premises, Wetherill Park. The goods remained in the shipping container on the trailer parked against a hurricane mesh fence. Some time over the long weekend, CTI’s yards were broken into by unknown persons, and 242 of the micro ovens – microwave ovens were stolen from the container. IT is agreed by all the parties at the time of the theft, Whirlpool was the owner of the microwave ovens and, as such, it has title to sue for the loss.”

29 The learned magistrate also held, notwithstanding the contention of JRH, that it did not have possession and that a transfer of possession was necessary for any bailment to arise; that JRH was a sub-bailee, holding that JRH had a contractual arrangement with the first defendant to deliver the goods to the plaintiff’s nominated warehouse, it had contracted that task to CTI and thus had obtained possession through “its sub-contractor – sub-contracted agent”. In that context, the magistrate posed the relevant issue in these terms: “the question (was) posed, (whether) the duty of the bailee to the bailor in respect of goods lost by theft was to take steps which were reasonable in the circumstances”. Her Worship referred to the standard as being one of reasonable care in the relevant circumstances. She then referred to the evidence on that issue.

30 She accepted the evidence of a witness, Mr. McLaughlin [also referred to in the materials as McLoughlin and McLauchlan], who had attended CTI’s premises about two months prior to the theft and had satisfied himself that security of those premises was “commensurate with the industry” provided that certain precautions were taken as to security: that is, “that the yard gates were kept locked, that the late night operation of the business continued in conjunction with random security, that the sensor lights were in working order and that efforts were made to butt the containers”.

31 The magistrate held that JRH had discharged its onus, establishing that the loss did not result from want of care its part. She then turned to consider the position of CTI.

32 It was contended on behalf of CTI that it was a term of the contract between CTI and JRH that CTI would collect the goods from Port Botany and deliver them to JRH, and that in breach of that contract, JRH refused to receive the goods.

33 The magistrate referred to evidence of Mr. McCaw (who appears also to be referred to as Mr. McCorr, at times), that although CTI was not in the business of providing storage for containers, from time to time containers might be held for a short while in their yard awaiting an appropriate time for a container to be delivered to other premises and that JRH had an arrangement with CTI that only a set number of containers would be accepted by JRH in any one day.

34 The magistrate referred to the position of JRH being that they could not receive containers after 3.00 pm because they had no capacity to unload after that time. She referred to the evidence of Mr. McLaughlin that CTI were aware that unless they could get containers to JRH’s yard by 3.00 pm, they shouldn’t bring them. The magistrate found that on this occasion CTI collected the container and left Port Botany at 3.15 pm. She found that the container was taken back to CTI’s yard ready for delivery the first thing the next business day. She held that JRH did not refuse to receive the goods in breach of a contract. She found that the container was kept in CTI’s premises in accordance with the existing relationship between it and JRH for the container to be held overnight ready for delivery first thing the next morning and that both Whirlpool and CTI “condoned” this arrangement.

35 When considering the security level of the premises, the magistrate made reference to the evidence that the CTI premises comprised a two and a half acre yard surrounded by a chain wire fence with barbed wire, and that the door of the subject container, as it had been placed in that yard overnight, was up against the chain wire fence.

36 The magistrate appears to have accepted the account given in a police report of how the goods were stolen, viz:-

“Offenders have cut a hole through the chain wire cyclone fence giving access to the rear yard where laden containers were stored. Offenders have then removed the seals from the door of about 10 containers by either using a screwdriver to top twist the seals from the door or the bolt cutter to remove heavy type seal. On removal of the seals, offenders have then opened the door and removed property therein which has been carried from the containers to a truck in the rear of the premises.”

37 It was accepted, the magistrate noted, by all parties, that neither the bolt seal nor the container itself provided security for what was inside. The magistrate noted the evidence of Captain Mathias that the container had not been placed in a position to prevent tampering either by placing the container door to door with another container or against a wall to prevent the door being opened. Such a placing of a container is apparently described as “butting”. That appropriate efforts were made to butt the containers was one of the precautions referred to by Mr. McLaughlin as necessary to ensure a sufficient level of security to comply with the arrangement between CTI and JRH.

