Matthew Short & Associates Pty Ltd v Riviera Marine (International) Pty Ltd and Anor

MEAGHER JA: I agree with Heydon JA.

HEYDON JA: Background This is an appeal from orders made by Mahoney DCJ on 19 May 2000, after a trial on 16-17 May 2000, that there be a verdict and judgment in favour of the plaintiff/first respondent (“Riviera”) against the first defendant/appellant (“Short”) and the second defendant/second respondent “(Campbell”) in the sum of $112,632.81 and various related orders. The sum of money reflected the cost (with interest) of repairing a motor cruiser manufactured by Riviera and damaged while being moved on a truck owned by Campbell pursuant to a contract between Campbell and Short.

Riviera carried on business at Labrador, Queensland, as a manufacturer of motor cruisers. Many of its motor cruisers were exported through the Port of Botany in Sydney to overseas small ship brokers. One of these brokers was Mr Richard Boland, who conducted his business under the name Richard Boland Yacht Sales in California.

Where motor cruisers manufactured by Riviera were exported through the Port of Botany, a regular pattern of conduct operated. Riviera would procure Short to book space on a freighter leaving the Port of Botany. Riviera, using its own semitrailer driven by an employee, would transport the motor cruiser to a parking area some hundreds of metres from the gateway of the Port of Botany. By reason of industrial conditions within the Port of Botany, it was not open to Riviera to take the motor cruiser into the Port of Botany alongside the freighter which was to transport the motor cruiser overseas except at prohibitive expense. However, Campbell was permitted to use its low-loader and driver to transport the cruiser onto the wharf alongside the freighter much more cheaply. Hence Riviera would procure Short to arrange for a mobile crane operator (in the present instance Botany Cranes) to be at the parking area together with a low-loader and driver (almost invariably supplied by Campbell, as it was in the present instance). The mobile crane would unload the cradle from the truck, unload the cruiser from the truck and position it in the cradle, place the cruiser and cradle on a flat rack (which is a shipping container sized steel base), and then lift the cruiser, cradle and flat rack onto the low-loader. Short would provide the driver of the low-loader with an “export receivable advice” (“ERA”), in triplicate: this was needed so that the low-loader with its load could pass through the gate and onto the wharf alongside the freighter.

By a document dated 12 August 1996, Short as “Consignor” and Campbell as “Carrier” agreed on Conditions of Carriage in relation to goods transported from the parking area to the freighter from time to time. Clause 3(1) provided: “Subject to cll 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 provided: “The Consignor will indemnify and keep indemnified the carrier or any other subcontractor, company, firm, person or body through whose hands the goods may pass against all claims for loss, damage, injury to any property or person arising from the carriage of the goods or the noncompliance with any special conditions and any laws, by-laws and regulations including but not being limited to those set out in clause 2 hereof and without limiting the generality of the foregoing will pay on demand to the carrier the full value of any other goods carried by or for the carrier and destroyed or damaged as a result of the carriage of the goods of the consignor or of any noncompliance as aforesaid.”

In mid 1997 Mr and Mrs Bill Smith, residents of the United States of America, caused Mr Boland to procure Riviera to build a motor cruiser conforming to particular specifications stipulated by the Smiths. That motor cruiser came to be known as 34/18. The relevant order, in the form of a “Build List” dated 25 June 1997, was signed by Mr Boland on 29 June 1997. Dealings between Riviera and Short on the one hand and Mr Boland on the other, like dealings between Riviera and Short, followed a standard pattern to be examined more closely later. Events in relation to the performance of the 34/18 contract followed that standard pattern until 34/18 was damaged as described below.

On 3 July 1997 Mr Short informed Mr Boland that one of the options for shipping 34/18 to California would be to book space on the “Direct Currawong”, leaving the Port of Botany on 12 August 1997.

On 4 July 1997 Mr Short informed Mr Boland, as was the fact, that he had booked 34/18 to be shipped on the “Direct Currawong” leaving on 12 August 1997.

On 16 July 1997 Mr Short again advised Mr Boland by fax that 34/18, together with another motor cruiser, was booked to be shipped on board the “Direct Currawong”, the estimated departure date still being 12 August 1997. In some respects the terms of that fax are important: “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.) Ocean freight A$13975/R34 on 40 ft fr A$19180/R43 USA terminals + US$380/40 ft flat +US$4050/R43 (Flat) (US$1250/M3) Surveyor A$450 A$450 Marine insurance (if required from US) additional upon request. Both boats booked ex port Sydney per (ANZDL) Direct Currawong V322N ETD 12/8/97 with ETA 1/9/97 Oakland (water discharge).”

On 4 August 1997 Mr Short contacted Botany Cranes and requested them to supply a 28 tonne crane at 6am on 12 August 1997 at the parking area. On the same day he contacted Campbell and requested it to arrange for a flat rack to be present at 7am on 12 August 1997.

On 8 August 1997 Mr Boland arranged for funds for US$152,842.57, being the purchase price of 34/18, to be paid into an American bank account in the name of Riviera.

On 10 August 1997, 34/18 was loaded onto Riviera’s truck at Labrador. Shortly before, Mr C A Jones, Production Manager of Riviera, had informed Mr Matthew Short as to when 34/18 would be leaving Labrador.

Shortly after 6am on 12 August 1997, a Riviera truck arrived at the parking area at the Port of Botany with 34/18. The Botany Cranes mobile crane lifted 34/18 from the truck and placed it in the cradle. Mr Short then assisted Mr Barry-Cotter (a director of Riviera) and Mr Andrews (the employee of Riviera who had driven the truck from Labrador) to secure 34/18 to the cradle. The driver of the Campbell truck then positioned it close to 34/18. The crane then lifted the cruiser onto the flat rack, and Messrs Short, Barry-Cotter and Andrews lashed the cradle to the flat rack. These operations were complete by 7.40am.

Mr Short then completed three copies of an ERA in relation to 34/18 (parts of which had already been filled in by Campbell) and gave them to the Campbell truck driver. (The usual procedure was for the three copies to be given to a wharf representative; one signed copy would be returned, and this would be sent by Campbell to Short as proof of delivery). The Campbell truck driver then drove off in the direction of the freighter.

The driver negligently drove the truck beneath an archway. The superstructure of 34/18 struck a large metallic sign attached to the archway. This caused considerable damage to 34/18.

At about 8am an employee of Campbell told Mr Short of the accident. Mr Short arranged for Botany Cranes to bring its crane back so as to avoid disruption to traffic coming into the terminal at the Port of Botany. Short paid for the services of Botany Cranes in this respect and did not seek to claim the cost either from Riviera or Campbell.

Mr Boland and the Smiths were advised of the damage to 34/18. The Smiths were irate and said they did not want the cruiser to have repaired items on it, only new ones. It was decided not to supply Mr Boland with 34/18, but with a replacement cruiser called 34/14. This was shipped from Sydney on 2 September 1997. The Pleaded Case

Against Short, Riviera claimed damages (being $94,451 incurred in repairing 34/18) on the basis of the following allegations in the Amended Ordinary Statement of Claim: “7. At all material times the Plaintiff was the owner of a Riviera R34/018 cruiser (‘the Cruiser’). 8. In or about early August 1997, the Plaintiff and the First Defendant entered into a contract of bailment (‘the Agreement’) whereby it was agreed that the First Defendant would arrange for the loading of the Cruiser on board the vessel ‘Direct Currawong’ (‘the ship’) on 12 August 1997, for transport to San Francisco in the United States of America. Particulars The Agreement was partly express and partly implied. To the extent that the Agreement was express, it was partly in writing and partly oral. The written part of the Agreement consists of correspondence between the Plaintiff and the First Defendant. The oral part of the Agreement consists of a conversation between the Plaintiff by its employee and the First Defendant by its employee on or about August 1997. The substance of the conversation relevantly was that the Plaintiff asked whether the First Defendant would arrange for the loading of the Cruiser on board the ship on 12 August 1997, for transport to San Francisco in the United States of America and the First Defendant said it would. To the extent that the Agreement was partly implied, the implication arises from: (a) the conversation between the Plaintiff and the First Defendant already particularised; (b) the previous course of dealing between the Plaintiff and the First Defendant; and (c) operation of law. 9. In the premises there were implied terms of the Agreement that: (a) the First Defendant would be entitled to its usual charges, or, alternatively, to fair and reasonable charges for the arrangement of the loading of the Cruiser; (b) the First Defendant would deal with the Cruiser safely; and (c) the First Defendant would not deal with the Cruiser nor allow the Cruiser to be dealt with so as to endanger it or the Plaintiff’s interest therein; (d) the First defendant would give all necessary briefings and instructions to the Second Defendant so as to meet the First Defendant’s obligation under (b) and (c) above including, but not limited to, briefing and instructing drivers of the Second Defendant’s trucks to drive around the overhead road sign. 10. In the premises, the First Defendant owed a duty to the Plaintiff to deal with the Cruiser safely and not allow the Cruiser to be dealt with so as to endanger it or the Plaintiff’s interest therein. 12. Pursuant to the Agreement, on 12 August 1997, the Plaintiff caused the Cruiser to be delivered to the First Defendant and the First Defendant accepted the Cruiser accordingly by removing the Cruiser from the vehicle of the Plaintiff. 17. In the premises, the First Defendant is in breach of the terms of the Agreement alleged in sub-paragraphs 9(b) and 9(c) and 9(d). 18. Further, and in the alternative, the First Defendant is in breach of the duty alleged in paragraph 10.”

