Siemens Ltd v Schenker International (Aust) Pty Ltd

[2003] HCATrans 336

[2003] HCATrans 336

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S158 of 2003

B e t w e e n -

SIEMENS LTD

Appellant

and

SCHENKER INTERNATIONAL (AUSTRALIA) PTY LTD

First Respondent

SCHENKER INTERNATIONAL DEUTSCHLAND GMBH

Second Respondent

McHUGH ACJ
GUMMOW J
KIRBY J
CALLINAN J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 4 SEPTEMBER 2003, AT 10.16 AM

Copyright in the High Court of Australia

__________________

MR P.H. GREENWOOD SC:   May it please the Court, I appear with my learned friend, MR I.G.B. ROBERTS, for the appellant.  (instructed by O’Reilly Sever & Co)

MR A.J. MEAGHER, SC:   If the Court pleases, I appear with MR R.J.H. DARKE, SC for the respondents. (instructed by Blake Dawson Waldron)

McHUGH ACJ:   Yes, Mr Greenwood.

MR GREENWOOD:   Your Honours, the propositions for which we contend can be simply summarised in this way.  The parties entered into a contract of a carriage ‑ ‑ ‑

GUMMOW J:   Well, you say that.

MR GREENWOOD:   It involved some carriage by air ‑ ‑ ‑

GUMMOW J:   Who are the parties to the contract?  Was the contract wholly in writing or partly in writing?

MR GREENWOOD:   Your Honour, the relevant parties to the contract were the second respondent and the appellant, a contract that was entered ‑ ‑ ‑

GUMMOW J:   Is that right?  Did not the trial judge find it was quadripartite?

MR GREENWOOD:   His Honour found that the first respondent, Schenker (Australia) became party to it by reason of the contemplation that Schenker (Australia) would be undertaking the road carriage part of the carriage.

GUMMOW J:   Yes.  All I am saying to you is it may be a mistake from your point of view to jump immediately into this waybill.  We need to know where the waybill stands in relation to the contract.

MR GREENWOOD:   Indeed, and that is a critical aspect in relation to the case we submit, on the basis that the proposition was that there would be different segments of carriage – carriage by air and carriage by road – and that the air waybill only related to the carriage by air and that carriage within the air waybill, wherever it appears, is referring to air carriage.  If your Honours go to the ‑ ‑ ‑

KIRBY J:   Can you explain to me how the air waybill relates to the Richtungsverkehr.

GUMMOW J:   That is what I was trying to encourage you to explain to us.

MR GREENWOOD:   I am sorry, I did not understand your Honour.  The overall agreement between the parties for the overall carriage was the Richtungsverkehr which provided for direct traffic between these two companies to go from wherever it was submitted in Germany to wherever it was to go around the world.

KIRBY J:   So that was an overarching agreement between them?

MR GREENWOOD:   Yes.

KIRBY J:   And the air waybill, on your construction, only applied to the air carriage?

MR GREENWOOD:   Correct, which nominates a ‑ ‑ ‑

KIRBY J:   Which itself was not as Justice Meagher described it, as I understand it.  Singapore Airlines merely picked it up at Frankfurt Airport.  Somebody else got it from Tegel to Frankfurt ‑ ‑ ‑

MR GREENWOOD:   Your Honour, the finding in the evidence is only to the effect that it went from Tegel Airport to Melbourne Airport by Singapore Airlines.  I am aware of the fact that the master air waybill ‑ ‑ ‑

KIRBY J:   Tegel is a very small pre‑war airport.  I have been to it.  I do not think Singapore Airlines flies to Tegel.  Singapore Airlines is an intercontinental carrier.

MR GREENWOOD:   Your Honour, we have the air waybill and I have provided for your Honours in a plastic sleeve, to make it more convenient, a separate copy of page 144 which is the front page of the air waybill and copied on the back and highlighted are some of the parts that we will need to go to.  But your Honours will see that the airport of departure is nominated on the front page as being Berlin‑Tegel.

KIRBY J:   Maybe Singapore Airlines does fly to Tegel following the fall of the Berlin Wall.  I do not know.  Anyway, maybe it does not matter.

GUMMOW J:   I think they fly to an East German airport ‑ ‑ ‑

MR GREENWOOD:   I do not think it does matter, but the evidence such as it is, reveals that this carriage was to go from Tegel to Melbourne Airport by only one carrier, SQ, being the IATA Code for Singapore Airlines.

KIRBY J:   Maybe we should use the non‑politically correct term “aerodrome”.

MR GREENWOOD:   Yes, well I must say Justice Meagher’s comment in that respect eluded me.

KIRBY J:   But it is the word in the Convention apparently.  That is how they translated the French word, I suppose.

MR GREENWOOD:   And just while your Honour has mentioned that, there are a number of different words that are used in different versions of the English text and I will have to address that at some stage.

KIRBY J:   Which is the authentic text?

MR GREENWOOD:   The French.  So, your Honours, there is that bit of evidence in terms of just dealing with this particular aspect.  There is also one other piece of evidence that was before his Honour which is an attachment ‑ ‑ ‑

GUMMOW J:   So what is the answer to my question?  What was the contract?

MR GREENWOOD:   The contract was the overall agreement between Schenker Germany and the appellant for the goods to be conveyed from Tegel Airport through to the bonded warehouse pursuant to the Richtungsverkehr, in which part of that was to be carried out by Schenker (Australia).

GUMMOW J:   Yes.

McHUGH ACJ:   Does the evidence explain what was the nature of this general contract?  It is understandable in terms of an arrangement, but supposing Schenker refused to take a particular consignment; would it have been in breach of the head agreement?  Some terms are loosely used here, but what is the consideration?  Is the consideration given by the carrier each time the carrier accepts something, or is there some binding obligation on the parties over and above what happens with some individual contract?

MR GREENWOOD:   The evidence – and I will take your Honours to it – was that there was this standing arrangement ‑ ‑ ‑

McHUGH ACJ:   I know they use the term “arrangement”, but what does that mean?

MR GREENWOOD:   The way it was put in the evidence was that to the extent that Siemens wished something to be delivered, they could ring up and say, “We want this to be taken today and delivered to there”, and the rate and the dates when it would be carried were all set and there was nothing else to be talked about because there was this standing arrangement that it would be done by Schenker pursuant to those instructions.

KIRBY J:   It went back to the 19^th century, according to Justice Meagher, the arrangements between them.

MR GREENWOOD:   Yes.  Can I take your Honours to Justice Barrett’s findings.

GUMMOW J:   Paragraph 26 of his reasons.

MR GREENWOOD:   Yes.  I was going to take your Honours to 407, paragraph 27, where it describes the contractual framework.

KIRBY J:   Is this the part Justice Meagher could not understand?

MR GREENWOOD:   No.  This refers to it going back to ‑ ‑ ‑

KIRBY J:   I hope we can explain this in the course of our reasons.

MR GREENWOOD:   - - - the 19^th century and refers to the 1991 negotiations producing:

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.

McHUGH ACJ:   In practical commercial operations, these so‑called contractual frameworks often amount to no more than statements of intent which do not have any binding legal effect until something is done.  What is the arrangement here?  To go back to the illustration I first gave, supposing Schenker refused to carry something.  Would they be in breach of their obligation?

MR GREENWOOD:   Yes, your Honour.  The transcript ‑ ‑ ‑

GUMMOW J:   You have to take us to paragraph 28 of the trial judge, do you not?  There is a finding.

MR GREENWOOD:   Paragraph 28, Justice Barrett refers to the fact that pursuant to the “Richtungsverkehr” there was contractual obligation “in relation to each individual consignment” and, your Honours, that is borne out ‑ ‑ ‑

GUMMOW J:   He said its terms “supplemented those of the standing arrangement”, a “waybill” supplemented it.

MR GREENWOOD:   Yes.

GUMMOW J:   He said that was not controversial.

McHUGH ACJ:   As opposed to incorporating.  One can have an arrangement where in a general way people say, “Now, if we contract, our contract is going to incorporate these various terms”, just the same as you go into a hotel and there are a list of conditions.  They become part of the contract.

MR GREENWOOD:   Yes.

McHUGH ACJ:   Now, is that what was meant?  Apparently, not.