38 The magistrate held that, short of locking the container away in a building, the easiest most practical way to ensure reasonable security was for a loaded container to be stored in such a way that access to the door was prevented either by placing the doors next to a wall or another container.

39 The Chief Executive Officer of CTI gave evidence that it was not possible to have done that in this instance since the goods had been intended to be stored overnight and some two days notice would be required in order to store containerised goods in such a way. He said it would have been a logistical nightmare to re-arrange matters so as to adopt that security precaution. In particular, he pointed out that to effect the necessary movements, a 20 tonne forklift would be required to move the container from the trailer to the ground.

40 However, the magistrate was not persuaded of this or that any efforts were made to butt the container. She accepted it was possible that containers on trailers can be butted to other trailers. She did not accept that butting the containers would have required two days notice or that any efforts were made to secure access to the container. She therefore was not satisfied that the second defendant adopted the security procedures that had been agreed.

41 On that basis, she found against CTI that it had breached of the terms of the bailment gave the judgment appealed from. She ordered CTI to pay Whirlpool’s and JRH’s costs. In consequence of an offer of compromise served on 10 April 2001 she ordered that the costs of the second defendant be paid on an indemnity basis from 10 April 2001.

42 The formal orders she made are as follows:-

“Judgment for the plaintiff against the second defendant.
Claim $28,706.25
Interest from 7/10/97 $12,647.66
Total $41,353.91
Verdict for the third defendant against plaintiff.
Second defendant ordered to pay the plaintiff’s and third defendant’s costs and disbursements as agreed; in default of agreement within two days, the costs are to be assessed under the Legal Profession Act.
Plaintiff’s costs against second defendant to be paid on an indemnity basis from 10 April 2001.
Liberty to either party to apply on seven days notice”

The plaintiff’s submissions

43 The written submissions for the plaintiff before me properly identified as a critical issue whether the plaintiff had complied with its contractual obligation. As the case had been conducted, correctly, in my view, the submission identified as the basis of the judgment, the magistrate’s conclusion that CTI had been in breach of its contract of sub-bailment with JRH and was thereby liable as sub-sub-bailee to Whirlpool. As the case was conducted, what appeared to be critically in issue was whether the plaintiff had adopted such security measures as the parties had contemplated by their agreements. As to that, it was submitted on behalf of the plaintiffs that the magistrate appeared to have found that the contract between CTI and JRH required CTI to make “efforts” to have the container “butted” and that the magistrate had found that it was reasonable in the circumstances that such efforts be made, but that these findings were in error as the magistrate “did not give or give adequate weight” to a number of facts said to have been established by the evidence, they being:-