In short, paragraph 8 alleged a contract of bailment; paragraph 9 alleged four implied terms in that contract; and paragraph 10 alleged that “In the premises” - i.e. the terms of the contract of bailment - Short owed a duty not to allow the cruiser to be dealt with so as to endanger it.

Short’s Defence put in issue the material allegations and denied any negligence on its part.

As against Campbell, Riviera claimed damages by reason of the following allegations: “11. Pursuant to the Agreement, on or about 4 August 1997, it was agreed (‘the Sub-Agreement’) between the First Defendant and the Second Defendant that the First Defendant would deliver to the Second Defendant the Cruiser to be transported from the point of delivery to the wharf at Port Botany. Particulars The Sub-Agreement was partly express and partly implied. The express part of the Sub-Agreement consists of a facsimile letter dated 4 August 1997 from the First Defendant to the Second Defendant and the documents referred to therein. To the extent that the Agreement was implied, the implication arises from: (a) the previous course of dealing between the First Defendant and the Second Defendant; and (b) operation of law. 13. Pursuant to the Sub-Agreement, on 12 August 1997, the First Defendant caused the Cruiser to be delivered to the Second Defendant by placing the Cruiser onto the vehicle of the Second Defendant and the Second Defendant accepted the Cruiser accordingly. 14. At all material times the Second Defendant owed a duty to the Plaintiff to exercise all due care, skill and diligence in dealing with and handling the Cruiser. 19. In the premises the Second Defendant is in breach of the duty alleged in paragraph 14. Particulars of Second Defendant’s Breach (a) failure to keep a proper lookout of the road ahead; (b) failure to notice and observe the position of the sign; (c) failure to avoid driving under the sign; (d) failure to detour around the sign; (e) failure to drive at a sufficiently low speed so as to permit stopping at the moment of impact; (f) failure to stop at the moment of impact.”

Campbell in its Amended Defence put in issue the material allegations. But it went further. It specifically put in issue Riviera’s allegation that it was entitled to sue as owner of 34/18. It also relied on clause 3 of the 12 August 1996 Conditions of Carriage, operative in contract as between it and Short, as a defence against Riviera on various bases.

Short cross-claimed against Campbell for indemnity or contribution. Campbell cross-claimed against Short, and in particular relied on clause 21 of the 12 August 1996 Conditions of Carriage. The Trial Judge’s Reasoning

At the trial it was common ground that Campbell’s driver had been negligent and that the sum of $94,451 was a fair and reasonable sum for damages.

Many of the trial judge’s conclusions have not been challenged. There was no challenge to any of his findings of primary fact; nor to his rejection of the implied terms pleaded in paragraph 9(c)-(d) of the Statement of Claim; nor to his conclusion that the Law Reform (Miscellaneous Provisions) Act 1946 s 5 did not apply on the cross-claims.

As between Riviera and Short, the trial judge found: (a) that Riviera was the owner of the goods at the time of the accident; (b) that, since the implied terms alleged in paragraph 9(c)-(d) of the Statement of Claim were rejected, “Riviera’s claim in contract” failed; (c) that another claim he identified, being a “claim in bailment”, succeeded on the basis that Mr Short’s conduct on 12 August in assisting with unloading and loading and in supplying the ERA “amounted to a taking of possession such as to justify the finding that Short was the bailee of 34/18 from Riviera and that Campbell became a sub-bailee from Short”.

As between Riviera and Campbell, the trial judge said that all “of the authorities point to the fact, and I do not understand it to have been argued before me to the contrary, that, in the light of such findings, both Short and Campbell are liable as bailee and sub-bailee respectively to Riviera for the damage caused by Campbell’s driver to 34/18.” He thus did not deal in terms with Campbell’s contention that it could rely on clause 3 of the Conditions of Carriage against Riviera: on that topic he summarised the submissions of Campbell and Riviera, but did not appear to make findings about them. However, one finding he made in relation to the cross-claims stands as an obstacle to Campbell’s success, namely that condition 3 is limited to claims in “contract or tort”, not “claims in bailment”.

On the cross-claims, after saying that the Law Reform (Miscellaneous Provisions) Act 1946 s 5 is not relevant to claims in bailment, he found that clause 21 of the Conditions of Carriage entitled Campbell to a full indemnity in relation to its liability to Riviera from Short. The Key Issues

The essential fact is that an employee of Campbell negligently damaged 34/18. For that act of negligence Campbell would ordinarily be vicariously liable to Riviera unless there is some special reason to the contrary. In one sense the entire case turns on Campbell’s attempt to escape that liability and on Short’s attempt to escape a liability which, less directly, Riviera seeks to impose on it. Campbell’s first way of escaping liability was to allege that Riviera was not the owner at the time of the accident. Its second way of escaping liability was to rely on the trial judge’s findings that Short was a bailee and Campbell was a sub-bailee, and to contend that Riviera was bound by clause 3 of the Conditions of Carriage operating in the contract between Short and Campbell. Its third way of escaping liability was to contend that Riviera was bound by clause 3 because Short entered the contract with Campbell as agent for Riviera.

The case was argued on the basis that if, at the time when Campbell’s employee negligently caused damage to 34/18, Riviera were not its owner, Riviera would lack standing to sue. Logically that is the first issue, since if it were answered adversely to Riviera, the proceedings would fail. But it is convenient not to deal with that issue first. Rather it is desirable to deal with another issue which, though logically not anterior to it, overlaps with it factually. That issue turns on the question of what relationship Short had with 34/18, and is crucial to Riviera’s case against Short. After that issue and the ownership issue have been dealt with, the remaining questions will be considered. Riviera’s Case Against Short: The Relationship Of Short With 34/18

The trial judge described Riviera’s submissions and his finding about them as follows (Red 46W-47O): “First [Riviera’s counsel] submitted that the contract between Riviera and Short was for much more than mere forwarding agency duties. He pointed to the variety of tasks which Short carried out on behalf of Riviera in the course of reserving cargo space on a ship, notifying Boland and Riviera, coordinating the arrival of the crane and Campbell’s low-loader with Riviera’s truck carrying cruiser and cradle, attending observing and assisting with the transfer of the cruiser from Riviera’s truck to Campbell’s low-loader, arranging for the marine insurance assessor to be on site and supervise the lashing of 34/18 to the cradle so as to accommodate to the requirement of Boland, attend to the payment of both Botany Cranes and Campbell out of its own funds, receiving the bill of lading from the shipping company, and finally forwarding the documentation and its own account for the total of all invoices for payment by Riviera - not forgetting that it rounded up the Botany Cranes bill to the nearest $10 when doing so. I accept his submissions that, on the evidence, Short was engaged in significantly more than being a mere forwarding agent.” The trial judge then summarised further submissions by Riviera and made the following further finding as follows (Red 48R-49K): “As learned counsel submitted on behalf of Riviera, there are different forms of possession. Some items can be held in the palm of the hand, the others are so big that they can be climbed on or sat in. In this case it has been submitted on behalf of Short that it did not take possession of 34/18 and did not assume control over it. On the evidence as to its size I am satisfied that Short, having been on site at the parking area on the morning of 12 August 1997 and carrying out the functions that he conceded he did, viz. being present and ensuring that everything went according to the arrangements he had put in place, assisting with the lashing, and finally furnishing Campbell’s driver with the ERA in triplicate - which only Short was able to do - amounted to a taking of possession such as to justify the finding that Short was a bailee of 34/18 from Riviera and that Campbell became a sub-bailee from Short. All of the authorities point to the fact, and I do not understand it to have been argued before me to the contrary, that, in the light of such findings, both Short and Campbell are liable as bailee and sub-bailee respectively to Riviera for the damage caused by Campbell’s driver to 34/18.”

Short submitted: (a) either that its sole role was to arrange for others to carry out acts in relation to 34/18, and that it never obtained possession of 34/18, or, alternatively (b) that it did not at any time obtain physical possession of the cruiser, or that if it did, at most it obtained possession for a brief period which began when or soon after Botany Cranes lifted 34/18 off the Riviera launch and ended when or just before Botany Cranes lifted 34/18 onto the Campbell low-loader.

