Fresh Produce Pty Limited v Vanguard Logistics Services (Aust) Pty Ltd

[2019] NSWSC 1845

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Fresh Produce Pty Limited v Vanguard Logistics Services (Aust) Pty Ltd [2019] NSWSC 1845
Hearing dates:	15 March 2019
Decision date:	19 December 2019
Jurisdiction:	Common Law
Before:	Ierace J
Decision:	(1)   The judgment of his Honour Magistrate Miller dated 12 July 2018 is set aside.  (2)   The matter is remitted to the Local Court to be determined according to law, taking into account that the learned magistrate erred in finding that the Ryan recorder was activated on 25 October 2016.
Catchwords:	APPEALS – appeal from Local Court to Supreme Court – whether the appeal involved a question of law, a question of fact or a question of mixed fact and law – discussion of principles pertaining to granting leave to appeal – where magistrate’s inference on a preliminary factual issue was not reasonably open on the evidence – leave to appeal granted – appeal upheld
Legislation Cited:	Evidence Act 1995 (NSW), s 70 Local Court Act 2007 (NSW), ss 39, 40, 41
Cases Cited:	Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; [1990] HCA 33 Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69
Category:	Principal judgment
Parties:	Fresh Produce Pty Limited (Plaintiff) Vanguard Logistics Services (Aust) Pty Ltd (Defendant)
Representation:	Counsel: A J Greinke (Plaintiff) C O Gleeson (Defendant)   Solicitors: Auyeung Hencent & Day (Plaintiff) Holding Redlich (Defendant)
File Number(s):	2018/244166
Decision under appeal	Court or tribunal: Local Court Date of Decision: 12 July 2018 Before: Miller LCM File Number(s): 2017/85495

Judgment

1. HIS HONOUR: This is an application, brought by way of a notice of motion filed on 11 September 2018, by the defendant in relation to an appeal to the Supreme Court from a judgment of the Local Court, seeking dismissal of the appeal as incompetent. The plaintiff, Fresh Produce Pty Limited (“Fresh Produce”), by summons filed on 8 August 2018, has sought orders seeking to set aside a judgment of the Local Court made in favour of the defendant, Vanguard Logistic Services (Aust) Pty Ltd (“Vanguard”) on 12 July 2018 and remitting the matter for determination according to law and the directions of this Court.

2. Fresh Produce was an importer of fresh foods. In November 2016, it imported a shipment of fresh peeled garlic, with a net weight of 25,000 kg, from China, inside a refrigerated shipping container, which is known as a “reefer”. Fresh Produce engaged Vanguard to provide Customs clearance services, then palletise and transport the product to Fresh Produce’s premises in Sydney.

3. Fresh Produce failed to pay Vanguard for its services. Vanguard commenced proceedings in the Local Court by way of a statement of claim filed on 20 March 2017, seeking the sum of $6,153.61, together with interest and costs. Fresh Produce filed a defence on 3 May 2017 and an amended cross-claim on 23 November 2017, seeking damages for breach of contract, breach of bailment or for negligence pursuant to ss 5B and 5C of the Civil Liability Act 2002 (NSW) in respect of the goods, in the sum of USD$78,250. It abandoned any claim over AUD$100,000, given the jurisdictional limit of the Local Court: s 23 of the Civil Procedure Act2005 (NSW).

4. The essence of the dispute was an allegation by Fresh Produce that, while the goods were in the possession of Vanguard, the garlic had “activated” due to a rise in its temperature, thus spoiling a significant part of the shipment as a marketable product. Fresh Produce pleaded in its cross-claim that a term of the agreement, in the form of an accepted quote supplemented by email and oral exchanges, was an obligation to maintain and ensure that the shipment’s temperature stayed at 1°Celsius, as indicated in the bill of lading, while it was in Vanguard’s actual or constructive possession. Vanguard had failed to do so, and the consequent temperature rise caused a significant part of the garlic shipment to activate and spoil.

5. In its defence to the cross-claim, Vanguard denied that a term of the agreement was to maintain the reefer at a nominated temperature. It also pleaded that its “standard trading conditions” to the agreement disentitled Fresh Produce from bringing any claims against Vanguard.

6. The matter proceeded to hearing and the magistrate found for Vanguard on a preliminary factual issue as to whether the consignment was in the possession of Vanguard when the rise in temperature that prompted the garlic activation occurred. Accordingly, his Honour dismissed the cross-claim and entered judgment in the amount sought by Vanguard.

7. By way of an amended notice of contention, Vanguard submits that if its application for dismissal on the basis of incompetency fails, the claim should be dismissed in any event on five alternative grounds. At the hearing of the notices of motion and contention, counsel for Vanguard abandoned one ground, concerning Vanguard’s “standard trading conditions” point; accordingly, I will not refer to the evidence, pleadings or submissions concerning that issue.

8. In order to assess the application for dismissal, it is necessary to canvass certain aspects of the pleadings and evidence in the Local Court proceedings.

