Siemens Ltd v Schenker International (Aust) Pty Ltd

[2003] HCATrans 665

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S241 of 2002

B e t w e e n -

SIEMENS LTD

Applicant

and

SCHENKER INTERNATIONAL (AUSTRALIA) PTY LTD

First Respondent

SCHENKER INTERNATIONAL DEUTSCHLAND GMBH

Second Respondent

Application for special leave to appeal

GUMMOW J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 11 APRIL 2003, AT 9.55 AM

Copyright in the High Court of Australia

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

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

GUMMOW J:   Yes, Mr Greenwood. 

MR GREENWOOD:   Your Honours, we submit there are five good reasons why a grant of special leave is appropriate in this case.  The first is the importance of the point for international and transnational carriers and freight forwarders in terms of the extent of the air waybill and the limitation clause within it.  Secondly, the facts of the case are straightforward and commonplace, so that the decision will be of general application.  Thirdly, there is a dearth of authority on this aspect.  Fourthly, there is difference of opinions between the judgments that have been given in the case.  Finally, there are ‑ ‑ ‑

GUMMOW J:   The Court of Appeal said it could not understand Justice Barrett’s reasoning. 

MR GREENWOOD:   Indeed, and the explanation for that, I think, your Honour, is that they were treating “carriage” as used by Justice Barrett as meaning all carriage, rather than carriage by air.  The fifth point is that there are difficulties and uncertainties that arise as a result of the Court of Appeal’s decisions.  

Your Honours, the facts, being commonplace, are, as your Honours are aware, simply this, that there was an overall agreement for carriage of goods from Germany to Australia.  In particular, there was a segment to be conducted by air between Tegel Airport in Berlin and Melbourne Airport, and then there was another segment to be conducted by road from Melbourne Airport to the bond warehouse outside the airport.  In relation to the overall contract for carriage, it was pursuant to an agreement of longstanding, called a “Richtungsverkehr”, between the parties.  The Richtungsverkehr was the whole contract for carriage, whereas the air waybill was a facilitatory document for the air part of the travel, we say. 

That is the main point of distinction in the case, between the decision of Justice Barrett and the decisions of Justices Sheller and Meagher, to the extent that Justices Sheller and Meagher have treated the air waybill as covering the whole of the transportation, including the road transportation.  Can I take your Honours to Justice Barrett’s decision to illustrate that.  At page 22, his Honour at line 2 refers to the practice of issuing “a house air waybill” in relation to the particular transportation.  At line 35, his Honour notes that: 

those provisions were operative, as a part of or adjunct to the overall contract. 

At page 25 line 2, his Honour then identifies that: 

the air waybill was created and employed in the context of the wider “Richtungsverkehr” arrangements which had resulted from the 1991 negotiations –

In relation to the air waybill, his Honour then looked at the indicia to demonstrate that it related to the air carriage part. 

GUMMOW J:   Now, we had supplied to us copies of the bill. 

MR GREENWOOD:   Yes.  Does your Honour have the copy in the folder?  It is probably going to be the easiest one to use. 

GUMMOW J:   Thank you. 

MR GREENWOOD:   It shows on the face of it that the shipper is – and it is hard to read the shipper’s name, but shipper being “SIEMENS AG” and the consignee “SIEMENS LTD”.  Your Honours, on the back page of that, if I can just take your Honours to it very briefly, the conditions of contract are not the correct ones because it is very hard to read the correct ones.  They are identical but for the line that is crossed out at the bottom, and we have crossed that out so that there is no confusion about it. 

GUMMOW J:   I see, thank you. 

MR GREENWOOD:   Your Honours will see on the front page of the air waybill, it nominates the airport of departure, being “BERLIN – TEGEL”, notes that it is to go to “MEL”, being Melbourne Airport, by the carrier “SQ”, being Singapore Airlines.  The airport of destination nominated:  “MELBOURNE – MEL”.  As we have referred to in the written submissions, that is the three letter IATA code for the particular airport, in this case, Tullamarine, as distinct from Essendon.  The front page notes only that the destination is to be Melbourne Airport.  The other side of the bill contains ‑ ‑ ‑

GUMMOW J:   Sorry, it says “Airport of Destination MELBOURNE”. 

MR GREENWOOD:   That is right.  One of the points of distinction is whether or not this air waybill goes beyond Melbourne Airport or not.  We submit ‑ ‑ ‑

GUMMOW J:   Yes, because the equipment fell off a truck at what stage? 