The first limb of the argument rested on the proposition that the only engagement upon which Short entered was to arrange for others to effectuate the movement of 34/18 from Riviera’s truck to Campbell’s low-loader. Once 34/18 had moved onto Campbell’s low-loader, Campbell became bailee and it was open to the owner of 34/18 to sue Campbell for breach of its duties as bailee. Short submitted that the finding that it assisted with the lashing of the cruiser ignored evidence that it was Riviera whom Short was assisting. Short submitted that it did not at any time take physical possession of the cruiser. Physical possession of the cruiser changed a number of times during the transfer from Riviera’s truck to the time of the accident as follows: Riviera was in possession while it carried the cruiser on its own semitrailer to the parking area; during the operation in which the mobile crane lifted the cruiser from the semitrailer to the ground and from the ground to Campbell’s low-loader the crane operator had possession; when the cruiser was placed by the crane operator on Campbell’s low-loader, possession passed to Campbell.

The second limb of the argument rested on the proposition that if, in the interval between the two periods when the crane was in operation and Botany Cranes had possession, Short had possession, that was a period of possession which was “fleeting”, merely an “accidental” part of carrying out the contractual engagement to arrange the movement of 34/18, but, more importantly, a period which terminated before Campbell obtained possession (not as sub-bailee, but as bailee) and caused the damage. It submitted that the fact that it played a role in complying with procedures within the Port of Botany by issuing an ERA in no way established that it took possession of 34/18. Short also submitted that the ERA was not a document of title, and that the handing of that document to Campbell’s driver was consistent with its role as a forwarding agent engaged to arrange carriage only.

Short further submitted that the trial judge fell into error by analysing Riviera’s case against Short as a case based on “contract” (which failed with the rejection of the implied term as pleaded in paragraph 9(c)-(d) of the Amended Statement of Claim) and a distinct “claim in bailment”. Short submitted that there was no distinct claim in bailment. The contract case alleged a “contract of bailment”; it alleged no more than an agreement by which Short “would arrange for the loading of” 34/18 on the “Direct Currawong”; that allegation was in effect demurrable because it did not allege a passing of possession; and there was no separate claim in bailment which did.

Riviera answered these submissions in two broad ways. First, it defended the trial judge’s conclusion that Short, by reason of what it agreed to do and did on 12 August 1997, had possession. Secondly, it contended that it had engaged Short “to procure the carriage of the goods, not simply to arrange for other people to do that, albeit it on terms that the actual carriage was to be performed by others”. Riviera cited Emery Air Freight Corporation v Merck Sharpe & Dohme (Australia) Pty Ltd (1999) 47 NSWLR 696 at [84]-[86] per Sheller JA. Riviera said that Short’s true contractual obligation was not to organise others to transport the goods, but itself to transport them, albeit by employing sub-contractors. Riviera did accept that the Amended Statement of Claim referred to “arranging” and said “if one were held to that it would be a difficult matter”. Riviera pointed to the following facts: there was no written agreement between Riviera and Short, Riviera did not seek to control which sub-contractors Short engaged or what they did, Short in fact selected and engaged the sub-contractors in its own name and did not advise Riviera of the terms of engagement.

Riviera further submitted: “It is apparent that Short contracted as principal with the supplier of the crane. The crane invoices were addressed to Short and paid by Short. Short did not on-charge Riviera for the face value of the crane invoices; Short did not attach copies of the crane invoices to Short’s invoices to Riviera … .” While Short did not attach copies of the crane invoices to Short’s invoices to Riviera, it is not true that Short did not on-charge Riviera for the face value of the crane invoices: it did, though not to the last cent.

Riviera further submitted: “it is apparent that Short contracted as principal with the supplier of the low-loader truck. The low-loader truck invoices were addressed to Short and paid by Short. Short did not on-charge Riviera for the face value of the low-loader truck invoices; Short did not attach copies of the low-loader truck invoices to Short’s invoices to Riviera … .” Again, while it is true that Short did not attach copies of the Campbell invoices to it to the invoices it sent to Riviera, it is not true that Short did not on-charge Riviera: it did, though not to the last cent. Thus the invoice sent by Short to Riviera in relation to the loaning of 34/14 on 2 September 1997 contained a charge by Botany Cranes of $460 for the crane and $720 for the low-loader, as well as $1,136 for Short’s efforts. The absence of invoices is not significant; what is significant is the separate incorporation of charges for the activity of Botany Cranes and Campbell.

Riviera also submitted: “To the extent that the crane operators and the truck drivers were subject to instruction, they were subject to the instruction of Short: see crane invoice at Blue Book 106, which indicates that the crane was ‘to work as directed’. Further, Short seemingly had the only relevant contact with the drivers of the low-loaders providing the say-so to proceed in the terminal and supplying to the said drivers the required documentation.” The statement in the Botany Cranes invoice in question “to work as directed at boat ramp Port Botany” does not necessarily mean anything more than that Botany Cranes was to be told which cruiser was to be moved from which truck to which low-loader.

Riviera relied on some vague evidence that it had “arranged” for Short to “do the work” and had asked Short “to perform a task in its entirety”. These loose phrases, however, do not point to any particular conclusion about whether Short had possession or whether Short had to do more than arrange for the sub-contractors to do the work.

Riviera submitted that Mr Short, not it, was in control of the operations pursuant to which 34/18 was moved from the Riviera truck to the Campbell low-loader. Riviera thus placed weight on the presence of Mr Short during the unloading and re-loading. Riviera submitted that this was significantly more than freight forwarding. Riviera also relied on Mr Short’s role in seeking to overcome the disruptive consequences of the accident, and on the fact that he paid Botany Cranes to do this without charging Riviera.

In short, as part of the second part of its argument, Riviera submitted that possession was not necessary. Riviera submitted that Arcweld Constructions Pty Ltd v Smith (McInerney J, Supreme Court of Victoria, unreported, 17 September 1968, pages 36-37) is authority for a proposition in effect put thus by McInerney J: “When a principal has in his charge the goods or belongings of another in such circumstances that he is under a duty to take all reasonable precautions to convey them from point A to point B, then if he entrusts that duty to a servant or agent, he is answerable for the manner in which that servant or agent carries out his duty. If the servant or agent is careless so that the goods are damaged, the master is liable.” Riviera submitted that in this case it was Short’s duty to take all reasonable precautions to convey the goods, and Short had entrusted it to Campbell. He submitted that that proposition was supported by Metaalhandel JA Magnus BV v Ardfields Transport Ltd [1988] 1 Lloyd’s Rep 197 at 202-203; Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 at 229 and 242-3 and Palmer, “Quasi-Bailment and Possessory Title” (1995) 3 Tort L Rev 186 at 192-196.

The first of Riviera’s two contentions that Short was liable - that accepted by the trial judge, namely that Short had possession by reason of the considerations referred to by the trial judge - is erroneous. The considerations relied on by the trial judge and Riviera did not point to Short having possession as distinct from having some other relationship with 34/18. The presence of Mr Short and the fact that he may have supervised the process of unloading and loading do not establish that he had possession of 34/18. While Mr Short may have ensured that the crane driver picked up the correct cruiser and re-loaded it onto the correct low-loader, the only period when he was in control, if he was ever in control, was while the cruiser was being strapped to the cradle. Even if he had possession during that interval, it does not follow that he had it earlier or later, nor that he had it when the Campbell driver caused the damage. Indeed it is not even clear whether he was in control in that interval, since Mr Andrews and Mr Barry-Cotter were also participating in the work. Mr Short’s conduct after the accident does not establish that he had possession. That conduct was no more than a sensible attempt to overcome the consequences of the crisis caused by Campbell’s driver: for this a crane was necessary, and it was Short which had been in contact with Botany Cranes. His failure to charge Riviera for the work is not significant in determining who had possession: it is capable of being explained as an attempt to preserve Riviera’s commercial goodwill.