“(i) the premises of CTI at Wetherill Park were two and a half acres in size;
(ii) CTI did not have the capacity to store containers in its warehouse as it was a racked warehouse;
(iii) if a container was delivered to CTI’s premises it was required to be stored in the yard;
(iv) CTI’s business was not that of a container storage business. CTI’s business was that of a transporter. CTI would only take containers if a client was not in a position to accept delivery therefore. CTI would store the containers for a short period pending receipt by the client.
(v) CTI did not have facilities to lift containers off trailers unless empty. This required a piece of machinery that CTI did not possess. Consequently, the relevant container could not be lifted off the trailer and placed on the ground for the purpose of having its doors butted. The only other means of lifting containers off trailers when full was using a particular type of trailer which had mechanical arms (side lift). In order to have access to that type of trailer, CTI required two days notice. As the relevant container was not expected to be stored at CTI, such a trailer was not used in the transportation from the wharf. Consequently, no means existed by which the relevant container could be placed on the ground for the purpose of butting its doors. In other words, CTI did not have the capacity as would a container storage facility to move full containers from trailers to the ground. These constrains were known to SWADS and Whirlpool;
(vi) butting containers on a trailer was difficult. It required bringing another trailer with a container to the back of another trailer with a container;
(vii) the ability to butt containers was also governed by how many containers and trailers were on the ground. As CTI’s premises were not designed for storing containers, it had limited facilities and space to butt containers particularly those that could not be lifted off trailers;
(viii) it was never put to Mr. McCaw on behalf of CTI that the relevant container in the circumstances then prevailing could have been butted in a way to prevent entry to the doors by the use of reasonable effort. In those circumstances, there was no evidence upon which the magistrate could have found that there was a breach of the relevant contract of sub-bailment by CTI;
(ix) the evidence of Captain Mathias called by Whirlpool took the matter no further. He had no understanding whether the circumstances were such that CTI could have butted the relevant container through the use of reasonable efforts. He merely observed that it had not been done;
(x) Mr. McCaw prepared a diagram during this evidence in which he depicted the location of empty boxes, full boxes, trailers and the general layout of the premises. Mr. McCaw stated that it was not feasible to line up the trailers with full containers along the driveway. The prospect of lining up a large number of trailers along the only mans of egress for a busy transport business itself raises issues of safety. Further, the failure to do so does not bespeak of want of reasonable endeavours. Further, her Worship’s question at t.67.20-.29 appears to overlook the circumstances in which CTI came to have possession of the container and the fact that it did not have the facilities of a storage container business which could in the ordinary course been able to deal with security in a manner appropriate to the circumstances. Relevantly those constraints were known both to SWADS and Whirlpool;
(xi) Mr. McCaw’s evidence in relation to the logistical problems and difficulties associated with butting the containers on trailers down the driveway was neither the subject of cross-examination nor was there evidence adduced by Whirlpool to the contrary. In those circumstances, it was not open to the magistrate to reject Mr. McCaw’s evidence on the issue and find that ‘no efforts were made to secure access to the doors’. That finding fails to recognise the constraints placed on CTI such that it was not feasible or logistically possible to do so. Such matters are even more important when the duty is no more than to do what is reasonable in the circumstances;
(xii) in rejecting Mr. McCaw’s evidence, her Worship relied on the evidence of Mr. McLaughlin that containers on trailers can be butted to another trailer. Mr. McLaughlin, however, qualified his answer by stating that ti depended on a number of factors including the space in the yard which eh said was not available to CTI. When asked whether he believed the trailers could be butted along the driveway or against a building, he said that whilst it was possible, it was not practical. The effect of Mr. McLaughlin’s evidence was that there was a significant difference between what was possible and what was practical. His evidence was akin to that of Mr. McCaw, namely, that butting the container against a wall or down the driveway was not logistically feasible. The fact that Mr. McLaughlin expected CTI to do no more than exercise reasonable efforts supports the proposition that CTI’s ability to butt containers depended on the prevailing circumstances. Further, there was no evidence illicited (sic) from Mr. McLaughlin that suggested he believed CTI had failed to exercise reasonable efforts. On the contrary, the evidence at t.18.9-.49 suggests that he did not think it was feasible in the circumstances for CTI to butt the subject container;
(xiii) a further mater relied upon by the magistrate in rejecting Mr. McCaw’s evidence was that ‘the container arrived at SWADS at about 6.00 pm on the Friday at the beginning of a long weekend’. This appears to relate to a suggestion that because it was 6.00 pm on the Friday before a long weekend CTI may not have had employees willing or able to butt the relevant container. Mr. McCaw rejected such an assertion and in any event stated employees were at CTI until midnight at day;
(xiv) in rejecting Mr. McCaw’s evidence, the magistrate found that it would not have taken two days notice to butt the subject container. The evidence was that CTI would require two days notice if a trailer with side arms was required to transfer the container on to the ground as CTI had only two such trailers. It is not clear what the magistrate is referring to at judgment t.513-.15 in relation to other containers on trailers and other empty containers. CTI submits that the magistrate erred in law in failing to have regard or sufficient regard to the weight of the evidence concerning the constraints placed on CTI in being able to butt the doors of the subject container whilst on a trailer. That evidence needed to be seen in the context of a legal obligation posed on CTI which was to do no more than exercise reasonable efforts in the circumstances. It also needed to be considered in circumstances in which both SWADS and Whirlpool were aware of the fact that CTI was not a container storage facility and was constrained in the way described by Mr. McCaw and Mr. McLaughlin. Further, whilst the magistrate correctly accepted that CTI’s duty to Whirlpool could rise no higher than the obligations imposed by the contract of sub-sub-bailment with SWADS, she proceeded to impose upon CTI a duty to secure the container in a manner and in circumstances that was inconsistent with such an obligation.”

