Sureguard Pty Ltd v M and F Hames Pty Ltd t/as Lismore Freight Service

[2015] NSWCATCD 101

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Sureguard Pty Ltd v M & F Hames Pty Ltd t/as Lismore Freight Service [2015] NSWCATCD 101
Hearing dates:	2 July 2015
Decision date:	26 August 2015
Jurisdiction:	Consumer and Commercial Division
Before:	K Holwell General Member
Decision:	The application is dismissed.
Catchwords:	Lost freight breach of contract negligence exclusion of liability
Legislation Cited:	Consumer Claims Act 1998 (NSW) Fair Trading Act 1987 (NSW)
Cases Cited:	Comalco Aluminium Ltd v Mogal Freight Services Pty Ltd (1993) ATPR (Digest) 46-106 Pondcil Pty Ltd v Tropical Reef Shipyard Pty Ltd (1994) ATPR (Digest) 46-134 Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd (1966) 115 CLR 353 Hadley v Baxendale (1854) 156 ER 145
Category:	Principal judgment
Parties:	Sureguard Pty Ltd (applicant) M & F Hames Pty Ltd t/as Lismore Freight Service (respondent)
Representation:	Mr D Williams for the applicant Mrs M Ellis for the respondent
File Number(s):	GEN 15/11371
Publication restriction:	Unrestricted

REASONS FOR DECISION

1. By an application filed 4 March 2015 the applicant sought a money order in the sum of $7,188.70 claiming losses incurred when two cartons of freight was lost by the respondent.

2. The Tribunal has jurisdiction to hear and determine this application pursuant to the Consumer Claims Act (1998) NSW. The applicant is a consumer. The respondent is the supplier of freight services. There was a supply of such services by the respondent to the applicant in New South Wales. The claim is made within the time limit in the legislation.

3. A directions hearing was held on 25 March 2015. On that day there was a suggestion that the respondent company may be in voluntary liquidation. However it was revealed that it was a related company to the respondent that was in that position. A further directions hearing was held on 22 April 2015. On that day the Tribunal was informed that an insurance claim had been made by the respondent and the insurance assessor required more time to consider the claim. The insurer subsequently denied liability. A further directions hearing was held on 20 May 2015. The case could not be settled on that day and it was set down for hearing on 2 July 2015. The case was heard on that day and thereafter the decision was reserved pending the giving of these reasons. The hearing was sound recorded.

4. Oral evidence was given by Mr Williams and Mrs Ellis. Both parties filed a folder of documents. It is not practical to recount all the oral evidence and the contents of all the documents. In making findings I shall endeavour to refer to the main features of the evidence. Findings are made on the balance of probabilities. The applicant has the onus of proof except in respect of whether the respondent can rely upon a term of contract excluding liability in which case the respondent has the onus.

5. The applicant purchased a product in China and it was sent by air freight from China to Brisbane. The applicant was to use the product to satisfy customer orders from Victoria.

6. The product was in two small cartons. In September 2014 the applicant engaged the respondent to collect the cartons in Brisbane and deliver them to Lismore. The respondent collected the cartons in Brisbane but they were subsequently lost either at the respondent’s depot in Lismore or somewhere between Brisbane and Lismore. The cartons were labelled with the applicant’s name by the respondent’s employee but no delivery address was put on the cartons.

7. The cost of the product was $656.27. The cost of shipping, air freight and customs clearance was $1,027.43. The applicant was unable to satisfy customer orders as a consequence of the lost product. The applicant claims it lost $5,402.00 in cancellations caused by the loss.

8. Consumer guarantees apply to conduct in trade or commerce on or after 1 January 2011. Australian Consumer Law was incorporated into the law of New South Wales via s 28 of Fair Trading Act 1987 (NSW). A person is taken to have acquired particular services as a consumer if the amount paid for the service did not exceed $40,000.00 or the services were of a kind ordinarily acquired for personal, domestic or household use or consumption. Here the service was provided for a business but the amount paid was less than $40,000.00 and accordingly the applicant is a “consumer” in regard to the guarantees.

9. In regard to services there is a guarantee that the services would be rendered with due skill in care. There is a guarantee that if the consumer makes known to the supplier any particular purpose for which the services are being acquired there is a guarantee that the services would be reasonably fit for that purpose. There is also a guarantee that services would be supplied within a reasonable time.

10. The applicant seeks to rely on these guarantees. However in this case the applicant has a problem. Section 63 provides that these guarantees do not apply to services that are supplied via a contract for or in relation to the transportation or storage of goods for the purposes of a business, trade, profession or occupation carried on or engaged in by the person for whom the goods are transported or stored. These cartons have clearly been transported for the purpose of a business and accordingly the applicant cannot avail itself of the consumer guarantees.

11. This issue was considered in Comalco Aluminium Ltd v Mogul Freight Services Pty Ltd (1993) ATPR (Digest) 46-106. In that case there was a finding that there was a contract for the transportation of goods and that a similar exemption in respect of now repealed legislation applied to prevent a claim alleging failure of care and skill against the defendant.