9. In its amended cross-claim, Fresh Produce pleaded the relevant agreement as its acceptance of a quote provided by Vanguard dated 19 September 2016, particularised as:

“Vanguard offered to, amongst other things, accept delivery of reefers at Sydney, transport the reefer to an unpack facility at a nominated temperature, monitor the temperature of the reefer, unpack the reefer and then deliver the stock to Fresh Produce’s nominated warehouse.”

10. In its defence, Vanguard denied “providing a quote to accept delivery of goods or to transport goods at nominated temperature”.

11. This necessitates consideration of the evidence concerning the terms of the agreement between the parties, the disputed facts concerning the dates on which the temperature rose above the nominated temperature to a point that the garlic activated and the evidence of the quantum of damages.

12. There were three witnesses in the Local Court hearing. Fresh Produce called Bao Ai Ly (known as Kim Ly), who was the operations manager of Fresh Produce, a position she had held for ten years. Vanguard called Alan Soriano, who was a business development manager for Vanguard. Negotiations between the parties relevant to the agreement in question were carried out by these two officeholders. Fresh Produce also called an expert witness, Captain Olav Castellino, whose evidence was relevant to the question of whether the temperature of the cargo rose significantly and, if so, when.

13. Affidavit evidence of the three witnesses was read at the Local Court hearing, except for certain portions of one affidavit affirmed by Ms Ly, concerning the quantum of damages alleged by Fresh Produce. The magistrate at the Local Court hearing noted that there was no challenge to Captain Castellino’s expertise or qualifications to provide his opinions.

The agreement between the parties as to refrigeration

The evidence on behalf of Fresh Produce

14. In her first and primary affidavit, affirmed on 19 September 2017, Ms Ly stated that her duties included liaising with freight forwarders and managing imported stocks. Her company regularly imported peeled garlic and shallots from China. On average, Ms Ly would arrange for the importation of two to five containers of peeled garlic and shallots a month, depending on the season. Ms Ly stated that she had not previously used Vanguard, but did so for this importation because in or about early September 2016, she was approached by an employee of Vanguard, Mr Soriano, who assured her that Vanguard had the necessary expertise to provide such a service. She related a conversation with Mr Soriano in early September 2016 at Fresh Produce’s premises, part of which was as follows:

“Ms Ly:   … there are a few critical control points that you need to be aware of … Before the garlic arrives your company will need to pre-lodge all paperwork for booking the earliest slots in the morning for inspection by AQIS [Australian Quarantine and Inspection Service]. … The garlic is transported by refrigerated containers known as ‘reefers’ and must be kept at below zero degrees Celsius at all times. Make sure the reefer is always on power. Garlic is very sensitive to temperature rises so if they are exposed to higher temperatures especially over long periods of time they will spoil quickly. That’s why the logistics and clearance must be tightly managed.

Mr Soriano:   Yes I understand. What about the transporting requirements?

Ms Ly:   After the garlic goes through customs it should be loaded onto trucks by midday. …

Alan:   Okay. I understand the requirements now. I will need to go back to my company and prepare a quote first and I will get back to you.”

15. In a later affidavit, Ms Ly stated that in this conversation she also informed Mr Soriano that after the garlic was loaded onto the trucks by midday, it should arrive on the same day. On or about 19 September 2016, Mr Soriano provided a quote of that date, which Ms Ly annexed to her affidavit (“the first quote”). Three of the items included in the quote were:

“Charge	Currency	Rate	per
…
Reefer Storage and Power including goods in Cold storage (per Container)	AUD	65.00	Per 40’ Container
Reefer Monitoring	AUD	25.00	per Day
Cold Storage	AUD	5.00	per Pallet per Day”

16. In late October 2016, Fresh Produce purchased 2,500 cartons of garlic with a gross weight of 28 tons and a net weight of 25 tons, from a company based in China, Jining Pengjie Trading Co Ltd, for USD$78,250 and USD$1,200 for freight costs. The shipment was to be from the port of Qingdao, China.

17. In early November, Ms Ly decided to retain Vanguard to handle the shipment on its arrival in Sydney. Attached to Ms Ly’s affidavit is an email exchange between her and Mr Soriano. At 12:12pm on 8 November 2016 (“the 8 November 2016 email from Ms Ly”), Ms Ly advised Mr Soriano as follows:

“To be able to make a realistic comparison I figure we have to give Vanguard a go. I have a container arriving ETA 16/11/16. … Please also confirm via reply email a summary of where the ‘critical points of the unloading’ is for our perishable goods. That way I know you have understood my brief, to entrust you with my temp sensitive cargo.”

18. A response from Mr Soriano at 3:41pm stated, in part:

“Hi Kim,

I hope I have a clear understanding of your requirements as follows:

Upon receipt of the 40RF a Quarantine inspection and local transport are to be booked immediately in order that a semi is ready for loading immediately after Quarantine inspection.

The 40 reefer is to be unpacked and palletised and stretch-wrapped.

Quarantine MUST be booked for a morning inspection in order that the garlic is inspected immediately right after unpack and allow transport the time of day where traffic is at its least. There cannot be any delay with the Quarantine inspection. And unpack only to be scheduled once the inspection time is known.

Once inspection has been conducted, the pallets are to be immediately loaded onto truck for transport to Cecil Park.

