Schenker International (Australia) v Siemens Ltd

[2002] NSWCA 172

CITATION:	Schenker International (Australia) & Anor v Siemens Ltd [2002] NSWCA 172
FILE NUMBER(S):	CA 40760 of 2001
HEARING DATE(S):	18/04/02
JUDGMENT DATE:	11 June 2002
PARTIES :	Schenker International (Australia) Pty Ltd and Schenker International Deutschland GMBH v Siemens Ltd
JUDGMENT OF:	Meagher JA at 1; Sheller JA at 13; Stein JA at 40

LOWER COURT JURISDICTION :	Supreme Court
LOWER COURT FILE NUMBER(S) :	SC 50152 of 1998
LOWER COURT JUDICIAL OFFICER :	Barrett J

COUNSEL:	Appellant: A Meagher SC & R Darke SC Respondent: C Needham SC & J Roberts
SOLICITORS:	Appellant: Blake Dawson Waldron Respondent: O'Reilly Sever & Co
CATCHWORDS:	Section 11 Civil Aviation (Carriers Liability) Act 1959 - damage to goods - whether Chapter 3 Articles 18 and 22 applied - whether Clause 4 of the House Airway Bill operated to limit the carrier's liability for negligence - appeal allowed.
LEGISLATION CITED:	Civil Aviation (Carriers Liability) Act 1959 Warsaw Convention at the Hague 28 September 1955 Customs Act 1901 Carriage of Goods by Road Act 1965 (UK)
CASES CITED:	Victoria Sales Corporation v Emery Air Freight Inc 917 F2d 705 (2nd Circulation 1990) Quantum Corporation Ltd v Plane Trucking Ltd [2001] 2 LloydsLR 133 Aerofloral Inc v Rodricargo Express Corporation 756 So 2R 234 (2000) Read-rite Corporation v Burlington Air Express Ltd 186 F 3d 1190 (1999) Adler v Dickson [1955] 1 Qb 158 Port Jackson Stevedoring Pty Limited v Salmond & Spraggon (Australia) Pty Limited (1980) 144 CLR 300 Samuel Montagu & Co v Swiss Air Transport Co Ltd [1966] 1 Lloyd's Rep 323 at 326 Read-rite Corporation & American Homes Assurance Company v Burlington Air Express Ltd (1998) US Dist LEXIS 21523, Cl 4
DECISION:	1. Appeal allowed; 2. Judgment given by Barrett J in favour of the Respondent on 31 August 2001 be set aside and in lieu thereof there be judgment for the Respondent in the sum of US$74,680.00 plus interest from 23 July 1997 to 31 August 2001; 3. That the issues relating to the applicable rates of interest on both the pre and post judgment amounts be remitted to the trial judge for determination; 4. That the issue of costs in the proceedings in the Court below be remitted to the trial Judge for determination; 5. That the issue of costs of appeal be determined by further application to this Court.

CA 40760 of 2001
SC 50152 of 1998

MEAGHER JA
SHELLER JA
STEIN JA

Tuesday, 11 June 2002

SCHENKER INTERNATIONAL (AUSTRALIA) PTY LTD & Anor

v

SIEMENS LTD

Facts
The appellants, Schenker International (Australia) Pty Limited (Schenker Australia, first appellant), and Schenker International Deutschland GMBH (Schenker Germany, second appellant), were responsible for transporting telecommunication electronic equipment from Germany to Melbourne on the terms of a house airway bill. The respondent, Siemens Ltd, was the owner of the cargo. After their arrival in Melbourne and while being removed from the area of Melbourne airport to the under bond warehouse of the first appellant, Schenker Australia, the cargo fell from the carrying vehicle and was damaged. At trial, Barrett J gave judgment for Siemens Ltd (the respondent) against the two Schenker companies (the appellants) in the amount of $1 688 059.50.

On appeal, the Court was concerned with (a) the question of who was liable to pay the respondent and (b) how much. In determining these issues, the Court took into consideration the provisions of Chapter III Articles 18 and 22 of the Warsaw Convention and Hague Protocol, as well as section 11 of the Civil Aviation (Carriers Liability) Act 1959.

