NEC Australia Pty Ltd v Gamif Pty Ltd & Anor Gamif Pty Ltd v Neway Transport Industries Pty Ltd Gamif Pty Ltd v Australian Eagle Insurance Co Ltd Gamif Pty Ltd v Colonial Mutual General Insurance Co Ltd Gamif Pty..

[1993] FCA 345

NEC AUSTRALIA PTY LTD v. GAMIF PTY LIMITED; NEWAY TRANSPORT INDUSTRIES PTY
LIMITED; AUSTRALIAN EAGLE INSURANCE CO LIMITED; COLONIAL MUTUAL GENERAL
INSURANCE COMPANY LIMITED and WEBDEN PTY LIMITED
No. G0009 of 1992
FED No. 345
Number of pages - 13
Insurance Law
(1993) 7 ANZ Insurance Cases 61-178 (extract)
(1993) 42 FCR 410

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J(1)

CATCHWORDS

Insurance Law - theft of facsimile machines from warehouse whilst in custody of carrier - whether machines were at the time of the theft "in transit" within the meaning of that term in a policy of insurance

HEARING

SYDNEY, 5 April 1993

#DATE 31:5:1993

Solicitors for the Applicant : Corrs Chambers Westgarth

Counsel for the First Respondent : G McArthur

Solicitors for the First Respondent: Madgwicks

Counsel for First Cross Respondent : P B Murdoch QC

Solicitors for First Cross Respondent: Phillips Fox

ORDER

The Court answers the question submitted to it as follows:

Question

Whether any of the goods the subject of the second burglary referred to in the further amended statement of claim were at the time of the second burglary "in transit" within the meaning of that term in the policy of insurance No. 05A036806 CGO issued by Australian Eagle Insurance Co Limited to Gamif Pty Limited?

Answer

No.

The Court orders that:

The matter be stood over for directions with respect to the preparation of the case for hearing and on that day the Court shall deal with any outstanding questions that remain with respect to the determination of the separate question including costs of the hearing before the Court.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

LOCKHART J NEC Australia Pty Limited ("NEC") sues Gamif Pty Limited ("Gamif") and Neway Transport Industries Pty Limited ("Neway").

1. NEC carries on the business of supplying and distributing electronic equipment including facsimile machines. Gamif carries on business in Victoria, under the business name "Neway Computer Transport", as a transporter and warehouse storer of electronic equipment including facsimile machines. Neway carries on business in Sydney as a transporter and warehouse storer of electronic equipment including facsimile machines.

2. NEC alleges that from about 10 July 1989 to 1 February 1990, Gamif, in the course of its business as transporter and warehouse storer of facsimile machines, took delivery at NEC's premises in Springvale Road, Mulgrave, Victoria of certain facsimile machines and carry cases (to which I shall refer as "the machines") undertaking to transport, store and deliver them to customers of NEC in New South Wales. NEC says that it agreed to pay Gamif certain charges for the storage and carriage of the machines and that, in the circumstances, Gamif was under a duty safely to keep and take care of them and to deliver them in accordance with the contract.

3. It is alleged that during the course of the contract between them, Gamif delivered the machines to Neway at its premises at 17 Vore Street, Auburn, New South Wales (the Auburn depot) for storage and delivery to NEC's customers in accordance with NEC's directions. Neway accepted and received the machines in its care and keeping for this purpose. It is alleged that Neway was under a duty safely to keep and take care of the machines and to deliver them in accordance with the directions of NEC.

4. It is agreed between the parties that in all relevant respects Neway acted as the agent of Gamif.

5. On 2 January 1990 certain of NEC's machines were stolen from the Auburn depot. On 19 February 1990 a further theft occurred of other machines of NEC, also from the Auburn depot. All of the stolen machines belonged to NEC: Gamif had taken delivery of them from NEC in Mulgrave, Victoria and carried them to the Auburn depot where they were at the time of the thefts in the custody of Neway. It is alleged by NEC that Gamif and/or Neway failed to keep the facsimile machines safe and secure and to deliver them in accordance with the directions of NEC. NEC alleges that it suffered damage as a result of the alleged negligence of Gamif and/or Neway.

6. In the alternative it is alleged by NEC that Gamif contravened s. 52 of the Trade Practices Act 1974 ("the Act") by making certain representations to NEC relating to the security of the Auburn depot, that NEC relied upon the representations and in the result suffered substantial loss and damage.