MR GREENWOOD:   No, what is intended, and perhaps it is easiest to go to the relevant letter of 17 January 1991 which is at appeal book page 71.  His Honour has referred to the January 1991 negotiations and in this letter what your Honours see is a part of the communications that is going between the parties about the rates that have been negotiated and this letter indicates some complaints about being chiselled down in terms of the price that was going to be charged.  At the bottom of the page your Honours will see a statement of the 11 different elements that comprise the Richtungsverkehr obligations from:

Receipt, handling and despatch –

of the goods –

Transport to Frankfurt.
Consolidation . . . 
Transit to customs controlled warehouse.
Break bulk –

and the status reports.  If I can take your Honours from that to page 102, 5 May 1994.

KIRBY J:   Which page is this?

MR GREENWOOD:   Page 102, and in the third paragraph reference to explaining and reinforcing:

the policy of Schenker to maintain the viability of the Siemens “Richtungsverkehr” by maintaining a traffic freeway for both companies, into which the stream of Siemens shipments can flow and everybody maintaining the freeway knows how to efficiently keep the flow going.

Enclosed there is an extract of previous correspondence, which is at page 104, and your Honours will see that the Richtungsverkehr is described as having:

as its first and foremost criteria, an absolute guarantee of uplift –

and the rate that is struck, which is a flat rate from wherever it may come in Germany, is on a compromise basis.

McHUGH ACJ:   It may be that it operates in two ways, that the direct traffic agreement itself creates contractual obligations and at the same time provides terms for individual contracts.  Take Coles and their carriers, Linfox Transport, in that case there is probably an overriding agreement that they will carry goods binding on it.

MR GREENWOOD:   And then for a specific delivery, an individual consignment, which says this one is to go from here to there and any special conditions would be attached to that and supplement the existing overarching agreement, and that is how we see the waybill as fitting into this arrangement.  There is the overall agreement where certain things are to be done, including transit from the airport to the customs warehouse, deconsolidation, storing the goods for free pursuant to the Richtungsverkehr.

GUMMOW J:   What does deconsolidation mean?

MR GREENWOOD:   In situations where the goods have been packaged with others, just breaking them up and identifying the individual consignees.

KIRBY J:   Does the Federal Republic of Germany have a law like the Civil Aviation (Carriers’ Liability) Act that brings the international Convention into force in Germany or for German contracts?

MR GREENWOOD:   I do not know.  Germany is certainly one of the high contracting parties to the Convention.

KIRBY J:   It is a high contracting party, I know.  Maybe they have a different principle of incorporating conventions by their own force.  Some civil law countries have that principle.

MR GREENWOOD:   Yes, I am not sure.

McHUGH ACJ:   Well, the same for the United States.  Is it not the fact that if the President signs a treaty it becomes part of the law in the United States?  I am not sure, I think it is.

MR GREENWOOD:   Coming back to the Richtungsverkehr, the other piece of evidence that bears on this is at appeal book 45.  There is some transcript which just indicates the way in which it worked.  At line 45:

Let us assume that Siemens in Germany was required to send goods at its own expense to Australia, to Melbourne.

GUMMOW J:   Who was Mr Barnard?

MR GREENWOOD:    Mr Barnard was a Schenker (Australia) representative.  It is put as:

a consignment that I want you to take to Melbourne on the terms that we have already agreed would be in place and at the rate we have agreed”.  Isn’t that the case?

And the witness agrees that that is how it would work.  It is perhaps more clearly set out on page 46, line 14:

I would be able to ring Schenker Germany and say, “Here is a consignment.  You have agreed to perform a certain service.  We have an agreed rate”, and you would carry out that service, would you not?
A.   Yes, we would.

KIRBY J:   I wonder why they did not sue in Germany for this breach of contract as they assert.

MR GREENWOOD:   Why Siemens Australia did not sue in Germany?

KIRBY J:   The original transhipment was first Siemens Germany, was it not?

MR GREENWOOD:   No, once it got to Tegel Airport, the title and risk passed to Siemens Ltd Australian entity.

KIRBY J:   I see.

MR GREENWOOD:   Your Honours can see at page 105 of the appeal book the rates that operated shipments to Melbourne and Sydney.  Your Honours will see the first column relates to the Siemens Richtungsverkehr Schenker System 1000 when there are other different rates for different systems, the Richtungsverkehr not having any minimum amount of cargo to be taken, a flat rate for the fee and that increases after this rate sheet and departure days on certain days of the week, only certain carriers to be used, Qantas, Lufthansa and Singapore Airlines, whereas the other services, which are cheaper, have different conditions applying to it.

The more current rate sheet is at page 126 and your Honours can see there again, Melbourne and Sydney, the next column the reference to “Siemens-Richtungsverkehr” and, again, the three carriers, “System 1000”, “ohne Minimum” – no minimum – and a flat rate of “5,05 DM”.

KIRBY J:   What is the significance of this?

MR GREENWOOD:   In terms of seeing that there is this arrangement that runs through, of general application, overarching agreement providing for this kind of carriage, namely Singapore Airlines.

GUMMOW J:   But with no exclusion clause.

MR GREENWOOD:   Correct.  Now, your Honours, I will come back to that point in just a moment.  Before I leave this though could I take your Honours to page 47 of the first appeal book, which refers to the fact that there are a number of different air waybills that can be used, and at line 25 ‑ ‑ ‑

McHUGH ACJ:   What page is this, Mr Greenwood?

MR GREENWOOD:   Page 47, “a number of different air waybills that are standard forms”, line 25.  And then the witness is taken to the FIATA guidelines that I will take your Honours to later, and at the bottom of that page that document is referred to as:

something that you would have regard to or your staff would have regard to when they came to choose between different airway bills for different types of consignments and carriages -

If your Honours would then go over to page 51 your Honours will see that Mr Barnard refers to the people who would actually be responsible within Schenker, and Mr Barnard is the general manager.  He says at line 25:

A.  It would be an air export operator.  So it wouldn’t be a junior staff member or an apprentice.  It would be a qualified air export ‑ ‑ ‑

KIRBY J:   What is the significance of that?

MR GREENWOOD:   So there is a deliberate thoughtful process involved in terms of selecting the particular air waybill and presumably completing it.  At line 30 Mr Barnard says that that person would have:

sufficient understanding of the industry to know what document was appropriate in what circumstances –

Now I mention that because some of the cases involve different types of air waybills, and there is a significant distinction between them that becomes apparent, and a qualified air export operator was involved for Schenker in relation to these air waybills.

Now, your Honour Justice Gummow referred to exclusion terms.  Could I take your Honours please to page 161 of the appeal book because it bears on that matter.  At 161 it just has the letterhead of Schenker International and on the next page Schenker’s Trading Conditions.  It is difficult to read but your Honours will see clause 14 ‑ ‑ ‑

CALLINAN J:   Page 161 did you say?  I am sorry.

MR GREENWOOD:   Clause 14(a) provides:

It is hereby agreed by and between the Consignor and the Company that any liability of the Company on whatsoever ground arising shall in every case be limited in amount to the sum of $20 in respect of all the goods listed in these forwarding instructions whether or not there has been any declaration of value of the goods or of any of them by the Consignor for the purposes of carriage or otherwise.

That clause was pleaded in the defence, and your Honours can see it at page 9 of the appeal books, but abandoned at the hearing.

GUMMOW J:   What about the Himalaya point; has that gone too?

MR GREENWOOD:   Yes, your Honour.  So the fact is – and I will return to this later – the conditions of contract of Schenker were not incorporated into this Richtungsverkehr – that is not part of their case – but they easily could have been if that had been the intention of the parties.

CALLINAN J:   Is that a Codelfa‑type point, is it?

MR GREENWOOD:   Yes.

CALLINAN J:   We look to see something that was at one stage the subject of negotiations because otherwise that clause would never have been formulated but, because there was no attempt to incorporate it, any provision to that effect should be regarded as negative.

MR GREENWOOD:   Yes.  Similarly, when one looks to try and say the air waybill should govern the whole of the carriage, not just the air carriage, one needs to see some intent that that was what the parties were wanting to do.

GUMMOW J:   That is what the appeal is all about really, is it not?

MR GREENWOOD:   In many ways.  That is the first threshold point and it was a finding that was made by Justice Barrett that was not dealt with expressly by the Court of Appeal at all.  Implicit in the respondents’ submissions is the argument that it was the intention of the parties, notwithstanding what appears on the face of the air waybill, for the air waybill to operate beyond the airport of destination nominated as the place for delivery in the air waybill.

GUMMOW J:   You say there was a finding by the primary judge?

MR GREENWOOD:   Yes, your Honour.

McHUGH ACJ:   He said it was not a matter of segments.