Held: Per Meagher JA (Sheller JA and Stein agreeing)
The limitation within Article 22.2 of the Warsaw Convention does not apply to loss or damage which takes place outside “an aerodrome” or airport. That the Article is to be given a literal interpretation was decided in Victoria Sales Corporation v Emery Air Freight Inc 917 F2d 705 (2nd Cir 1990). The Schenker Companies therefore cannot rely on Article 22 of the Convention.
Clauses 4 and 11 of the house airway bill respectively provide for the liability of the carrier for goods during the period that they are in its charge, and the delivery of the goods to be made at the place of the destination in accordance with the instructions of the consignee. The house airway bill is evidence of a contractual framework and therefore cannot be construed as one which involved the Australian Schenker in no duties at all once the goods arrived at the airport.
The trial judge erred in holding that the airways limitation did not apply to the cargo. The Schenker companies were transferring the cargo under two regimes: one covering the route from Berlin airport to Melbourne airport, one covering the route from Siemen’s Berlin factory to Schenker’s Melbourne bondstore. If the latter, contractual regime is different from the former, statutory one, it still operates to the extent it can. It thus covers the short trip from Melbourne airport to the bondhouse: Quantum Corporation Ltd v Plane Trucking Ltd [2001] 2 Lloyds LR 133, Aerofloral Inc v Rodricargo Express Corporation 756 So 2R 234 (2000), and Read-rite Corporation v Burlington Air Express Ltd 186 F 3d 1190 (1999).

Orders
(See page 8 of judgment).

CA 40760 of 2001
SC 50152 of 1998

MEAGHER JA
SHELLER JA
STEIN JA

Tuesday, 11 June 2002

SCHENKER INTERNATIONAL (AUSTRALIA) PTY LTD & Anor

v

SIEMENS LTD

Judgment

1 MEAGHER JA: This is an appeal by two Schenker companies (“the German Schenker” and “the Australian Schenker”) against a verdict awarded against them by Barrett J at the instance of Siemens Ltd, the respondent to this appeal. The respondent is a subsidiary of the well-known German electronics company, Siemens AG. The Australian Schenker is a subsidiary of the German Schenker. The verdict was given in respect of a loss which occurred when a valuable pallet of cargo fell off the back of a truck driven by an employee of the Australian Schenker just a few kilometres outside Tullamarine Airport, Melbourne (Victoria). The cargo was owned by the respondent.

2 The cargo contained telecommunication electronic equipment, which the respondent had ordered from Siemens AG to meet the contracted requirements which the respondent owed Telstra Corporation Ltd for a project in Western Australia. The sale between the two Siemens companies was on a FCA basis, so that as between those two companies, property and risk both passed to the respondent at the airport of departure at Berlin. The respondent bore the freight charges.

3 The consignment was transported from Siemens AG’s factory to the Berlin airport by the German Schenker, which forwarded it from Berlin to Melbourne by Singapore Airlines. At Melbourne it was to be transported from Singapore Airlines to the Australian Schenker Warehouse.

4 The cargo damaged was worth a very large sum of money, and the case before Barrett J (and before us) concerns the question of who is liable to pay the respondent, and how much. To some extent the matter is governed by the provisions of the Warsaw Convention and Hague Protocol, to which Australia is a High Contracting Party, and which has been made applicable in Australian domestic law by the provisions of s11 of the Civil Aviation (Carriers Liability) Act 1959. Chapter III Article 18 of the Convention says, insofar as it is relevant:

“1. The carrier is liable for damages sustained in the event of the destruction or loss of, or of damage to, any registered baggage or any cargo, if the occurrence which caused the damage so sustained took place during the carriage by air.
2. The carriage by air within the meaning of the preceding paragraph comprises the period during which the baggage or cargo is in charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of a landing outside an aerodrome, in any place whatsoever.
3. The period of the carriage by air does not extend to any carriage by land, by sea or by river performed outside an aerodrome.”

That creates the liability, Article 22.2 then imposes limits on that liability. Paragraph (a) of that article is as follows, insofar as relevant:

“In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a sum of two hundred and fifty franks per kilogramme…”

As Article 22.2 says, that limitation does not apply to loss or damage which takes place outside “an aerodrome”, an expression which is synonymous with the more politically correct term “airport”. The boundaries of the Tullamarine airport are readily ascertained and can be described in metes and bounds. The Schenker bondhouse is not within them. Nor is the place where the accident happened. On a literal reading of the convention, therefore, the Schenker parties cannot rely on Article 22. That the Article is to be given a literal interpretation was decided by the United States Court of Appeals, second circuit, in Victoria Sales Corporation v Emery Air Freight Inc 917 F2d 705 (2nd Cir 1990), and that view has been followed in many other jurisdictions worldwide. The contrary contention, is that the Article be given a “purposive” interpretation – and I might say it was not a contention pressed by Mr Meagher QC, learned senior counsel for the appellant, with over much enthusiasm – and that the word “aerodrome” be treated as including all bondstores outside the boundaries of, but carrying on activities related to, the airport. There is nothing to be said for such a construction.