The second contention advanced by Riviera for Short being liable - that Short had not contracted with Riviera to arrange for others to carry the goods, but had contracted to procure that the goods would be carried - should be rejected. It was not pleaded by Riviera. Indeed Riviera pleaded a contrary case, which the trial judge accepted, that Riviera and Short agreed that Short “would arrange for the loading of” 34/18. Riviera in substance admitted this, instead urging that the pleadings be approached “with some degree of tolerance”. Counsel for Short submitted that had the new case been pleaded, evidence might have been called at the trial which might possibly have answered it. He did not point to any specific evidence of that type, as distinct from arguments available on the existing evidence, but that is not uncommon when a fresh point is raised on appeal. Counsel for Short on the appeal had not appeared at the trial. It is entirely possible that had the new case been pleaded the factual circumstances relevant to its acceptance or rejection would have been more fully investigated. In answer to this, Riviera submitted that from a reference by the trial judge to Arcweld Constructions Pty Ltd v Smith , Metaalhandel JA Magnus BV v Ardfields Transport Co Pty Ltd and Hobbs v Petersham Transport Co Pty Ltd , together with the article by Palmer in 3 Torts L Rev 186, it could be inferred that the argument now advanced on appeal had been advanced at the trial. Speaking of the cases the trial judge said: “It seems to me that the difficulties I encounter in seeking to reconcile the various judgments … with respect to various pronouncements on the necessity for there being a possession before there can be a bailment, do not arise in this case.” Since the trial judge treated the cases as being relevant to the issue of whether possession is necessary for bailment and not as supporting the submission now advanced, the citations do not point clearly to the proposition that the new case, which was not advanced in the pleadings, was in fact advanced as part of the trial. In any event, the citation of authorities in final address, after the evidence had been closed, does not necessarily point to the relevant issue as having been a live one before and at the time when evidence was tendered. Since it is possible that the new case might have been met by evidence, it cannot be advanced on appeal: Suttor v Gundowda Pty Ltd (1950) 81 CLR 418.

Accordingly, assuming Riviera to have been the owner of 34/18 at the time of the accident, the legal relationship between Riviera and Short at the time of the accident was not that of bailor and bailee. Campbell was bailee. Since Campbell was an apparently competent carrier, Short was not in breach of any duty to Riviera, and Riviera’s case against it should have been dismissed. That leaves its potential liability to indemnify Campbell if Riviera succeeds against Campbell, which turns on the application of clause 21 of the Conditions of Carriage. Riviera’s Case Against Campbell: Who Owned 34/18 When The Accident Happened?

If this question is answered “Mr Boland”, then Riviera lacked any title to sue, and the Amended Statement of Claim and the Cross Claims should have been dismissed independently of the outcome on any other question. If this question is answered “Riviera”, then Riviera was entitled to judgment against Campbell, subject to any other defence of Campbell. The trial judge answered the question: “Riviera”. He said (Red 32O-34D): “… 34/14 was fitted out to the Smiths’ specifications and shipped out of Sydney on 2 September 1997 on board the freighter Direct Eagle. 34/18 was repaired and sold to a retail subsidiary of Riviera. Short had not invoiced Riviera in respect of services associated with the abortive shipping of 34/18 and Riviera had not raised an invoice for it against Boland. After Direct Eagle sailed from Sydney the usual documentation and keys to 34/14 was sent to Boland. The invoice for that transaction contains the following details: INVOICE NO: 1455; DATE: September 5 1997; BOAT NUMBER: 34/14; DATE SHIPPED: 02/09/97; SHIPPED VIA: Direct Eagle; F.O.B. POINT: Sydney; TERMS: COD. Another one of the usual documents sent to Boland after Direct Eagle had sailed from Sydney is entitled: ‘MANUFACTURER’S STATEMENT OF ORIGIN TO A BOAT OR MOTOR”. The presently relevant portion of the document reads: ‘The undersigned CORPORATION’ (Riviera) ‘hereby certifies that the new boat or motor described below, the property of said CORPORATION, has been transferred this 2nd day of September 1997 on Invoice No. 34/14 to RICHARD BOLLAND YACHT SALES…’. Short invoiced Riviera for $2318.50 in respect of its services associated with the shipping of 34/14. The presently relevant details of that invoice, dated 2 September 1997, which covered ‘CRANE, F.I.D., WHARFAGE/AGENCY, CARTAGE/DELIVERY, 9 HOURS AT WHARF’, read: ‘RIVIERA 34/4 RICHARD BOLAND EX SYDNEY TO OAKLAND DIRECT EAGLE ETD 2-9-97 ON 40FT FLAT RACK’. INFERENCE AVAILABLE As there is no suggestion in the evidence that Short ever invoiced Riviera in advance of the services performed the irresistible inference, which I draw, from the usual course of dealings over the years between Riviera and Boland and from the details of the documents extracted and reproduced above is that 34/14 was swung ‘over the rail’ of Direct Eagle on 2 September 1997, and that both Riviera and Boland were of the one mind: namely that Riviera maintained ownership of 34/14 until it had gone ‘over the rail’ on 2 September 1997. Such an inference is consistent with one of the essential elements of an FOB contract, which is what both Riviera and Boland each understood they had entered.” Later the trial judge concluded that property in 34/18 would not have passed from Riviera to Mr Boland until after it was loaded over the rail of the “Direct Currawong”.

Campbell attacked the trial judge’s reasoning and Riviera defended it. Short adopted, but did not add to, the arguments advanced on behalf of Campbell.

In paragraph 7 of the Amended Statement of Claim Riviera averred that at all material times it was the owner of 34/18. Paragraph 3 of Short’s Defence and paragraph 3 of Campbell’s Amended Defence put that allegation in issue. For its part, Campbell went further. Evidently concerned to ensure that the point should not be overlooked by Riviera, Campbell pleaded in its Amended Defence: “13. In the premises and in answer to the whole of the Ordinary Statement of Claim in so far as it pleads a case against the Second Defendant, the Second Defendant puts in issue the Plaintiff’s asserted title to sue as ‘owner’ of the cruiser as pleaded in paragraph 7 of the Ordinary Statement of Claim. 14. In the premises and in further answer to the whole of the Ordinary Statement of Claim, as at the commencement of these proceedings, the Plaintiff had no entitlement to bring this action against the Second Defendant as it had no cause of action.” At one stage during the appeal Riviera suggested that this had caused Campbell to assume the burden of proving that the property passed to Mr Boland before the accident, but this appears unsound and the suggestion was indeed withdrawn. In consequence the onus lay on Riviera to rebut any relevant presumption arising under the applicable law of sale of goods.

The parties and the trial judge assumed the Sales of Goods Act 1923 (NSW) to be applicable. Since no plea of any applicable non-Australian law was advanced, and no proof of it was offered, and since the only other possible provision was the Sale of Goods Act 1896 (Qld), the provisions of which are not materially different from those of the NSW Act, there is no reason to treat the approach of the parties and the trial judge as wrong.

The Sale of Goods Act 1923 provides: “6. (1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price. There may be a contract of sale between one part owner and another. (3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale; but where the transfer of the property in the goods is to take place at a future time, or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled, subject to which the property in the goods is to be transferred. 21. Where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained. 22. (1) Where there is a contract for sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. (2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties, and the circumstances of the case. 23. Unless a different intention appears, the following are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer. Rule 1. Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery, or both, be postponed. Rule 2. Where there is a contract for the sale of specific goods, and the seller is bound to do something to the goods for the purpose of putting them in a deliverable state, the property does not pass until such thing be done and the buyer has notice thereof. Rule 3. Where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh measure test or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing be done and the buyer has notice thereof. Rule 4. Where goods are delivered to the buyer on approval or on ‘sale or return’ or other similar terms, the property therein passes to the buyer: (a) when he signifies his approval or acceptance to the seller, or does any other act adopting the transaction; (b) if he does not signify his approval or acceptance to the seller, but retains the gods without giving notice of rejection, then if a time has been fixed for the return of the goods, on the expiration of such time, and if no time has been fixed, on the expiration of a reasonable time. What is a reasonable time is a question of fact. Rule 5. (1) Where there is a contract for the sale of unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally appropriated to the contract either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made. (2) Where in pursuance of the contract the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract. 25. Unless otherwise agreed, the goods remain at the seller’s risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyer’s risk, whether delivery has been made or not: Provided that where delivery has been delayed through the fault of either buyer or seller, the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault: Provided also that nothing in this section shall affect the duties or liabilities of either seller or buyer as a bailee of the goods of the other party. 35. (1) Where in pursuance of a contract of sale the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, is prima facie deemed to be a delivery of the goods to the buyer. (2) Unless otherwise authorised by the buyer, the seller must make such contract with the carrier on behalf of the buyer as may be reasonable, having regard to the nature of the goods and the other circumstances of the case. If the seller omit[s] so to do, and the goods are lost or damages in course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself, or may hold the seller responsible in damages. (3) Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit under circumstances in which it is usual to insure, the seller must give such notice to the buyer as may enable him to insure them during their sea transit, and if the seller fails to do so, the goods shall be deemed to be at his risk during such sea transit.” In s 5(1) the following definitions appear: “’Future goods’ means goods to be manufactured or acquired by the seller after the making of the contract of sale. ‘Specified goods’ means goods identified and agreed upon at the time a contract of sale is made.” There is no definition of “unascertained goods”.