MR GREENWOOD:   Yes.  That starts at page 410 of Justice Barrett’s judgment at line 36, the bottom paragraph:

A fundamental question posed by the circumstances of this case is as to the point at which the carriage referred to in the air waybill concluded . . . The determinant is, rather, the usual one in contract construction cases of the parties’ intention objectively manifested.  In discovering that intention, it must be borne in mind that the air waybill was created and employed in the context of the wider “Richtungsverkehr” arrangements which had resulted from the 1991 negotiations and subsequent revisions.

It is a little further on in that passage that his Honour refers to the binding nature on all four companies.  His Honour in the middle of 411 says:

I also entertain no doubt that, according to the understandings at the root of the contractual relationship, it was foreseen that Schenker GmbH and Schenker Australia would together provide all services required –

and this next passage is important –

with Schenker GmbH being responsible for the elements commencing at the German airport and ending upon unloading of the aircraft in Australia and with Schenker Australia then having responsibility for the elements from the aircraft unloading point to, at the least, customs clearance –

That very notion of handover from one to the other is precisely consistent with the notion of the air waybill terminating with delivery being effected by Singapore Airlines, delivery being effected by Schenker Germany pursuant to the air waybill at the airport of destination.

GUMMOW J:   That letter referred to of 17 January is the one at appeal book 71?

MR GREENWOOD:   Yes, your Honour, on the bottom of 411.  Then on the next page, the reference to the letter of 5 May 1994 is appeal book 102 that I took your Honours to.

GUMMOW J:   Thank you.

McHUGH ACJ:   It may not be quite accurate, but in one sense what the Court of Appeal had done is to regard the waybill as almost exclusively concerned with the dealings of the parties in relation to this whole arrangement.

MR GREENWOOD:   Yes.  There is a complete conflation of the terms of the air waybill and the terms of the Richtungsverkehr and it happens within sentences and within paragraphs of Justice Meagher and Justice Sheller’s judgments where they start referring to the air waybill in the beginning of the sentence and then at the end of the sentence they are clearly referring to the Richtungsverkehr.

GUMMOW J:   Can you give us an example of that?

MR GREENWOOD:   In Justice Meagher’s judgment commencing at page 442 his Honour makes such a conflation on 445.  To go back and follow his Honour through, at 444 his Honour in paragraph 5 at the end refers to the fact that it is necessary:

to appreciate . . . two factors: the airway bill itself and the Richtungsverkehr between the parties.

His Honour refers to the “airway bill” which should be an “air waybill” and then ‑ ‑ ‑

KIRBY J:   That means nothing.  It could be just a typist’s mistake.

MR GREENWOOD:   No.

McHUGH ACJ:   What you say becomes very clear, does it not, in the last sentence on 445 at line 30 where his Honour says:

In particular, I cannot see how the contract could be construed as one which involved Australian Schenker in no duties at all once the goods arrived at Tullamarine airport -

This overlooks the fact that the head agreement has obligations, as far as they are concerned.

MR GREENWOOD:   I thought his Honour was dealing with a different point, but further in that paragraph it becomes obvious in the third sentence.  His Honour is referring to the waybill and he says:

In clause 11 it –

that must be the waybill –

provides for delivery to be made at the place of destination to or in accordance with the instructions of the consignee.

Correct.  But, now:

The place of destination was Melbourne –

under the waybill it was Melbourne Airport –

and delivery was to be made to the respondent at the Australian Schenker’s warehouse.

No, not under the air waybill, under the contract.  Then he goes back to the air waybill and says:

By clause 4 –

and that should be a reference to clause 9 –

the carrier remained liable for the goods –

and that is back to the waybill.  So, within the paragraph, talking about the provisions of the air waybill, his Honour has moved to talking about the overall contract for carriage.

KIRBY J:   In answer to questions you have jumped ahead to criticise what Justice Meagher said, but I still do not have entirely clear in my own mind what your theory of the case is which will make it easier for us to criticise or support.  I would like to know exactly what you say is the relationship between the Richtungsverkehr and how the waybill kicks in at a certain point.

MR GREENWOOD:   The Richtungsverkehr provides for the overall agreement between the parties for individual consignments.  The air waybill provides additional contractual provisions that relate only to the air carriage of that individual consignment.

KIRBY J:   Can you contract out of the – can you supplement the waybill and derogate from it by private arrangements between the parties during the air carriage?  In other words, I would like to understand how the two interrelate.  Is the position that in respect of the air carriage German law kicks in and controls it in terms of the Convention?

MR GREENWOOD:   The Convention, according to Australian law, governs the parties.

KIRBY J:   Why would Australian law attach to an air passage which begins at Tegel Airport, goes through Frankfurt am Main and ‑ ‑ ‑

MR GREENWOOD:   It is a contract between Siemens Ltd Australia and Schenker Germany that relates to the carriage of goods to Australia, the Warsaw Convention operating in relation to that international carriage by air.  I do not want to leave this point with your Honour uncertain about what the proposition is that we are seeking to make good, and that is very simply that there is this overall arrangement and the waybill is but a small part of it.

McHUGH ACJ:   The waybill is itself a private contractual arrangement, is it not?

MR GREENWOOD:   It provides evidence of the contract between the parties, yes.

McHUGH ACJ:   Yes.

KIRBY J:   I remember reading that the legislation, and I think also the Convention, were being the subject of negotiations for amendment quite recently, in the last two years.  Do you know if anything happened?  Is the statute that is referred to here, has that been supervened by subsequent legislation in Australia?

MR GREENWOOD:   Not that is relevant to this case, your Honour, no, and I am not aware otherwise.

KIRBY J:   If there has been any change in the statute or the Convention I would like to know it because I have a clear recollection a discussion paper was issued by the relevant federal department in Australia about the change of it.  It is not relevant to this case but if the law has changed we would have to mention it.

MR GREENWOOD:   That may have been in relation to the limits that are imposed in terms of dollar limits and the way in which they are calculated.

KIRBY J:   I think it was mainly in relation to passengers.

MR GREENWOOD:   Can I take your Honours to the legal framework that relates to carriers’ liability and the Civil Aviation (Carriers’ Liability) Act 1959. Your Honours will see that the Act is divided into various types; Part II relating to carriage to which the Warsaw Convention and the Hague Protocol apply, and other parts relating to other aspects of the Warsaw Convention.

We need not trouble your Honours with the other parts particularly because it is acknowledged on all sides and throughout that the relevant convention that governed this air carriage was the Warsaw Convention, as amended at The Hague 1955, but your Honours will see that that comes into Australian law in section 11. I am sorry, if your Honours did not have the Act, the Act is with the respondent’s bundle in the respondent’s folder of materials. Section 11 provides for:

The provisions of the Convention have . . . the force of law in Australia in relation to any carriage by air to which the Convention applies, irrespective of the nationality of the aircraft –

The Warsaw Convention, as amended at The Hague 1955, is Schedule 2 to the Act, whereas the original Warsaw Convention of 1929 is Schedule 1 and can I ask your Honours to turn to each of them and I wanted to go through them but indicate to your Honours the similarity between the two for this reason.

These standard form air waybills are designed to cover carriage by air, whether it be governed by the Warsaw Convention 1929 or the Warsaw Convention as amended at The Hague 1955 or non‑Warsaw Convention travel.

McHUGH ACJ:   I think in your submissions you refer to the Samuel Montagu Case, do you not, in support of that?  Is there a statement to that effect in that case?

MR GREENWOOD:   Yes, your Honour.

McHUGH ACJ:   I think it is at 327, the passage.

MR GREENWOOD:   There is a passage of Lord Justice Salmon at the bottom of page 327, left‑hand side.

GUMMOW J:   What is the citation?

McHUGH ACJ:   [1966] 1 Lloyd’s Reports.

MR GREENWOOD:   It is behind guide card 6 in the materials and I will provide other authority for the same proposition but this is as at 1966:

The form of the waybill in this case was settled by the International Air Transport Association and is in use, as I understand it, in most countries of the world as a dual purpose form of waybill which is equally applicable for international and non‑international carriage.

And I will take your Honours to the meaning of “international carriage” under the Conventions.  Lord Denning, also Master of Rolls, refers to that point.  I will come back to that later.

KIRBY J:   Lord Justice Salmon embraces the concept which is, one would think, incontestable that it is desirable that the constructions be consistent with those in other countries.  Justice Meagher certainly thought that the construction for which you urge would render a number of decisions - or Justice Barrett’s opinion would render a number of decisions incorrect.  We have to deal with that.

MR GREENWOOD:   Yes, I will be taking your Honours to those.  We submit that is not the case.  Rather, the very notion of uniformity and certainty is of critical importance in a situation such as this.

KIRBY J:   You accept that principle, of course.

