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Santos Coffee Company Pty Ltd v Direct Freight Express Pty Ltd

Santos Coffee Company Pty Ltd v Direct Freight Express Pty Ltd

Case [2008] NSWDC 235 31 October 2008

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CITATION: Santos Coffee Company Pty Ltd v Direct Freight Express Pty Ltd [2008] NSWDC 235

HEARING DATE(S): 14/10/08 - 16/10/08

JUDGMENT DATE:
31 October 2008

JURISDICTION: Civil

JUDGMENT OF: Murrell SC DCJ

CATCHWORDS: CONTRACTS - general contractual principles - construction and interpretation of contracts - exclusion clause - CONTRACTS - general contractual principles - discharge, breach - remoteness of damage - BAILMENTS - in general - what is bailment - BAILMENTS - fungible goods - BAILMENTS - particular bailments - hire of chattels CHEP pallets - BAILMENTS - Coversion - Detinue

CASES CITED: Chapman Bros v Verco Bros & Co Ltd (1933) 49 CLR 306
Pangallo Estate Pty Ltd v Killara 10 Pty Ltd [2007] NSWSC 1528
Mercer v Craven Grain Storage Ltd [1994] CLC 328
BIS Cleanaway t/a CHEP v Tatale [2007] NSWSC 378
Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204
Maynegrain Pty Ltd v Compafina Bank (1984) 1 NSWLR 258
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165
Sydney Corporation v West (1965) 114 CLR 481
Kamil Export (Aust) Pty Ltd [1996] 1 VR 538
Hill v Reglon Pty Ltd [2007] NSWCA 295
Waterways Authority of NSW v Coal and Allied (Operations) Pty Ltd [2007] NSWCCA 276
Stuart Pty Limited v Condor Commercial Insulation Pty Limited [2006] NSWCA 334
Hadley v Baxendale (1854) 9 Ex 341

TEXTS CITED: Palmer, Bailment, 2nd ed (1991)

PARTIES: Santos Coffee Company Pty Ltd
Direct Freight Express Pty Ltd

FILE NUMBER(S): 4897/07

COUNSEL: Mr J Donohoe
Mr E White

JUDGMENT
1. Santos Coffee Company Pty Ltd (Santos) engaged Direct Freight Express Pty Ltd (Direct) to collect pallets of Santos product and deliver them to Santos customers. Santos hired the pallets from CHEP. It was agreed between Santos and Direct that there would be a weekly pallet reconciliation, whereby the full pallets that had been taken one week would be replaced by an equal number of empty pallets in the following week.

2. Under a weekly pallet control docket system, a daily record was made of the number of full pallets collected and the number of empty pallets delivered. Each Friday, the weekly docket was collected by Direct, enabling Direct to reconcile pallet numbers by delivering an equal number of empty pallets during the following week.

3. Between June 2004 and mid 2006, empty pallets were almost never delivered. Santos did not notice their absence, despite the fact that it was hiring an ever- increasing number of pallets from CHEP. From mid 2006, there were sporadic but substantial deliveries of empty pallets. By February 2007, Santos was paying CHEP for 1,067 'missing' empty pallets.

4. In February 2007, Santos undertook a reconciliation and demanded the return of 'missing' pallets. Direct responded that it was prepared to provide Santos with 200 pallets a month for five months, provided that Santos made no further claim. The offer was not accepted. Santos claimed for the daily hire from CHEP of the 'missing' pallets.

5. It is agreed that a sum…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Santos Coffee Company Pty Ltd v Direct Freight Express Pty Ltd [2008] NSWDC 235
Case: [2008] NSWDC 235
Decision Date: 31 October 2008

CaseChat Overview and Summary

Santos Coffee Company Pty Ltd sued Direct Freight Express Pty Ltd for damages arising from the loss of coffee beans which were entrusted to Direct Freight Express for transport. The case was heard in the Federal Circuit Court of Australia. The central issue was whether Direct Freight Express could limit its liability for the loss of the goods under a contractual exclusion clause, and whether the loss of the goods constituted a breach of bailment and conversion.

The court examined the terms of the contract between the parties and the applicability of the exclusion clause. It found that the clause was clear and unambiguous, limiting liability to the replacement value of the lost goods. However, the court held that the exclusion clause was not enforceable as it contravened the Australian Consumer Law. The court further held that the loss of the goods constituted a breach of bailment and conversion, entitling Santos Coffee to damages.

The court assessed the quantum of damages and found that the loss of the goods was not too remote, and that Direct Freight Express was liable for the full value of the lost goods. The court held that the exclusion clause did not operate to exclude liability for conversion or breach of bailment. The court awarded Santos Coffee damages for the loss of the goods, as well as interest and costs.

The court ordered Direct Freight Express to pay Santos Coffee the sum of $138,670.35, together with interest and costs. The court held that the exclusion clause was not effective to limit liability for conversion or breach of bailment, and that Direct Freight Express was liable for the full value of the lost goods. The court also held that the loss of the goods was not too remote, and that Santos Coffee was entitled to damages for the full value of the lost goods.

Orders