5 Mr Meagher’s next submission was that a limitation (of US$20 per kilogram of goods lost, damaged or delayed) contained in the house airway bill covering the carriage of the cargo was applicable. His Honour found against him on this submission. In order to appreciate this submission one must have referred to two factors: the airway bill itself and the Richtungsverkehr between the parties.

6 As to the airway bill, it was issued by the German Schenker to Siemens AG for the carriage by air of electronic equipment from Berlin to Melbourne. The airway bill does not define the word “carriage”, but it does define the word “carrier”. That definition, contained in clause 1, is as follows:

“As used in this contract ‘carrier’ means all air carriers that carry or undertake to carry the goods hereunder or perform any other services incidental to such air carriage.”

If it went no further that that, it would, in my respectful opinion, be sufficient to apply to the Australian Schenker, as that company was plainly performing a service “incidental to such air carriage”, i.e. removing the cargo from an airport to a place where delivery could be effected. The limitation clause itself is clause 4, which is in the following terms:

“Except as otherwise provided in carrier’s tariffs or conditions of carriage, in carriage to which the Warsaw Convention does not apply carrier’s liability shall not exceed USD 20.00 or the equivalent per kilogram of goods lost, damaged or delayed, unless a higher value is declared by the shipper and a supplementary charge paid”.

It names Siemens AG as shipper, the respondent as consignee and the German Schenker as carrier. In clause 11 it provides for delivery to be made at the place of destination to or in accordance with the instructions of the consignee. The place of destination was Melbourne and delivery was to be made to the respondent at the Australian Schenker’s warehouse. By clause 4, the carrier remained liable for the goods during the period that they were in its charge or the charge of its agent. In these circumstances, I fail to see how the airway bill was not either a contract or evidence of a contract whereby the Schenker companies came to take the goods to its bondhouse for delivery to the respondent. In particular, I cannot see how the contract could be construed as one which involved the Australian Schenker in no duties at all once the goods arrived at Tullamarine airport

7 As to the Richtungsverkehr, that is best explained in his Honour’s words. They are:

“The contractual framework within which the carriage occurred was of long standing. The Siemens Group and the Schenker Group had a commercial relationship extending back to the nineteenth century, at least at the level of the German parent companies. In 1991, negotiations between those parent companies in Germany produced a new agreed basis for the carriage of goods by the Schenker Group for the Siemens Group between Germany and Australia. This was revised periodically by further negotiations. Although the relevant discussions and correspondence between the German companies, their respective Australian subsidiaries were consulted and may be taken to have acquiesced in the results. The framework thus developed became known as ‘Richtungsverkehr’ (literally, ‘Direct Traffic’).
It must be accepted that the “Richtungsverkehr” arrangements, as in force from time to time, had contractual effect among the parties in relation to each individual consignment and its transportation…”

8 In these circumstances, his Honour held that the airways limitation did not apply to the cargo. His Honour relied considerably on clause 2.1 of the airways bill contract. It is in these words:

“Carriage hereunder is subject to the rules relating to liability established by the Warsaw Convention unless such carriage is not ‘international carriage’ as defined by that Convention.”

His Honour read into these words an intention that the airway bill did not apply unless no part of the carriage was governed by the Warsaw Convention; if the Warsaw Convention did not apply to any part of the carriage, the airway bill did. I confess to being quite unable to understand this reasoning. In truth, the Schenker companies were transferring the cargo under two régimes: one covering the route from Berlin airport to Melbourne airport, one covering the route from Siemen’s Berlin factory to Schenker’s Melbourne bondstore. If the latter, contractual, régime is different from the former, statutory, one, it still operates to the extent it can. It thus covers the short trip from Melbourne airport to the bondhouse.

9 Mr Meagher was unable to refer us to any case which is precisely on all fours with this case. However, he did refer us to a number of cases of the converse of the present case: cases in which the goods were lost or damaged near, but outside, the boundaries of an aerodrome before the main flight commenced, where the goods were subject to an airway bill containing a clause which was either the same as a similar to clause 4 of the airways bill in the present case: Quantum Corporation Ltd v Plane Trucking Ltd [2001] 2 LloydsLR 133, Aerofloral Inc v Rodricargo Express Corporation 756 So 2R 234 (2000), and Read-rite Corporation v Burlington Air Express Ltd 186 F 3d 1190 (1999). In each case it was held that whilst the Convention limitation did not apply, the airways bill limitation did. These cases would have been decided differently if Barrett J were correct.