MR GREENWOOD:   Absolutely, we embrace it.  It has been also reiterated in a number of the cases I will be taking your Honour to, including New South Wales Court of Appeal.

KIRBY J:   So I suppose our first step is to form our own view on the contractual arrangements and the meaning and operation of the waybill and then to look at international authority on it to see whether our own view is consistent with that.  If it is, there is no problem.  If it is not, then we have to struggle to find some appropriate way to resolve that difference.

MR GREENWOOD:   Our submission is there is no international authority directly on point.  The case it referred to, I will take your Honour to it.

KIRBY J:   You say that, but a quick reading of the materials referred to by Justice Sheller seems to suggest the contrary, but no doubt ‑ ‑ ‑

MR GREENWOOD:   I will deal with that.

McHUGH ACJ:   Lord Justice Salmon referred to Seth’s Case in the United States as coming to the same conclusion.  Is that ‑ ‑ ‑

MR GREENWOOD:   That is just in relation to the interpretation of clause 2.1 as governing, on the one hand, international carriage pursuant to the Convention and also non-international carriage.

McHUGH ACJ:   Judge Charles Wyzanski is a highly respected United States federal judge.

GUMMOW J:   That is right.

McHUGH ACJ:   Is his judgment on the list, is Seth’s ‑ ‑ ‑]

MR GREENWOOD:   It is not.

GUMMOW J:   It should be.

MR GREENWOOD:   Your Honour, that point is ‑ ‑ ‑

GUMMOW J:   I do not know why we are so Anglocentric in these matters?

MR GREENWOOD:   It was not on the list simply because that point is not in contention. It is accepted on all sides that 2.1 has that operation. Your Honours, I was going back to the Schedule 1 and Schedule 2. Before I do, could I just draw your Honours’ attention to section 8, though, of the Civil Aviation (Carriers’ Liability) Act which refers to the texts of the Conventions because I mentioned earlier there is some difference in wording from time to time between the different English versions of the Conventions.  For example, the American version refers to “transportation by air”, whereas our version refers to “carriage by air”.  There is nothing in it, in our submission.  However, it explains why there are some differences sometimes between what appears in the cases and what appears in the schedule here.  Your Honours will see that under Australian law:

the text of a Convention specified in any of the following paragraphs is taken to be the text set out in the Schedule ‑ ‑ ‑

KIRBY J:   So we do not have to worry about all these variations in translating “aéroport” as airport or aerodrome?

MR GREENWOOD:   Well, unless there is an inconsistency between the English and the French and then one goes one goes to section 8(2) and one goes back to prefer the French.

KIRBY J:   I see.  But that does not seem to arise in this case?

MR GREENWOOD:   No.

MR GREENWOOD:   If I could then start with Schedule 2, Article 1, your Honours will see that:

This Convention –

this is the Warsaw Convention as amended at The Hague –

applies to all international carriage of persons, baggage or cargo performed by aircraft for reward.

The same wording is adopted ‑ ‑ ‑

KIRBY J:   What is the stake in this case?  On your contention, how much is recoverable?  It is 72,000-odd if the Convention applies ‑ ‑ ‑

MR GREENWOOD:   Yes, it is 1.6 million I think.

KIRBY J:   6 million?  So there is quite a lot ‑ ‑ ‑

MR GREENWOOD:   1.6.

KIRBY J:   1.6, I see.  Thank you.

MR GREENWOOD:   Article 1.2 defines “international carriage” as meaning:

any carriage in which, according to the agreement between the parties, the place of the departure and the place of destination, whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two High Contracting Parties ‑

and we do not need to read further because that covers this case.  It deals with other situations where it occurs:

within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory ‑

of another State.  Then paragraph 3 of Article 1 refers to:

Carriage to be performed by several successive air carriers is deemed . . . to be one undivided carriage, if it has been regarded by the parties as a single operation ‑

The particular significance of Article 1 paragraphs 2 and 3 is that there is reference to the agreement between the parties in each of them.  That is an important focus of the Convention, not relating merely to flights or journeys, but rather the agreement for carriage between the parties.  The notion of international carriage, or referring to carriage by air, incorporates the possibility of there being other carriage as well ‑ ‑ ‑

GUMMOW J:   You get that from Article 1.1, do you not, which is really the starting place?  It has to be “performed by aircraft for reward”.

MR GREENWOOD:   Yes.

GUMMOW J:   It is carriage performed by aircraft ‑ ‑ ‑

MR GREENWOOD:   The Convention applies to “international carriage . . . performed by aircraft for reward” and “international carriage” means any carriage which involves ‑ ‑ ‑

GUMMOW J:   All I am trying to explain to you is 1.2 does not use the word “aircraft”.  It does not have to, because it is clear by 1 that the international carriage has to be “by aircraft for reward”.

MR GREENWOOD:   I understand what your Honour says but there is reference ‑ ‑ ‑

GUMMOW J:   It seems to me to favour you at the moment.

MR GREENWOOD:   Yes.  Well, I did not want to grab too quickly on it, your Honour, because there is a downside to it as well that incorporates other things such as transhipment, and that is set out in Article 1.2.  The Warsaw Convention, if your Honours can just flip back to look at Article 1 of the Warsaw Convention 1929, is in substantially similar terms and I do not need to go through it.  With each of these articles I will just ask your Honours to refer back and see how the two work together because the air waybill sometimes has to deal with things that are in one Convention and not in the other.

Then your Honours will see that Article 3 provides for the passenger ticket, the documents of carriage relating to passengers, and 3.1(a) requires an indication of the places of departure and destination.  Article 4 relates to the baggage check and, again, requires an indication of the places of departure and destination.  Then Article 5 is in the section relating to air waybills.  The Convention provides that:

1.   Every carrier of cargo has the right to require the consignor to make out and hand over to him a document called an “air waybill . . . 

2.   The absence, irregularity or loss of this document does not affect the existence or the validity of the contract of carriage ‑

Article 6 provides the mechanisms, or the mechanics in terms of the three copies being handed over, and Article 7 provides for the carrier of cargo to require the consignor to make out separate air waybills if there is more than one package.  Now, Article 8 in the amended Convention specifies what the air waybill must contain.  Again, firstly:

an indication of places of departure and destination;

. . . agreed stopping places –

if there are any, and:

a notice to the consignor to the effect that, if the carriage involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention may be applicable –

with limits of liability.  If your Honours would contrast that with Article 8 of the unamended Convention, the original Convention, your Honours will see that the original Convention provides for the air waybill to contain a lot of particulars and, significantly for later on, Article 8(q):

a statement that the carriage is subject to the rules relating to liability established by this Convention.

KIRBY J:   So what do you make out of that?  That is not in the new Article 8.

MR GREENWOOD:    It explains why clause 2.1 in the air waybill is worded the way it is, and that is what Samuel Montagu was about, whether or not clause 2.1 satisfied the requirements of Article 8(q) of the original Convention.  Article 9 provides what occurs if an air waybill has not been made out or does not include the relevant notices.  The consequence is the carrier cannot avail himself of the provisions of Article 22.  Article 22 provides the monetary limits.  The next important article is Article 11, which provides for the air waybill to provide:

prima facie evidence of the conclusion of the contract –

not the terms of the contract but, rather, “the conclusion of the contract” –

of the receipt of the cargo and of the conditions of carriage.

So there is prima facie evidence as a result of the air waybill.  Then Articles 12 and 13 assume particular significance about the rights of the consignor and then the consignee, which bear upon the way in which the air waybill should be examined.  Article 12 provides:

Subject to his liability to carry out all his obligations under the contract of carriage, the consignor –

the person sending the goods –

has the right to dispose of the cargo by withdrawing it at the aerodrome of departure or destination, or by stopping it in the course of the journey on any landing, or by calling for it to be delivered at the place of destination or in the course of the journey to a person other than the consignee named in the air waybill –

So that up to the moment of arrival of the goods at the place of destination the consignor retains control in the instructions to the carrier.  In Article 12.4:

The right conferred on the consignor ceases at the moment when that of the consignee begins in accordance with Article 13 –

And the consignee’s rights arise:

on arrival of the cargo at the place of destination –

At that point the consignee may:

require the carrier to hand over to him the air waybill and to deliver the cargo to him –

Hence the importance of identifying the place of destination.

2.  Unless it is otherwise agreed, it is the duty of the carrier to give notice to the consignee as soon as the cargo arrives -

at the place of destination.

GUMMOW J:   Article 13.1 uses the expression “conditions of carriage set out in the air waybill”.  Article 12.1 talks about “liability to carry out all his obligations under the contract of carriage” simpliciter.  Is there a distinction between the contract of carriage and the waybill?

