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Commercial Transactions

Module 6

Winter 2006 Session

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This presentation and Copyright therein is the property of Maureen Noonan and is prepared for the benefit of students enrolled in the Commercial Transactions course conducted by the Law Extension Committee and is available for their individual study. Any other use or reproduction, including reproduction by those students for sale without consent is prohibited.

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BAILMENT A BAILMENT IS FORMED BY DELIVERY

OF PERSONAL PROPERTY WITHOUT TRANSFER TITLE

BY BAILOR TO BAILEE

USUALLY UNDER AGREEMENT (NOT NECESSARILY CONTRACT)

FOR PARTICULAR PURPOSE GIVING RISE TO DUTY OF CARE UPON COMPLETION PURPOSE BAILEE IS OBLIGED

TO RETURN BAILED PROPERTY (OR DEAL WITH IT AS DIRECTED) CTB1

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BAILMENT

CLASSIFICATIONS

Lord Holt in Coggs v. Bernard (1703) 2 Ld Raym909;

92 ER 107

1. The deposit of goods for gratuitous safekeeping by the bailee.

2. The delivery of goods to a bailee for work to be done on the goods for the benefit of the bailor without reward.

3. The delivery of goods by way of gratuitous loan for use by the bailee.

4. The deposit of goods for safekeeping for reward.

5. The delivery of goods to have something done to them for reward.

6. The delivery of goods for use by the bailee for reward (hiring).

7. The delivery of chattels to be held as security for a loan.

B20

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BAILMENT

DOMESTIC EXAMPLES

DRY CLEANING

CAR REPAIRS

USING A SUPERMARKET TROLLEY

LENDING A FRIEND SOMETHING

YOUR CAR / A BICYCLE / COAT / JEWELLERY / GARDENING TOOLS

HIRING A CAR/SKIS/BOAT/JETSKI

B31

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BAILMENT

COMMERCIAL EXAMPLES

Contracts for HIRE

FLOORPLAN ARRANGEMENTS with Dealers

Sales with title Retention Clauses where delivery given to buyer.

TAXI operation

Couriers, CARGO SHIPMENT

STORAGE/WAREHOUSE Arrangements

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BAILMENT

DISTINGUISH BAILMENT FROM

CONTRACT

Consideration Involuntary possession

LICENCE Who has possession? Actual v. constructive?

Ashby v. Tolhurst Council of the City of Sydney v. West Walton Stores v. Sydney City Council

GIFT

B2

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BAILMENT

ASHBY V. TOLHURST (1937) 2 KB 242

1. Tolhurst owned car park 2. Ashby paid 1/- to attendant 3. Received ticket 4. Exclusion clause 5. Locked car and went away 6. Car given to someone else

NATURE OF RELATIONSHIP? · Contract? · Licence? · Bailment?

Licence only No obligation on licensor No change in possession In any case, exclusion clause covers

B3

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BAILMENT

COUNCIL OF THE CITY OF SYDNEY V. WEST

(1966) 114 CLR 481 1. West drove into Domain parking station 2. Handed a ticket, no time to read it This card must be presented to attendant to obtain release of vehicle 3. Directed to spot, left car for the day 4. Exclusion clause

The Council does not accept any responsibility for the loss or damage to any vehicle or for loss of or damage to any article or thing in or upon any vehicle or for any injury to any person however such loss, damage or injury may arise or be caused.

5. On return, paid and went to get car 6. Car missing 7. Attendant had issued duplicate ticket 8. Attendant on exit had let thief pass

· Nature of contract? · Licence? Bailment?

Berwick CJ and Taylor J · Contract of Bailment. Possession with Parking Station · Possession retained until presentation and surrender ticket · In circumstances of the case, loss not within exemption clause · Because it was unauthorized delivery of possession · Outside contract · Not mere negligence, inadvertence (as in Ashby v. Tolhurst) · Note comments about whether due notice of exclusion anyway. · Confirmed in Walton Stores v. Sydney City Council. (Similar facts. Goulburn Street Parking Station).

B4

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Greenwood v. Municipal Council of Waverley (1928) 28 SR (NSW) 219

Before Greenwood went swimming at Bondi Beach, he changed in sheds owned and operated by the council and left his clothes in one of its lockers---having paid the required fee. When he returned, his clothes were missing.

He sued the council alleging it was in breach of its duties as a bailee. He failed.

The court held that merely placing clothes in a locker owned by the council did not make the council a bailee. It had never acquired possession or control of Greenwood’s clothes either in fact or in intention. What had happened was that the council had hired him a locker. What he did with it was his business. In law, there was no bailment--there was merely a licence by the council allowing Greenwood to use its property for a specific purpose.

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Petrifond Midwest Ltd v. Esso Resources Canada Ltd

(See text p 243)

Operator was facilitator for number of oil companies. Mined tar sands and produced synthetic crude oil. Entered into contract to excavate a fire hydrant. During excavation, underground duct bank was damaged and oil production interrupted. Operator found to be bailee for participants and could sue in its own name even though it had not suffered the business interruption…the oil company participants had.

Agency involves service, representation, power to affect the legal position of the principal. Bailee does not represent bailor and has no power to make contracts on bailor's behalf.

Management agreement specifically created relationship of principal and agent not bailor and bailee.

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Which of the following involve Bailments?