7. Four cross-claims have been brought. The first cross-claim is by Gamif against Australian Eagle Insurance Co Limited ("Eagle"). This cross-claim relates to the theft of the machines stolen on 18 February 1991. The cross-claim is made pursuant to a policy of insurance No. 05AO36806 in which Eagle insured Gamif against certain loss or damage to the property. I shall refer to the relevant terms of the policy later. Gamif seeks indemnity from Eagle against the loss and damage which it is alleged to have sustained arising from the theft of the machines on 18 February 1991.

8. The second cross-claim is made by Gamif against Neway based on the alleged failure by Neway safely to keep and secure the machines whilst in storage at the Auburn depot before their delivery to customers of NEC.

9. The third cross-claim is brought by Gamif against Colonial Mutual General Insurance Company Limited ("Colonial Mutual") seeking indemnity against all loss and damage arising out of the thefts of 1 January 1990 and 18 February 1991 from the Auburn depot. This claim is based on a policy of insurance by Colonial Mutual in favour of Gamif.

10. The fourth (and at this stage final) cross-claim is brought by Gamif against Webden Pty Limited ("Webden"), the insurance broker retained by Gamif. This cross-claim in effect seeks indemnity from Webden against any damages which Gamif may be liable to pay to NEC and for any costs it incurs in defending NEC's claim.

11. The Court has been asked by Gamif and Eagle to determine a preliminary question arising from the first cross-claim (by Gamif against Eagle). All parties acceded to the adoption of this course as it is expected by the parties that the determination of this preliminary question may resolve the whole or a substantial part of the case. I heard argument on this preliminary question in Melbourne at the request of the legal representatives of NEC, Gamif and Eagle. Each of Gamif and Eagle was represented by counsel at the hearing. NEC was also represented there, but in the nature of a watching brief.

12. The preliminary question is whether any of the machines the subject of the second burglary were at the time of the second burglary "in transit" within the meaning of that term in the policy issued by Eagle in favour of NEC. Gamif says the answer to that question should be "yes" and Eagle says "no".

13. For the purpose of answering this preliminary question Gamif and Eagle agreed on certain facts which I shall now recite.
    

"1. NEC is and was at all material times carrying on business as a supplier and distributor of, inter alia, facsimile machines. NEC had premises at Clayton (a warehouse) and Mulgrave (head office and dispatch area) in Victoria.

2. Gamif is and was at all material times a duly incorporated company carrying on business under the name 'Neway Computer Transport' as a transporter of electronic goods including facsimile machines. Gamif had a transport depot and office at Tullamarine in Victoria.

3. Eagle is and was at all material times a duly incorporated company carrying on business as an insurer.

4. By an agreement ('the Agreement') consisting of an exchange of documents, namely a letter from Gamif to NEC dated 21 June 1988, a letter from Gamif to NEC dated 8 November 1988 and NEC Purchase Order No. 228711 dated 24 January 1989, Gamif was engaged by NEC, inter alia, 'to collect, linehaul and warehouse facsimile units to capital city warehouses and on instruction, to delivery units of special serial numbers to customers'.

5. The rates agreed between Gamif and NEC and at all material times charged by Gamif for the task referred to in paragraph 4 were $20.00 per unit for delivery to capital city customers of NEC and $35.00 per unit for delivery to NEC's customers in country areas. There was also a rate for delivery from one state to depots or customers in other states.

6. Gamif started carrying NEC's facsimile machines pursuant to the Agreement in about August 1988. The same procedure generally was followed from then until and including 18 February 1990.

7. The general procedure for transporting the NEC facsimile machines pursuant to the Agreement was as follows -

(a) NEC would advise Gamif of the quantities and models of facsimile machines to be collected and despatched to each state.

(b) Gamif would then organise the collection of the facsimile machines from NEC's warehouse at Clayton (generally) and/or from Mulgrave (sometimes).