44 The plaintiff’s submissions accepted that there was a legal obligation on CTI, a breach of which resulting in the loss of the goods would support the verdict. But it was contended that the extent of the obligation on CTI was to do no more than exercise reasonable care in the circumstances and that in holding, as she did, the magistrate had concluded the agreement included a term which imposed a higher standard than was agreed or imposed by law.

45 Thus, in essence, it was submitted, the magistrate had erred in law in failing to have regard or sufficient regard to the weight of the evidence concerning the constraints on CTI, and as were known to JRH, to butt.

46 In the plaintiff’s supplementary submissions, it was asserted that the magistrate accepted that the plaintiff’s duty to Whirlpool could rise no higher than the contractual obligations imposed by the contract between the plaintiff and JRH and propounded that it was necessary for the magistrate to determine what the terms of the contract of sub-bailment between the plaintiff and JRH was. It was submitted that the plaintiff had asked the wrong question, namely, “did [the plaintiff] adopt the security procedures approved by [JRH]”. It was there contended that the magistrate had misunderstood the applicable legal test to the facts as found. It was asserted that the applicable legal test was determined by considering what did the contract require between the plaintiff and JRH. It was accepted that the plaintiff had taken no steps to butt the subject containers, but the plaintiff in the supplementary submissions contended there was no such obligation imposed because the contract did not require it.

47 It was asserted that the magistrate seemed to have imposed liability on the plaintiff by reason of its failure to adopt the security procedure that Mr. McLaughlin referred to in his evidence. That evidence included reference to attempting to butt where possible. It was submitted that the evidence of Mr. McLaughlin was irrelevant. It was submitted that Mr. McLaughlin’s evidence rose no further than an unexpressed assumption by him that efforts would be made to butt the containers and that that was not evidence of a contractual obligation on the part of the plaintiff and was irrelevant to a consideration of the true obligation.

48 I do not accept these submissions. The evidence plainly went to enable identification of the content of the terms of the agreement between the parties and the responsibility the plaintiff had under those terms. The evidence was available to show what the terms were included a duty to act reasonably what steps would have complied with that duty. In particular, the evidence showed that the plaintiff, if acting reasonably, needed to make efforts as Mr. McLaughlin had said in his evidence. The evidence related to the content of the term of the sub-bailment. Despite the multiplicity and complexity of the grounds and submissions, at bottom they merely contend that the magistrate erred in finding the facts as she did.

49 It was further contended that the magistrate had erred in holding “that the easiest, most practical and reasonable security is for a locked container to be stored in such a way so that access to the doors is either prevented either by placing the doors next to a wall or other container”. It was contended this was a finding in respect of which there was no evidence and so constituted an error of law and that all evidence was to the contrary.

50 That finding is a result of the application of sheer plain common sense, and there was evidence from Mr. McLaughlin as to the matter. There is no error of law here.

The general case

51 It was not necessary, in my view, to examine in detail what possible alternative security precautions might have been considered by the parties as available in lieu of efforts being made to butt. As the case was conducted, the issue as to what appropriate security was necessary resolved to whether the plaintiff was required to make efforts to butt or to adopt an equivalent alternative.

52 The magistrate did not accept that any alternatives had been embarked upon such as to produce a sufficient compliance with the requirements of the relationship. The magistrate found that the specific security precautions which might have been sufficient to discharge the duty, if they had been carried out, had not been attempted. In my view, on the whole of the evidence, these findings were open to the magistrate and were findings of fact. As the case had been conducted I see no error. I see no basis on which any “question of law alone” may be decided in favour of the plaintiff such as would warrant the success of this appeal, nor do I see that the verdict “cannot be supported having regard to the evidence”.