Which type? reward, gratuitous (benefit bailor/bailee)sub?

Adele borrows a book from the library • Brian borrows $20 from ClareDell rents a safe deposit box from her bank and locks her jewellery in itElle pawns her TV as security for a loan • Frank rents his house to GwenHal leaves his luggage overnight in a railway left luggage roomIan sells goods to Jan on 10% deposit with balance payable in installments over 12 months. Jan gets immediate possession.Kate allows Les to copy her lecture notes •Mike gives Nan his assignment so she can check the spelling •Olive hires a removalist to help her move house •Pat returns a defective computer to the shop for repair under warranty •Quincy subscribes to an Internet service and allows Ray to log on using his password •Sue licenses Tanya to use her registered trade markUlf rents a video recorderViv engages a smash repairer to repair her motor bikeWes parks his car in a security carparkZanthia finds a watch while jogging in the parkYasmin receives a book from the Readers Club on approval without ordering it •Zane gives his mother a pendant as a birthday present

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Duties of the Bailor

To deliver the goodsThereafter not to interfere with bailees lawful possessionTo inform the bailee if they are dangerousWhere bailment is hiring for reward, to ensure goods are merchantable and fit for purpose.

Note that if the bailment is contractual, there may be other duties, such as to pay the bailees reasonable charges for work done during the bailment, perhaps to keep them insured, or if the bailor has agreed to keep them in repair, to ensure that the required repair work is done in a timely and competent manner. See Wicks Farming v. Waraluck Mining P/L (1996) 1 QdR 99

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Bailor’s duty to inform Bailee if goods are dangerous

Schirillo, a market gardener, lent an onion sorting machine to Chernabaeff. He had earlier removed the safety guard with which the machine had originally been fitted and he warned Chernabaeff not to let children near it when it was operating.

Chernabaeff ignored the advice and used it with the help of Pivavaroff, a 13 year old boy. Pivovaroff’’s hand was crushed and badly injured.

Schirillo was held not liable. He had been under a duty to warn Chernabaeff of the potential dangers, but he had discharged that duty by informing him of the risks and of the proper procedures to employ when using the machine.

Pivovaroff v. Chernabaeff (1978) 21 SASR1

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DUTIES OF A BAILEE

1. To take care of the goods. Standard is reasonable in all the circumstances.See Mitchell, Houghland, Port Swettenham, Hobbs.

2. To retain possession (unless it is a term of the bailment to do so).

3. Not to use or misuse the goods…usually also breach of duty of care or conversion.

4. To return the goods or to deal with them as directed.

5. Not to dispute the bailor's title.

See Edwards v. Amos

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BAILEE DUTY AND LIABILITY DUTY OF BAILEE 1. To take due care of the goods 2. To return the goods at the end of the bailment

STANDARD OF CARE THAT DEGREE AN ORDINARY REASONABLE PERSON Would take in ALL THE CIRCUMSTANCES See Houghland, Mitchell and Port Swettenham

COURTS BEAR IN MIND: 1. Bailment for reward or gratuitous? 2. For benefit of one party or both? 3. Whether bailee has professed skill?

ONUS OF PROOF Once bailment proved: ONUS SHIFTS to bailee to disprove negligence Contrast action in negligence See Hobbs

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HOUGHLAND V. RR LOW (LUXURY COACHES) (1962) 1 QB 694

Mrs. Houghland caught coach Southampton to Hoylake. Suitcase locked in boot by driver in Southampton. Delay at Ternhill for meal and breakdown. Luggage transferred to new coach by passengers in the dark . No luggage on arrival at Hoylake

Ormerod LJ.

Judge below had found bailment Gratuitous bailment Argument that “gross negligence” required in case of gratuitous bailment Judge said it was the standard demanded by the circumstances of the

particular case Infinite variety of combinations of circumstances. Rigid categories inappropriate Prima facie case arose. Suitcase put on at Southampton. Not there on arrival in Hoylake. Onus on defendants to rebut presumption of negligence They did not do so.

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MITCHELL V. EALING LONDON BOROUGH COUNCIL (1979) QB 1

Mrs Mitchell was evicted. The Council offered to store her furniture. She accepted. The Furniture was put in a lock-up garage. Her Husband arranged to collect it on 19.12 He went to Council’s office but the Council Officer went to lock-up garage. Due to the mixup, there was no meeting, no pick-up. The husband went away. The Mitchells could not be contacted for a while. 4 weeks later, a new arrangement was agreed for 15.1.79 When the garage was opened, the furniture was gone.

O’Connor J. If bailee unable to deliver, liable for value unless he can show loss without negligence. Timing of the loss was important in this case No negligence for using lock-up garage. Usual to put seized goods there No recorded incident of previous theft No blame for not mounting a guard BUT, it was negligent to send Officer to wrong place After that, Council were insurers of goods

Note: If after new arrangement, might have been different duty. No evidence on timing.

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PORT SWETTENHAM AUTHORITY V. T.W WU AND CO (1979) AC 580

Wu arranged for 93 cases of pharmaceuticals to be sent to them in Malaysia. Cases arrived by ship at Port Swettenham. Stored by the Port Swettenham Authority Shed 8 10 days later, 64 cases had disappeared. Wu sued and won. Appeal to PC

Lord Salmon Law on Bailment in this case codified-set out in sections 104 and

105 Contracts (Malay States) Ordinance 1950

In all cases of bailment, the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality, and value as the goods bailed.