(c) Small loads would be collected by an employee of Gamif driving its truck. Larger loads would be collected by a semi-trailer arranged on sub-contract by Gamif. The facsimile machines at the time of collection from NEC were in their individual cartons. Some cartons were in larger cartons or on shipping skids or pallets depending on the models. On the outside of the larger cartons, skids or pallets NEC would have written the destination such as 'Neway NSW' or Neway Vic'

(cc) A larger carton is a large carton with 4 to 10 facsimile machines insider but does not have a disposable pallet base. A shipping skid is a large cardboard box with a disposable cardboard pallet base, normally holding approximately 8 to 10 cartons each containing a facsimile machine. A pallet is a 1 metre x 1 metre wooden platform approximately 6 inches in height on which facsimile machines in boxes are stacked to a height of approximately 1 metre and then shrink wrapped in clear polythene.

(d) The facsimile machines were loaded onto the truck at Clayton or Mulgrave in their cartons and on their skids or pallets and were then transported by that truck to Gamif's premises at Tullamarine.

(e) At those premises the cartons, skids and/or pallets of facsimile machines were unloaded from the truck and divided according to the State of destination.

(f) The cartons, pallets or skids of facsimile machines were then loaded onto line haul trucks destined for depots in each State. In the case of facsimile machines destined for New South Wales the cartons, skids or pallets of facsimile machines were usually loaded onto a line haul truck and despatched the night of the same day as they had been picked up from NEC.

(g) The depot in New South Wales was a building at 17 Vore Street, Auburn, New South Wales ('the Depot').

(h) Upon arrival by line haul truck at the Depot the cartons, pallets or skids of facsimile machines were removed from the line haul truck by forklift and placed on racks or block stacked in the Depot. Confirmation of the arrival of the facsimile machines was sent to NEC that day. No copies of those confirmations are available.

(i) NEC would then advise the Depot by fax when it had arranged a sale of one or more of the facsimile machines. The fax identified the facsimile machines sold by model and serial number. No copies of these faxes are available.

(j) Upon such advice from NEC the particular facsimile machines sold would be removed from the carton, pallet or skid and loaded onto a delivery truck.

(k) The delivery truck delivered the facsimile machines to NEC's customers.

(l) The facsimile machines remained in their individual cartons during the process referred to above.

(m) Gamif billed NEC the agreed rate for the carriage of each facsimile machine after the delivery of that facsimile machine to NEC's customer.

(n) Gamif paid Neway Transport Industries Pty Ltd. $10.00 per facsimile machine for the services that it provided.

8. Gamif invoiced in accordance with the Agreement. The invoices for deliveries from the Depot for the period between the 2 burglaries referred to below are annexed. The first column under 'Date' shows the date of delivery to NEC's customer. The column under 'Our ref' shows Gamif's consignment note number. The column under 'Your ref' shows, in the case of facsimile machines, the 5 digit serial number of the machine. The column under 'Service' shows 'QP' which means quoted price for delivery pursuant to the Agreement. The column under 'Items' shows the number of facsimile machines or items despatched. The column under 'Weight' was used to show the model of the facsimile machine because weight was not relevant to the charge paid by NEC. The column under 'Description' shows the place from which the goods were picked up and the place to which they were delivered. The references to NEC are references to NEC's premises at Clayton or Mulgrave in Victoria from which the goods the subject of the entry were collected by Gamif. The entries on the invoices do not show the dates on which the facsimile machines were collected from NEC's premises in Mulgrave or Clayton or the dates they arrived at the Depot.

9. The time between the facsimile machines being unloaded at the Depot in Sydney and them being loaded again onto a truck for delivery to a customer of NEC varied.

10. On about 1 January 1990 certain facsimile machines belonging to NEC referred to in the Further Amended Statement of Claim were stolen from the Depot ('the First Burglary'). No issue in relation to the First Burglary arises between Gamif and Eagle.

11. By a policy of insurance No. 05 AO36806 CGO ('the Policy') issued by Eagle in consideration of a premium paid to it Eagle ('the company' in the Policy) insured, inter alia, Gamif in the following relevant terms -

'A. Legal Liability Cover

Subject to the terms and conditions of this policy and to its limits, the company will indemnify the insured in respect of all sums which the insured shall become legally liable to pay and shall pay as compensation for loss of or damage to property whilst in the care, custody or control of the insured, its servants, agents or sub-contractors in transit within the radius specified in the policy schedule.

For the purposes of this policy, 'in transit' includes loading and unloading and packing and unpacking and whilst in the normal course of transit the property is temporarily housed on or off the vehicles.'

