Maersk Australia Pty Ltd v BGP International Pty Ltd

[2007] VSC 154

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 5504 of 2006/

5505 of 2006   

MAERSK AUSTRALIA PTY LTD	Plaintiff
(ACN 003 750 969)
v
BGP INTERNATIONAL PTY LTD	Defendant

(ACN 108 211 392)

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JUDGE:	SMITH J
WHERE HELD:	Melbourne
DATE OF HEARING:	3 May 2007
DATE OF JUDGMENT:	18 May 2007
CASE MAY BE CITED AS:	Maersk Australia Pty Ltd v BGP International Pty Ltd
MEDIUM NEUTRAL CITATION:	[2007] VSC 154

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APPEAL – Small Claims Tribunal decision – Claim for damages arising out of contract for shipping of oranges – Adequacy of reasons as to causation of damage – Appropriate relief.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A Broadfoot	Logie-Smith Lanyon
For the Defendant	Mr D Bailey	John Blanch

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HIS HONOUR:

The appeal

1. The plaintiff, Maersk Australia Pty Ltd, (“Maersk”) appeals from two decisions of the Victorian Civil and Administrative Tribunal (“VCAT”) following a hearing on 3 March 2006.  The decisions were made in two proceedings, namely, C15/2006 and C17/2006.

The original proceedings

1. In those proceedings, BGP International Pty Ltd (“BGP”) sought damages from Maersk in respect of two shipments of its oranges which were transported for BGP in refrigerated containers by Maersk from Melbourne to Japan and found on inspection in Japan to be damaged.  In the application C15/2006, (container 66) BGP sought $4,447 and in application C17/2006 (container 69) the sum of $9,999.  It relied on the assignment of rights to sue given to it by the Japanese consignee.

1. In the applications lodged with VCAT, the documents described the claims as being made under the Fair Trading Act 1999 and sought payment of money for loss, injury or damage because of a contravention of the Fair Trading Act and alleged misleading or deceptive conduct, false representation and unconscionable conduct. 

1. At the hearing of the application, the case for BGP was presented by a Mr Barker on behalf of BGP.  Maersk was represented by a Mr Mills and a Ms Lenkinoska.  The two cases appear to have been run before the Tribunal on the basis that the claim was for breach of contract.  BGP alleged that in each instance, it was a term of the contract to transport the oranges that they be transported at 0⁰C.  The content of the term as to temperature was disputed.  It was common ground, however, that the oranges were carried by or on behalf of Maersk to Japan at a temperature of -0.5⁰C.  It was also common ground that when ultimately inspected in Japan, it was found that a quantity of the oranges were damaged and BGP pointed to the carriage at -0.5⁰C as the cause.

1. The cases were handled as trader-trader disputes by the Tribunal in its Small Claims jurisdiction.  The proceedings were, of course, handled informally.  Facts were asserted by the representatives of the parties and there was no cross-examination.  Documents referred to were tendered as exhibits.

The alleged errors of law

1. The notices of appeal in both proceedings are wide ranging.  At the hearing of the appeal, the scope was sensibly reduced by Maersk’s counsel and confined initially to two primary alleged errors of law:

1.That it was not open[1] to the Tribunal to conclude in either case that it was a term of the contract that the oranges would be carried by Maersk at 0.0⁰C.

2.If it was open to the Tribunal to find that it was a term of the contract of carriage that the goods would be carried at 0.0⁰C, it was not open on the evidence to conclude that the damage suffered was caused by the failure of Maersk to carry the goods at 0.0⁰C.

[1]Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355-63.

1. Towards the conclusion of submissions, it also emerged that Maersk alleged, in the alternative to the second point mentioned above, that there was an error of law in that the Tribunal failed to give any or any adequate reasons to explain its finding of a causal connection between the breach of contract and the damage suffered.  I will address each issue in turn.

Reasons for Decision – the contract term

1. The Tribunal gave oral reasons for the decision on the date it was given.  Written reasons were requested and subsequently, on 29 March 2006, written reasons for judgment were given.

1. In its reasons, the Tribunal stated that the matters were two trader-trader disputes involving two contracts for the carriage of fresh fruit between Australia and Japan.  The Tribunal went on:

“The first of these contracts related to an order placed by the applicant for the carriage of fresh fruit from the Patrick terminal in Melbourne to the Moji terminal in Japan.  The order was acknowledged by the respondent by way of booking acknowledgement dated 13 July 2005 and it was a term of the contract (confirmed in the acknowledgement document) that the carriage of the goods was to occur at 0⁰C or 32⁰F.”

As to the second of the contracts, the Tribunal said that:

“It was acknowledged in writing by the respondent on 26 July 2005.  This particular container load was to be shipped from the Melbourne Patrick terminal to the Nagoya terminal in Japan, and, in the terms of the contract, it was to be carried at 0⁰C.”