No argument was advanced to the effect that even if property was transferred to Mr Boland before the accident, the goods remained at Riviera’s risk. Rather, Campbell advanced two positive contentions: (a) It could be inferred from the fact that Mr Boland had paid for 34/18 on 8 August that it was the intention of Riviera and Mr Boland that at that moment they intended property to be transferred. (b) Alternatively, even if there was no evidence of the intention of the parties, property passed by reason of the operation of s 23 r 5 when 34/18 came into the possession of Short or Campbell. Common ground

There is no doubt that at the time of the contract made in late June 1997, the motor cruiser 34/18 was “future goods”: it was a motor cruiser to be manufactured by the seller, Riviera, after the making of the contract of sale. The motor cruiser 34/18 could also be characterised as “unascertained goods”, since one category of that class is “goods not yet in existence, which have to be manufactured … by the seller”: Benjamin’s Sale of Goods (5th ed, 1997) para 1-116; see also para 5-059. It follows that property could not pass until the goods were ascertained (s 21), and that the contract was strictly speaking not a sale, but an agreement to sell (s 6(3) and (4)).

The following matters were common ground: (a) property did not pass at the time of the contract because the goods were at that time unascertained (s 21); (b) property did not pass before payment on 8 August 1997; (c) property would not have passed after the time when 34/18 would have crossed the rail of the “Direct Currawong” had it not been damaged en route to that vessel on 14 August 1997; (d) the loading of 34/18 into a Riviera truck at Labrador was not an effective delivery under s 35(1), and hence not a delivery of “the goods to the buyer” under s 23 r 5(2), because so far as the driver of that truck, Mr Andrews, was a carrier, he was the employee of Riviera, and delivery to him was not delivery to Mr Boland; (e) further, delivery to Mr Andrews was not delivery “to a carrier or other bailee” under s 25 r 5(2), because the relevant carrier must be a bailee, and Mr Andrews was not a bailee, he was a conduit through whom Riviera retained possession. Intention that property would pass on payment?

There are cases where the time when property passes is postponed from the time fixed by s 23 r 1 (the time when the contract is made) to the time when payment is made: e.g. Re An Arbitration Between Shipton, Anderson & Co and Harrison Bros & Co [1915] 3 KB 676 at 680; Re Anchor Line (Henderson Brothers) Ltd [1937] Ch 1 at 7 and 11. Where, as here, the contract was not for specific goods in a deliverable state, but for future goods, the time fixed by s 23 r 5 can be displaced, and the time of earlier payments selected, if the intention of the parties is to do so.

Campbell relied on the following dictum of Diplock LJ in Ward (RV) Ltd v Bignall [1967] 1 QB 534 at 545: “in modern times very little is needed to give rise to the inference that the property in specific goods is to pass only on delivery or payment.” That does not assist its argument. It states that delivery or payment are necessary conditions for the passing of property. The present question is whether payment is a sufficient condition for the passing of property at the time of payment, or sufficiently strong evidence of intention that property is to pass at that time.

Campbell then submitted: “Here, a most important fact is that the goods were paid for on a COD basis - payment in fact was made on 8 August 1997 i.e. prior to the dispatch of the goods. This requirement contradicts any notion that the contract was a true FOB contract. There is no evidence here that Riviera retained contractual right of disposal in the boat at all.” In putting this submission, Campbell was seeking to defeat an inference from the invoice of 5 September 1997 to Mr Boland which described the “F.O.B. point” for 34/14 as Sydney. Campbell appeared to be apprehensive that if the contract were an FOB contract, title would pass when the goods passed the rail of the freighter. Campbell conceded that if the contract were an FOB contract, “that would in the usual event involve property not passing to Boland … until the goods are passed over the ship’s rail”. Campbell referred to Carlos Federspiel & Co SA v Charles Twigg & Co Ltd [1957] 1 Lloyd’s Rep 240 at 247. There Pearson J said: “normally, at any rate, under an f.o.b. contract the property passes on shipment.” Pearson J referred to various cases including Browne v Hare (1859) 4 H & N 822 at 829; 157 ER 1067 at 1070 per Erle J, Stock v Inglis (1884) 12 QBD 564 at 576 per Lindley LJ and Colley v Overseas Exporters [1921] 3 KB 302 at 307 per McCardie J.

Campbell said that the trial judge made a crucial finding when he said: “Boland knew that Riviera would not move [its] cruisers out of its Labrador factory until it had received the clear funds for the total purchase price into its USA bank account.” Campbell submitted that the goods were not sold FOB, but “COD” in the sense that the purchase price had to be paid before the goods would leave Labrador, and on being paid, or perhaps on the goods being placed on Riviera’s truck for transport to Sydney, property passed. (That sense of the expression “COD” is a peculiar one, since the cash was not paid on delivery but before delivery.) Campbell further submitted that if Riviera went into liquidation just after the boat had been paid for, had left Labrador and was travelling south, it would be absurd to suppose that the liquidator could retain the boat and give Mr Boland only a dividend in the liquidation; the absurdity did not arise if title had passed to Mr Boland.

The competing submissions of Riviera drew attention to two categories of evidence. One was the contemporary practices of the parties and the documents constituting the actual transaction. The other was the testimony of various witnesses at the trial about their understanding of the character of the transaction.

The contemporary practices and documents constituting the actual transaction were as follows. Mr Boland would pay the full purchase price by clearing funds, usually about four days before departure of the freighter on which the Riviera motor cruiser in question was to be shipped. Riviera would then transport the motor cruiser to Sydney and it would be loaded as a result of the efforts of Short and Campbell. Short would send Riviera an invoice for its services in that regard after those services had been performed, and that expense was not charged separately to Mr Boland. It was common ground that Mr Boland paid the cost of carriage on the freighter and the cost of insurance while the motor cruiser was on the freighter. Short would, a few days after the freighter sailed, prepare and forward to Mr Boland various other documents among which were: (a) an invoice identifying the motor cruiser shipped, the date of shipment, the freighter, the port of departure and the price; (b) a “Manufacturer’s Statement of Origin” certifying that the identified motor cruiser, “the property of” Riviera, “has been transferred” on the day of shipment to Mr Boland; the Statement of Origin would also certify that “this was the first transfer of such new boat in ordinary trade or commerce”; (c) a Bill of Lading provided by the owner of the freighter to Short, which passed it on to Riviera with a view to its being forwarded to Mr Boland.

Riviera submitted that this method of carrying out and documenting the transaction revealed that only once the Riviera motor cruiser was placed on board the freighter and the freighter had sailed did Riviera communicate to Mr Boland that the relevant events had occurred, and enclose a certificate that the property in the motor cruiser had passed. The Manufacturer’s Statement of Origin did not say that property passed on the day, usually four days before shipment, when the price was paid, or on the day, two days before shipment, when the motor cruiser left Labrador. It said that property was transferred on the day the motor cruiser was loaded onto the freighter. It did not say expressly that it passed when the motor cruiser was loaded on the freighter, and this left open the possibility that it passed earlier that day. But it was no part of this aspect of Campbell’s argument that property passed earlier that day: the choice posed was between property passing on loading and property passing at or about the time of payment.

These arguments of Riviera based on the contemporary practices and documents employed have considerable force.

Riviera also relied, however, on certain categories of testimony as follows. One category was evidence that the contract was an FOB contract. First, there were Mr Hardie’s non-responsive answers in cross-examination to the effect that the sale was FOB: he was the financial controller of Riviera. Next there was Mr Short’s statement in cross-examination that Riviera’s terms of trade with its dealer was to sell on an FOB basis. Thirdly, Mr Boland gave evidence in chief that his purchases were FOB. Fourthly, the evidence of Mr Barry-Cotter, a director of Riviera, was to the effect that the transaction was FOB, not COD. Another category of testimony consisted of answers by Mr Barry-Cotter to the effect that Mr Boland had no power of disposition over the motor cruiser until it was loaded onto the freighter and that he had no intention that the motor cruiser be at Mr Boland’s disposal once it was paid for.

The testimony relied on is insufficient to sustain the conclusion for which Riviera contended. First, so far as the evidence consisted of assertions that the contract was an FOB contract, Mr Short was speculating about the terms of dealings between Riviera and Mr Boland to which his company was not a party; all the evidence went to questions of law; and, with respect to the witnesses, there seemed to be a shared view that it was important to the case that the terms be FOB and that that proposition be communicated to the court whether in response to questions asked or not. Though Mr Barry-Cotter’s answers about the power of disposition were responsive, they too rested on conclusions of law, and the trial judge eventually stopped the line of questioning on that ground. These items of testimony were, if strictly admissible at all, of extremely doubtful weight when contrasted with the contemporary business documents.

However, there is one piece of contemporary evidence that does support characterisation of the contract as an FOB contract. A fax of 16 July 1997 from Short to Mr Boland makes it plain that while Mr Boland would be paying for the cost of freight from Sydney to the United States of America, and for the cost of insurance for that voyage if desired, Riviera would be paying for the cost of transport to Sydney: “Riviera will be including transport to wharf Sydney/crane etc on their invoice as F.O.B.”. As indicated above, the invoice of 5 September 1997 to Mr Boland described the “F.O.B. point” for 34/14 as Sydney. The contract was “FOB” in the sense that the seller delivered the goods to the freighter at its own expense, the risk of loss was transferred to the buyer upon loading and the seller was discharged of obligation at that point; the freighter owner and the buyer at that point became responsible for the carriage of the goods. The contract was not a “CIF” contract, since the entitlement of Riviera to payment did not depend on sending the invoice, the bill of lading and an insurance policy over the goods while they were on the freighter to the buyer: Riviera’s entitlement to payment arose earlier a few days before shipment of the freighter.