12. No radius was specified in the policy schedule rather it covered conveyances from anywhere in Australia to anywhere in Australia. The period of insurance under the Policy was 15 February 1990 to 31 October 1990.

13. On 18 February 1990 a further burglary ('the Second Burglary') took place at the Depot and further facsimile machines ('the Machines') belonging to NEC were stolen from the Depot. At the time they were stolen the Machines were in cartons stacked on pallets or in skids at the Depot.

14. The dates on which the facsimile machines which were allegedly stolen in the Second Burglary were delivered to the depot can largely be determined. Annexed is a series of sheets headed 'List of NEC fax machines stolen 18.2.90'. The first column on each sheet sets out the serial number of facsimile machines in respect of the loss of which Gamif seeks to be indemnified. The second column sets out the date that fax machine arrived at the Depot. Annexed to each such sheet is the NEC packing list and the NEC stores issue which sets out the date of dispatch from melbourne of the facsimile machines from which the likely date of arrival has been determined.

15. Of 36 N400 facsimile machines delivered into the Depot on 2 December 1989 bearing serial numbers 92710 to 92745 none is claimed as having been lost in the First Burglary and invoices reveal that 11 had been delivered from the Depot to NEC's customers between 2 December 1989 and 18 February 1990. Accordingly 25 of the 36 were still held at the Depot at the time of the Second Burglary. Of 84 N150 facsimile machines delivered into the Depot on 21 December 1989 bearing serial numbers 87285 to 87368 none is claimed as having been lost in the first burglary and the invoices reveal that 17 of the 84 had been delivered from the Depot to NEC's customers between 21 December 1989 and 18 February 1990. Accordingly 67 of the 84 were still held in the Depot at the time of the Second Burglary. Of 80 N300 facsimile machines delivered into the Depot on 24 January 1990 by 18 February 1990 19 had been delivered to NEC's customers and accordingly 61 remained in the Depot. The movement of these facsimile machines is consistent with the movement of facsimile machines generally from the Depot for the period covered by the invoices.

16. Eagle has declined to indemnify Gamif pursuant to the Policy in respect of the Second Burglary on the grounds that the Goods were not 'in transit' within the meaning of that term in the Policy."

1. In the course of the hearing before me it became obvious that the statement of facts needed clarification in some respects; and in the result amendments were made by consent to the statement. I should say at this point that statements of agreed facts, like stated cases, can serve useful purposes. They suffer, however, from the inherent problem that parties can agree upon facts they perceive as being relevant at the time the document is drafted, but as the argument proceeds at the hearing, the true issues tend to emerge and the agreed facts often prove deficient or ambiguous. The parties sought to remove these problems by amendments made at the hearing and they are embodied in the above recitation of agreed facts. I do not say this critically of the parties or their legal advisers at all. Indeed, they are to be commended for preparing the document. I simply sound a cautionary note in cases of this kind for the reasons which I have given.

2. Attached to the statement of facts are various documents which are referred to in the body of the statement and to which I shall refer as the occasion requires. The statement of agreed facts, together with these documents, comprises Exhibit 1.

3. The policy issued by Eagle is described as "Carriers Liability Policy"; the relevant part of it is in the following terms:
   

"Upon payment or agreement to pay the initial premium or any subsequent renewal premium,

Australian Eagle Insurance Company Limited ('the company') agrees to indemnify the insured in respect of its legal liability in accordance with the terms of this policy.

You should note that the proposal completed by you or on your behalf is the basis of and forms part of this contract of insurance.

You should also note that this policy does not provide insurance cover for damage to your

customer's goods during the period of carriage by you. If your customers wish you to arrange insurance cover for their goods then that will need to be insured by this company separately. A. Legal Liability Cover

Subject to the terms and conditions of this

policy and to its limits, the company will

indemnify the insured in respect of all sums which the insured shall become legally liable to pay and shall pay as compensation for loss of or damage to property whilst in the care, custody or control of the insured, its servants, agents or subcontractors in transit within the radius specified in the policy schedule.

For the purposes of this policy, 'in transit' includes loading and unloading and packing and unpacking and whilst in the normal course of transit the property is temporarily housed on or off the vehicles.

The company will in addition pay any legal costs incurred with its written consent.