MR GREENWOOD:   Yes, there must be.

GUMMOW J:   Is that expression, “contract of carriage”, expounded anywhere?

MR GREENWOOD:   No, it starts back at the beginning of the schedule back in the definition of “international carriage” in terms of the agreement between the parties.  Then in Article 5.2 it expressly refers to the fact that the air waybill, whether it exists or not, will “not affect the existence or the validity of the contract of carriage”.

McHUGH ACJ:   Perhaps one of the problems in this case is that it was commenced by summons.  There are no pleadings in the common law sense, no particulars given, the contract of carriage is not identified.  It may have conduced clarity of thought if those things had been done.  I mean, really what you are suing under is the implied obligation under the head contract, are you not, to carry the goods safely?

MR GREENWOOD:   Yes, but there is no dispute about liability of course.

McHUGH ACJ:   No, I know.

MR GREENWOOD:   It is merely as to whether or not there is some limitation provision which operates ‑ ‑ ‑

McHUGH ACJ:   But in common law pleading terms, if you had to plead your contract and identify it, that is what you would be identifying, would you not, as the source of your right?

KIRBY J:   The onus would be on the respondent, would it not, to establish that there was a departure from the general principle ‑ ‑ ‑

MR GREENWOOD:   Yes, and that is set out in the defence.  The particular limitation provisions are set out in appeal books 8 and 9 that were pleaded and relied upon, including that additional conditions of contract that was abandoned.  So I think it is probably fair to say that the issues were very clearly delineated before Justice Barrett.

McHUGH ACJ:   They are in terms of limitations and so on, but it may have caused the Court of Appeal to look at the matter in this way, because on a cursory reading, one might think in some way you were suing on the waybill.  Apparently that is the way the court seemed to see the case.

MR GREENWOOD:   Can I just continue then by referring to Article 15.  It has significance because it provides that:

2.  The provisions of Articles 12, 13 and 14 can only be varied by express provision in the air waybill.

So the notion of the consignor’s rights up to the arrival of the goods at a place of destination and then the consignee having rights on arrival of the goods at the place of destination must be applied in the absence of any express provision in the air waybill, and there was not any such variation in the air waybill.

GUMMOW J: The significance of 15.2 is that it has the force of law by virtue of section 11 of the Australian Act.

KIRBY J:   There was a suggested invocation of the provision – is it 17 – about servants and agents.  There is an extension in Mr Meagher’s submissions.

MR GREENWOOD:   That is not in contest.

KIRBY J:   Anyway, you press on.

MR GREENWOOD:   Your Honours, Chapter III of the amended Warsaw Convention then relate to the liability of the carrier.  Article 17 relating to passengers and, although I will not be dealing with passengers at any length, it is worth bearing in mind that everything that relates to the cargo in general terms relating to the Convention also applies to passengers.  In terms of passengers, the relevant period of carriage by air that the Convention applies to is limited by the embarking and disembarkation off the aircraft – on and off the aircraft – which we will submit is consistent with the construction that we are putting in relation to cargo.

Article 18 is the particularly important article.  It is the same in both the original Convention and the amended Convention and it provides for:

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.

“Carriage by air” is then defined in the next paragraph as:

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.

That is a restrictive provision which saves the carrier in circumstances where the carrier does not have the charge of the goods.  Then, 18.3 provides for:

The period of the carriage by air does not extend to any carriage by land, by sea or by river performed outside an aerodrome.

What follows thereafter is a presumptive extension:

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.

So that one does not need to know exactly where damage occurs to be able to sue the carrier.  One can say whether it occurred while you were loading it, delivering it or transhipment of it, there is a presumption that it occurred during the period of carriage by air, subject, of course, to the contrary being proved.

KIRBY J:   Why does that not apply here, given that this is a case of delivery?

MR GREENWOOD:   No, your Honour, it was not delivery under the air waybill.  The air waybill terminated upon delivery of the goods to the place of destination in the air waybill, Melbourne Airport.

KIRBY J:   Yes, but the liability referred to in Article 18.3 limits the period of the carriage by air and then says that can be extended to delivery, so why would the ‑ ‑ ‑

MR GREENWOOD:   No, it does not extend to delivery.  There is a presumption which can arise if it is not known where the damage occurs to the goods.  That did not arise here.  It was quite clear where the damage occurred to the goods.

KIRBY J:   This is a fiction.  Article 18.3 though is a fiction, is it not?

MR GREENWOOD:   Yes, to aid a person who is asserting that goods have been damaged so that they do not have to prove exactly where it occurred, because usually, of course, they could not.  Whether it occurred on the aircraft during turbulence or whether it occurred when they were being unloaded at the aerodrome or airport is not something that a consignee or a consignor is ever going to know, or usually not going to know, so there is this provision which provides for it to be presumed to being within the carriage by air, subject to proof to the contrary.

GUMMOW J:   All this seems to be proceeding on the basis that Schenker was an air carrier.

MR GREENWOOD:   Yes, your Honour.

GUMMOW J:   The air carrier was Singapore Airlines.

MR GREENWOOD:   No, Singapore Airlines was the actual carrier but Schenker Germany was a carrier for the purposes of the air waybill, it providing ‑ ‑ ‑

GUMMOW J:   Is it a carrier for the purposes of the Warsaw Convention?

MR GREENWOOD:   Yes, your Honour.

GUMMOW J:   It does not appear from the face of it.  The waybill identifies the carrier as Singapore Airlines.  “SQ” it says, halfway down on the left‑hand side:  “Berlin‑Tegel” to “Melbourne” by Singapore Airlines, “SQ7387”.

MR GREENWOOD:   Yes, it refers to the actual air carrier.

GUMMOW J:   Then it seems something happened in Singapore, I think, “SQ7294”.

MR GREENWOOD:   Yes.  Your Honour will see in the top right‑hand corner ‑ ‑ ‑

GUMMOW J:   I know that.  That is typed in.

MR GREENWOOD:   Yes, Schenker Germany being ‑ ‑ ‑

GUMMOW J:   The word “carrier” is typed in.  It is not in the form, is it?

MR GREENWOOD:   No, and there is a distinction between the freight forwarder, being Schenker Germany, and the actual carrier, being Singapore Airlines.  It was a matter that was considered in the Court of Appeal in Emery ‑ ‑ ‑

GUMMOW J:   There is no particular reason why Schenker and Siemens cannot adopt the waybill as part of their contract, but insofar as you then seek to construe the waybill in terms of the international Convention, which is all about protecting airlines, is it not?

MR GREENWOOD:   It extends to the freight forwarders as well, your Honour, because ‑ ‑ ‑

GUMMOW J:   In an era when a lot of countries had national airlines.

MR GREENWOOD:   Yes.

CALLINAN J:   And Article 1 refers to “carriage . . . performed by aircraft for reward”.

GUMMOW J:   Yes, that is right.  That is why ‑ ‑ ‑

MR GREENWOOD:   Yes, and the freight forwarder is attending to the performance of the carriage.  Your Honours, it was considered by the New South Wales Court of Appeal in Emery Air Freight Corporation v Merck Sharpe & Dohme Australia Pty Limited (1999) 47 NSWLR 696. It is one of the cases that I provided to your Honours this morning. In that case the court considered whether a freight forwarder was a carrier within the meaning of the Warsaw Convention ‑ admittedly the original Convention, the 1929 one.

GUMMOW J:   It is important because you only get the advantage of the exclusions as a matter of statute by section 11 if you are actually within the Convention. If you have chosen to adopt the Convention privately, that is your affair, but you do not get the force of law by 11 in the Act. That is right, is it not?

MR GREENWOOD:   Yes, your Honour.

GUMMOW J:   What does Emery decide?

MR GREENWOOD:   I know it would also be good for us but Emery deals with the fact that the freight forwarder is a carrier within the meaning of the Convention.

GUMMOW J:   Where does it say that?

MR GREENWOOD:   The President adopts at page 707 the decision of Justice Sheller in terms of the meaning of “carrier” in the Convention, paragraph 60.  Justice Sheller deals with it commencing at page 709, refers to a number of the considerations that your Honour has referred to.

GUMMOW J:   In the United States Emery has their own planes, I think.  What aircraft was used?  Qantas, was it?

MR GREENWOOD:   In Emery?  Yes.

GUMMOW J:   Yes.  Sorry, I interrupted you.

MR GREENWOOD:   The conclusion appears at page 713, paragraph 90.