Onus on defendants to prove they met this standard. Conspicuously failed to do so.Called only 2 witnesses.Who knew nothing about the lost goods. Did not call men working in shed 8, Not even man in charge.Therefore, no evidence they had taken due care and not been negligent. System of control and security left much to be desired

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HOBBS V. PETERSHAM TRANSPORT CO (1971) 124 CLR 220 1. Petersham Transport agreed to carry 2. Equipment belonging to ASEA Electric 3. Petersham Transport engaged Hobbs 4. Hobbs loaded equipment onto near new semi 5. On the way, semi suddenly overturned 6. Unexpected failure of axle.

· ASEA sued Petersham in contract and joined Hobbs · ASEA won. · Hobbs appealed

Barwick CJ Breach of promise to carry goods safely Onus on plaintiff to prove fault/negligence Not done Non-delivery prima facie evidence Axle failure not due to act of Petersham or Hobbs Destroyed prima facie inference Not bailment Onus would have been otherwise in bailment

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COTTEE V. FRANKLINS SELF SERVE PTY LTD

(1997) 1 Qd R469

R purchased goods in store and was pushing it with goods and her 6 month old child towards her car in the carpark attached to the store; when she suffered injury.One of the front wheels collapsed without warning. It capsized and R was hurt trying to restrain it from toppling over. Experts did not explain why it had occurred. No evidence that any system of inspection would have prevented it.

Gratuitous bailment? If so, a gratuitous lender is liable only to warn the borrower of defects known to the lender not apparent to the borrower making them unfit for the borrower's purpose.

Contractual bailment? Open to the court to find it in this case-consideration. In such a case, clear from HC that the implied term in the case of hire of chattels is that they shall be reasonably fit for the purposehired…obligation same as that with sale of goods…

TPA mentioned but not pleaded.

Negligence not proven.

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Tottenham Investments P/ L v. Carburettor Services P/L (1994) Aust Torts Reports 81-292

The D was held liable when thieves entered its premises through a skylight and stole P’s vehicle, the keys of which had been left in the ignition. The Court held that, even though the premises were located in a well lit street, adjacent to a busy bus depot and had not been the subject of break ins or theft for 15 years, the D had failed to exercise the standard of care that would have been expected of a careful and vigilant person in like circumstances.

The fact that security bars, an alarm system and warning signs were all installed at minimal expense after the theft was held to be evidence that all these precautions were practicable,and should have been taken before it.

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Pitt Son & Badgery Ltd v. Proulefco SA (1984) 153 CLR 644

A Wool broker was held liable when an intruder gained access to a wool store, lit a fire and destroyed the wool. The broker had failed to take appropriate steps to ensure the fence was adequate to keep intruders out.

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Wills consigned container load of cigarettes to TNT. Carrier was SRA. Following delivery by SRA to TNT, container was put in TNT’s shed Shed stood in SRA’s rail terminal yard. Left overnight; locked but unstaffed.Stolen overnight

Mason P, Priestley JA, BeazleyJA

A person could not become bailee or sub-bailee of goods in absence of possession, consent or knowledge on their part No assumption of responsibility on SRA’s part No known reliance or dependence on the part of the freightforwarders or customers including Wills and TNT No duty on SRA as lessor of shed to provide security No general duty on occupiers to take reasonable care to prevent others using it as springboard for stealing

WD AND HO Wills (Australia) Limited v. State Rail Authority of NSW; SRA v. TNT Nos. CA 40577/95;CA 40663/95(1998)NSWCSC 81 (21.4.98)

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Sub-Bailments-General Rules …cases

If bailee sub bails with knowledge and authority of bailor, unless bailee negligent in choosing sub-bailee, the only person liable if the goods are lost or damaged would be sub-bailee.If the bailee sub bails without authority,usually liable to bailor---not because the loss or damage has occurred, but because they are in breach of the duty to retain possession. See Edwards v. Newland & Co (1950) 2 KB 534, 539, 542.In either case, sub-bailee will be liable to bailee for loss, attributable to their breach of duty, or if bailment contractual, breach of contract. See Edwards. The sub-bailee will also be directly liable to head bailor; at least if they know they are their property or the property of a person other than the one they received them from. Gilchrist WattThe head bailor cannot succeed against both head bailee and sub bailee in the same action because this would result in double damages. Usually the head bailor sues one or the other. If they sue the bailee, they would normally seek indemnity from sub-bailee by joining them to the action.

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THE ISSUE OF SUB-BAILMENT

RIGHT OF ACTION BY BAILOR AGAINST SUB-BAILEE

GILCHRIST WATT AND SANDERSON V. YORK PRODUCTS (1970) 1 WLR 1262 York bought 2 cases clocks from Germany.Gilchrist stevedores and ships agents at wharf. Unloaded 2 cases and placed them in a shed they used in day. Keys to shed kept by customs during night. When agents of York came, 1 case missing. York successfully sued.