B. Exclusions

This policy does not cover liability in respect of loss or damage proximately caused by:

(a) the carrying vehicle being driven by or in the charge of any person who is under the influence of any drug or intoxicating

liquor, or in whose blood the percentage of alcohol is in excess of the legal limit prescribed by the law applicable in the State or Territory where the accident

occurred as indicated by analysis of the person's breath or blood.

Provided that this exclusion shall not apply to the extent that there are

relevant statutory provisions to the contrary.

(b) the carrying vehicle being driven by a person who is not the holder of the

appropriate licence to drive the carrying vehicle for the purpose for which it was being used.

(c) the load of the carrying vehicle being in excess of that which the vehicle was constructed to carry or that which the vehicle was authorised to carry by law or regulation.

(d) Inherent vice or nature of the goods or merchandise, delay, deterioration, loss of market or consequential loss of any description."

1. The policy refers under the heading "A. Legal Labiality Cover" to loss or damage to property "in transit within the radius specified in the policy schedule". No such radius is specified in the schedule but the schedule does state:
   

"VESSEL and/OR CONVEYANCE: ROAD

VOYAGE: AT AND FROM: ANYWHERE IN AUSTRALIA TO: ANYWHERE IN AUSTRALIA"

1. Although the policy is described as "Carriers Liability Policy" it is important that the policy is construed according to the terms of the policy itself and not some label that it attached to it. See Re NM Superannuation Pty Ltd and Stephen Elliott Young and Geoffrey Charles Barratt, unreported, Full Federal Court (Burchett, Hill and O'Loughlin JJ), 12 March 1993.

2. The critical question for determination is whether the machines, whilst in storage at the time of the second theft in the Auburn depot and admittedly then in the custody or control of Gamif through its agent Neway, were "in transit" within the meaning of the policy.

3. The words "in transit" are not defined exhaustively, but the policy states that the expression "includes loading and unloading and packing and unpacking and whilst in the normal course of transit the machines are temporarily housed on or off the vehicles".

4. Counsel for Gamif argued that at the time of the second burglary the machines fell within those words of the policy. They were being "housed" at the Auburn depot until such time as delivery instructions were received from NEC. They were being "housed off the vehicles" "in the normal course of transit" at the time of the second burglary by being kept in the Auburn depot in accordance with the usual conduct of the arrangements between NEC and Gamif. They were "temporarily" housed in that they were not intended to be in the New South Wales depot permanently, but were there for a passing purpose even if the actual length of time was not defined in advance. Reliance was placed upon the dictionary definition of the word "temporarily" as connoting a passing need, something that is not permanent. I was referred to various decisions including Hafza v Director-General of Social Security (1985) 6 FCR 444 especially at 451-3; Burrows v Lang (1901) 2 Ch 502 and Thomson v Martin (1986) 2 Qd R 483; also Hollis v Dean Ryder (1976) 1 NSWLR 389.

5. It was argued by counsel for Gamif that there was one transit from NEC to its customer, not a number of transits separated by warehousing activity at the Auburn depot. Eagle, it was said, had not sought to impose a time limit on how long goods could be "temporarily housed" which it could have done in drafting the policy. Reference was made to Hepburn v A Tomlinson (Hauliers) Limited (1966) AC 451. In short, it was argued on behalf of Gamif that the machines were being temporarily housed off its vehicles at the time of the second burglary in the normal course of transit of those machines from NEC to its customers.

6. In the alternative, it was argued by counsel for Gamif that the machines were "in transit" within the meaning of the first paragraph of the policy under the heading "A. Legal Liability Cover" without reference to the inclusive definition. It was said that the temporary storage of the machines at the Auburn depot was incidental to the transit of the machines and therefore part of the transit. Reliance was placed upon Crows Transport Limited v Phoenix Assurance Co Limited (1965) 1 WLR 383. It was argued that the "transit" of the machines began when they were collected from NEC and did not end until the machines were finally unloaded by Gamif at NEC's customers' places of residence or business. Reference was also made in this respect to Hepburn and to Cascade Group Limited v Royal Insurance Australia Limited (1992) 7 ANZ Insurance Cases 61-134.

7. Finally it was argued on behalf of Gamif that if there is any ambiguity surrounding the meaning of "temporarily", "housed", "normal course of transit" or "in transit" the policy should be construed contra proferentem in favour of Gamif.