Transportation window ex Botany to Cecil Park MUST be between the hours 10:00am and 1:00pm to avoid any traffic congestion and sure absolute minimum travel time.

Can you please confirm that I have clearly understood your brief.”

19. The relevance of these exchanges, in the case for Fresh Produce, was that Vanguard was informed, and accepted, that the maintenance of refrigeration was a critical element of the agreement. As emerged in the evidence of Captain Castellino, containers were not connected to power when being transported on a truck, so quick truck transportation was critical.

20. Ms Ly posted the shipping advice and Bill of Lading to Vanguard, advising Mr Soriano by email that Fresh Produce needed the shipment to be cleared and delivered “ASAP”, because it was running short of stock. On 14 November 2016, Mr Soriano acknowledged receipt by email.

The evidence on behalf of Vanguard

21. Mr Soriano swore two affidavits, the first on 18 September 2017 (the day before Ms Ly’s affidavit was affirmed). Mr Soriano annexed Vanguard’s quote dated 19 September 2016 and the 8 November 2016 email from Ms Ly, incorporating his earlier email but not his reply later the same day.

22. Mr Soriano stated he received four documents from Fresh Produce dated 17 November 2016, including the bill of lading, copies of which are annexed to his affidavit. He stated that he received the documents on or about 15 November 2016, although I note that one of the documents, which is entitled an “Electronic Import Delivery Order”, contains a signature of Ms Ly which is dated 21 November 2016.

23. Mr Soriano said that he issued a revised quote to Fresh Produce, “based on the actual services required”, being processing of customs clearance, unpacking and palletising and delivering the palletised cargo (“the second quote”).

24. Ms Ly later denied ever receiving, or knowing of, the second quote. In his evidence, Mr Soriano said he hand-delivered both quotes. That factual dispute may be of little moment, since the annexed quote includes these items:

“Charge	Currency	Rate	per
…
Reefers Storage incl. Power	AUD	65.00	40’ Container per Day
Reefers Storage Bonded/AQIS held	AUD	95.00	40’ Container per Day
…
Cold Storage (Free Cargo)*	AUD	5.00	per Pallet per Day
Monitoring Fee (Mon-Fri)	AUD	25.00	per Day
…
*First 3 Days free”

25. Mr Soriano further stated that, following the arrival of the container in Sydney, there were “unexpected delays” before Vanguard could arrange collection. These were that the shipping company, APL, took “longer than expected to release the container”, customs placed a hold on the container to enable it to be x-rayed, and it was then directed to Australian Quarantine and Inspection Services (AQIS) for inspection. Consequent upon these delays, Vanguard was unable to collect the container until 24 November 2016. Vanguard arranged collection on that date by a transport company, Price & Speed Pty Ltd (“P & S”), who unpacked the reefer and delivered the contents to Fresh Produce on 26 November 2016.

26. Annexed to Mr Soriano’s affidavit was Vanguard’s tax invoice dated 2 December 2016. It included the following items:

“DESCRIPTION	GST IN AUD	CHARGES IN AUD
…
Reefer Storage – 2 days 24/11 to 25/11	10%=13.00	130.00
Temperature Monitoring – 2 days	10%=5.00	50.00
Cold Room Storage	10%=14.00	140.00”

27. In evidence, Mr Soriano conceded that, following discussions with Ms Ly in September 2016, he was aware that the garlic had to be refrigerated, which necessitated the reefer being connected to power and, once unpacked and inspected by Quarantine, it had to be delivered as quickly as possible. Mr Soriano was taken to his email to Ms Ly dated 8 November 2016 at 3:41pm and agreed that, because of temperature sensitivity, this involved booking a morning time for the quarantine inspection which is to occur immediately after unpacking, and the garlic was then to be transported between 10:00am and 1:00pm, to minimise travel time by ensuring minimal traffic congestion.

The submissions on behalf of Vanguard

28. In its written submissions to this Court, Vanguard submitted that the agreement comprised four documents: the second quote; the customs clearance/GST principal and agent agreement; the electronic import delivery order authorising the defendant to receive import documentation and charges from the carrier; and the credit application. Referring to the quote, Vanguard submitted that:

“The prices charged for storage and power, reefer monitoring and cold storage were plainly limited to the period of delivery, and not any period before pick up.”

The submissions on behalf of Fresh Produce

29. Fresh Produce, in its written submissions, relied on the following to establish the agreement: the first quote expressly including cold storage and reefer monitoring; the conversation between Ms Ly and Mr Soriano and the full email exchange between them on 8 November 2016; and the charges included in Vanguard’s invoice for reefer storage, temperature monitoring and cold room storage.

Conclusion

30. Mr Soriano’s evidence confirmed that the services in the quotes and invoice included a condition that the cargo be refrigerated and that, at a minimum, the fact of refrigeration be monitored. The reference in the invoice to “temperature monitoring” takes the evidence a step closer to what was alleged by Ms Ly to be a condition requiring Vanguard to monitor a nominated temperature. In any event, leaving aside that aspect, it is apparent that the parties agreed that, from the date and time that Vanguard took possession of the shipment, it was liable to keep the shipment refrigerated, whether it was still in the reefer or unpacked into cold storage, and monitor that it was in fact refrigerated.