10 It follows that Mr Meagher’s submission on the airway bill must be upheld.

11 There is one further matter, which needs attention. Miss Needham SC, learned senior counsel for the respondent, submitted that the Australian Schenker was not a party to the airway bill and therefore could not take advantage of the limitation of liability it contained. There are, I think, many answers to this submission, but one will suffice. On his Honour’s analysis (which, with respect, I adopt) the Richtungsverkehr transmogrified all airway bills into quadri-partite contracts.

12 The following orders are made in accordance with the Short Minutes of Order brought in by the parties:

1 That the appeal be allowed;
2 That the judgment given by Barrett J in favour of the Respondent on 31 August 2001 be set aside and in lieu thereof there be judgment for the Respondent in the sum of US$74,680 plus interest from 23 July 1997 to 31 August 2001;
3 That the issues relating to the applicable rates of interest on both the pre and post judgment amounts be remitted to the trial judge for determination;
4 That the issue of costs in the proceedings in the Court below be remitted to the trial judge for determination;
5 That the issue of the costs of the appeal be determined by further application to this Court.

13 SHELLER JA: The facts necessary for the determination of this appeal are set out in the judgment of Meagher JA which I have had the benefit of reading in draft. So far as necessary I shall refer to them in a summary way.

14 Goods were carried from Germany to Melbourne on the terms of a house air waybill (HAWB) issued by the carrier, Schenker International Deutschland GMBH (the German Schenker) (the second appellant). The terms of the HAWB corresponded with the current text of air waybill conditions prescribed by the International Air Transport Association (IATA). The shipper’s name was shown as Siemens AG, the consignee’s name as Siemens Limited (the plaintiff and respondent to this appeal), which was an Australian subsidiary of the shipper. The airport of departure was Berlin-Tegel, the airport of destination Melbourne. The HAWB noted that it was agreed that the goods described therein were accepted in apparent good order and condition for carriage subject to the conditions of contract on the reverse side of the HAWB.

15 After their arrival in Melbourne the goods - while being moved from the area of Melbourne airport to the under bond warehouse of Schenker International (Australia) Pty Limited (Schenker Australia) (the first appellant), a subsidiary of the carrier - fell from the carrying vehicle and were damaged. The accident was the result of the negligence of the vehicle driver, an employee of Schenker Australia. Siemans Limited sued Schenker Australia and Schenker International Deutschland GMBH to recover damages flowing from this occurrence. Barrett J heard the proceedings and gave judgment for Siemans Limited against the defendants in the amount of $1,688,059.50 inclusive of interest with party and party costs up to 6 July 2001 and costs on an indemnity basis thereafter. The defendants appeal from that decision. The appeal is limited to the quantum of damages awarded.

16 The conditions of the contract of carriage set out on the reverse side of the HAWB, pertinent to the resolution of this appeal, were 1, 2, 4, 7, 9 and 11. Clause 1 defined “carrier” as used in the contract to mean “all air carriers that carry or undertake to carry the goods hereunder or perform any other services incidental to such air carriage”. Clause 2.1 provided that carriage under the HAWB was subject to the rules relating to liability established by, relevantly, the Warsaw Convention as amended at the Hague on 28 September 1955 (the Convention), unless such carriage was not “international carriage” as defined in the Convention. Clause 2.2 provided that, to the extent not in conflict with “the foregoing”, carriage under the HAWB and other services performed by each carrier were subject to: applicable laws (including national laws implementing the Convention), government regulations, orders and requirements (2.2.1); and provisions “herein” set forth (2.2.2). In short, carriage under the HAWB and services performed by each carrier were subject to the provisions of the HAWB. Subclause 2.2.3 is not relevant.

17 Clause 4 of the HAWB was in the following terms:

“Except as otherwise provided in carrier’s tariffs or conditions of carriage, in carriage to which the Warsaw Convention does not apply carriers’ liability shall not exceed USD20.00 or the equivalent per kilogram of goods lost, damaged or delayed, unless a higher value is declared by the shipper and a supplementary charge paid.”

It should be noted that the clause speaks of “carriage” not of “air carriage” to which the Convention does not apply. In short, in any carriage under the HAWB, to which the Convention did not apply, liability was limited in accordance with cl 4.

18 Clause 7 was in the form of a Himalaya clause; Adler v Dickson [1955] 1 QB 158. Clause 8 provided that subject to the conditions in the HAWB, the carrier should be liable for the goods during the period they were in its charge or the charge of its agent. Clause 11 provided for notice of arrival of goods to be given promptly to the consignee and went on:

“On arrival of the goods at the place of destination, subject to the acceptance of other instructions from the shipper prior to arrival of the goods at the place of destination, delivery will be made to, or in accordance with the instructions of the consignee.”