The conclusion for which Campbell contended is not advanced by the posing of the question of what would have happened if Riviera had gone into liquidation after Mr Boland had paid for the boat. Even if Mr Boland were not entitled to 34/18 and took the risk of Riviera’s insolvency over the four days from 8 to 12 August, that circumstance alone cannot prevail against the force of the transaction documents.

If Campbell’s submissions were sound, Mr Boland would be owner from at least the time when the journey from Labrador started. Prima facie the risk would pass to him at that time: s 25. Yet Mr Boland was not in the habit of insuring motor cruisers he bought until the time when they were on board the freighters shipping them from Australia. The fact that Mr Boland did not do this points to the conclusion that he did not intend to take title or believe that he had taken title until the motor cruisers were shipped onto the freighter. His subjective intention in isolation is not crucial, but it supports the inference to be drawn from the contemporary documents. In any event it may be inferred that that intention was shared by the Australian parties: when on 16 July 1997 Short sent Mr Boland a fax stating the freighter costs, informing him that Riviera would be paying the costs of transport to Sydney, and saying that marine insurance could be arranged at additional cost, its silence about insurance between the time when 34/18 was loaded on the truck at Labrador and the time when it was loaded onto the “Direct Currawong” points to Short’s perception that that insurance was not a matter for Mr Boland.

In Allison v Bristol Marine Insurance Co Ltd (1875) 1 App Cas 209 at 229 Blackburn J said: “Merchants, according to my experience, attach very great weight to a stipulation as to who is to insure, as shewing who is to bear the risk of loss … .” In Carlos Federspiel & Co SA v Charles Twigg & Co Ltd [1957] 1 Lloyd’s Rep 240 at 255 Pearson J said that if: “there is reason for thinking … that the goods were, at all material times, still at the seller’s risk, that is prima facie an indication that the property had not passed to the buyer.” At 256 he said of the case before him: “there is no suggestion of the goods being at the buyer’s risk at any time before shipment; no suggestion that the buyer should insist on the seller arranging insurance for them.” The same is true here. Riviera and Short did not inquire about whether Mr Boland wanted insurance for the Labrador-Sydney journey; Mr Boland did not ask for it, even though he was alive to the desirability of insurance from Sydney to the United States of America and arranged it as of course.

In short, leaving aside s 23 r 5, whatever conclusion might flow from the fact, taken by itself, that Mr Boland paid for 34/18 four days before the accident, the contemporary practices of the parties (including Mr Boland’s practice about insurance, known to both of them) and the documents they employed to carry out the transaction point to the conclusion that property would not have passed until 34/18 had been loaded on the freighter because that is when the Manufacturer’s Statement of Origin suggested that it did. The parties may expressly indicate their intention as to the passing of property, and they did so by contracting on the basis that the Manufacturer’s Statement of Origin would be employed in this transaction in conjunction with the other procedures: they contracted on that basis because they knew, from their experience of many identical prior dealings, that the past documents and practices would be employed again for the sale of 34/18. Section 23 r 5

Campbell’s argument in reliance on s 23 r 5 was that the contract was a contract for the sale of unascertained or future goods by description - a motor cruiser meeting particular specifications. That motor cruiser was unconditionally appropriated to the contract by the seller with the assent of the buyer when it was delivered to a carrier or other bailee, namely Short or Campbell, without reservation of a right of disposal and for the purpose of transmission to the buyer Mr Boland. Property thereupon passed to Mr Boland.

This argument would not be contradicted by the reasoning which rejected the proposition that property passed on payment. That reasoning hinged on the Manufacturer’s Statement of Origin. That document, had one been issued for 34/18 after it was loaded on the freighter, would have certified that property passed on 12 August, but it would have been silent on whether it passed when 34/18 left the Riviera launch, when it was loaded onto the Campbell truck, or when it crossed the rail of the freighter.

However, the s 23 r 5 argument fails on other grounds.

Rule 5(2) applies where the seller delivers the goods “to a carrier or other bailee”. The owner of the “Direct Currawong” was a carrier; but Campbell’s argument depended on the owner of the “Direct Currawong” not being the relevant carrier or other bailee, but on the relevant delivery to a carrier or other bailee taking place when 34/18 arrived at the parking area or when 34/18 was delivered to Campbell. There are various possibilities as to when 34/18 was delivered to the carrier for the purpose of transmission to Mr Boland. To some extent they depend on when possession of 34/18 moved from Riviera to others. (a) It is possible that Short became a carrier or other bailee once 34/18 was unloaded from the Riviera truck. (b) It is possible that a series of bailments took place from the moment 34/18 was unloaded from the Riviera truck until the loading of 34/18 onto the freighter. The bailees under that series of bailments would have been, first, Botany Cranes (as 34/18 was unloaded from the Riviera truck); then Short (while 34/18 was being containerised, unless Riviera regained possession through Mr Andrews and Mr Barry-Cotter); then Botany Cranes again (while 34/18 was loaded onto Campbell’s truck); and then Campbell (once 34/18 had been loaded onto Campbell’s truck). (c) It is possible that Riviera retained possession until the loading of 34/18 into the Campbell truck. (d) It is possible that Riviera retained possession until 34/18 crossed the side of the freighter.

Proposition (a) must be rejected. It is inconsistent with the conclusion reached in [43] above to the effect that Short never obtained possession. If it never obtained possession, it never became a “carrier or other bailee”.

If proposition (d) were sound, by itself it would prevent s 23 r 5 operating until the motor cruiser were loaded onto the freighter; but it is probably not sound: see [45].

It is not, however, necessary to decide which of these possibilities is correct. That is because there are three reasons why the only person who was a “carrier” within the meaning of s 23 r 5 was the freighter owner.

First, delivery to the relevant “carrier or other bailee” must have “the purpose of transmission to the buyer”. If there were a series of bailments - bailment to Botany Cranes, bailment back to Short (or delivery back to Riviera), bailment to Botany Cranes again, and bailment to Campbell - the successive transfers of possession point against there having been delivery of “the goods … to a carrier or other bailee … for the purpose of transmission to the buyer”. Botany Cranes was not a carrier, Short was not a carrier, Riviera was not a bailee, and Campbell was only to be a carrier for a short distance and a short time. The successive acts were acts preparatory to transmission of the goods to the buyer, rather than being part of the transmission. The only reason why this series of bailments, if they were bailments, had to take place is that they were necessitated by industrial conditions in the Port of Botany. Had industrial conditions in the Port of Botany not had the particular characteristic that it was financially unattractive for Riviera to deliver the motor cruiser to the freighter, thus making it necessary to use Campbell, presumably Riviera would have delivered 34/18 to the side of the freighter, and there would be no doubt that the freighter owner was the “carrier or other bailee” referred to in r 5(2).

Secondly, it is highly significant that the practice of Short was to inform Mr Boland of the freighter on which a particular motor cruiser was to be taken from Australia to the United States of America; its estimated date of departure; the “indicative costs” for the freighter to be paid by Mr Boland; and the availability of insurance to be paid by Mr Boland. But it was not Short’s practice to inform Mr Boland of the identity of the modes of transport from Queensland, and in particular the details of which crane company would unload at the parking area and which company would transport the cruiser from that point to the side of the freighter the details of which crane company would unload at the parking area and which company would transport the cruiser from that point to the side of the freighter. Mr Boland knew that the motor cruisers had to be transported to either Brisbane or Sydney. Mr Boland was told by fax from Short on 16 July 1997 that there would be costs of transport to Sydney and costs of the crane at the wharf, but that Riviera would be paying those costs. That accorded with the practice after the time when a particular contract of sale with Riviera was made. Mr Boland described it thus: “(ii) The plaintiff would then proceed to manufacture the cruiser to the specifications set out in the Build List. (iii) The purchase price always incorporated all costs and expenses to get the cruiser on board the vessel for shipment to USA. Sometimes the plaintiff would arrange for such shipment to occur from Brisbane and on other occasions from Sydney. (iv) Towards the completion of the manufacture process, I would receive advice from the plaintiff of such and there would be communication between myself and the first defendant, as shipping agent on behalf of the plaintiff, as to the details of shipment, including the vessel name and date of departure. (v) I had no separate contract or arrangement with the first defendant. I would never advise the first defendant as to how, when, where or why it ought to provide its services in relation to securing the placement of a cruiser on board the vessel for shipment. I never paid the first defendant for any such service. (vi) I would only insure the cruisers which I purchased at this time from the plaintiff from the time when the said cruisers were on board the vessels for shipment. I treated all such purchases as ‘free on board’ (F.O.B.), and all documentation I received from the plaintiff for such purchases reflected this understanding. (vii) With each of these purchases, I would transfer into a bank account of the plaintiff in the USA clear funds for the full purchase price of the cruiser. This was a requirement of the plaintiff as it would not deliver the cruiser on board the vessel of shipment until it had cleared funds for the purchase price. Indeed, such practice accorded with my experience in relation to all similar commercial dealings.”