When did Vanguard take possession of the cargo?

The pleadings

31. In its amended cross-claim, Fresh Produce asserted, at par 11, that Vanguard or its agent picked up the reefer on 24 November 2016 and took it to the P & S container unpacking facility, where it was unpacked. In its amended defence, Vanguard admitted that “the consignment was collected from the wharf on 24 November 2016 but otherwise does not admit paragraph 11 of the Statement of Cross-Claim” but was silent as to who collected it from the wharf, or on whose behalf.

32. Vanguard admitted that the consignment “was delivered to Fresh Produce on 26 November 2016 at approximately 9am”.

When was the shipment picked up from Customs?

33. There was no dispute between the parties that the shipment left the port in Qingdao on 31 October 2016 (the date of the Bill of Lading) and that it arrived at Port Botany on 16 November 2016.

34. There was a significant delay in the shipment progressing through Customs and quarantine and being transported to Fresh Produce’s premises; it was not delivered until 26 November 2016. Much of Ms Ly’s affidavit evidence involved her concern at the delay and repeated inquiries she made of Vanguard and other agencies in an attempt to understand the reasons, so as to facilitate its processing and delivery. Essentially, Ms Ly asserted that Vanguard failed to provide the necessary paperwork to the relevant agencies, to ensure the shipment’s efficient processing and delivery.

35. Vanguard, on the other hand, in its pleadings, responded that 24 November 2016 was “the designated date to pick up the container” and that the “consignment was collected from the wharf on 24 November 2016”.

36. For the purposes of determining this application, this part of Ms Ly’s affidavit evidence is relevant only as to the responses by Vanguard to her inquires that the cargo remained refrigerated and the whereabouts of the container on particular dates that are relevant to temperature spikes; in particular, whether the container was in Vanguard’s actual or constructive possession at those times.

37. This evidence may be summarised by reference to emails from officeholders at Vanguard to Ms Ly, copies of which were annexed to Ms Ly’s primary affidavit. On Wednesday 23 November 2016 at 10:04am, Tiffany Orr, who was the operations manager for Vanguard, confirmed earlier oral advice from Mr Soriano that the delivery of the reefer was delayed because Customs was x-raying it. In an email sent the same day at 3:15pm Jodie White, a Customs Transport Co-ordinator at Vanguard, stated that Customs had ceased exercising a hold on the container and it was ready for collection. She said that P & S would pick it up at 1:00pm the following day and take it to their depot. By email dated Thursday 24 November 2016 at 8:58am, Ms Orr stated that P & S could not unpack the container for quarantine inspection until Friday 25 November 2016, due to a “high volume of produce containers in yard”. By emails dated Friday 25 November 2016 at 9:39am and 11:02am, Ms Orr stated the container had been unpacked by P & S and inspected by quarantine (AQIS). In the 9:39am email, Ms Orr stated: “I can confirm the container is and has been on power”. In her email sent at 11:02am, Ms Orr said, as to the unpacked garlic following the quarantine inspection and whilst awaiting transport to Fresh Produce, “The cargo is in the cool room in the meantime”.

33. Vanguard’s invoice confirms that it regarded the cargo as being subject to its control from 24 November 2016 to its delivery on 26 November 2016 by claiming the following costs. Firstly, the cost of two days of “reefer storage”, being 24 and 25 November 2016; secondly, the cost cold storage, by inference from 25 November 2016 to its loading onto trucks for delivery to Fresh Produce on the morning of Saturday 26 November 2016; and thirdly, “temperature monitoring” over that two day period.

34. Accordingly, it was common ground, and stated as such at the outset of the Local Court hearing by counsel for Vanguard, that Customs had released the reefer into Vanguard’s possession on 24 November 2016 at about 1:33pm.

The evidence of a temperature rise and the relevant dates

The evidence of Ms Ly

40. The 25 tons of garlic, packed into 2,500 cartons, was delivered in palletised form on two semi-trailers on the morning of 26 November 2016. Ms Ly was in attendance. She stated in her primary affidavit that, in her experience, such shipments of garlic were packed in vacuum-sealed clear plastic wrapping. When the stock was unloaded, she noticed that “a large portion of the packages had ballooned and lost their vacuum”. She had the garlic immediately placed into Fresh Produce’s reefers and arranged a video to be taken of the unloading and the condition of the packages.

41. Ms Ly stated that, in her experience, once packaged garlic has lost its vacuum, it has a significantly reduced shelf life, so that it is no longer fit for sale.

42. The following day, Ms Ly’s staff located the “temperature logger” together with its data reading, inside one of the cartons of garlic. On Monday 28 November 2016, Ms Ly emailed Ms Orr, informing her that she intended to “claim for damages to our cargo of fresh peel garlic attributed to high temperatures during transit”. In the email, Ms Ly provided her contact details for “appointments for inspections”. On the same date, Ms Ly arranged for a suitable expert, Captain Olav Castellino, to inspect the stock and prepare a report. Captain Castellino attended on 1 December 2016 and examined the stock and temperature logger data.