MR GREENWOOD:   After it left the airport.  It gets to the airport, it gets ‑ ‑ ‑

GUMMOW J:   Well, there is a debate about that, is there not, about physically where this was?

MR GREENWOOD:   No, that has gone.  It is unloaded ‑ ‑ ‑

GUMMOW J:   It is near the airport, at any rate. 

MR GREENWOOD:   Yes.  It is unloaded from the airport, eventually put on the back of a truck, driven out of the airport, but it is not properly loaded, so when it goes around a bend on the road off it comes and it is destroyed.  But there is no argument that it was outside the precincts of the airport. 

GUMMOW J:   Yes.  Well, outside the relevant Commonwealth place. 

MR GREENWOOD:   Well, yes.  In terms of the conditions of contract, firstly, at the top there is the: 

NOTICE CONCERNING CARRIERS’ LIMITATION OF LIABILITY” –

pursuant to the Warsaw Convention.  The conditions of contract provide for the carrier, meaning all air carriers, that carrier: 

undertake to carry the goods hereunder or –

we say, in distinction to the carrying aspect –

perform any other services incidental to such air carriage. 

CALLINAN J:   Where is that? 

MR GREENWOOD:   Condition 1, your Honour.  Clause 1. 

GUMMOW J:   Could you just make that point again, Mr Greenwood, about clause 1? 

MR GREENWOOD:   Yes.  Clause 1 is referring to carriers being “air carriers” that: 

carry or undertake to carry the goods –

First point; so that is the notion of the “carriage” –

or perform any other services incidental to such air carriage. 

Then in clause 2.1, there is reference to “Carriage hereunder” being: 

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

Your Honours are no doubt aware that the Warsaw Convention provides for limitations of liability in relation to international carriage. 

GUMMOW J:   Yes, I was going to ask you that.  Is there a choice of law clause in this one?  There is not, is there? 

MR GREENWOOD:   No.  It operates so that it is a dual purpose waybill, covering both international carriage or national carriage or international carriage not between high contracting parties. 

GUMMOW J:   Now, is there any impact upon this contract of the federal Act, the Civil Aviation (Carriers’ Liability) Act? 

MR GREENWOOD:   Yes, it purports to adopt the provisions of the Warsaw Convention. 

GUMMOW J:   And apply them to what contracts? 

MR GREENWOOD:   And apply them to all contracts such as this, where ‑ ‑ ‑

GUMMOW J:   But what is the nexus in the statute? 

MR GREENWOOD:   Section 11 provides for the Convention to have force: 

in Australia in relation to any carriage by air to which the Convention applies –

In this instance, Schedule 2 to the Act is the relevant “Warsaw Convention as amended at The Hague, 1955”.  It is at page 55. 

GUMMOW J:   Yes, thank you. 

MR GREENWOOD:   If I could deal with a couple of the provisions of the Convention whilst it is open before your Honours.  Article 1 provides for the Convention to apply: 

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

“International carriage” meaning carriage where the place of departure and place of destination are within high contracting parties.  Your Honours, Article 5 is the start of the section relating to the air waybill, the air waybill being a document which is necessary in order to get the protection of the Warsaw Convention.  Article 8 provides that “The air waybill shall contain” certain information, the first one being: 

(a)  an indication of the places of departure and destination;

and Article 9 makes it clear that if a waybill is not issued then the carrier is not entitled to the protection, being limitation of liability. 

GUMMOW J:   Yes.  I took you away from condition 1. 

CALLINAN J:   It is the ultimate point, is it not, when the event occurred, whether it was the performance of “services incidental to” air carriage?  Is that the ultimate point? 

MR GREENWOOD:   It can be put that way, your Honour.  It can be put this way, in two bites.  One is, does this air waybill have any operation after the carriage by air is concluded?  If not, end of story.  If it does, then does clause 4 and the meaning of carriage in clause 4 encompass other than ‑ ‑ ‑

GUMMOW J:   Clause 4? 

MR GREENWOOD:   ‑ ‑ ‑ yes – other than carriage by air?  Clause 4 providing that when “carriage to which the Warsaw Convention does not apply” then there is certain limitation on liability.  

GUMMOW J:   Thank you. 