McHUGH ACJ:   Having a quick read of the judgment I am not sure that the court has not looked at the matter in contractual terms rather than as to what the Convention itself declares.  As Justice Gummow has pointed out, parties can contract as they like.  They can incorporate what they like in their contract.

KIRBY J:   Is that the correct position, Mr Greenwood, that you can as it were supplement the Convention because it is part of the Australian law made so by an act of Parliament which takes primacy because of that authority, but you cannot detract from or give lesser rights?  Would that be the operation of the Convention in Australian law?

MR GREENWOOD:   Well, in my submission, the parties could contract to treat a person as a carrier for the purposes of the Convention if they so choose to do, and the air waybill apparently does that by defining “carrier” in the first section, first paragraph, as meaning:

all air carriers that carry or undertake to carry the goods hereunder or perform any other services incidental to such air carriage ‑ ‑ ‑

McHUGH ACJ:   But one of the consequences is, is it not, that the provisions so incorporated can only operate contractually and they do not have the force of law under the statute.  If somebody wants to contract to be a carrier for the purposes of the Civil Aviation (Carriers’ Liability) Act a person can do so but it does not follow that provisions incorporated into that contract have statutory backing as opposed to contractual effect.  See, in this case, there seems to me two separate questions.  Is Schenker International a carrier for the purpose of the Convention and is it a carrier for the purpose of the waybill?  Now, it seems to be clear enough that it is a carrier for the purpose of the waybill.  But does it follow that it is also a carrier for the purpose of the Convention and, therefore, the Convention’s terms apply by reason of the statute and could not be varied?

GUMMOW J:   Someone must have had a contract with Singapore Airlines.

MR GREENWOOD:   Yes, Schenker Germany, as the freight  ‑ ‑ ‑

GUMMOW J:   And if they hurl this machinery around in Singapore, not transhipping it, someone would have wanted to sue them.  Who would that have been?

MR GREENWOOD:   Schenker Germany as the freight forwarding agent, most obviously ‑ ‑ ‑

CALLINAN J:   Well, the list of rates identifies a number of different airlines, does it not?

MR GREENWOOD:   Yes, three different for the Richtungsverkehr.

CALLINAN J:   Yes, that you took us to.

MR GREENWOOD:   Yes.

CALLINAN J:   But you have these words too in Article 1 of the Convention:

It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking.

Those words “air transport undertaking”, I do not know what application they have to the earlier sentence, but it really does suggest that it has to be an air carrier, does it not?

MR GREENWOOD:   Yes.

GUMMOW J:   Is that not the sense of the Convention?  Would not the travaux preparatoires indicate this?

MR GREENWOOD:   That that was in 1929 the intent?

GUMMOW J:   Yes.

MR GREENWOOD:   But, your Honours, the Convention has been interpreted as being relevant to current events and I think that was what was behind the decision in Emery in terms of looking at the Convention in a realistic sense as at today and applying its terms.

GUMMOW J:   We do not have any trouble with that, but the question is, as the Acting Chief Justice has been putting to you, how does the Convention get into the Act.  There are two steps, there are two questions involved.

MR GREENWOOD:    Your Honours, if I could give the matter more thought and I will return to it, but we have been proceeding on the basis, obviously, that Schenker Germany was a relevant air carrier within the ‑ ‑ ‑

GUMMOW J:   They could not be an air carrier; they would be in breach of all sorts of regulatory requirements…..civil aviation carriage.

MR GREENWOOD:   That, for the purposes of the application of the Convention, is what I was referring to.

GUMMOW J:   Yes, well, that is the point, that is the problem.

MR GREENWOOD:   Your Honours, could I go back to complete the walk through the Convention.  I had got to Article 18.3.  Could I just draw your Honours’ attention to Article 22, which relates to the particular monetary limits provided in the Convention, for passengers that is amended by the provisions of the Act.  Then Article 25 which provides for the limits in Article 22, modifying if certain things can be proved, namely, that the damage occurred:

from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result -

Article 26 relates to receipt by the person entitled to delivery and 26.2 provides for the person entitled to delivery complaining to the carrier.

KIRBY J:   Article 25 has no application, I assume.

MR GREENWOOD:   No, it is not relied upon, but I refer to it merely to see the way in which it is operating, namely, that this limit of liability is a benefit to carriers in certain circumstances.  That is, if they ensure there is an air waybill and subject to specific matters where the limits can be removed.  Finally, Article 31 Chapter IV relates to combined carriage and:

In the case of combined carriage performed partly by air and partly by any other mode of carriage, the provisions of this Convention apply only to the carriage by air, provided that the carriage by air falls within the terms of Article 1.

Namely, international carriage.

McHUGH ACJ:   One of the problems of applying the Convention to people who want to just call themselves carriers but who actually do not operate the aircraft is Article 34, which says that:

The provisions of Articles 3 to 9 . . . shall not apply in the case of carriage performed in extraordinary circumstances outside the normal scope of an air carrier’s business.

MR GREENWOOD:    Yes.

GUMMOW J:   Justice Callinan refers to Article 1.3, it talks about “successive air carriers”, for example.

MR GREENWOOD:  Does your Honour mean in the context of suggesting it is several different people actually performing the task of carrying the goods or the people, as in airlines?

GUMMOW J:   What about Article 34 that the Acting Chief Justice refers to:

the normal scope of an air carrier’s business.

The scheme of the Convention deals with – go back to Article 1.1 with:

carriage of persons, baggage or cargo performed by aircraft for reward.

And then you get the three sections dealing with 3.1, “carriage of passengers”, and Article 4, “carriage of registered baggage”, then Article 5, “cargo”.

CALLINAN J:   Article 12 speaks of “the aerodrome of departure or destination”.

KIRBY J:   There is no provision in the Convention itself that renders servants and agents liable as carriers?

MR GREENWOOD:   Servants and agents of the carrier?

KIRBY J:   Yes.

MR GREENWOOD:   Article 25A deals with the ability of a:

servant or agent . . . to avail himself of the limits of liability which that carrier himself is entitled to invoke under Article 22.

KIRBY J:   Is that applicable here?

GUMMOW J: Section 11(1) gives the game away a bit. It says:

Irrespective of the nationality of the aircraft performing the carriage –

That is the interest of the high contracting parties, the nationality of their aircraft.

MR GREENWOOD:   Did your Honour say 11(1)?

GUMMOW J:   Of the statute, which is the pivotal provision.

MR GREENWOOD:   Yes. 

GUMMOW J:   I do not think these contracting parties are much fussed about freight forwarders.  They were concerned about the responsibilities that might arise from the nationality of their aircraft and the need for insurance, and the need to avoid that by putting in some limitations.

CALLINAN J:   And the high risk activity that flying was at that time.

GUMMOW J:   Yes, and the difficulty of getting insurance and so on and so forth.

MR GREENWOOD:   Your Honours, the two organisations that have adopted these air waybills in the particular form that your Honours see is the IATA and FIATA, the freight forwarders.  Now, that is not to say, of course, that governs the position at all, but that is the way in which ‑ ‑ ‑

GUMMOW J:   The members of IATA being whom?

MR GREENWOOD:   The airlines.

GUMMOW J:   Yes.

MR GREENWOOD:   And the freight forwarders being the members of the organisation FIATA.

GUMMOW J:   That is right.  They are perfectly free to do that.

McHUGH ACJ:   Is there any difference in the question of whether these terms ‑ ‑ ‑

MR GREENWOOD:   Apply as a matter of law.

McHUGH ACJ:   ‑ ‑ ‑ apply as a matter of law or as a matter of contract?  That brings in Article 15, about variation, what you can or cannot do, because if the Convention does not apply as a matter of law, then Article 15 may have a different operation.

MR GREENWOOD:   But its operation, in my submission, is still going to be significant in the parties adopting the Convention as applying to their contract of carriage.

McHUGH ACJ:   Yes.

MR GREENWOOD:   If I take your Honours to the particular waybill, then, the fact that the air waybill that your Honours are concerned with is modelled on the provisions of the Conventions is borne out by the comment by Lord Justice Greene in Grein which is behind tab 5, Grein v Imperial Airways Ltd [1937] 1 KB 50. Lord Justice Greene’s judgment commences on page 74 of the judgment where, towards the bottom of that page, his Honour refers to the object of the Convention ‑ ‑ ‑

GUMMOW J:   Wait a minute.  This was someone suing the old Imperial Airways.

MR GREENWOOD:   Yes, a passenger suing in relation to ‑ ‑ ‑

GUMMOW J:   An unhappy trip from Antwerp to London.