Appeal to PC: Lord Pearson

Duties arise at common law only if legally recognised relationship. One such recognised relationship is voluntary custody of goods of another. Obligation created by delivery and assumption possession. Defendants took possession and kept possession pending delivery As sub-bailees took on duty to exercise due care notwithstanding no contractual relationship. Confirmed judgement

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Westpac bought NZ & US currency from Bank of Tonga. Sent by post from Nuku’alofa to Sydney. Carried by Royal Tongan Airlines, Air NZ and Qantas. Did not reach Westpac. Westpac sued for breach of duties of care of in bailment Either Westpac or Bank of Tonga had title to sue. When had title passed? Timing material to liability as bailee? Giles CJ Chain of bailments -Tongan Postal Department to Royal Airlines to NZ.Post to Air New Zealand to Qantas.Lost from possession of either Air NZ or Q.Confirmed Morris v. Martin (mink stole to sub bailee) Consent of bailor (Bank of T or W) to sub-bailment Air NZ claimed protection by terms agreement with NZ Post governing sub-bailment. No, said judge Anyway, concluded they were lost by Qantas. If lost by Q, protected by terms of ground handling agreement with Air NZ or Australian Postal Corporation Act? Former not so normal or usual assent could be presumed. Bailor only needs to prove goods went into possession of bailee and not redelivered Bailee must prove he exercised reasonable diligence in taking care of them Qantas liable unless protected by s. 34 APCA and acts by or on behalf of Australia Post It must prove that. Had not done so. Westpac should have judgement because it was entitled to possession at time loss s. 23 SGA

WESTPAC BANKING CORPORATION V. ROYAL TONGAN AIRLINES & ORS 50127/95 5.9.96 SCNSWCD

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MAYNEGRAIN V. CAMPAFINA BANK (1982) 2 NSWLR 141

Campafina Swiss Bank. ANZ was Australian agent. Campafina lent BTE money to buy barley for export to Kuwait. Barley stored in silos by Maynegrain. Maynegrain acknowledged it held on ANZ’s account. BTE directed Maynegrain to ship barley to Kuwait. Maynegrain did so without authority Campafina. Campafina found out, obtained assignment bill of lading. Barley sold Price less than loan. Campafina sued Maynegrain in SC and succeeded. Note lack of direct relationship

Appeal to C of A. Hutley JA

1. Trial judge assessed damages at whole value of barley 2. Damages are meant to be compensation 3. Entitled to be put back in position as if no conversion. 4. Measure of damages is: debt + expenses-sale proceeds

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PENFOLDS WINES V. ELLIOTT (1946) 74 CLR 204

Elliott was hotelkeeper. Brother brought him empty Penfold bottles.Elliott filled them with wine for him.Before he could collect, agents of Penfolds acting as inspectors took them Penfolds sued Elliott in trespass and conversion.

Dixon J.

Not trespass because no infringement of possession Not conversion, because no act nor intent inconsistent with appellants right to possession and nothing to impair or destroy it

Penfolds bailors of bottles; brother was bailee. In distribution of Penfolds wines, each successive merchant or trader had implied authority to create a bailment.Acts repugnant to bailment could found action for conversion but not trespass.Filling the bottles and returning them to person in possession not repugnant to bailment. Filling bottles did not involve exercise of dominion.No intention to take property or deprive Penfolds of title.Handing them to officials bowing to authority, not a sale. Temporary and harmless use at the request of and for the benefit of a person in possession

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Westrac Equipment P/L v. “Assets Venture” (2002) FCA 440

Action in Admiralty,by P - writ in rem against the ship Assets Venture (Vessel) - damages for loss Caterpillar D6M bulldozer (the machine) in course of a voyage between Christmas & Cocos Keeling Islands.

P (importer and distributor heavy earthmoving equipment) made contract with Government to supply machine. Title not to pass until machine delivered. Arranged carriage with Z.(D2)D2 supplied 20 foot bolster and chains to attach to machine to make it ready for transportation. Arranged transport to Fremantle, went on board Libra Australia to Malaysia and transshipped to Assets Venture for voyage to Cocos. Stowed in No 1 hold. Decision made in course of voyage to discharge and load at Christmas Island on the way to Cocos instead of the way back. Machine taken from hold and stowed on No 1 hatch cover for remainder voyage. Vessel left Christmas Is. late Dec 1. Early Dec 3, the crew noticed that bolster and machine not on board.Claim by P in bailment and negligence against Vessel owners (D1); damages for breach of contract, bailment and negligence against D2.

Lee J:

D1 were sub-bailee of machine for reward even though it took possession under arrangements between D1 and D2 and not directly with P. Had notice that D2 arranging carriage for a third party, not itself-regular course of business between them for carriage for others.

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Westrac Equipment P/L v. “Assets Venture” (2002) FCA 440(2)

D1,sub-bailee, liable if loss occurred whilst machine in their possession unless they could show they had taken reasonable care of the machine or its failure to do so was not the cause of loss….same duty as direct bailee. D1 did not adduce evidence, did not establish on documents, or cross examination it had exercised reasonable care. Judge accepted evidence of marine surveyors that D1 had not taken necessary care in securing the bolster to hatch cover…adequate lashing points should have been welded plus blocks to stop lateral movement. No observable residue of any welding sites and log made no record. Only 20 minutes between closing of hatch cover and sailing and 3 hours required for adequate welding.D1 pleaded loss caused by act of God and not breach…judge found it was an ordinary event to expect heavy roll and pitch in ocean swells.D2 was quasi bailee…did not take actual possession….same duty as D1….there was no substitution of D1 for D2 as D2 retained overall responsibility for carriage.