From Mr Boland’s point of view, the carriage of the motor cruiser to the United States of America only commenced when the freighter was loaded. From Mr Boland’s point of view, the freighter owner was the person responsible for bringing the motor cruiser to it and the person whom it was to pay.

Parke B described the basis of the common law rule now embodied in s 23 r 5 as follows in Wait v Baker (1848) 2 Ex Ch 1 at 7; 154 ER 380 at 383: “if goods are ordered by a person, though they are to be selected by the vendor, and are to be delivered to a common carrier to be sent to the person by whom they have been ordered, the moment the goods, which have been selected in pursuance of the contract, are delivered to the carrier, the carrier becomes the agent of the vendee, and such a delivery amounts to a delivery to the vendee … .” The same principle would apply where the goods were not selected by the vendor but, as here, manufactured by the vendor. Benjamin’s Sale of Goods (5th ed, 1997) para 5-097 says: “The carrier is prima facie constituted the buyer’s agent for the purpose of taking delivery; but if the terms of the contract or appropriation show that the carrier is the agent of the seller, the property will not normally pass until the goods are actually delivered to the buyer or his agent.”

If Riviera retained possession until Campbell obtained it, or even until 34/18 was to be moved over the rail of the “Direct Currawong”, it would not be a “carrier”: Galbraith and Grant Ltd v Block [1922] 2 QB 155 at 156. If Riviera lost possession, either when 34/18 was lifted off its truck or when 34/18 was lifted onto Campbell’s truck, the persons who had possession thereafter until 34/18 was placed on the freighter were certainly not the agents of the buyer Mr Boland. The owner of the freighter was its agent - not in the sense of having a capacity to create legal relationships between Mr Boland and third parties, but in the sense of an actor carrying out a function for Mr Boland. The owner of the freighter transported the motor cruiser, it was to be paid by Mr Boland for doing so, and the risk of its damaging the motor cruiser was a matter which Mr Boland was to insure against and did insure against. On the other hand, while Short, Botany Cranes and Campbell were not strictly agents of Riviera - they were not authorised to make contracts binding on Riviera with third parties - they were persons who were agents in the sense of actors carrying out a purpose desired by Riviera. That purpose was to deliver the motor cruiser to the freighter owner.

The presence of Riviera’s officers, Messrs Andrews and Barry-Cotter, during the process of unloading and loading, point to Riviera having a supervisory role over the activities of Short and the sub-contractors engaged by Short for whose services Riviera, but not Mr Boland, was going to pay. That supervisory role is suggestive of conduct by the seller anterior to the moment when transmission of goods to the buyer by a carrier or other bailee who is independent of the seller begins. The short period in which Campbell was to move 34/18 from car park to wharf was not a period of supervision by Riviera’s officers, but it immediately followed it. It would be artificial to treat Campbell, rather than the freighter owner, as the carrier or other bailee who was to have possession of 34/18 for the purpose of transmission of it to Mr Boland. The role of Campbell was much more closely connected with the other activities arranged by Short at Riviera’s request than it was with the activities of the freighter owner.

Thirdly, in Carlos Federspiel & Co SA v Charles Twigg & Co Ltd [1957] 1 Lloyd’s Rep 240 at 255-256 Pearson J said: “usually but not necessarily, the appropriating act is the last act to be performed by the seller. For instance, if delivery is to be taken by the buyer at the seller’s premises and the seller has completed his part of the contract and has appropriated the goods when he has made the goods ready and has identified them and placed them in a position to be taken by the buyer and has so informed the buyer, and if the buyer agrees to come and take them, that is the assent to the appropriation. But if there is a further act, an important and decisive act to be done by the seller, then there is prima facie evidence that probably the property does not pass until the final act is done.” On the facts of that case he said: “the last two acts to be performed by the seller, namely, sending the goods to Liverpool and having the goods shipped on board, were not performed.” The following appears in Williston on the Law Governing Sales of Goods at Common Law and Under the Uniform Sales Act (rev ed, 1948) vol 2 para 278: “where several things are to be done by the seller to the goods, it is to be presumed that the parties intend the appropriation to be deferred until the last of these acts has been done. … … Where, as in the case of shipment by carrier, the last of the acts which the seller is to perform puts the goods out of his control, there is an added reason for selecting that time. Though the buyer may assent to an appropriation of the goods while still wholly in the seller’s control, even though the seller is bound by his contract to deliver the goods to a carrier, yet in the absence of a clear expression of that intention it is a more natural inference whereby the terms of the bargain the goods are promptly to be put in the hands of a carrier (or other bailee for the buyer,) that the property does not pass until that has been done, and that then it will pass.” Among the acts which the seller and buyer contemplated as being done by the seller was arranging the transport of 34/18 to, and the loading of 34/18 on board, the “Direct Currawong”. The cost of doing this was borne by the seller; no separate charge was made to the buyer or paid by the buyer. Though the buyer was informed of the details of the selected freighter, the buyer did not advise Short “how, when, where or why it ought to provide its services in relation to securing the placement of” 34/18 or any other cruiser on board the freighter. It follows that the last act to be performed by the seller was procuring the delivery of 34/18 on board the freighter, and not anything anterior to it. Campbell’s role in taking 34/18 alongside the freighter so that it could be placed on board the freighter was contemplated as being part of the seamless series of steps by which 34/18 moved from Labrador to the freighter: there are no natural divisions of that series into events which it was the seller’s responsibility to procure and events which it was the buyer’s responsibility to procure. It was the seller’s responsibility to procure all of them.

Hence the freighter owner was the relevant “carrier” for the purposes of s 23 r 5. Section 23 r 5 operates to create a presumption that the property in the goods passed when 34/18 passed over the side of the freighter into the possession of the freighter owner. There is no evidence of any different intention to rebut that presumption: indeed the presumption arrives at a conclusion similar to that to which the evidence as a whole points.

Hence property did not pass to Mr Boland until after the accident. Campbell’s contention that Riviera’s case against it fails because Riviera lacked standing to sue fails. Is Riviera’s Case Against Campbell Defeated Because Of A Sub-Bailment By Short To Campbell On Terms?

Campbell contended that Riviera was bound by clause 3(1) in the Conditions of Carriage dated 12 August 1996 operating between Short as Consignor and Campbell as Carrier on the basis that Short was bailee of 34/18 and Campbell was sub-bailee. Campbell relied on the following passage in The Pioneer Container [1994] 2 AC 324 at 339: “if the effect of the sub-bailment is that the sub-bailee voluntarily receives into his custody the goods of the owner and so assumes towards the owner the responsibility of a bailee, then to the extent that the terms of the sub-bailment are consented to by the owner, it can properly be said that the owner has authorised the bailee so to regulate the duties of the sub-bailee in respect of the goods entrusted to him, not only towards the bailee but also towards the owner.” However, Campbell conceded that if Short were not a bailee at the time when 34/18 was damaged, the principles stated in The Pioneer Container did not apply. It was held in [45] that Short was not a bailee at the relevant time. No more need be said of this argument, except that in any event there was insufficient evidence that Riviera consented to clause 3(1). Is Riviera’s Case Against Campbell Defeated Because Clause 3(1) Was Part Of A Campbell-Riviera Contract?

Campbell contended that Riviera was bound by clause 3(1) in the Conditions of Carriage dated 12 August 1996 operating between Short as Consignor and Campbell as Carrier because Short contracted with Riviera on its behalf. Campbell submitted: “The witnesses of Riviera admitted that: (a) they knew that Short was contracting with other parties for the performance of services; and (b) they knew that it was very likely that such contracts would contain exemption clauses of the very kind here invoked by Campbell. In those circumstances, there can be no doubt that the clause was incorporated into the contract which Short made with Campbell on Riviera’s behalf.” Campbell submitted that Riviera had authorised Short to engage Campbell to carry out the carriage of the goods from the car park to the freighter.

The argument has the following flaws.

First, Short was not contracting with Campbell on behalf of and as agent for Riviera. Short contracted with Campbell as principal. It did so in fulfilment of its duties to Riviera as a “forwarding agent”, but it was the principal, and it was not contracting on behalf of Riviera as either a disclosed or as an undisclosed principal. Campbell looked to Short for payment, not Riviera. Campbell was paid by Short, not Riviera. Short looked to Riviera for payment and received payment from Riviera.