MR GREENWOOD:   The proposition that we put, your Honours, is that, as Justice Barrett found, the indicia throughout this air waybill are that it is relating to carriage by air.  That may change in certain circumstances where it is explicit on the front of the bill that it incorporates other carriage.  It does not arise here.  That being the case, the carriage hereunder, your Honours will see, in clause 2.1 is described as being: 

subject to the rules relating to liability established by the Warsaw Convention unless such carriage is not “international carriage” –

In other words, the Warsaw Convention applies to the extent that it applies, but, we submit, it applies in relation to it being “air carriage”. 

Now, your Honours, the other significant clauses of this air waybill are clause 4, of course, clause 9 and clause 11.  The essence, we submit, of the Court of Appeal’s decision – at least, Justice Meagher’s decision – is that his Honour has treated the place of destination of the ‑ ‑ ‑

GUMMOW J:   Where do we find that phrase? 

MR GREENWOOD:   “Place of destination” in clause 11: 

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. 

Justice Meagher treated the place of destination pursuant to the waybill as being the warehouse, rather than the place nominated in the waybill.  So much is apparent from his Honour’s decision ‑ ‑ ‑

GUMMOW J:   The place nominated in the waybill being?

MR GREENWOOD:   Melbourne Airport. 

GUMMOW J:   Yes. 

MR GREENWOOD:   It appears at page 59 of his Honour’s judgment.  He has, in our respectful submission, extended the operation of the air waybill beyond the place nominated in the waybill by running together the overall contract for carriage and the carriage by air governed by the waybill.  So his Honour says, page 59 line 21: 

The place of destination was Melbourne –

rather than Melbourne Airport –

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

We would submit, correct in terms of the overall contract for carriage, but wrong in terms of the waybill.  When I say “we”, I am incorporating within that, of course, Justice Barrett’s decision on the point – Justice Barrett finding that the air waybill was confined to the carriage by air.  On page 60 of Justice Meagher’s decision, your Honours will see that ‑ ‑ ‑

GUMMOW J:   What do you say about paragraph 8 on page 60 of the reasoning in the Court of Appeal? 

MR GREENWOOD:   Thank you, your Honour, I was just going to that.  In order to do so, I have to take your Honours back to Justice Barrett’s decision, because this is the paragraph where Justice Meagher says he cannot understand what Justice Barrett was saying.  If I take your Honours to page 28 of the application book, your Honours will see at the top Justice Barrett says at line 2: 

As I have said, it is, by its terms, confined to air carriage –

and he sets out his reasons for so finding.  He then turns to look at clause 2.1 and 4, 2.1 involving, Justice Barrett says, a: 

clear assumption in each of these provisions . . . that the carriage –

and his Honour is here, we would submit, talking about the carriage under the waybill, and that is carriage by air –

as a whole will or will not be within the Convention’s definition of “international carriage” and that the carriage –

under the waybill –

as a whole will or will not be carriage to which the Convention applies. 

Justices Meagher and Sheller have treated, however, the description of carriage as being all carriage pursuant to the contract of carriage, and so, on page 60, Justice Meagher says, line 25: 

I confess to being ‑ ‑ ‑

GUMMOW J:   Well, the words “in truth” are always a bit of a worry, too. 

MR GREENWOOD:   Yes.  Well, it is a good sentence: 

In truth, the Schenker companies were transferring the cargo under two regimes –

yes –

one covering the route from Berlin airport to Melbourne airport –

yes –

one covering the route from Siemen’s Berlin factory to Schenker’s Melbourne bondstore.  If the latter, contractual, regime –

and, we would submit, if his Honour is talking about the Richtungsverkehr, he is right –

is different from the former, statutory, one –

presumably meaning the Warsaw Convention –

it still operates to the extent it can.  It –

the Richtungsverkehr –

thus covers the short trip from Melbourne airport to the bondhouse. 

But his Honour does not mean that.  His Honour must mean ‑ ‑ ‑

GUMMOW J:   The primary judge. 

MR GREENWOOD:   No.  Justice Meagher must mean “it” to mean the air waybill, when he should, we submit, mean the Richtungsverkehr.  He is treating them as one and the same, in effect.  Justice Sheller, with respect, does the same, and it was illustrated perhaps best starting at page 66 line 26, where his Honour says: 

Although this is not expressed in the [air waybill] –

correct –

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 –

That was pursuant to the Richtungsverkehr, not the air waybill.  Then on page 67 line 15, his Honour runs the two together, we submit, by saying: 

To effect delivery in accordance with the [the air waybill] and the instructions of the shipper, the carrier was bound to arrange for the goods to be carried to the under bond warehouse ‑ ‑ ‑

GUMMOW J:   Well, you say that is confusing conflation. 