19 At issue in this appeal was whether the Convention still applied to the goods, given that they had been taken out of the airport or aerodrome curtilage at Melbourne. If the Convention does not apply, it is necessary to determine whether cl 4 operated to limit the carrier’s liability for negligence in damaging the goods as they were carried by road transport from the airport to the under bond warehouse of Schenker Australia, and, if so, whether Schenker Australia was entitled, as the agent or representative of the carrier, to the benefit of the limitation.

20 I agree with both Barrett J and Meagher JA for the reasons they have given that the Convention did not apply to the carriage to the under bond warehouse to the extent that it was outside the boundary of Melbourne airport.

21 Chapter III of the Convention is headed “Liability of the Carrier”. Article 18 para 1 makes the carrier liable for damages sustained in the event of the damage to any cargo if the occurrence which caused the damage so sustained took place during the carriage by air. Article 18 para 3 provides:

“3. The period of the carriage by air does not extend to any carriage by land, by sea or by river performed outside an aerodrome. If, however, such a carriage takes place in the performance of a contract for carriage by air, for the purpose of loading, delivery or trans-shipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the carriage by air.”

22 It is well established by authority, though challenged in this appeal by the appellant, that the expression “outside an aerodrome” should be given a literal interpretation. In this case, on such an interpretation, the occurrence which damaged the goods took place outside the Melbourne aerodrome or airport. Accordingly, since that part of the carriage from the airport to the under bond warehouse was carriage to which the Convention did not apply, the question was whether pursuant to cl 4 of the HAWB the carrier’s liability was limited in the way described in that clause.

23 Barrett J held (at para 36 of his reasons for judgment) that the HAWB “did not extend to the part of the overall journey consisting of transportation from the Melbourne airport to the Schenker Australia warehouse, even though, under the umbrella contract, that element was clearly placed within the responsibility of Schenker GMBH and was to be physically undertaken by Schenker Australia”. The umbrella contract referred to was found in a long standing contractual framework between the parties known as “Richtungsverkehr” or, literally, “Direct Traffic”. In passing I note that his Honour expressed the view that according to the umbrella contract the carrier became a bailee of the cargo for the consignee at the point at which title and risk passed from the consignor to the consignee at the Berlin airport and undertook an obligation to transport the goods to Schenker Australia’s warehouse in Melbourne and that a sub-bailment or sub-contract arose when Schenker Australia took possession of the cargo from Singapore Airlines at the Melbourne airport. This finding disposes of any doubt about Schenker Australia’s entitlement to the benefit of the limitation by force of the Himalaya clause, cl 7 of the HAWB. See generally Port Jackson Stevedoring Pty Limited v Salmond & Spraggon (Australia) Pty Limited (1980) 144 CLR 300.

24 Barrett J held that the carriage under the HAWB corresponded with carriage under the Convention and that cl 4 did not apply to any part of the carriage which was not carriage under the Convention. After referring to cll 4 and 2.1 of the HAWB his Honour said:

“39 The clear assumption in each of these provisions is that the carriage as a whole will or will not be within the Convention’s definition of ‘international carriage’ and that the carriage as a whole will or will not be carriage to which the Convention applies. No half measures are contemplated. The carriage is not regarded as consisting of segments, with some being ‘international carriage’ for the purposes of the Convention and others not, or with the Convention applying to some but not to others. It is all or nothing. This, to my mind, indicates that the concept of ‘carriage’ adopted by the waybill is intended to correspond, and does correspond, with the concept of ‘carriage’ under the Convention.
40 Clause 4 does not apply unless the whole of the relevant carriage is ‘carriage to which the Warsaw Convention does not apply’. In other words, if the Convention does apply, clause 4 does not: one or the other operates exclusively. On any view of matters, the Convention did apply to this carriage. It applied in such a way that its liability and liability limitation regime extended up to the point where the cargo crossed the boundary of the Melbourne airport en route to the Schenker Australia warehouse. It follows that the carriage was not of the description in clause 4 of the air waybill. The substitute liability limitation provision in that clause therefore did not operate at all. It did not operate in relation to the carriage as I have just described it because clause 4 so dictated. It did not operate in relation to the transportation from the Melbourne airport to the Schenker Australia warehouse because that was not part of any carriage.
41 The defendants’ contention based on a contractual limitation of liability accordingly fails ….”