The expert evidence of Captain Castellino

43. Captain Castellino’s expert report, together with a supplementary report, was tendered.

44. Captain Castellino’s evidence was that the temperature of perishable goods during transportation is routinely monitored by the use of a “Ryan recorder”, which is a device placed randomly in the goods and, once activated, periodically records the temperature for up to 90 days or until it is de-activated. The temperature is recorded on a strip graph that can be interrogated as to the temperature and the timing of any variations.

45. A form on the face of the Ryan recorder allowed for the insertion of the date and time of activation, which was indicated in handwriting as 27 October 2016 at 10:35, which was accepted by the parties to be in the morning. There was also a signature but not a name. The strip graph indicates days, rather than dates, so that the date of a particular event on the graph is calculated by counting the days from the day entered on the activator, and taking the time of activation as the beginning of a day.

46. Captain Castellino’s report had an analysis of the variation of temperatures relevant dates, as follows:

“… The recorder … commenced on the 27 October 2016. From this information, it would appear that during shipment the temperature within the container had been maintained at normal levels. On the 28th day of shipment the temperature started to fluctuate, but remained at 8ºC on the 29th day. On the 30th day, the temperature increased to 21ºC/22ºC and then fluctuated between 15ºC-21ºC for the remainder of the day. On 31st day which coincided with calendar date 26 November 2016 and after delivery to Fresh Produce, the temperature of the cargo within the cartons started to fall however it appears that this was too late to suppress the garlic from becoming active.”

47. Assuming that the data logger was activated on 27 October 2016, the 28th day would have been 23 November 2016, that is, the date that Vanguard advised Fresh Produce that the reefer was being X-rayed by Customs. Captain Castellino considered that the first spike, on the 28th day, was unlikely to have activated the garlic, because the temperature was out of range for only 4-6 hours.

48. However, the second spike, on the 29th day, being 24 November 2016 (the day that P & S collected the container from Customs and took it to their depot), would have done so, because the temperature was at 8°C for up to 10-12 hours and then continued upward, on the following two days.

49. The 30th day would be 25 November 2016 (the day that the container was unpacked by P & S and inspected by AQIS) and the 31st would be 26 November 2016, being the day of delivery of the garlic to Fresh Produce and their placing of it in their reefers.

50. In relation to whether the reefer would have been connected to power on 23 November 2016, Captain Castellino said he had not been to the x-ray facility and therefore did not know, but “I do know that Customs takes cargoes from the wharf to the x-ray facility and returns them back to the terminal”.

51. It was Fresh Produce’s case that the evidence established, by necessary inference, that when P & S had collected the reefer on 24 November 2016 at about 1:33pm and took it to their depot, they failed to ensure that it was connected to power at their depot and to maintain refrigeration of the consignment when it was unpacked or to monitor the temperature to ensure that refrigeration was maintained.

The cross-examination of Ms Ly and Captain Castellino

52. At the Local Court hearing, counsel for Vanguard, Mr Sahade, in cross-examination, took Ms Ly to four documents generated in China concerning the shipment. These were the vendor’s invoice; the packing list; the manufacturer’s declaration; and a phytosanitary certificate (“the four shipping documents”). He also cross-examined Captain Castellino about three of these documents (not the vendor’s invoice).

53. The manufacturer’s declaration was a declaration as to the condition of the garlic, including the absence of defects or disease, and that it was vacuum-packed in plastic. The phytosanitary certificate was explained in evidence to be a certificate issued by the government of the People’s Republic of China attesting to the pest-free status of the goods.

54. All four shipping documents were dated 25 October 2016. The phytosanitary certificate stated that the goods had been inspected on that date. Two of the documents (the packing list and the vendor’s invoice) referred to a “temperature logger”, together with the identifying number of the Ryan recorder. The manufacturer’s declaration and the packing list also bore a “seal number” that corresponded to the seal number on the bill of lading. It was accepted at the hearing on the notice of motion that this is a reference to a seal with which the container is locked, before it is closed.

55. Counsel for Vanguard suggested to the witnesses that a necessary inference of the recording of the identifying number of the Ryan recorder and seal number on the packing list, and the date of inspection indicated on the phytosanitary certificate, was that the container was sealed on 25 October 2016. It therefore followed that the Ryan recorder had to have been activated and placed in one of the cartons of garlic on that date, meaning that the date entered on the Ryan recorder of 27 October 2016 was an error.

56. Ms Ly responded that, although she was not familiar with the procedure in China, she disagreed that the container was necessarily packed on the date of the packing list. She said:

“… you can have the data logger ready but you don’t need to activate it straight away, so you can prepare the data logger ready for this consignment … but not literally turn it on yet.”

57. Ms Ly was also of the view that the number of cartons to be packed on the reefer necessitated some delay between inspection and packaging. She said:

“… it does stand to reason because 2,500 containers is not easily packed into a container on the spot. So you probably need to do a pre-inspection, give time to people to load the container in a practical manner.”

58. Mr Castellino said he had no experience of Chinese procedures, but said the following in relation to the phytosanitary certificate:

“We’ve never gone on the phytosanitary because … the people who issue the documents are not necessarily the packer of the container. … The document may be issued by somebody and the packer of the container somebody completely different. So we always go by who packs the container.”