MR GREENWOOD:   Yes.  Whilst it is correct that, if you take both into account, that is right, his Honour goes on incorrectly to say: 

and therefore bound within the meaning of cl 1 –

of the air waybill –

to perform a service incidental to the air carriage.  That was part of the contract evidenced by the –

air waybill.  We say, no.  That is that conflation. 

GUMMOW J:   Yes, thank you, Mr Greenwood.  We will hear from Mr Meagher. 

MR MEAGHER:   Your Honours, the draft notice of appeal raises two questions.  The first is whether the air waybill regulated the relevant carriage, which was the carriage to the bond store, and the second is as to the meaning of “carriage” in clause 4 of the air waybill.  Now, it is our submission that the Court of Appeal is correct in the way it has construed clause 4 and that construction is not controversial, in the sense that it accords with United States decisions on the same document, including a decision of the Court of Appeals for the 9^th Circuit.

GUMMOW J:   That is California. 

MR MEAGHER:   Yes, your Honour, and that is the decision in Read‑Rite.  In order to understand precisely the way the issue arises, I need to point out to your Honours two matters.  The first one concerns the facts and the second concerns the operation of the Convention.  Could I take your Honours to paragraph 28 of Justice Sheller’s judgment on page 67. 

GUMMOW J:   Yes, that is the one we have just been looking at. 

MR MEAGHER:   Yes: 

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 [house air waybill] 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. 

Now, if your Honours go back to paragraphs 26 and 27, the reasons for that appear.  In essence, they are that by a combination of the request from the shipper and the application of the Commonwealth Customs Act, this consignment, because it was a consolidated consignment, could not be delivered other than at the bond store.  We are talking about a bond store that is just beyond the perimeter of Tullamarine Airport, nevertheless a distance around the perimeter of four kilometres from the airport gate. 

So the position was that in order to give delivery under the air waybill, my clients had to transport the goods by land to the bond store.  If I could just take your Honours to clause 11 of the air waybill – perhaps if I go to clause 9 first.  Clause 9 says: 

the carrier shall be liable for the goods during the period they are in its charge or the charge of its agent. 

We do not quarrel with the proposition that the goods were in our charge at the time they were damaged.  Then clause 11: 

Notice of arrival of goods will be given promptly . . . 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. 

Now, the position here was that both consignee and shipper had agreed, and the nature of the consignment required, that it be delivered at the bond store.  So the land carriage which occurred occurred for the purpose of giving delivery.  Could I then take your Honours quickly to the other provisions of the bill to which my friend has drawn attention.  Clause 2.1 says that: 

Carriage hereunder is subject to the rules relating to liability –

and those are the rules in Chapter III of the Convention.  Could I take your Honours to Article 18 in Chapter III. 

CALLINAN J:   That is at page 57, is it, in the ‑ ‑ ‑

MR MEAGHER:   I am not sure if I have the same page numbering.  Page 61, I think. 

CALLINAN J:   It is the application book I was talking about – page 57 of the application book? 

GUMMOW J:   It is set out on 57. 

MR MEAGHER:   It is not set out in full, though, your Honours. 

GUMMOW J:   I see. 

MR MEAGHER:   So I would invite your Honours to go to the article, because paragraph 3 is significant in the present context.  What the Convention does by Article 18 is make the carrier: 

liable for damages sustained in the event of the destruction or loss of, or of damage to . . . cargo, if the occurrence which caused the damage so sustained took place during –

a period which is described as “the carriage by air”.  Paragraph 2 defines that period, in effect, as: 

the period during which the baggage or cargo is in charge of the carrier, whether in an aerodrome or on board an aircraft –

Paragraph 3 provides expressly that that period: 

does not extend to any carriage by land, by sea or by river performed outside an aerodrome. 

The next sentence is significant, because it acknowledges that: 

If, however, such a carriage –

that is, carriage by land –

takes place in the performance of a contract for carriage by air, for the purpose of loading, delivery or trans‑shipment –

there is a presumption that the damage took place during “the carriage by air”. 

GUMMOW J:   Now, is this referred to by the Court of Appeal? 

MR MEAGHER:   Article 18? 

GUMMOW J:   As part of its reasoning, yes. 

MR MEAGHER:   Yes. 

GUMMOW J:   Whereabouts? 

MR MEAGHER:   Certainly, Justice Meagher sets out the relevant, but not all of the relevant, provisions in paragraph ‑ ‑ ‑

GUMMOW J:   Well, that is what worries me. 