Measure of damages is amount required to restore P to position it would have been in but for the breach. Loss of profit not appropriate because it was a singular sale modified to order and not situation where loss of machine meant loss of opportunity to effect a further sale. Correct measure is cost of replacement machine including cost of modification and further costs incurred in meeting specifications of contract made with department plus freight and insurance plus interest for delay period for loss of use of money.

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EDWARDS V. AMOS (1945) 62 WN (NSW) 204

Mr. Jones had refrigerator from SCC on HP. Purported to assign to Miss Edwards 2.8.43. Delivered it to Miss E. She handed it to Amos, for safekeeping 10.8.43, SCC agreed to substitute Mrs J as hirer. Mrs J paid out what was owing and became owner. Mrs J claimed refrigerator from Amos. Amos gave it to her. Miss E sued Amos.

Herron J No legal title passed on assignment. Normally bailee cannot dispute bailor’s title. Very foolish to take the risk Has onus to prove better title of person he gave goods Bailee can plead jus tertii (the right of a third person) in 3 cases: 1. Where he defends on behalf of and by authority true owner 2. He committed the conversion by authority true owner 3. Where he has already made satisfaction to true owner by returning property

In this case onus discharged. Mrs. J entitled to refrigerator

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BAILMENT EXCLUSION CLAUSES

BAILOR AND BAILEE CAN AGREE TO MODIFY

WAS TERM AGREED TO BY BAILOR? IF SO, MEANING? EACH CASE DETERMINED ON OWN FACTS. A FEW PRINCIPLES: DISPLAY OF NOTICES Mere display not enough.Bailor must have agreed to terms Or, be taken to have done so. Large letters, prominent location, Chance to read and proceed or Small print on tickets

CONSTRUCTION AGAINST BAILEE …in case of ambiguity, against the party asserting it

TICKETS Did Bailor know document contained contractual conditions? Did Bailor think it was a receipt only?

FUNDAMENTAL BREACH Only relevant now to construction Deviation outside contract not covered by exemption. SUB BAILMENTS Sub-bailee sometimes can rely; sometimes not, mostly not.

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EXCLUSION OF LIABILITY

1. The person seeking to rely on an exemption clause must establish it has become part of the contract by showing either:

That it was included in a contract signed by the other; or That he or she had taken steps which were reasonably sufficient in

the circumstances to give notice; or That the parties had intended to contract on the same basis as

before.

2. If the nature of an exemption clause is misrepresented, the person seeking to rely on it will not be permitted to do so.

3. An exemption clause will be construed strictly-any ambiguity against the person seeking to rely on it.

4. An appropriately worded exemption clause can exclude a party from liability for negligence, although it will not normally be construed as doing so in the absence of clear words to that effect.

5. Exemption clauses will not normally be construed as limiting or excluding liability for acts done outside the terms or scope of the contract. Thomas

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Exemption Clauses

Whether a particular exemption clause governing a bailment effectively excludes liability for breach of either a party’s common law duties or contractual obligations all depends on whether, on proper construction, clause is wide enough to cover breach in question. See Nissho Iwai Australia Ltd v. Malaysian International Shipping Corp Berhardt (1989) 167 CLR 219, 227.

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THOMAS NATIONAL TRANSPORT (Melb.) PTY LTD v. MAY & BAKER (Aust) Pty Ltd (1966) 115 CLR 353

TNT regularly employed subcontractors to pick up goods around Melbourne and transport them to their central depot; which closed at 5.30pm. On the day in question the subcontractor collected the goods and finished around 5.40. As he was too late, he took his loaded truck home as he had been directed to do by TNT when he was too late. He backed it into his garage but in the early hours of the morning a fire broke out damaging the goods.

In an action for damages, the HC held that it was implicit in the contract between TNT and the customer that their goods would be taken to and received by the depot. Accordingly, taking the goods home was an unauthorised departure or deviation from the terms of the contract and precluded TNT from relying on the exclusion clause in the contract.

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BAILMENT and EXCLUSION CLAUSES

Kamil Export (Aust) Pty Ltd v. NPL (Aust) Pty Ltd (1996) I VR538

Shipper shipped goods from Melbourne to Guam and other goods from Melbourne to Nauru, with same carrier. In Guam goods were unloaded into warehouse and released to consignee without bill of lading. In Nauru goods were also unloaded into warehouse and 11/20 pallets released with shippers consent to consignee without production of bill of lading. Remaining 9 released without production of BL. Shipper sued carrier for damages for loss of Guam goods and loss of 9 pallets of Nauru goods.

Carrier relied on exemption clauses in bill of lading which also contained clauses which made it clear that the carrier would not only transport the goods from port to port but would also "deliver" them.Implied term that a carrier will deliver only in exchange for the bill of lading….long practiced understanding in merchant shipping.Specific clauses agreed can defeat the object of the contract of carriage, …e,g, negligence perhaps…..but not here. Held not to cover deliberate conversion. "The question is ordinarily whether, on the proper construction of the contract, it can be said that the language of the exemption clearly applies to the event or kind of event which has actually happened, notwithstanding that its effect may defeat the object of the carriage contract".