25 From the consequences of this conclusion the defendants bring this appeal.

26 Although this is not expressed in the HAWB, the parties had agreed that the goods would be available for collection and the carrier or its agent would deliver them at the under bond warehouse outside the curtilage of the airport and about 4 kilometres away. The parties had no choice in the matter. The direct air carrier of the goods was Singapore Airlines, its air waybill showed the shipper as the German Schenker and the consignee as Schenker Australia. The nature and the quantity of the goods was described as “consolidation cargo as per attached cargo manifest”.

27 In 1986 Schenker Australia moved its offices and under bond warehouse out of the airport to 7 International Square, Tullamarine, to which the goods were being taken. The customs requirements and the 1987 permissions under s40AA (since repealed) of the Customs Act 1901 (Cth) stated that such shipments be moved direct and without delay to the specified premises, namely the under bond warehouse, and were not authorised for release directly to an importer or its contractor. Such shipments could only be released from the approved premises, that is to say the specified premises. The shipment consigned under the Singapore Airlines air waybill was a consolidated shipment and was therefore required to be moved by Schenker Australia from the Qantas International freight terminal at the airport to the Schenker Australia under bond warehouse.

28 As I understood it the respondent conceded that it was not possible for the parties to agree for the goods to be collected from the carrier at any earlier or different point in the transportation. To effect delivery in accordance with the HAWB and the instructions of the shipper, the carrier was bound to arrange for the goods to be carried to the under bond warehouse and therefore bound within the meaning of cl 1 to perform a service incidental to the air carriage. That was part of the contract evidenced by the HAWB. With due respect there is no sound basis for treating the HAWB as evidencing a contract which terminated before delivery to the consignee at the point where the goods crossed the boundary at Melbourne airport.

29 Clause 2.1 of the HAWB is consistent with part of the carriage to be performed under the HAWB being subject to the rules relating to liability established by the Convention and part of it not being so subject because it is carriage performed outside an aerodrome. In Samuel Montagu & Co Limited v Swiss Air Transport Co Limited [1966] 1 Lloyd’s Rep 323 at 326, Lord Denning MR, speaking of a clause in a waybill substantially the same as cl 2.1, said that the clause was “just another way of saying that the carriage is subject to the rules so far as the same are applicable”. The waybill was treated as a dual purpose form of waybill equally applicable for international and non-international carriage.

30 Quantum Corporation Inc & Ors v Plane Trucking Limited & Anor [2002] EWCA Civ 350 concerned the application of the CMR Convention (CMR) scheduled to the Carriage of Goods by Road Act 1965 (UK) in circumstances where the contract of carriage embraced more than one type of carriage. Section 1 of the 1965 Act provided that the provisions of CMR “shall have the force of law so far as they relate to the rights and liabilities of persons concerned in the carriage of goods by road under a contract to which the [CMR] applies”. Chapter 1 of the CMR, consisting of articles 1 and 2, was entitled “Scope of Application”. Article 1 provided relevantly:

“1. [The CMR] shall apply to every contract for the carriage of goods by road in vehicles for reward, when the place of taking over of the goods and the place designated for delivery, as specified in the contract, are situated in two different countries, of which at least one is a contracting country, irrespective of the place of residence and the nationality of the parties.”

31 At first instance, Tomlinson J [(2001) 2 Lloyd’s Rep 133 at 139] considered that Article 1 of CMR required that any contract of carriage be characterised as a whole and held that, unless the contract as a whole could be said to be for carriage by road internationally, any road carriage it embraced fell outside the terms of the CMR. The goods in transit between Singapore and Dublin were lost in North Wales. The carriage was arranged by a freight forwarder under their house air waybill. The freight forwarder also issued a master air waybill for these and other goods as agent for Air France. The master air waybill recorded that the goods were to be carried in two stages, the first from Singapore to Paris, the second to Dublin by a trucking service used by Air France. Claims were made against the trucking company, which had become insolvent, and Air France. Air France’s conditions of carriage in the master air waybill enabled it to limit its liability to seventeen special drawing rights (SDRs) per kilogram. Tomlinson J accepted Air France’s case that its liability once the goods left Charles de Gaulle fell to be measured by reference to its own terms and conditions in the air waybill.