Specific grounds of appeal

53 As to the specific grounds relied on, notwithstanding the written argument in support of them propounded by the plaintiff was discursive, on analysis it becomes clear that what is contended is merely argumentative as to the effect of the evidence. Grounds one and two both materially mis-state the magistrate’s conclusions. The magistrate did not conclude that CTI was required to manoeuvre the subject container in such a way as to prevent theft, as ground one propounds.

54 Ground two, which asserts the inability of CTI to so manoeuvre the subject container, proceeds upon a similar mis-conception. In each case there was evidence that it was possible for CTI to make efforts to butt the container or to take steps to achieve sufficient security and it was open to the magistrate to conclude on such evidence as there was in favour of the party successful below.

55 Ground three propounds the magistrate failed “to properly have regard to the duties owed by CTI to JRH and Whirlpool”. That ground is propounded on the basis that JRH and Whirlpool were aware that CTI was unable to manoeuvre the subject container in such a way as to prevent theft. The ground fails since the evidence before the magistrate which she accepted was that it was possible to manoeuvre the container in such a way as to attempt to prevent theft thus meeting that level of security defined in the evidence as appropriate having regard to the various specific matters that Mr. McCaw referred to.

56 Ground four does not accurately record the magistrate’s finding. The magistrate did not conclude that the law implied into the sub-bailment a duty on CTI of strict liability. The magistrate decided a matter of fact, that is to say, what was the ambit of a term agreed upon by the parties as included in their relationship. Ground five again adverts to the weight of the evidence, as did grounds one, two and three. The asserted error does not represent the effect of the evidence nor is the error asserted in this ground and error of law.

57 Grounds six and seven deal with costs. I will turn to those matters under that heading.

58 As I have said, I accept the submission made on behalf of Whirlpool in answer to all grounds that the essence of the plaintiff’s complaint in this court is that related to the magistrate’s findings of fact. In my view, there was evidence capable of supporting the findings of the magistrate both by way of direct evidence of the facts found and as sufficiently supported the inferences the magistrate drew. I see no mis-direction in law. I do not see that the magistrate’s findings are perverse, unreasonable or wrong. The judgment is to be read in the light of the way the case was conducted. In that light there is no error.

Conclusion

59 I have therefore reached the conclusion that the plaintiff’s appeal against the verdict should be dismissed.

The costs appeal

60 I turn now to the further appeal in respect of the costs order.

61 Ground six contends the magistrate erred in law in failing to give CTI the opportunity of being heard in relation to the costs order and ground seven contends the magistrate erred in law in failing to give reasons for making the order.

62 Prior to reaching her decision, the magistrate afforded all parties an opportunity to address on what findings and orders the magistrate might make. The parties provided written submissions as well as addressing extensively orally. In those submissions prior to the delivery of judgment, reference was not made expressly to the question of costs. It appears the parties were then content to allow the normal incidence of costs to lie pending any particular finding by the magistrate. It was clear that what was debated throughout the case was the entitlement of the plaintiff to relief against the second and third defendants. The submission did not quarrel with the indemnity basis after the offer of compromise.

63 In the ordinary exercise of discretion, a successful plaintiff would have been entitled to costs and when, as here, the obligation of the third defendant was to be performed by the second defendant on behalf of both of them under the sub-bailment arrangement, it could only be expected that a breach of duty, if found against the second defendant, but where the third defendant is exculpated, would result in the second defendant being liable for the costs and disbursements occasioned to the plaintiff.

Events before the magistrate

64 At the conclusion of the magistrate’s judgment, the magistrate turned to the question of costs but, before completing his order, was interrupted. Questions were then debated concerning indemnity costs and the assessment of costs. It was at that time that the question of a judgment for the third defendant against the plaintiff was raised. Earlier the magistrate had said that the second defendant would be ordered to pay the plaintiff’s and the third defendant’s costs and disbursements as agreed. There was debate as to whether there had been a cross-claim and debate as to the verdict for the third defendant against the plaintiff. The following thereafter occurred:-