Secondly, the evidence does not support the submission that Riviera’s witnesses “knew that it was very likely” that the Short-Campbell contract “could contain exemption clauses” like clause 3(1). Each of Mr Hardie, (Financial Controller of Riviera), Mr Jones (Production Manager of Riviera) and Mr Barry-Cotter (a director of Riviera) said that he understood that Mr Short arranged for a carrier from the gate to the freighter on terms agreed between Short and the carrier, but said that he never inquired of Mr Short what they were or whether they were like clause 3(1). In essence, the Riviera witnesses knew that exemption clauses were a possibility, but did not know what they were. Campbell submitted that these officers could not rely on ignorance generated from a failure to inquire, but that circumstance is immaterial. Campbell’s Cross-Claim Against Short: Clause 21

The position to this point is that Campbell has failed in its attempts to avoid its liability for the negligence of its driver based on Riviera not having title to sue, on reliance on clause 3(1) on the ground that Short was bailee and Campbell was sub-bailee, and on the ground that Short contracted with Campbell as agent for Riviera. As a result it is not necessary to decide whether the trial judge’s construction of clause 3 of the Conditions of Carriage was correct. Further, Riviera has failed in its claim against Short on the basis that Short was bailee.

That leaves standing the trial judge’s conclusion that Campbell was liable to Riviera. The remaining issue is whether Campbell can avoid the consequences of that liability by claiming indemnity against Short under clause 21 of the Conditions of Carriage dated 12 August 1996 which were part of the contract between Short and Campbell. In its Amended Notice of Cross Claim, paragraph 9, Campbell relied on clause 21 in the following terms: “It was a term of the contract of carriage that [Short] would indemnify and keep indemnified [Campbell] against all claims for loss, damage, injury to any property or person arising from the carriage of the cruiser the subject of these proceedings.” In consequence it claimed indemnity in such amount as it was liable to Riviera for. Short denied paragraph 9 and denied that Campbell was entitled to indemnity.

Short’s submission to the trial judge is recorded by him as being that clause 21 “could only apply to a consignor which, on the plaintiff’s case, was Riviera itself and, on Campbell’s case, was Boland.”

The trial judge said: “As to Campbell’s claim to indemnity, the undisputed evidence is that on 12 [August 1996] Short signed and dated a document containing various clauses, including clauses 3 and 21, which Campbell had sent to it. Short returned that signed and dated document to Campbell thereby indicating it was on notice that, henceforward, all contracts of carriage between Short and Campbell would be covered by those terms and conditions. It matters not that the terms were not fully read at Short because they ‘ … had a lot of legal jargon …’.” The trial judge concluded: “There will be a verdict and judgment on the indemnity clause point in favour of the second defendant against the first defendant on the second defendant’s cross claim. I order the first defendant pursuant to that verdict fully to indemnify the second defendant in the total amount of the verdict and judgment plus costs awarded to the plaintiff. The first defendant is to pay the second defendant’s costs of that cross claim.” It will have been noticed that the trial judge did not in terms deal with Short’s submission about clause 21, though he must have rejected it in the course of concluding that the indemnity order should be made.

Paragraph 4 of Short’s Notice of Appeal was: “His Honour erred in the construction of the contract between the appellant and the second respondent, in particular [clause] 21.”

On appeal in its written submissions Short repeated the argument advanced below. However, it did not repeat it in oral submissions, and indeed abandoned it, since at two points in the oral argument Short accepted that it was consignor, not Riviera or Mr Boland (transcript page 8 line 54 and page 21 line 1).

Having abandoned on appeal the argument it did put below, Short put to this Court an argument it had not put below. It said: “The short point … is … cl 21 is an indemnity against claims as a result of damage to persons or property other than the goods bailed. It is clearly a public liability type indemnity rather than an indemnity in respect of a claim for the goods for a simple reason that … if his Honour’s construction was right, you wouldn’t need a limitation of liability at all because if the property includes the goods, the consignor would have to indemnify Campbells for claims by the consignor.” Short said that if clause 21 were construed to render Short liable to indemnify Campbell for damage to the goods caused by Campbell, then clause 3 would not be necessary - it “would lead to a complete circularity”. It “would render absolutely unnecessary the exclusion clause”.

Campbell argued that the words in clause 21 before “and without limiting the generality of the foregoing” were very general. Short promised to indemnify Campbell “against all claims for loss, damage, injury to any property … arising from the carriage of the goods … .” Any property included the goods it carried. The words after “and without limiting the generality of the foregoing”, if they consisted of the totality of the clause, would be consistent with Short’s argument, because they obliged Short to pay Campbell the value of “any other goods carried by or for the carrier and destroyed or damaged as a result of the carriage”. But clause 21 stipulated that those concluding words were not to limit the generality of the opening words. Campbell relied on the principle of construction stated for exclusion and limitation clauses by the High Court in Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510, which is that: “the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity.”

The construction propounded by Campbell is the sounder for the following reasons.

First, the use of the words “any other goods carried” in the latter part of clause 21 stands in contrast to the generality of “any property” in the first part, and suggests that the expression “any property” is wide and has its natural and ordinary meaning of “any property, whether the goods carried or not”. The words “any other goods carried” cannot be used as a means of reading down the first part of the clause.

Secondly, if Short’s argument that clause 21 had to be read so as to avoid any overlap with clause 3 were correct, it would require the words “(except the goods carried)” to be inserted after “any property”. To do that is to do some violence to the words “any property”.

Thirdly, the overlap between clause 3 and clause 21 on Campbell’s construction is not complete. For one thing, if the trial judge’s construction of clause 3 (supported by Short) is correct, clause 3 applies only to liability “in tort or in contract”, not “in bailment” or on any other basis, whereas clause 21 applies quite generally. Further, clause 3 applies to non-delivery, while clause 21 does not. There is thus work for clause 3 to do in areas where clause 21 does not operate, and work for clause 21 to do in areas where clause 3 does not operate. Campbell’s construction does not, contrary to Short’s submission, “lead to a complete circularity” or “render absolutely unnecessary the exclusion clause”. There is some overlap, but clause 3 is not “absolutely unnecessary”. While Short’s submission would have force if in the areas where clause 3 and clause 21 overlap they conflicted, in fact they do not conflict: the provisions operate harmoniously, not discordantly. While clause 3(1) is expressed to be subject to clause 18 and clause 20, and clause 21 is not so expressed, in fact both clause 18 and clause 20 are expressed to apply to the totality of the conditions, i.e. including clause 21. (Clause 18 requires the conditions, in respect of contracts made in Queensland, to be read subject to the carriage of goods by land ( Carrier’s Liability) Act 1967 (Qld). Clause 20 requires the conditions to be read subject to specified legislation.) That in itself is a piece of untidy drafting which suggests that the Conditions of Carriage are not to be read with pedantic precision.

Hence the trial judge’s conclusion that clause 21 applied is correct. Orders

The following orders are proposed. In view of their complexity and in view of the fact that various of the trial judge’s orders survive, provision has been made in the proposed orders for the parties to have liberty to apply. 1. Appeal allowed. 2. The verdict and judgment with costs of the trial judge in favour of the first respondent/plaintiff against the appellant/first defendant is set aside. 3. Verdict for the appellant/first defendant against the first respondent/plaintiff. 4. The first respondent/plaintiff is to pay the appellant’s/first defendant’s costs of the appeal and of the proceedings below. 5. The first respondent/plaintiff is to have a certificate under the Suitors Fund Act in relation to its costs of the appeal if entitled. 6. The cross appeal is dismissed. 7. The cross appellant/second defendant is to pay the second cross respondent’s/plaintiff’s costs of the cross appeal. 8. Note that these orders do not affect the verdict and judgment of the trial judge in favour of the first respondent/plaintiff against the second respondent/second defendant in the sum of $112,632.81 with costs. 9. Note further that these orders do not affect: (a) the trial judge’s verdict and judgment in favour of the second respondent/second defendant against the appellant/first defendant on the second respondent’s/second defendant’s cross claim; (b) the trial judge’s order pursuant to that verdict that the appellant/ first defendant fully indemnify the second respondent/second defendant in the total amount of the verdict and judgment plus costs awarded to the first respondent/plaintiff; or (c) the trial judge’s order that the appellant/first defendant pay the second respondent’s/second defendant’s costs of that cross claim. 10. Order the appellant/first defendant to indemnify the second respondent/second defendant against: (a) the second respondent’s/second defendant’s costs of the appeal and cross-appeal; (b) the second cross respondent’s/plaintiff’s costs of the cross- appeal to the extent that the second respondent/second defendant has been ordered to pay them. 11. Liberty to apply.

IPP AJA : I agree with Heydon JA.