The Local Court judgment

59. The hearing in the Local Court was on 4 June 2018. Judgment was handed down on 12 July 2018.

60. The magistrate stated that the preliminary issue for consideration in the Local Court was whether the Ryan recorder was activated on 27 October or 25 October 2016. If the former, the cargo was not in Vanguard’s possession at the time of the spike in temperature and it did not have control of the cargo, meaning the cross-claim would necessarily fail. The magistrate found the latter, drawing the inference that the date and time recorded on the data logger was therefore an error.

61. His Honour’s reasoning was as follows (emphasis added):

“It is, in my view, highly likely that the date on the official documents, issued by and forming part of the business records of the company and of a foreign government are likely correct. It is more probable that documents issued in the process of business and issued by a government authority are more accurate than a handwritten date inscribed on the face of a data logger by an unknown person. It is a reasonable inference to draw that the relevant certificates would not have been issued prior to the container being sealed. I note that the packing list is dated that same day. It would have been difficult to see, as a matter of common sense, how a data logger could be placed in the container some time two days after the official inspection had been undertaken.

The phytosanitary certificate is particularly dated 25th and issued and notes that the cargo is free from white rot, indicating that as of 25th it had been inspected by authorities.

…

… There is clearly two competing inferences. The documents relied upon by both parties are clearly business records and both provide evidence as to the truth of the asserted fact contained in the representations. The asserted fact contained on the data logger is that it was activated on 27 May 2016. The handwritten date would fit within the exception also to the hearsay rule in section 70 of the Evidence Act. The asserted fact contained in the business records relied upon by the defendant to draw the inference are in the phytosanitary certificate, the date of inspection was undertaken and the certificate issued on that date. In relation to the packing list, that the date that the packing list was prepared and issued was 25 October. And, in terms of the commercial invoice, the date that the invoice was issued for services being provided is set out in the invoice, was 25 October.

Clearly, there is a higher likelihood of accuracy in relation to the documents produced by the Chinese Government and by the manufacturer, as opposed to a handwritten entry made by an unknown person on the face of the data logger.

There is always a risk when humans are involved that there can be error. The only question is what inferences can be drawn about the sealing of the container from the documents produced by the Chinese Government and the manufacturer. A fair reading of those documents, having regard to the mention of the container number on each, the seal number that had been allocated to the container being mentioned on each and the data logger number being mentioned on each, in my view would allow the inference to be drawn that the container had been packed, inspected and sealed when the documents were issued on 25 October 2016.

It would be unusual that a national government would allow cargo to be interfered with following certification of that particular cargo by the government authority.”

62. Accordingly, the magistrate dismissed the cross-claim and entered judgment for Vanguard.

The pleadings and submissions of the parties on the magistrate’s finding concerning the date that the Ryan recorder was activated

Fresh Produce’s submissions

63. The basis of the appeal by Fresh Produce, as set out in the appeal grounds and omitting grounds 1 and 6, which are not pressed, is as follows:

“2   The learned magistrate erred in law by drawing the inference that the data logger was activated on 25 October 2016, when such inference was not reasonably open on the evidence before the magistrate.

3   The learned magistrate erred in law by drawing that inference from dates recorded on a Phytosanitary Certificate … a Manufacturer's Declaration … and a Packing List … where there was no evidence as to how these dates were probative or relevant as to the time of activation of the data logger.

4   The learned magistrate ought to have found that the only evidence probative or relevant as to the time of activation of the data logger was the date written on the data logger and related evidence as to the industry practice.

5   Accordingly, the learned magistrate ought to have found that the data logger was activated on 27 October 2016.”

64. In oral submissions, counsel for Fresh Produce submitted that the sentence “It is a reasonable inference to draw that the relevant certificates would not have been issued prior to the container being sealed” was an intermediate inference drawn by the magistrate that was not available on the evidence. Essentially, Fresh Produce submitted that the magistrate then erred in finding that that there were “two competing inferences”, in the sense of a conflict between the dates of the four shipping documents and the date written on the Ryan recorder form. Rather, there was no evidence upon which a necessary inference was open that the Ryan recorder must have been placed in the shipment and activated on 25 October 2016, and therefore there was no conflict between the date of the four shipping documents and the date of activation entered on the Ryan recorder.

65. Fresh produce submitted that the only evidence as to the date and time of activation was that of the entries written onto the form accompanying the Ryan recorder, as understood with the benefit of the expert evidence of Captain Castellino concerning the procedure adopted in the shipping of perishable goods, which was admissible in spite of being hearsay pursuant to s 70 of the Evidence Act 1995 (NSW). Section 70 provides:

“70   Exception: contents of tags, labels and writing

The hearsay rule does not apply to a tag or label attached to, or writing placed on, an object (including a document) if the tag or label or writing may reasonably be supposed to have been so attached or placed:

(a)   in the course of a business, and

(b)   for the purpose of describing or stating the identity, nature, ownership, destination, origin or weight of the object, or of the contents (if any) of the object.”