CALLINAN J:   He leaves out the quite important sentence that you have just read. 

MR MEAGHER:   This is not a case where the presumption applied, but the point is that Article 18 recognises that under a contract for carriage by air, you can have land carriage beyond the airport for the purpose of giving delivery.  It also provides that the rules do not apply to that land carriage, and they do not apply to anything that happens in the course of that land carriage.  That is the critical point, in a sense, because Article 23(1) permits the party or the carrier to, in effect, fix limits of liability provided that they are not inconsistent with the operation of the Convention rules. 

To answer your Honour Justice Gummow’s earlier question, if I can refer your Honour to paragraph 36 on page 72 of the application book, in the judgment of Justice Sheller he makes the very point that I have been seeking to make to the Court. 

GUMMOW J:   But Justice Meagher does not. 

MR MEAGHER:   Not in the same terms, but Justice Stein agrees with Justice Sheller and Justice Meagher. 

GUMMOW J:   Yes.  Can you assist me in this, Mr Meagher.  Section 11 of the federal Act would apply of its own force, would it not, regardless of what the contract said? 

MR MEAGHER:   Yes, your Honour.  This is a case where the parties have sought to incorporate the Convention rules of liability as a matter of contract and they also apply as a matter of municipal law.  They apply if the state which is the place of departure and the state which is the place of destination are both contracting parties to the relevant treaty.  In this case, it is the Convention as amended by The Hague protocol.  So it applies perforce of contract and as part of our municipal law. 

GUMMOW J:   Would the federal Act have any operation in respect of so much of the carriage to which 11 did not apply? 

MR MEAGHER:   Does your Honour mean Article 18? 

GUMMOW J:   Section 11 of the Act. 

MR MEAGHER:   Not relevantly, no.  The Act makes provision for passengers and what have you, but says nothing about cargo, relevantly ‑ ‑ ‑

GUMMOW J:   Outside the Convention. 

MR MEAGHER:   That is so. 

GUMMOW J:   Yes, thank you. 

MR MEAGHER:   So when your Honour then goes back to the air waybill, if one looks at it, 2.1 says it is:

subject to the rules relating to liability –

we accept that, and 2.2. says: 

To the extent not in conflict with the foregoing –

that is, the rules, then it is subject to the following:  2.2.1 is “applicable laws”, and that does not present problems; 2.2.2. is “provisions herein set forth”, and those provisions, relevantly, include 4.  Clause 4 says: 

Except as otherwise provided in the carrier’s tariffs or conditions of carriage –

and that was not this case –

in carriage to which the Convention does not apply carriers’ liability shall not exceed USD 20.00 . . . a kilogram –

This land carriage answered the description of “carriage”, it was not carriage to which the rules applied, and therefore clause 4 applied.  That is the way the Court of Appeal approached it and it is the way ‑ ‑ ‑

GUMMOW J:   You may be right in the end but I do not think one could dismiss this application on the basis that there was no serious question.  This is of enormous commercial significance. 

MR MEAGHER:   Your Honour, I have made the point ‑ ‑ ‑

GUMMOW J:   I am not saying you are not right, in the end, but to dispose of it as raising no serious question would be fairly heroic, I think. 

MR MEAGHER:   It is subject to these two matters – could I just put these matters.  First, my friend does not suggest that there is any decision of any court which decides that this should be construed in the way he contends, and there are ‑ ‑ ‑

GUMMOW J:   Well, we can be manful about that. 

MR MEAGHER:   In being manful, your Honours will no doubt have regard to the fact that it is a document which has been in existence for a long time and been construed by a number of courts in the United Kingdom and in the United States ‑ ‑ ‑

GUMMOW J:   Not all that much, actually, given its importance, but I take your point. 

MR MEAGHER:   The second point is, your Honour, that this is not a case, as we see it on the way my friend puts his argument, which depends solely on the construction of the air waybill.  My friend seeks to say that this is a particularly complicated matter because of this overarching arrangement, and that proposition affects, obviously enough, the utility of any decision which might be made in this case, if it is to be said to be of general application.  Your Honour, those are our submissions. 

GUMMOW J:   Thank you, Mr Meagher.  We do not need to hear you in reply, Mr Greenwood.  There will be a grant of special leave in this matter.  It will be a one day case, gentlemen, will it not? 

MR GREENWOOD:   Yes, your Honour. 

MR MEAGHER:   Yes, your Honour. 

AT 10.27 AM THE MATTER WAS CONCLUDED