MR GREENWOOD:   Yes, from London to Antwerp to London.  One of the issues was whether or not it was one journey or two.  There is reference to the object of the Convention at page 74 point 8 and running over to 75 in terms of it being the international code and governing the contractual relationships between the parties.  The passage on page 77 point 8 also makes clear what I said to your Honours before, that:

The rules are rules relating not to journeys, not to flights, not to parts of journeys, but to carriage performed under one (or . . . more than one) contract of carriage.  The contract –

being the unit –

to which attention is to be paid in considering whether the carriage to be performed under it is international or not.

While your Honours have the decision in front of you, could your Honours go to page 78.  At the bottom of the page his Honour refers to the notion of “Place of departure and place of destination”.  This related to the original Convention, not the amended Convention.  It perhaps does not shed an awful lot of light in this case, but his Honour refers to the place of departure and place of destination at 79 as being “the place at which the contractual carriage begins and the place at which the contractual carriage ends”. 

MR MEAGHER:   And, indeed, under the terms of the bill because the goods are in our charge we accept liability but we seek to limit our liability under clause 4 to an amount which was approximately equivalent to the Convention amount in any event.  So that on the case which the appellant makes, once we left the airport gate and started to drive towards the terminal for the purpose of giving delivery, we cease to be subject to the Convention and we cease to have the benefit of the bill because, on their first argument, the bill did not apply at all because the activity was beyond its scope.  Now, our first answer ‑ ‑ ‑

GUMMOW J:   And what the primary judge did was read the words “by air” after the word “carriage” on line 2 in clause 4.

MR MEAGHER:   Yes, and that is really the next issue that one comes to, and that is what is meant by “in carriage”.  One has to start I suppose at clause 1 which does not identify “carriage” but identifies “carrier”.  It describes “carriers” as people who “carry or undertake to carry the goods hereunder or perform any other services incidental to such air carriage”.  Now, services incidental to such air carriage would presumably include loading, unloading, carriage to the aircraft within an aerodrome carriage, from the aircraft ‑ ‑ ‑

GUMMOW J:   That first sentence of clause 1 does not come out of the Convention, does it?

MR MEAGHER:   No, there is no definition.  But what your Honours will remember is that in Article 18 paragraph 3 there is an express contemplation of a contract of carriage to which the Convention applies which involves land carriage beyond the airport for the purpose of giving delivery, which is precisely this case.

McHUGH ACJ:   Except that the contrary was proved in this case.

MR MEAGHER:   I am sorry, your Honour?

McHUGH ACJ:   The contrary was proved in this case, that the damage occurred.

MR MEAGHER:   Yes, but the presumption provision in a convention which contemplates – may I go back a step.  The Convention does not operate to imply terms into contracts.  What it does is it operates upon actual carriage, but it assumes an agreement, because if there is not an agreement then it cannot be international carriage.  Article 18 contemplates that the agreement evidenced by the air waybill could be for carriage beyond the aerodrome, and it does so expressly.  That is this case.  We say simply because that land carriage is carriage, but it is not carriage to which the rules relating to liability apply, clause 4 is satisfied, in the sense that it is carriage to which the Warsaw Convention does not apply.

GUMMOW J:   Yes, it does not apply in the sense of “is expressed not to apply”.

MR MEAGHER:   Yes, but it can be said at one level that the Warsaw Convention does apply, because, even if the air carriage has happened, articles like Articles 12 and 13, which deal with delivery and which give rights to people who may not be parties to the contract, are provisions of the Convention which in that sense apply.

Our submission is – and this is the way it has been construed in those American cases – that in clause 4 the words to which the Warsaw Convention does not apply are talking about the rules relating to liability, and one gets that if one goes back to clause 2.1.  That is the starting point.  It says, “Carriage hereunder”, which we submit means carriage under this bill, or the carriage called for by this contract.  Could I stop there to have your Honours note that under clause 8 the same expression is used, and it makes it clear that it is talking in the sense of the movement of the goods from Berlin to Melbourne and that it does not have to be air carriage, although that is obviously the primary means of transportation.

So that going back to 2.1, “Carriage hereunder”, that is, carriage undertaken in performance of this contract, “is subject to the rules relating to liability”.  It does not say that they apply; it says it is subject to the rules.  And if the rules in their terms apply, then they apply, and 2.2 picks that up:

To the extent not in conflict with the foregoing, carriage hereunder –

and then it adds words –

and other services performed by each carrier –

Now, those are not incidental services, in our submission.  They are services provided by the carrier which would not be in performance of the contract for carriage.  For example, if the carrier was asked to store the goods at the destination, rather than give delivery, that storage would be a service performed by the carrier outside the terms of this contract, but this contract seeks to address it.

GUMMOW J:   2.2 helps explain your construction of 11.

MR MEAGHER:   Of 11 and 4, your Honour.

GUMMOW J:   And customs laws, yes.

MR MEAGHER:   Because: 

To the extent not in conflict with the foregoing, carriage hereunder –

is “subject to”.  Then 2.2.1 is “applicable laws”; 2.2.2 is the “provisions herein set forth”, relevantly, clause 4; 2.2.3 “applicable tariffs, rules, conditions of carriage”.  Then one drops down to clause 4.  It provides that one goes first to the “carrier’s tariffs or conditions of carriage”, but:

Except as otherwise provided in carrier’s tariffs or conditions of carriage, in carriage to which the Warsaw convention does not apply –

the liability is limited.

We submit, and as I have submitted to your Honours, the few United States decision which have addressed this question have construed the words to which the Warsaw Convention does not apply in that context as addressing the rules relating to liability, in other words, Article 18, relevantly.  That is the argument in its essence.  It is a construction question and, as I have submitted, I will not take your Honours to those other cases but when one reads them – I perhaps could just indicate to your Honours what they say, that is, the American cases.

In Aerofloral the carriage was international carriage from Miami.  The goods were received before Miami Airport and some of them were stolen in the warehouse before the airport.  So the distinction between that case and this is that the loss occurred before the period of carriage provided for by Article 18 happened.  Aerofloral relied upon clause 4.  The court said that it was carriage to which the Convention did not apply because it was outside the Article 18 period and therefore clause 4 was capable of applying.  As a matter of fact, the court subsequently held that the goods were not in carriage because they were being stored in a condition which did not permit them to be carried. 

Now, the earlier decision is the decision in Read‑Rite and that was a case where the cargo was to be carried from Heathrow to San Francisco.  The carrier took delivery at a freight facility near but outside Heathrow.  The cargo was damaged.  So again a case of damage before the airport.  The District Court held that clause 4 applied and the Court of Appeals confirmed that clause 4 applied.

The final case is the decision in HIH v Gateway.  That was a case where the damaged happened after the period of carriage by air.  The cargo was carried to San Francisco and delivered to China Airlines ground handling agent outside the airport and stolen.  In those circumstances, where the goods were in the warehouse awaiting delivery, they were held to be in carriage and it was held that clause 4 applied.

What I want to do is to give your Honours some examples which illustrate difficulties which would arise if the appellant’s construction is accepted.

GUMMOW J:   Are these in your written outline?

MR MEAGHER:   No, your Honour, I am sorry, they are not.  I will be short.

GUMMOW J:   Go ahead.  Shock us.

MR MEAGHER:   The appellant argues that “carriage” in clause 4 is to be construed as carriage by air.  Assume a simple case, where a house bill or an air waybill is issued in the form of this bill, it provides for carriage from a place in Italy to a place in Germany by air, but for reasons of strikes, or what have you, it is the liberty exercised under clause 8 is used to carry the goods by road or by rail.

In those circumstances, the carriage hereunder in 2.1 would be “subject to the rules” but they would not apply because there is no air carriage and 2.2 would provide that the “carriage hereunder and other services . . . are subject to . . . provisions herein set forth” and then one gets to clause 4 and it says:

Except as otherwise provided . . . in carriage to which the Warsaw Convention does not apply –

On the appellant’s argument, one would read that as in carriage by air to which the Convention does not apply and if one reads it that way, clause 4 has no application and, in the circumstances, the carriage by road or rail which is pursuant to the liberty in clause 8 takes place without any limited liability regime applying at all which on the face of it ‑ ‑ ‑

McHUGH ACJ:   That is not surprising, though.  It is not surprising if this is to protect carriage by national aircraft and that if, for instance, for one reason or another, there has to be carriage by sea or by land, then it is outside the limitation clause.  Parties have to rely on their own contractual arrangements to cover it.