The parties’ submissions

66. In their written submissions to this Court, Vanguard submitted that Fresh Produce’s grounds of appeal constitute a challenge to a finding of fact by the magistrate, and since a party may only appeal to this Court from the Local Court as of right on a question of law pursuant to s 39(1) Local Court Act 2007 (NSW) (“LCA”), the appeal must fail. Vanguard further submits that, to the extent that the appeal can be constructed as raising a question of mixed fact and law pursuant to s 40(1) of the LCA, it is not an appropriate matter for a grant of leave. Accordingly, the appeal is incompetent. In any event, Vanguard submitted, the magistrate’s finding of fact was not in error.

67. The parties are in agreement that the appeal by Fresh Produce hinges upon whether its challenge to the finding by the magistrate that the Ryan recorder was activated on 25 October 2016 is a question of fact or of law, although Vanguard has also addressed the possibility of it being a question of mixed fact and law. Conformably with authority, they accept that whether it is a question of law depends upon whether the inference drawn by the magistrate was not reasonably open or made without evidence: see Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; [1990] HCA 33 at [43] and [87]-[89] per Mason CJ. Counsel for Vanguard submits that the Court must distinguish this from a wrong finding of fact, reasoning which is demonstrably wrong or an illogical inference of fact, which are not appealable on this basis.

68. In oral submissions, counsel for Vanguard submitted that, at the Local Court hearing, counsel for Fresh Produce had:

“… accepted [the shipping documents] as being capable of drawing that inference because at no point was it suggested that those documents were irrelevant to the propositions that were being put to the witnesses.”

This was referring to the cross-examination of Ms Ly and Captain Castellino to establish the date that the Ryan recorder was activated. Counsel submitted that the appeal fails on that basis.

69. Counsel for Fresh Produce responded that the documents were relevant on other bases, including that the consignment was in good condition when it left the consignor’s possession and that an absence of objection did not foreclose a party later submitting that the evidence was irrelevant to that particular issue. In any event, it was submitted, the parties’ closing submissions in the Local Court hearing are not before this Court, so it is not known what propositions were put to the magistrate as to whether the shipping documents constituted relevant evidence at all.

Conclusion

70. The learned magistrate’s finding that the Ryan recorder was activated on 25 October 2016 was based on his Honour’s interpretation of the shipping documents, in particular, that they were evidence that the Ryan recorder must have been activated on the same date as the date of the documents. The weight his Honour attributed to the documents for this purpose was so great that it prompted her to reject the evidence of the date of activation that was entered onto the form accompanying the Ryan recorder, which, having regard to Captain Castellino’s expert evidence, would have been entered by the person who activated it.

71. I am unable to follow his Honour’s reasoning as to how the documents could provide any evidence at all for such a proposition, let alone to the point of rejecting the date on the Ryan recorder form. Firstly, there appears to have been an error by his Honour as to the extent to which the shipping documents contained the information that he found persuasive. The paragraph immediately preceding the passage of his judgment setting out his reasoning, which is the evidentiary basis as his Honour saw it, is as follows:

“The plaintiff relies upon the documents produced in China to assert that the data logger commenced on 25 October 2016 and that the handwritten date must, therefore, be erroneous. The date on the (1) manufacturer’s declaration, (2) phytosanitary certificate and (3) packing list are all dated 25 October 2016. Each of those documents also contains references to (1) the container number, (2) the seal number for the container and (3) the data logger number itself.”

72. In fact, the manufacturer’s declaration does not contain the data logger number and the phytosanitary certificate contains neither the data logger number nor the seal number. The packing list, which his Honour did not mention in this context, contains only the temperature logger number.

73. The critical part of his Honour’s judgment, which is the only part where he sought to explain the evidentiary basis and reasoning for his inference, is:

“It is a reasonable inference to draw that the relevant certificates would not have been issued prior to the container being sealed. I note that the packing list is dated that same day. It would have been difficult to see, as a matter of common sense, how a data logger could be placed in the container some time two days after the official inspection had been undertaken.”

74. The reference to the “official inspection” is to the inspection which occurred on 25 October 2016, for the purposes of the phytosanitary certificate. There is no explanation as to why common sense dictates that the consignment would be sealed in the container on the same date as the inspection of the garlic for quarantine pests. Nor is it apparent why this would be so. Each of the documents purports to be created for a specific purpose, each to do with steps to be taken prior to the final loading and sealing of the container. The entry on the Ryan recorder is of a date two days after these procedures, meaning by inference that it was sealed by then, and the ship left port four days after that.

75. Accordingly, I find that Fresh Produce’s grounds for appeal raise a question of law, since it involves an inference that was central to the determination of the case that was not reasonably open to be drawn.

76. Vanguard noted that Fresh Produce had put its case exclusively as being a question of law, but submitted in the alternative that, if the Court determines the question to be one of mixed fact and law, which requires leave, it should not be granted. Although Fresh Produce did not put its case this way, as it has been fully ventilated by Vanguard so that it could not be said it is disadvantaged by a consideration of it, in the event that I am wrong as to the question being exclusively one of law rather than a mixed question of fact and law, I will assess this basis, as well.

77. Vanguard submits that leave should be denied on three grounds. The first, adopting the formulation of Kirby P in Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69, at 3, is that this matter does not involve “issues of principle, questions of general public importance or an injustice which is reasonably clear, that is to say goes beyond merely being arguable”.