1. The Tribunal went on:

“Whatever may have occurred by way of purported instructions from third party packing companies to the respondent, the fact remains that the applicant BGP ordered its goods to be transported at 0⁰C and the respondent’s written acknowledgement reflected that requirement.”

As to other matters raised as to the contract term, the Tribunal commented:

“The representative for the respondent informed the Tribunal that the applicant knew that it carried oranges to Japan at -0.5⁰ because of industry protocols and to ensure that the cargo did not ripen in transit.  On the evidence before me I am not persuaded any variation of the contract was communicated by the respondent to the complainant.  Whatever may be the case in relation to protocols put forward by various industry bodies and referred to by the respondent, those protocols do not operate to set aside the plain terms of the contract between the parties.”

The reasons then turned to other issues.

Term of contract – analysis

1. It is clear that the Tribunal took the view that in each case, the contract was concluded and recorded in a document supplied by Maersk or on its behalf to BGP called a “Booking Acknowledgement”.  The first of these was dated 13 July 2005.  It set out the various details including quantities and route and a variety of requirements in respect of the conditions in the container, including a temperature requirement of 0.0⁰C or 32⁰F.  In respect of the other claim, the relevant document was a Booking Acknowledgement dated 26 July 2005.  It was in a similar form and contained similar details including the same temperature requirements.

1. There was another category of documents called “Export Receival Advice”.  The respective Export Receival Advices came into existence on 20 July 2005 and 5 August 2005.  These were documents prepared by BGP’s packing agent, Valley Pack at Mooroopna.  They contained instructions to Maersk about the carriage of the goods.  Both recorded that the temperature was to be 0⁰C.  The Bills of Lading did not record a required temperature.[2]

   [2]I note authority to which I was referred by BGP that where there is an inconsistency between the Bill of Lading and the terms of the agreement, the terms of the agreement will prevail.  Schmitthoff “The Export Trade” Sixth Edition at 299; The Ardennes [1951] 1 KB 55; Cook Islands Shipping Co Limited v Colson Builders Limited [1975] 1 NZLR 423.

1. On this appeal it was argued, however, that there was other evidence before the Tribunal which, if accepted, as it was by the Tribunal, had the result that it was not open to the Tribunal to conclude that the temperature specified as a term of the contract was  0.0⁰C or 32⁰F.

1. Maersk relied upon a document described as a “Pre‑receivable Advice” prepared for each delivery and given by Valley Pack to Maersk containing detailed instructions for the carriage of the goods and advising of the dates of arrival and departure of the containers.  On the second page of each of those documents, the “Control” temperature was specified as -0.5⁰C.  Maersk argued that Valley Pack was BGP’s agent and that this document bound BGP contractually.  Mr Barker said that he instructed Valley Pack to carry at 0⁰C and could not explain why they hadn’t followed that instruction.

1. The other evidence relied upon before the Tribunal by Maersk was evidence as to the international protocols that applied for goods shipped to Japan, which it was said required the goods to be carried at -0.5⁰C.  Its representatives asserted that PGB was aware of this before any agreements were made.  The evidence on the latter point was inconclusive.

1. I am not persuaded that the Tribunal erred in finding that the contract required that the goods be carried at 0.0⁰C or 32⁰F.  On the evidence the contract was formed and recorded in the original booking acknowledgement documents between the parties.  As to the other evidence relied upon, the pre-receivable advice was prepared by the packing agent of BGP, Valley Pack, but there was no evidence that that company had any authority to vary a contract that had been made by its principal BGP.  Valley Pack on the evidence merely packed the goods and transported them to the Patrick premises.  As to the evidence as to the requirements of protocols, they themselves could not vary any terms of contract and did no more than raise the question of why it was that the parties appeared to have agreed that the goods would be transported at 0.0⁰C or 32⁰F.  In my view the plaintiff cannot demonstrate that it was not open to the Tribunal to make the finding that it was a term of the contract that the oranges be carried at 0.0⁰C.

Reasons for decision – causation issue

1. The written reasons produced by the Tribunal stated that, as a result of the breach, the complainant suffered loss and damage and awarded the sums abovementioned.  The reasons did not explain how the conclusion as to causation was reached.

Causation Issue - analysis

On the question of whether it was open to find a causal link between the breach of contract and damage suffered, the situation is less clear.  There was no direct evidence relevant to the question of what caused the oranges to be damaged.  As to the damage itself, in container 66, the survey report stated the following:

“Decayed fruit were affected with blue/green mould and clear rot.  Pliable to soft, various slight/moderate scarring/mechanical injuries, depressed/deformed, split, slight pitting, plugged or too long buttons found to some extent.”

The survey report on container 69 was as follows:

“The decayed fruit were affected with blue/green mould and clear rot.  Pliable to soft, various slight/moderate scarring/mechanical injuries, depressed/deformed, split, slight pitting, plugged or too long buttons found to some extent.  The above ice mark or distress fruit quantities are as per consignee/end user.  Cold storage photos as well as sample photos sent to our office – emailed on 12 September/05.”