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Exclusion Clause in Kamil Export v. NPL

"The carriers obligations in respect of the goods shall begin when the goods are accepted at the ocean vessel's rail at the port of lading and shall continue until the goods are discharged at the ocean vessel's rail at the port of discharge. The Carrier shall not in any circumstances whatsoever be liable for any loss or for delay or damage to the goods (whether in his actual or constructive possession or not) howsoever caused occurring before they are accepted at the ocean vessel's rail at the port of loading or after they are discharged at the ocean vessel's rail at the point of discharge.

The Carrier may at any time and for any purpose whatsoever discharge the goods or any part thereof from the vessel whether before or after sailing from the port of lading and/or land or store the same either on shore or afloat and/or trans-ship or forward the same by sea, air and/or land. In any such case, the Carrier shall not be liable for any loss, damage or delay howsoever caused to the goods arising after discharge from his vessel."

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BAILMENT AND LEGISLATION

INTERACTION examples TPA S. 74…warranty that services will be rendered with due care and

skill and where purpose known, reasonably fit for same. Note that by 74(3) it does not apply to transportation of goods for business, trade, profession.

PAWNBROKERS AND SECOND-HAND DEALERS ACT 1996 (NSW) COMMON CARRIERS ACT 1902 (NSW)…common carrier not liable for loss of

valuable items if value exceeds $20. TRANSPORT ADMINISTRATION ACT 1988 (NSW) …..limits liability. CIVIL AVIATION (CARRIERS LIABILITY) ACT 1959 (CTH) implements treaty

obligations for international carriage-limits liability to particular amounts for both international & domestic. See also CARRIAGE OF GOODS BY SEA ACT 1991

INNKEEPERS ACT 1968 limits liability. INDUSTRIAL RELATIONS ACT-taxis INCOME TAX ASSESSMENT ACT-employee? Commissioner of Taxation of the

Commonwealth of Australia v. De Luxe Red & Yellow Cabs Co-operative (Trading) Society Ltd & Ors (1998) 361FCA.

SALE OF GOODS ACT….Can be very relevant to understanding who has title Matthew Short & Associates Pty Ltd v. Riviera Marine (International) Pty Ltd and Anor (2001) NSWCA 281.

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Commissioner of Taxation of the Commonwealth of Australia v. De Luxe Red & Yellow Cabs Co-Operative (Trading) Society Ltd & Ors (1998) 361FCA

Were payments to taxi drivers by taxi operators constitute “salary or wages” under the Income Tax Assessment Act? If so, taxi operators required to deduct income tax and pay superannuation guarantee charge.

Is the relationship between operators and drivers one of employment or bailment?

Per Beaumont, Foster and Sackville JJ. It is one of bailment.

Commissioner’s argument was that a taxi driver does not conduct their own business operation but provides labour as an integral part of the operator’s business. Most services provided by operator-base, registration,maintenance, panel beating, code of conduct, registers, advertising, charge cards. Driver responsible for petrol and washing.Industrial Relations Act defines relationship as one of bailment. Awards based on that relationship.Other cases and aspects of general law have proceeded on that basis.

When circumstances viewed in setting drivers are bailees notwithstanding level of control of operator. Such reservation of control is not necessarily inconsistent with a bailment relationship.

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RE: Commissioner of Taxation of the Commonwealth of Australia v. De Luxe Red & Yellow Cabs Co-

operative (Trading) Society Ltd & Ors (1998) 361FCA.

INDUSTRIAL RELATIONS ACT 1996 -

SECT 307 Contract of bailment meaning

1. For the purposes of this Chapter, a contract of bailment is a contract under which:

a) a public vehicle that is a taxi-cab is bailed to a person to enable the person to ply for hire in a transport district established under the Transport Administration Act 1988, or

b) a public vehicle that is a private hire vehicle is bailed to a person to transport passengers in such a transport district.

2. If a person:

a) is in possession of a private hire vehicle otherwise than as a bailee or employee, and

b) is, in such a transport district, engaged in transporting passengers in the private hire vehicle pursuant to a licence under the Passenger Transport Act 1990 of which the person is not the holder, this Chapter applies to and in respect of that person in the same way as it would apply if the person were in possession of the private hire car under a contract of bailment made with the holder of the licence.

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Matthew Short &Assoc. P/L v. Riviera Marine (Int.) P/L &

Anor (2001) NSWCA 281. The Facts

Riviera,manufacturer motor cruisers, sold some o/s, exporting through Pt Botany. In1997 Mr&Mrs S, of US caused broker,B to procure Riviera to build motor cruiser (34/18). At time of contract, boat “future goods” within meaning of SOGA. Dealing followed standard pattern. When boat ready, Riviera booked arrangements with Short, the carrier, for 34/18 to be shipped to California on “Direct Currawong” leaving Aug 97. Once again, standard dealings between R and S. Because of IR situation at Botany, Short could not have his own employees take 34/18 alongside ship and employed contractors. Campbell had a low loader to transport it alongside and then a crane would load.Fax by Riviera to Boland advising on shipment.Further to your fax of this afternoon please find hereunder indicative costs to cover the 2 shipments as requested. (Riviera will be including transport to wharf Sydney/crane etc on their invoice as F.O.B)

Campbell drove under archway. Superstructure of 34/18 struck large metallic sign attached to the archway causing considerable damage. Smiths refused to take a repaired boat and a different cruiser was sent.