12. In that case the plaintiff succeeded with a claim alleging misleading and deceptive conduct relying upon a representation that the defendant would exercise reasonable care in the packing of the material and other representations about skill and competence.

13. Section 18 of Australian Consumer Law deals with misleading and deceptive conduct. However the applicant cannot establish that the respondent engaged in this conduct. In Pondcil Pty Ltd v Tropical Reef Shipyard Pty Ltd (1994) ATPR (Digest) 46-134 at 53,638 Cooper J said that a mere breach of a warranty to exercise due care and attention and an implied warranty that the services and material provided will be reasonably fit for the purpose does not amount to misleading or deceptive conduct. There must be specific representations as to competence and experience and evidence of general incompetence. Where a person engaged in a profession or trade occasionally does work incompetently or badly and there is no specific representation, misleading or deceptive conduct will not be established. In this case the respondent was just asked to collect and deliver two cartons coming from China. The respondent did not expressly represent to the applicant about competence, skill or experience in respect of the collection or delivery.

14. With the applicant not being able to rely upon consumer guarantees, the focus is on the common law. The respondent is in breach of contract and negligent.

15. The respondent is not liable in regard to the labelling issue. The labelling may have been the responsibility of the applicant. But in any event, the cartons were to be delivered to the respondent’s Lismore depot. They were not to be delivered to a specific address. The absence of an address on the label is, in my view, irrelevant when the cartons were going to the depot.

16. The applicant had a credit request with the respondent in 2011 and at that time acknowledged the respondent’s terms and conditions. Between 2011 and 2014 the respondent did numerous jobs for the applicant based upon that contractual arrangement.

17. I find that the applicant is bound by the terms and conditions of that contract. One of those terms is that the goods are at the risk of the applicant and not the respondent and that the respondent shall not be responsible in tort or contract or otherwise for any loss, damage, deterioration of goods, mis-delivery, failure or delay with delivery. The term goes on to say that there cannot be any liability in negligence or for breach of contract.

18. If parties have had numerous dealings and notice of exclusion clauses have been given in the past, such terms may then be implied into a new contract of the same kind between the parties. In Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd (1966) 115 CLR 353 the High Court accepted that exclusion clauses on a printed form regularly used by the carrier’s customer were terms of the contract of carriage without finding it necessary to inquire whether the contents were actually known by the customer. If there are previous dealings there is ample opportunity to be aware of the terms and conditions of freight carriage and lack of knowledge of these terms in a specific instance does not prevent their incorporation into a new contract between the parties.

19. I therefore find based on the dealings between the parties over three or four years in the knowledge of the terms and conditions of the respondent that the respondent can exclude its liability for damages from breach of contract or negligence. The applicant should have insured the cartons to protect itself if the goods were lost.

20. The application will have to be dismissed.

21. If in another place there is a finding that the respondent cannot rely upon the exclusion clause and the respondent is liable for breach of contract and/or in negligence I consider that the damages should be $1,683.70 being the value of the goods, the air freight, shipping and customs costs. This would put the applicant in its position prior to the loss. I also consider that the consequential losses claimed would not be recoverable.

22. The law on consequential losses comes from Hadley v Baxendale (1854) 156 ER 145 and cases which followed it. A summary of the law which has come from those cases is a follows:

1. It is well settled that the governing purpose of damages it to put the party whose rights have been violated in the same position, as far as money can do, as if his/her rights had been observed. This purpose, if relentlessly pursued, would provide him/her with a complete indemnity for all loss resulting from a particular breach, however improbable, however unpredictable. This in contract is considered too harsh a rule and hence

2. In cases of breach of contract the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonable as liable to result from the breach.

3. What was at that time reasonably so foreseeable depends upon the knowledge then possessed by the parties or, at all events, by the party who later commits the breach.

4. For this purpose knowledge possessed is of two kinds: one imputed, the other actual. Everyone, as a reasonable person, is taken to know the “ordinary course of things” and consequently what loss is liable to result from a breach of contract in the ordinary course. This is the first limb. But to this knowledge, which the contract breaker is assumed to possess, whether he or she actually possesses it or not, there may need to be added in a particular case knowledge which he or she actually possesses of special circumstances outside the ordinary course of things of such a kind that a breach in those special circumstances would be liable to cause more loss. Such a case attracts the operation of the second limb so as to make additional loss more recoverable.

5. The respondent did not have actual knowledge of what was contained in the cartons. The applicant did not tell the respondent what was in the cartons or that the contents of the cartons were urgently required to fulfil orders. The respondent could not have imputed knowledge. This was just an ordinary delivery of freight with the contents of the freight of no specific concern.

6. I am of the view that the consequential losses would not have been recoverable even if the respondent was liable.

K Holwell

General Member

Civil and Administrative Tribunal of New South Wales

26 August 2015

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 08 October 2015