78. However, a finding that the date of activation entered on a Ryan recorder is to be disregarded because shipping documents are uniformly of a different date, even though they do not expressly state either the date of activation, the date the cargo was packed or sealed or the date the Ryan recorder was inserted in the cargo, does raise a significant issue of general public importance. Namely, it tends to undermine a tenet of the transportation of perishable goods, which is widespread reliance upon the date and time of activation written onto the Ryan recorder by the person who activates it.

79. The second ground is that, since the quantum of the dispute is less than $100,000, there is a real risk of the costs of the proceedings below and on appeal being disproportionately high to the claim itself: Carolan v AMF Bowling Pty Ltd. In my opinion, while the issue of costs relative to the quantum of the claim is concerning, the quantum involved in the cross-claim is at the upper limit of the jurisdictional amount, which is a relevant consideration as to costs. As well, that concern is outweighed by the public interest involved in the resolution of the issue of whether there was an evidentiary basis, as a question of law or mixed fact and law, for the inference found by the magistrate as to the date of activation of the Ryan recorder.

80. The third ground advanced by Vanguard as to why leave should be refused is that:

“… there is no utility in the appeal where the plaintiff failed to adduce adequate evidence to support any findings as to the damage to the cargo or the quantum of any loss suffered.”

81. Because of the manner in which the magistrate dealt with the hearing, by ruling in favour of Vanguard on the preliminary issue of the date that the Ryan recorder was activated, the issue of quantum of damages was not determined. The evidence before the magistrate included an assessment by Captain Castellino of the approximate percentage of the shipment that had activated (50-60 per cent), which corresponded with Ms Ly’s evidence of the number of cartons that were not saleable (1,274 of 2,500, being approximately 51 per cent). This allowed a figure to be determined, based on the evidence of the value of the shipment.

82. Accordingly, had the question been one of mixed fact and law, leave would have been granted.

Vanguard’s notice of contention

83. In the event that the appeal is not dismissed as incompetent pursuant to its notice of motion, Vanguard has filed a notice of contention, contending that the decision of the court below be affirmed on four grounds. The first is that the evidence does not support the “competing inference” that the Ryan recorder was activated on 27 October 2016. On the basis of the evidence pertaining to the entries on the Ryan recorder, its recovery from the consignment and the analysis of its strip graph, together with the expert evidence of Captain Castellino as to the widespread practice concerning the use of Ryan recorders in the transportation of perishable goods, I reject that ground.

84. The second ground is that Vanguard owed no duty of care to Fresh Produce in contract, bailment or negligence. The way in which this ground was put, in oral submissions by counsel for Vanguard, was to tie it again to the issue of when Vanguard took possession of the consignment. It was submitted that Vanguard’s contractual obligations and the strict obligations that Vanguard had as a bailee, did not arise until after the garlic had already activated.

85. As to contract, Mr Soriano accepted in evidence that, consistently with entries in both quotes that he said he gave to Ms Ly and items for payment in Vanguard’s tax invoice, he understood that a term of the agreement was that the consignment was to be kept refrigerated and monitored when in Vanguard’s possession. Similarly, counsel for Vanguard in oral submissions accepted that a duty of care in negligence only arose from when Vanguard took physical possession of the cargo.

86. The last two issues are, thirdly, that Fresh Produce failed to prove that the damage to the goods was caused by any act of Vanguard and fourthly, that Fresh Produce failed to adduce adequate evidence to prove its loss. Both these issues were not adjudicated below, because the preliminary issue was determined in favour of Vanguard. However, the evidence in the Local Court was to the effect that the inspection of the consignment by Ms Ly was consistent with the analysis of the strip graph; that is, that the unmarketability of the garlic, due to it having activated, was consistent with a rise in temperature over the previous 44 hours. I have already noted that there was evidence before the Local Court permitting a quantification of the loss to Fresh Produce of the partial damage to the shipment.

87. Accordingly, I decline to affirm the judgment of the magistrate on the grounds advanced in the notice of contention.

The appropriate course

88. Section 41 of the LCA is in the following terms:

“41   Determination of appeals

(1) The Supreme Court may determine an appeal made under section 39(1) or 40:

(a)   by varying the terms of the judgment or order, or

(b)   by setting aside the judgment or order, or

(c)   by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court’s directions, or

(d)   by dismissing the appeal.”

89. The determination of the matter by the magistrate on a preliminary issue, now to be set aside, means that significant factual issues remain to be determined. Accordingly, the appropriate course is for the matter to be remitted to the Local Court for determination in accordance with my direction that the magistrate erred in finding that the Ryan recorder was activated on 25 October 2016.

Orders

90. In the matter of Fresh Produce Pty Limited v Vanguard Logistics Services (Aust) Pty Limited, I make the following orders.

(1)   The judgment of his Honour Magistrate Miller dated 12 July 2018 is set aside.

(2)   The matter is remitted to the Local Court to be determined according to law, taking into account that the learned magistrate erred in finding that the Ryan recorder was activated on 25 October 2016.

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Amendments

20 December 2019 - Typographical errors corrected.

Decision last updated: 20 December 2019