32 In the present case Barrett J found that neither the Convention nor the HAWB applied to the road transport section of the carriage from the boundary of the airport to the under bond warehouse. In Quantum Corporation, the trial Judge held that CMR did not apply to the road transportation of the carriage. It was not suggested that if the CMR did not apply, the conditions of the master air waybill did not apply. The conclusions flowed from the idea, in one case, that the HAWB applied to that part of the carriage which “as a whole” was either within or not within the Convention’s definition of “international carriage” and, in the other, that CMR applied only where the whole of the carriage could be said to be for carriage by road internationally. In one case the Judge held that the HAWB applied only to the extent that the contract could be characterised as a whole as one for carriage by air. In the other case the Judge held that for the CMR to apply the contract had to be characterised as a whole as a contract for carriage by road.

33 A basic issue for the English Court of Appeal was what constituted a “contract for the carriage of goods by road in vehicles for reward” within the meaning of Article 1 of CMR. The appellant’s case was simply and solely that, although there was only one contract, by it Air France contracted, first, for the carriage of goods by air to Charles de Gaulle and thence, secondly, for their carriage by truck to Dublin. Mance LJ, with whose judgment Aldous and Latham LJJ agreed, said:

“14. Two questions present themselves when considering article 1. The first is to what extent the application of the Convention depends upon a carrier having obliged itself contractually to carry by road (and by no other means). This depends upon the force, in context, of the word ‘for’ in the reference in article 1 of the Convention to a ‘contract for the carriage of goods by road’. [Compare the acknowledgement in the HAWB of acceptance of the goods ‘for carriage’]. The second is to what extent (if at all) a contract can be both for the carriage of goods by road, within article 1, and for some other means of carriage, to which CMR does not apply.
15. Taking the first question, attention can for a moment be confined to a simple contract for carriage from A to B, without any unloading from the trailer. There is a range of possibilities, each of which may actually lead to goods being carried by road internationally: Thus: (a) the carrier may have promised unconditionally to carry by road and on the trailer, (b) the carrier may have promised this, but reserved either a general or a limited option to elect for some other means of carriage for all or part of the way, (c) the carrier may have left the means of transport open, either entirely or as between a number of possibilities at least one of them being carriage by road, or (d) the carrier may have undertaken to carry by some other means, but reserved either a general or a limited option to carry by road.
….
24. The judge considered that article 1 required any contract for carriage to be characterised as a whole. On this basis, the instant contract could not in his view properly be described as a contract for carriage of goods by road. It was in his view pre-dominantly for carriage by air. Underpinning his conclusion was, he said, the circumstance that the place of taking over could only be Singapore. But he added that, even if Air France could (implausibly, in his view) be treated as obliged to carry by road from Paris to Dublin, the contract would at most be a contract for carriage by both air and road, not a contract within article 1; and, even if that problem could be overcome, the only place of taking over could be Singapore, which would be ‘both absurd and contrary to the Warsaw Convention’.
…
56. The European authority on the first question can thus be summarised as follows. The Belgian, Dutch and German courts have all held that CMR can apply to carriage by road internationally in case (d), as well as necessarily in cases (a), (b) and (c). The French court (the tribunal de commerce of Bobigny) has reached what appears, from its reasoning, to be the opposite conclusion, although there is some room for doubt about this, bearing in mind, firstly, the absence in its judgments of any reference to ‘advance notice’ of the changed means of carriage having been given as required by condition 8.1 and, secondly, the terms of the commentator’s note. Assuming that the tribunal’s decision does stand for an opposite conclusion to that reached in Belgium, the Netherlands and Germany, it is clear that its reasoning can only apply in case (d), and not cases (a), (b) and (c) described in paragraph 15 above. The present case falls, I have concluded, within case (b). So all such European authority as has been produced suggests that CMR should be applied to the carriage by road from Paris to Dublin, subject to the answer to the second question. This confirms the answer that I would give to the first question, without the benefit of any authority (see paragraphs 15-22 above).
…
59. The weight of the European authority is thus firmly in favour of a conclusion that CMR is applicable to an international road leg of a larger contract in cases (a), (b) and (c) mentioned in paragraph 15. While I see the force of the objections suggested by Prof. Fitzpatrick and accepted by the judge, my own inclination, apart from authority, would have been in the same sense. As it is, and with the benefit of such authority, I have no real hesitation about adopting the conclusion which other European countries have reached. For my part, I would also favour the German Supreme Court’s view that CMR is applicable in case (d). I reach these conclusions on the basis that the concept of a contract for the carriage of goods by road embraces a contract providing for or permitting the carriage of goods by road on one leg, when such carriage actually takes place under such contract. The place of taking over and delivery of the goods under article 1(1) are to be read as referring to the start and end of the contractually provided or permitted road leg. Detailed provisions, such as articles 4, 5(1), 6(1), 8(1) and 13-16 of CMR fall to be operated with the carrier (or its representatives) so far as necessary putting itself in the position of the consignor or consignee when taking over goods at the start of a road leg, which is not the first leg in the overall carriage, or when delivering up the goods at the end of a road leg, which is not the last leg in the overall carriage.”