Riviera sued Short under a contract of Bailment….In or about early August 1997, the Plaintiff and First D entered into a contract of bailment….4 implied terms in that contract….breached and therefore claimed damages.

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Matthew Short &Assoc. P/L v. Riviera Marine (Int.) P/L & Anor (2001) NSWCA 281. The Facts cont.

Riviera also sued Campbell in negligence…failure to keep a proper lookout, failure to notice and observe position of sign, failure to avoid driving under the sign, failure to detour around the sign, failure to drive at a sufficiently low speed so as to permit stopping at the moment of impact, failure to stop at impact.

There was a contract between Short and Campbell.Clause 3: Subject to 18 and 20 hereof the carrier shall not be under any liability whether in tort or in contract for any loss of or damage to or misdelivery, delay in delivery, concealed damage, deterioration, contamination, evaporation, non-delivery of goods held in its care, custody or control,or any consequential loss arising therefrom howsoever caused including but not limited to any negligence or breach of contract by the carrier. Clause 21: Indemnity

Who owned 34/18 when the accident happened?Intention of the parties?

If Boland/The Smiths, then Riviera would lack any title to sue.Reference to FOB, COD, payment made before delivery. Belonged to Riviera until it was swung “over the rail”? Parties assumed SOGA applied.Consideration of ss. 6, 21, 22, 23 particularly Rule 5, 25, 35. See the consideration of whether there were contracts of bailment, and if so between which parties. Note insufficient “possession” with Short for there to be Bailment in that case.

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Matthew Short &Assoc. P/L v. Riviera Marine (Int.) P/L & Anor (2001) NSWCA 281.

Riviera claimed damages from Short and Campbell and won. Short was ordered to indemnify Campbell under a clause in the Conditions of Carriage. Short appealed and Campbell cross-appealed.

Held by Heydon JA (MeagherJA and IPP AJA concurring) allowing appeal and dismissing cross appeal;

Short was not liable to Riviera for the damage to 34/18 by Campbell’s negligence. If Riviera was owner of 34/18 at the time of accident, Riviera and Short were not in legal relationship of bailment since Short did not have possession of 34/18 as distinct from some other form of relationship with it. Short was not in breach of any duty to Riviera because Campbell was an apparently capable carrier.Riviera owned 34/18 at the time of the accident. Sale of Goods Act. Contract for future goods, time fixed by s. 23 r 5 replaced by time of earlier payments if parties so intended.

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Matthew Short &Assoc. P/L v. Riviera Marine (Int.) P/L &

Anor (2001) NSWCA 281. Cont.

Contemporary practices of parties and documents (fax referring to FOB) used indicated intention for property to pass when 34/18 loaded onto freighter. Property did not pass when 34/18 came into the possession of Short or Campbell by reason of s.23 r5. The freighter owner was the relevant “carrier” for purposes of s.23 r 5(2), not the drivers on the way to loading on the freighter. Only delivery to the freighter owner was for “the purpose of transmission to the buyer”.

No sub bailment by Short to Campbell on terms which would defeat Riviera’s claim against Campbell. Short was not a bailee and therefore Campbell was not a sub-bailee. Insufficient evidence that Riviera consented to the terms contained in the “Conditions of Carriage” between Short and Campbell.

The exclusion of liability term in Conditions of Carriage between Short and Campbell did not defeat Riviera’s claim against Campbell because although Short contracted with Campbell in fulfilment of its duties to Riviera, Short nonetheless contracted with Campbell as principal not agent for Riviera. Indemnity applied as between Short and Campbell.

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What if bailed goods contain other goods?

e.g. I hand you a locked briefcase containing important papers. Are you the bailee of the briefcase alone or of both the case and the papers?

If it is reasonable to assume the item handed over contained goods of the same type that it did in fact contain, the bailment extends to contents.

This was the case in Moukataff v. BOAC (1967) 1 Lloyd’’s Rep 396 where 20,000 pounds in banknotes sent by registered mail from London to Kuwait was stolen by a baggage handler. BOAC denied liability arguing that while it might have been a bailee of the mailbags, it was not a bailee of their contents. They failed. The court held that because BOAC knew that the mailbags contained mail and in particular that red labelled registered mailbags contained valuables, it had become a bailee of both.

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What if bailed goods contain other goods?

e.g. I hand you a locked briefcase containing important papers. Are you the bailee of the briefcase alone or of both the case and the papers?

If it is reasonable to assume the item handed over contained goods of the same type that it did in fact contain, the bailment extends to contents.

If it is NOT reasonable to make that assumption, the only way the bailment can extend is if the bailor made specific mention at the time of delivery. In Mendelssohn v. Normand Ltd (1970) 1 QB 177, Mendelssohn was prevented from locking his car by a car park attendant. He told the attendant that it contained valuables and asked him to ensure it was locked after being parked. When he returned, he found it unlocked and the valuables gone. The company was held liable. It had been a bailee of both the car and its contents because it had been put on notice that the car contained valuables.

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COMMON CARRIERS LIABLE WHETHER NEGLIGENT OR NOT

DOES CARRIER HOLD HIMSELF OUT AS WILLING TO PROVIDE SERVICES TO ALL WHO CHOOSE TO ENGAGE HIM? OR DOES HE MAKE KNOWN HE RESERVES RIGHT TO REFUSE? DOES HE CARRY GOODS? (people only?)