8. Counsel for Eagle argued that at the time of the second burglary the machines were being warehoused, and had ceased to be in transit.

9. In my opinion the policy covers machines of NEC whilst being transported from one place to another. It does not mean that the machines must be in motion at all times. But it does mean that the overall object of the insurance contract is to facilitate the transportation of the machines of NEC from one place to another. The "transit" may be interrupted to permit efficient and economical loading, transhipment, unloading and storage to await another vehicle to carry the goods from the point of original shipment to the point of destination; but the interruption cannot be merely for the commercial convenience of one of the parties.

10. The ordinary meaning of "transit" essentially connotes that goods are in motion between two points, but the period of transit may continue during intervals or periods when they may be loaded or unloaded and temporarily housed provided that this is reasonably referable to the furtherance of the carriage of goods to the final destination. The notion of "in transit" accepts that the movement of the goods may be interrupted by circumstances associated with the requirements of their transportation. See Commercial Union Assurance Co v The Niger Co Limited (1922) Lloyds LR 75 at 81-2; Safadi v Western Assurance Co (1933) 46 Lloyds LR 140 at 142; Verna Trading Pty Limited v New India Assurance Co Pty Limited (1991) 1 VR 140 per Kaye J (with whose reasons McGarvie J agreed) at 147 and per Ormiston J at 169-170.

11. In Wiggins Teape Australia Pty Limited v Baltica Insurance Co Limited (1970) 2 NSWR 77 Macfarlan J said at 80 that:
    

"The purpose of a warehouse-to-warehouse clause - is to insure during a limited land movement ... it has never been suggested it is intended to cover indefinite storage at some place not

brought about by the requirements of transport, but determined by the voluntary decision of the consignee."

Kaye J cited this passage with approval in Verna at 147.

1. Although the policy in the present case is not one that contains a "warehouse-to-warehouse" clause, the observations made by the judges in Verna assist in determining whether the machines with which this case is concerned were "in transit" within the meaning of the policy.

2. It is not suggested that the terms of the contractual arrangements between NEC and Gamif were known to Eagle. It was part of the contract between those two companies that the machines would be taken by Gamif from NEC's premises in Victoria to Gamif's Melbourne depot and then, after separation into goods that were New South Wales or Victoria bound, placed on particular vehicles for transportation to the Auburn depot (so far as the New South Wales machines were concerned) and where they would be stored until such time as they were delivered to customers of NEC. But it is not suggested that these arrangements were known to Eagle, so they cannot in my opinion assist in the construction of the relevant terms in the policy. These terms of the contract between NEC and Gamif are relevant in defining the circumstances in which the claim is made and as part of the factual matrix which defines the claim. It is impermissible to construe the language of the policy by reference to the facts of the contractual arrangements between NEC and Gamif; but it is those facts that must be ascertained to determine if a claim falls within the language of the policy.

3. The machines with which this case is concerned bore particular serial numbers and they were machines included in four models (NE facsimile 150, 200, 300 and 400). Of the N150s, those stolen in the second burglary had been in the Auburn depot for approximately two months.

4. As to the N200 machines, those stolen had been in the Auburn depot for approximately two months. Of the N300 machines, those stolen had been in the depot for some three weeks. As to the N400 machines, those stolen had been in the Auburn depot for approximately two-and-a-half months. Other machines (not the subject of the second burglary) had been in the Auburn depot for period as long as six months.

5. NEC conducted its business by having Gamif transport its machines from NEC's premises in Victoria to various places including the Auburn depot. Gamif took delivery of the machines from NEC's premises and carried them to Gamif's premises at Tullamarine. Each of the facsimile machines was housed in its own carton. The machines within their individual cartons had been packaged at the time of their collection by Gamif from NEC in one of three forms of containers: larger cartons, shipping skids, or pallets. The large cartons, shipping skids or pallets, as the case may be, all had their destination written upon them by NEC before leaving its premises marked either as "Neway NSW" or "Neway Vic". The cartons, shipping skids and pallets were then loaded onto Gamif's truck at the premises of NEC and transported to Gamif's premises at Tullamarine. At those premises the large cartons, skids or pallets were unloaded from the truck and divided according to the State of destination. They were then loaded on to line haul trucks destined for depots in each State. In the case of the facsimile machines destined for New South Wales, the cartons, skids or pallets were usually loaded on to a line haul truck and despatched the night of the same day as they had been picked up from NEC. On arrival at the Auburn depot by line haul trucks, the cartons, pallets or skids were removed from the truck by forklift and placed on racks or blocks, stacked in the depot and confirmation of the arrival was sent to NEC that day.