“GOW : I appreciate that, your Worship. In my experience, if the plaintiff is successful against the second defendant, they get an order against the second defendant. We are successful in the action as between the plaintiff and third defendant so there should be a verdict for the third defendant as against the plaintiff, so the plaintiff is still successful against the second defendant.
FREIDMAN: Your Worship, I have no difficulty with that in as far as that goes. The only issue would be as between – in costs as between the third defendant and the plaintiff. If I understand your orders correctly, the second defendant would be paying the third defendant’s costs directly?
WROBEL: Essentially that’s the Bullock order.
FREIDMAN: Yes.
WROBEL: your Worship’s making a Bullock order, so the second defendant pays everybody’s costs, yes.
BENCH: That’s what I’ve intended on --
WROBEL: Of course.
BENCH: That’s based on the research that I have don in relation to this matter.
WROBEL: that is in my submission an appropriate order, your Worship. That is an appropriate order. But we --
BENCH: You say I need to put as part of that formal order verdict --
GOW: A verdict for the third defendant against the plaintiff.
FREIDMAN: I have no submissions on that.
BENCH: You have no objection to me making that formal order as well?
WHITE: No.
BENCH: Alright. Do you want to say anything about that?
WROBEL: Not about the order with respect to judgment.
BENCH: That’s what I’m talking about at the moment. I’ll just finalise the orders that I’m doing. So in relation to those orders that I’ve made, 1, 2 and 3, I will include a fourth order, verdict for the third defendant as against the plaintiff.
GOW: Yes.
BENCH: Do you want to make any submissions in relation to the orders or are you talking about --
FREIDMAN: I don’t actually, your Worship. Your Worship has made the orders and it would not be appropriate to cavil with them.
BENCH: No, I’m not asking you to cavil, I’m just talking about the formal requirements in relation to the order.
FREIDMAN: I don’t think I can say anything, your Worship.
BENCH: I was only giving you an opportunity to comment there in relation to that.
PIKE: Thank you, your Worship.
BENCH: In relation to the submissions, is this a Calderbank --
GOW: Your Worship, I don’t have written submissions, but in relation to the costs order, we’re entirely happy with your Worship’s costs order. There’s just the offer of compromise. My friend has an offer of compromise as against the second defendant. We have an offer of compromise as against the plaintiff. So in my submission, in relation to this offer of compromise, and I can tender this as against the plaintiff, that I would ask your Worship to make an order that costs payable by the second defendant as against the third defendant, as your Worship’s already done, be assessed on a party party basis up until 23 May 2001 and thereafter.
BENCH: 23 May?
GOW: 2001 and thereafter.
BENCH: Thereafter on indemnity basis.
GOW: Indemnity basis. That’s against the plaintiff, but of course your Worship’s made the order that the second defendant has to bear those costs.
BENCH: I’ll just ask the other parties one at a time. Do you have anything you want to say to me in relation to that request?
WROBEL: No, no your Worship.
FREIDMAN: Your Worship, on the last occasion I think your Worship indicated that today was not the day to argue difficult questions of costs. I’d ask your Worship perhaps to adjourn that issue so that we could consider it. I was not aware, I don’t think, as far as I recall anyway, that an offer of compromise was made by the third defendant to the plaintiff, and I’m not in a position to address your Worship as to whether the consequence of that ought to be visited on the second defendant, so I’d as your Worship to --
BENCH: Give you an opportunity.
FREIDMAN: Yes.
WROBEL: The first point I’ve already made your Worship, that is that our costs as against the second defendant be paid on an indemnity basis from 10 April 2001, which is the date of our offer of compromise.
BENCH: Alright. Are you seeking anything else?
WROBEL: Not at the moment.
BENCH: What do you have to say about the plaintiff’s submission?
FREIDMAN: In respect of that submission, I don’t think I can usefully say anything, your Worship.
BENCH: So you’re aware of that offer of compromise?
WHITE: Yes.
BENCH: And you’re aware that that would be an appropriate order in that situation?
FREIDMAN: Well we received the offer of compromise your Worship, and I can’t say anything in response to what my friend puts.
BENCH: In relation to the third defendant’s request, was your offer of compromise – was a copy of that ever notified to the second defendant?
GOW: I’m not sure whether it was your Worship, but in my submission this is as against the plaintiff, and your Worship has already formulated a costs order and it’s simply – if my friend’s asking you to adjourn the costs issue, well that means he’s asking you to vacate your costs order so it can be argued on another occasion.
FREIDMAN: I don’t think I am doing that, with respect your Worship.
BENCH: No., I think he’s just asking for more time to consider the application that’s been put before me and to perhaps make submissions in that regard. How much time do you need? It’s not something that you can just --
FREIDMAN: I think I’d need something like seven days, your Worship.
BENCH: Alright, it’s not something you can do in half an hour.
FREIDMAN: Well your Worship has made a Bullock order, as I understand it. I’m not aware of a situation – I’m not saying there hasn’t been – where in effect an offer of compromise to which a party suffering a Bullock order is added to on a piggy bank type basis, and it may take some thought, your Worship.
WROBEL: The only other alternative your Worship is to simply make the order and grant the parties liberty to apply within --
BENCH: I have made that.
WROBEL: Yes.
BENCH: I did make that order at the end. Should there be need for further orders, I grant liberty to either party to apply on seven days notice.
WROBEL: Yes, thank you. Well it’s just a matter of – if you want to confirm your costs orders now or put it over to another day. I’m in your Worship’s hands. I’m content with any course your Worship want to take.
FREIDMAN: I’m sorry, just for my benefit, your Worship, I understand your Worship to have made what I’ve described as a standard Bullock order. That is to say that the second defendant is to pay the costs of the other parties. With respect to the third defendant, that order ordinarily one would think would contemplate costs on a party party basis. An application is made in effect for indemnity costs after a certain date. It is that issue, not the orders that your Worship has made, but that issue for which a further order is being sought, in essence that we would like time to consider.”