Private carrier free to negotiate conditions of carriage. Only liable if cannot disprove negligence Duties: Carry goods for anyone that are properly packed.Carry the goods by the usual route. Deliver to consignee without unreasonable delay.Deliver to consignee in accordance with instructions of consignor Rights: To be informed if goods dangerous.Can require payment in advance. Has a lien for carrying charges.Can refuse carriage if dangerous or insufficiently packed Exceptions to absolute liability: Acts of God.Acts of enemies of state or seizure public authorities Faulty or defective packing.Inherent fault or deterioration goods Statute: Common Carriers Act 1902 (NSW) Transport Administration Act 1988(NSW) (railways) Australian National Railways Commission Act (Cth) 1983 Civil Aviation (Carriers’Liability) Act 1959 (Cth) Civil Aviation (Carriers’Liability) Act 1967 (NSW) Carriage of Goods by Sea Act 1991 (Cth)

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COMMON INNKEEPERS LIABLE EVEN WITHOUT NEGLIGENCE

Provides lodging and sustenance for travellers Must be Guest and not lodger or boarder Has a lien

Statute: Amends common law duties Innkeepers Act 1968 (NSW): 1. Keeping of an inn shall not attract common law duties, liabilities and

rights 2. Nothing in act affects liability for default, neglect or wilful act 3. Abolishes distinction for liability purposes between damage and loss 4. Excludes vehicles and live animals from liability and liens, subject to

(2) 5. Limitation of liability provided prescribed Notice conspicuously

displayed in reception and in room

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BAILMENT QUESTIONS

1. How does bailment differ from sale?

2. How does bailment differ from a licence?

3. How is a bailment created?

4. How can a bailment be brought to an end?

5. Can a bailee limit liability for negligence by an exclusion clause?

6. What is a common carrier?

7. What is the difference between a common carrier and a private carrier?

8. What is the difference between a guest and a lodger?

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BAILMENT?

1. A borrows $100 from B

2. B, a phone card collector, deposits her collection with the bank for safekeeping.

3. C leaves his cat with a neighbour while away on business.

4. D hires a car at Sydney Airport.

5. E smashes his car and books it into a garage for repairs.

6. F pawns her gold watch.

7. G posts a parcel to her son at Christmas.

8. H lends his bicycle to his friend.

9. J uses a trolley at the supermarket.

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BAILMENT PROBLEM

George left his Porsche overnight with Airport Parking while he flew to Sydney for a meeting. He paid $20.

Airport Parking parked the car for him in a padlocked garage, which had a burglar alarm, that was switched on at night plus a security company conducted regular patrols.

Unfortunately, there was a power failure that night which blacked out the suburb where Airport Parking was located and shut down the alarm.

When a thief broke into the garage by cutting through the padlock, the alarm did not work and he was able to steal George's car. The security company was attending another call at the time.

Advise George.

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BAILMENT PROBLEM

Anna left her ball gown with Rapid Dry Cleaners for dry-cleaning. She requested that special care be taken with

beads and sequins. An employee said that all goods left for dry cleaning would be treated with due care and skill but that the dry cleaners did not accept responsibility for clothes left with them. On the back of the ticket Anna was given there was a clause to the effect that all care would be taken but no responsibility for loss or damage accepted by the dry cleaners.

Without getting permission from Anna, Rapid sent the gown to another cleaner that specialised in ball gowns.

When Anna got the dress back she discovered that some of the beads and sequins were missing and that the dress had been stained.

Advise Anna.

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The chainsaw problem

Bob lent his chainsaw to Charlie, who wanted it to lop a large tree in his front yard. The saw had a tendency to jam if it was not kept properly lubricated but Bob showed Charlie what to do and also lent him his specially adapted oil can. After Charlie had lopped the tree he decided to cut up some old timber joists for firewood. Unfortunately a nail had broken off inside one of the joists and, as Charlie cut through it, a number of the saw’s teeth were badly damaged.

Notwithstanding this, Charlie lent the saw to Dick who wanted to use it to clear some scrub. Dick’s work was interrupted by a sudden storm and he ran for cover leaving the saw out in the rain. When he attempted to restart it some time later it would not work. He pulled it to pieces in an attempt to fix it but then found that he could not put it together again. Bob has asked Charlie to return the saw. Charlie, in turn, has asked Dick to return it. Dick has told him that he has not finished with it and that he will hand it back “in a couple of days”.

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The chainsaw problem (2)

The chainsaw situation:

What are the respective positions:

(bailor, bailee, head bailor, sub bailee etc) of Bob, Charlie, Dick?

What are the respective duties and liabilities of Bob, Charlie, Dick?

What breaches of duty have occurred and by whom?

What actions could be instituted and by whom to remedy those breaches?

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BAILMENT PROBLEM

Robin lent her neighbour Pat her lawnmower.

The mower did not have a guard on it and she told Pat that when mowing she must wear safety glasses to protect her eyes from stones being thrown out by the blades.

Pat forgot Robin's warning and during the course of mowing, was struck in the eye by a stone. She has been told that the eye cannot be saved.

Advise Pat.