MR MEAGHER:   The submission, your Honour, the scheme of the provisions indicates that the carrier is seeking to limit its liability in circumstances where it is able to because the Convention does not apply.  As your Honours appreciate, the Convention contains in Article 23.1 a provision which prevents contracting out so that ‑ ‑ ‑

GUMMOW J:   Is that in the Guadalajara Convention too, it picks it up?

MR MEAGHER:   Guadalajara simply picks up Warsaw and Warsaw/Hague.  So that clause 4 is, in our submission, clearly addressing the liberty which the carrier has to contract out because the Convention does not apply or to limit its liability.

McHUGH ACJ:   I think Article 18.3 indicates that “carriage by land, by sea or by river” are not within the Convention. 

MR MEAGHER:   That is certainly so, your Honour, but it does not tell one that it is not carriage.  In fact, it describes it as carriage and that is our point.  Clause 4 operates in circumstances where there is carriage to which the Convention does not apply.

KIRBY J:   What is your answer to Justice McHugh’s earlier case of the limousine service?

MR MEAGHER:   It is not a cargo case.  I am not sure how one fits it within a passenger ticket.

KIRBY J:   No, but it is still in principle.

MR MEAGHER:   Article 17, if your Honours look, operates on different principles.  Article 17, which deals with passengers, only deals with damage sustained as a result of an accident which happens “on board the aircraft” or in the course of “embarking or disembarking”.

McHUGH ACJ:   Yes, but supposing you have a passenger’s ticket which is in terms of clause 4, I am pretty sure there are clauses much to that effect.  I mean, you just say, “Well, bad luck.”

MR MEAGHER:   At one level, your Honour, it is a matter of contract.  It would be subject to whatever laws there were in the place where the contract was made but, at one level, it is a matter of contract and, similarly, the Convention permits liabilities to be limited when its rules do not apply, and that is precisely what this air waybill seeks to do.  Your Honours, unless there are ‑ ‑ ‑

GUMMOW J:   Yes, there is.  We have extracts from Shawcross and Beaumont, but we have no extracts dealing with the Guadalajara Convention.  Does it cover that Convention?  I would expect it to.  It need not be done now.

MR MEAGHER:   Your Honours, I think I can hand up – I cannot give your Honours an assurance ‑ ‑ ‑

GUMMOW J:   Well, just check it for us and then give it to us.

MR MEAGHER:   Would your Honours prefer that I do that?  If the Court please, they are our submissions.

McHUGH ACJ:   Thank you, Mr Meagher.  Yes, Mr Greenwood.

MR GREENWOOD:   Thank you, your Honours.  The notion that the Richtungsverkehr comes secondarily to air waybill is a fresh argument that, in our submission, is not borne out by the references my friend took the Court to.  The fact that Mr Jones said that delivery at all times was to go to the bonded warehouse is as per the original Richtungsverkehr agreement, appeal book 71.  It is one of the line items in the Richtungsverkehr.

GUMMOW J:   I am sorry, I will have to make sure I get that in my head.  Page 71?

MR GREENWOOD:    Page 71 of the appeal book sets out the different aspects of this overarching agreement and the sixth one is the “Transit to customs controlled warehouse”.

GUMMOW J:   Yes, that is right.

MR GREENWOOD:   It is the air waybill that deals with the fifth one.  So Mr Jones’ evidence that all these shipments were to go to the bonded warehouse is perfectly consistent with the arrangement pursuant to the Richtungsverkehr, whereas my friend is seeking to submit that it indicates that it was the intention of the parties pursuant to the air waybill that they would go there.  In that respect, the reference on the face of the air waybill to Melbourne cannot be construed as a reference to the warehouse, but rather the airport, as your Honours will see, so the airport of departure is Berlin, Tegal, so the airport of destination is Melbourne and not Essendon, but Tullamarine MEL.

In terms of the intention of the parties which is so critical, if it had been the intention of the parties for this air waybill to run to the warehouse, in our submission, it would need to have submitted that by way of a line item, as occurred in the case of Jaycees Patou, which is on the list and copies have been provided to your Honours, where it appears as a separate line item as a door to door waybill.

Your Honours, my friend’s submission about an analogy that can be drawn with Salmond & Spraggon does not run.  When your Honours look at Salmond & Spraggon, your Honours will see that the bill of lading specifically provided for the carrier to retain the control of the goods as the bailee, as distinct from this air waybill which provides simply for the delivery to occur.

My friend’s reference to clause 9 as operating whilst the goods are in their charge can only have operation to the extent of the waybill and does not extend the operation of the waybill and the notion of delivery in clause 11 is read in this way “delivery will be made to” and one must finish that, “delivery will be made . . . to the consignee” or to somebody.  Not delivery made in accordance with the instructions of the consignee, but delivery to someone at the airport, either the consignee or to someone in accordance with the instructions of the consignee.

GUMMOW J:   Yes, but how do you square that with 2.2.1?

MR GREENWOOD:   Clause 2.2.1?

GUMMOW J:   Yes, “applicable laws” may make that impossible.  It has to go into bond.

MR GREENWOOD:   But what occurs here is that there is the delivery that takes place to the consignee ‑ ‑ ‑

GUMMOW J:   Depends what one means by “delivery”.

MR GREENWOOD:   Yes.

GUMMOW J:   It is a legal term, it is not a popular term.

MR GREENWOOD:   Well, the way it is to be read, in our submission, in clause 11 takes one back to reflecting the articles of the Convention, 12 and 13, when the rights change in terms of recalling the goods by the consignee and the control by the - sorry, recall by the consignor or control by the consignee.  When one then goes to this notion of services incidental, what my friend has not identified is how the road carriage in fact does fall within this air waybill.  Is it an incidental service in relation to - within clause 1?  If so, it is not carriage and so it does not fall within 4.

Finally, the reference to incidental service in clause 1, being something different to other services performed by the carrier in 2.2, does not follow, with respect.  There are no other services that the carrier can perform as part of the carriage hereunder apart from what is in 1, namely carrying or other services incidental to that air carriage.

I am sorry, I said finally, but I have one further matter, and that is that the reference - the distinction my friend draws to the wording in 2.1 in relation to “Carriage hereunder . . . subject to the rules relating to liability established by the Warsaw Convention” is quite different to the notion of “carriage to which the Warsaw Convention” applies, which are the words in clause 4.

GUMMOW J: Do you disagree that Mr Meagher’s clients get into the Australian statutory regime through the Guadalajara Convention – in other words, not through section 11? What is the section of the Act that is the equivalent ‑ ‑ ‑

MR GREENWOOD:   Section 25A.

GUMMOW J:   Yes, that is right.  They get in through 25A insofar as there is a mandatory statutory regime.  That is what it has to ‑ ‑ ‑

MR GREENWOOD:   To the extent that that was operative at the relevant time, your Honour, yes.

GUMMOW J:   We were told it is 1 May 1964.

MR GREENWOOD:   Yes, we do not disagree with that.  Your Honours, just wishing to deal with that 2.1 and 4 contrast in this way.  With the notion of this air waybill – and this is really where it all derives from – if one takes the view that this air waybill is endeavouring to deal with international carriage on the one hand and non‑international carriage on the other hand, as we would submit comes out of the air waybill being modelled on the Convention provisions, then either way it is air carriage.  In this case the international air carriage character means that the carriage that was undertaken pursuant to this waybill was international carriage to which

the Convention applied but the road service meant that the rules could not apply to that leg.  Hence the “carriage” in clause 4 was governed by the Warsaw Convention but not the rules relating to liability.  If the Court pleases.

McHUGH ACJ:   It might be helpful to the Court if the parties want to put any submissions in writing concerning how section 25 and Schedule 3 apply.  If you have any submissions in respect of that matter, it might be helpful to the Court.  What I have in mind is, it seems to me at a quick glance at Schedule 3 that some of the provisions of the Convention may need to be modified, or arguably may need to be modified in respect of the persons to whom Schedule 3 applies when there are deeming provisions and there is distinction between “actual carriers” and so on.  There may be nothing in it but if anybody thinks there is anything that may be of use to the Court, then perhaps some submissions could be put in within the next 14 days.

GUMMOW J:   It would be useful to be taken through how it works.

McHUGH ACJ:   Yes, as to how it works.

MR GREENWOOD:   Thank you, your Honours.

McHUGH ACJ:   Within the next 14 days.

MR GREENWOOD:   Fourteen days, thank you, your Honour.

McHUGH ACJ:   The Court will reserve its judgment in this matter.  It is indebted to counsel.  We will adjourn until 10.00 am tomorrow.

AT 3.52 PM THE MATTER WAS ADJOURNED