34 In para 19 Mance LJ said:

“Air France emphasises that CMR, in contrast with for example the Warsaw convention, focuses on ‘the contract for the carriage of goods by road’, and not on the carriage. So it does, although it is worth noting that the Warsaw Convention also contemplates an agreement: see in particular article 1(2) (whereby ‘the expression international carriage means any carriage in which, according to the agreement between the parties, …’) and article 5(2) (whereby the absence, etc. of an air waybill ‘does not affect the existence or validity of the contract of carriage which shall … be none the less governed by the rules of this Convention’); and see generally Fellowes (or Herd) v Clyde Helicopters Ltd [1997] AC 534 and Western Digital Corp v British Airways plc [2000] 2 LlR 142, esp paragraph 42 (‘Whilst it is clear that in certain respects the Convention scheme provides general rules rather than merely statutory contractual terms, it is also clear that the draughtsmen had very much in mind as a premise to its application the existence of a relevant contract of carriage’).”

35 The reasoning of the English Court of Appeal is compelling and I agree with it. The need to characterise the contract as a whole as one for carriage by road for it to be governed by CMR was rejected. In particular, I accept what Mance LJ described as the concept of a contract for the carriage of goods by road embracing a contract providing for or permitting the carriage of goods by road on one leg, when such carriage actually takes place under such contract. If CMR had not applied, the conditions of the air waybill would have applied to the road leg of the carriage. For like reason it seems to me here that the HAWB and in particular cl 4 was not limited in its operation to carriage by air.

36 Amongst other things, in cl 11 of the HAWB, the carrier agreed to deliver the goods to or in accordance with the instructions of the consignee. The agreement was for delivery at Schenker Australia’s under bond warehouse. Once the goods left the airport the effect of Article 18 para 3 of the Convention was that the carriage was no longer carriage by air within its meaning. However, the second sentence of para 3 acknowledges that carriage by land, by sea or by river performed outside an aerodrome may take place “in the performance of a contract for carriage by air”. “…[A]ny damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the carriage of air.” The fact that such proof to the contrary is available does not mean that the carriage did not take place “in the performance of a contract for carriage by air”. In my opinion, the HAWB remained the contract for carriage that governed the road transportation from the airport to Schenker Australia’s under bond warehouse. Since it was carriage to which the Convention did not apply, cl 4 of the HAWB did.

37 We were referred to two American cases. The later was Aerofloral Inc v Rodricargo Express Corporation, 756 So2d 234 (2000) a decision of the Court of Appeal of Florida, Third District, given on 26 April 2000. In that case a loss had occurred at a warehouse almost a mile from the Miami International Airport. By its own terms the Warsaw Convention did not apply because the loss occurred outside the airport. Aerofloral relied upon rule 4 which was in the same terms as cl 4 of the HAWB. Reference was made to an argument that the terms of the air waybill did not limit the carrier’s liability because the goods were not “in carriage”. It was observed that “the air waybill does not define ‘carriage’, but it does define ‘carrier’ as one who ‘undertakes to carry the goods hereunder or perform any other services incidental to such carriage’.“ It was remarked “clearly, warehousing the goods for carriage is a service ‘incidental to such carriage’ as contemplated by the definition of the term ‘carrier’.” The Court went on to say that on remand the trial court should address whether it was also encompassed within the term “carriage”. With due respect, it would seem to me that the definition of air carrier which includes one who undertakes to perform other services incidental to such air carriage suggests that air carriage includes the performance of services such as warehousing.

38 In Read-Rite Corporation and American Homes Assurance Company v Burlington Air Express Ltd (1998) US Dist LEXIS 21523, cl 4, in like terms to cl 4 of the HAWB, was held to apply where goods were damaged in the course of transportation from and outside the perimeter of an airport to another airport by road. The decision was affirmed on appeal to the United States Court of Appeals for the 9th Circuit (186 F3d 1190 (1999)). Because the Warsaw Convention did not apply the case was governed by the conditions of the air waybills issued by the carriers. The decision is contrary to the submission put by the respondent that cl 4 applied only to damage during air carriage.

39 The appeal should be upheld. I agree with the orders that Meagher JA has proposed.

40 STEIN JA: I agree with both Meagher JA and Sheller JA.

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