6. It is plain from the documents attached to the agreed facts that so far as the goods with which this case is concerned, they were consigned by NEC to Neway NSW (Neway acting as agent for Gamif, this is agreed). The consignee was Neway NSW at the Auburn depot. None of the goods that were the subject of the second burglary had been sold by Neway to its customers at the time of the burglary. None of them had been the subject of a facsimile transmission from NEC to the depot stating that it had arranged a sale of one or more of the machines. Hence, the procedures envisaged in paragraphs 7(i) and (j) of the statement of agreed facts had not taken place in respect of any of the machines the subject of the claim by Gamif against Eagle Insurance. The transportation by Gamif of the machines for NEC was therefore of machines which had not been presold by NEC to any customers in New South Wales.

7. Doubtless the machines were despatched by NEC from its premises in Victoria before they had been sold, both because the machines would then be available in the Auburn depot to supply quickly the needs of customers for facsimile machines and to ensure a full load of the machines for the line haul trucks.

8. But there had been no appropriation of any machines by NEC to any customer at any relevant time. The machines were consigned in bulk by NEC to Neway NSW, in the sense that the machines within the individual cartons were contained in larger forms of packaging (larger cartons, shipping skids and pallets). They remained in the Auburn depot until a particular machine or machines had been sold; and were then extracted from their bulk containers and duly despatched to the ultimate customer.

9. Some of the goods transported by Gamif to the Auburn depot may, if the second burglary had not intervened, have been sold to customers of NEC over varying periods of time, but some may not have been sold at all, though I recognize the probability that they would ultimately have been sold. However, the fact is that some may not have been sold for any one of a variety of commercial reasons. For example, some other type of facsimile machine may have suddenly proved popular and rendered the machines with which this case is concerned unattractive to customers and therefore been left as idle stock of NEC.

10. In my opinion there were on the agreed facts two possible forms of "carriage in transit". First is the carriage of the machines from the premises of NEC in Victoria to the Auburn depot. That carriage involved loading and unloading at the Tullamarine base of Gamif, transportation to the Auburn depot and unloading there. If the transportation of the goods from Victoria to the Auburn depot had itself involved some temporary stop or loading or unloading then doubtless it too would fall within the concept of the machines being "in transit", though this did not occur in the present case.

11. Once the goods had reached the Auburn depot and had been unloaded they remained there for varying periods of time, some for substantial periods. The machines ceased to be in transit in my opinion once they had been unloaded and stacked in the Auburn depot, assuming the stacking was done by Gamif or its agent Neway.

12. If NEC had subsequently sold the machines and followed the procedure set out in paragraph 7(i), (j) and (k) of the statement of agreed facts, the particular machines that had been sold would again form part of the contract of transportation and be "in transit" from the time they were loaded on to a delivery truck of Gamif or Neway (or possibly earlier unloading from the larger cartons, pallets or skids if this was done by Neway) until they were unloaded at the premises of the customers who had bought the machines or other points of delivery authorized by them. In the meantime the goods were not in transit whilst they remained at the Auburn depot. Once a machine had been sold to a customer there would be a fresh consignment by NEC to that customer of particular identifiable machines. The earlier consignment finished however upon the unloading of the goods in bulk at the Auburn depot.

13. Whilst at the Auburn depot goods would no doubt be at risk primarily of fire, flood, tempest or burglary. These are risks of a different kind to those normally encountered whilst goods are "in transit". Whilst the goods were under the control of Gamif it was of course a bailee of the goods and Neway had control of them as agent for Gamif. The contrary is not disputed.

14. In my opinion the question should be answered as follows:-
    

Question

Whether any of the goods the subject of the second burglary referred to in the further amended statement of claim were at the time of the second burglary "in transit" within the meaning of that term in the Eagle Insurance policy?

Answer

No.

1. I shall stand the matter over for directions with respect to the preparation of the case for hearing and on that day shall deal with any outstanding questions that remain from the determination of this separate question including costs of the hearing before me.