65 The discussion continued, but the transcript is unclear as to the identity of the individual speakers. The following was recorded:-

“WHITE: That’s as I understand. I’m quite content with that course.
BENCH: What I’m proposing that I do is make the order in relation to the cots against the second defendant as applied for by the plaintiff, make that order. In relation to the order that you’re seeking, I’ll just – and I don’t know if this covers you or not, but I could leave it that the costs be as agreed or assessed and that should there be any need for further orders, seven days notice, and then you can maybe – if you can, sort it out between yourselves. If you can’t you can re-list it before me and we’ll argue just that point.
WHITE: Yes, I’d certainly be content.
BENCH: Is that the appropriate way?
WHITE: Yes, thank you. I’d be content with that.
BENCH: Rather than listing it now and you’ll both incur further costs having to come back on another day, and it may not be worth it anyway
WHITE: That’s right, yes. Well I can get some instructions about that.
BENCH: You can come to some – alright, so that protects your position.
WHITE: Yes. Can I just formally your Worship tender the offer of compromise as against the plaintiff dated 22 May 2001.
BENCH: Alright. Do you have any objection?
PIKE: No, your Worship. I haven’t seen it I don’t think, but I certainly have no objection.
BENCH: Alright, I’m going to make a fifth order in relation to the orders that I’ve made, and thank you for your assistance. The fifth order is that costs as against the second defendant – the plaintiff’s costs as against the second defendant be paid on an indemnity basis from 10 April 2001, and I note that being filed is an offer of compromise dated that date. I will also note that there is an offer of compromise filed by the third defendant, but at this stage I make no orders in relation to that. However, should there be need for further orders, I grant liberty to either party to apply at seven days notice.”

Were there the errors alleged?

66 I am unable to conclude from this that the magistrate fell into any such error as is asserted. All of the parties were given a sufficient opportunity to be heard and having regard to the judgment on liability as well as this discussion, in my view, no further reasons were necessary. The appeal against the costs order must also be dismissed.

67 I direct the parties to bring in short minutes of the formal orders to give effect to these decisions. Should there not be agreement as to costs of these proceedings the mater may be re-listed by arrangement with my associate.

68 My having come to these conclusions on the principal subject matter of the appeal, leaves me in doubt as to what course should now be taken on the cross-claims. However, they can be re-listed if necessary should their disposition need to be further addressed.

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Last Modified: 12/18/2003