I note that the reports refer to problems other than problems associated with the chilling of the oranges but it was common ground that the chilling was the cause of the damage in respect of which compensation was sought.

1. In relation to the shipment in container 69, there was evidence before the Tribunal that on 5 August 2005 at 09.15 hours prior to the receipt of the container by Maersk, there was a probe placement checking the temperature of the container.  It showed the following:

“Sensor placement	Pulp Temperature
1 - first row right side second carton down/      second carton across	-0.40C
2 - fifth row left side fourth carton down/      third carton across	-0.70C
3 - ninth row left side sixth carton down/      third carton across	0.40C.”

There was no similar information available in respect of the other earlier shipment.

1. In the case of both shipments, the vast majority of time during which the oranges were refrigerated was the time when they were in the custody of Maersk.

·Container 69 had been loaded with oranges at Mooroopna on 5 August 2005.  It arrived at, and was received at, Patrick’s terminal on the same day.  The container was shipped out on 9 August 2005 and discharged at Nagoya on 30 August 2005.  The oranges were not surveyed until 8 September 2005 when damage was found.

·In relation to the other container, container 66, it was loaded on 20 July 2005 and received at the wharf at Patrick’s terminal on 21 July 2005.  It was shipped on 26 July 2005 and discharged at Osaka on 10 August 2005.  It was surveyed on 22 August 2005 and damaged oranges were found.

1. At the hearing, Mr Barker referred to publications containing articles by experts but it is clear from the transcript that the Tribunal decided to reject the material because the parties had not called any experts.

1. The representatives of Maersk asserted that this was the first occasion out of some 256 containers shipped under the same temperatures where there had been any problem.  No other evidence was placed before the Tribunal to support that assertion.

1. The decision may have been reached in a number of ways.  Without suggesting that any of the following may be sound or unsound, it may be that the Tribunal took the view that the probabilities were that it was the prolonged exposure on the journey to Japan that was more likely than not to be the cause of the problem. It may have seen the situation as one appropriate for the application of res ipsa loquitur.  Another possibility is that the decision turned on the Tribunal’s view as to who carried the onus of proof on the issue of causation.  It may have reached its conclusion notwithstanding the assertions as to there having been no difficulties in the past with shipments at that temperature.  On the other hand, it may have been that the Tribunal did not accept that assertion.  As to container 69, it may have regarded the evidence about the early refrigeration as not altering the inference that might be drawn from the probability of damage during the long period of refrigeration whilst shipped by Maersk.  There may have been other lines of reasoning.

1. It is not possible for Maersk to demonstrate error of law in the Tribunal’s decision on the issue of causation.  But that arises because the reasons given did not adequately reveal the reasoning process.[3]  Thus the alternative ground is made out.

   [3]Sun Alliance v Massoud [1989] VR 8: Intertransport International Private Ltd & Anor v Donaldson & Anor [2005] VSCA 303; See Secretary to the Department of Treasury and Finance v Richard Dalla-Riva [2007] VSCA 11 [23] and the cases there cited.

1. I note that Maersk raised on the appeal the question of whether it was in fact the appropriate company to be sued, when the evidence before the Tribunal as revealed in the Bill of Lading was that it was merely the agent of the carrier A P Muller-Maersk A/S trading as Maersk Sealand.  Not only was this not raised below but it would appear from the evidence before me that Maersk elected not to raise the point below, it having foreshadowed that it would raise the issue in correspondence prior to the proceedings being issued and then not doing so.  The point is relevant to two issues – whether the appropriate party was found liable and whether the exclusionary clauses of the Bill of Lading would be applicable to the contract.  The short answer appears to me to be that Maersk should not now be allowed to change its position.  The situation is one where the parties have proceeded and incurred costs on a particular basis elected by Maersk.  Maersk should not now be allowed to resile from that position.  In addition, the issue is plainly one where the course adopted by Maersk has deprived BGP of the opportunity of seeking to question its representatives about the relationship between the companies.  Accordingly it is not a matter that can now be raised.[4]

   [4]Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598.

1. There remains the question of the appropriate orders to be made. It will be necessary to allow the parties the opportunity to make submissions on that question. It may be that the appropriate order should be one requiring the provision of reasons. On the other hand, because the explanation for the decision may lie in the application of principles not exposed in the course of the hearing below and, therefore, not subject to submissions by the parties, it may be appropriate not to order simply the provision of reasons but to set aside the decision as to causation and direct a rehearing according to law on that issue and that issue alone. The power given to this Court by s 148(7) Victorian Civil and Administrative Tribunal Act 1998 would seem to permit the formulation of any order that is required to address the error and ensure the resolution of the dispute in accordance with law.  It may be necessary formally to set aside the entire order, but any rehearing should be confined to the issue of causation; for no error was demonstrated by Maersk in relation to the finding as to the terms of the contract.

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