COMALCO ALUMINIUM LIMITED, COMALCO NZ LIMITED

AND NEW ZEALAND CAN LIMITED v.

MOGAL FREIGHT SERVICES PTY. LIMITED, OCEANIA
SHIPPING CORPORATION LIMITED AND
ANGKASA SHIPPING AND TRADING INC.
No. G161 of 1991
FED No. 180/93
Number of pages - 27
Trade Practices - Shipping and Navigation

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION
SHEPPARD J
CATCHWORDS

Trade Practices - consumer protection - representations as to

competence and skill - representations as to exercising reasonable
care - whether representations as to future conduct - whether
misleading or deceptive conduct - whether reliance placed upon
representations.

Trade Practices - consumer protection - implied statutory

warranties - transportation of goods - packing services rendered as
part of contract to transport goods from Sydney to Auckland -
whether packing services provided as part of contract for
transportation of goods thus exempting contract from operation of
8.74 of Trade Practices Act 1974.

Shipping and Navigation - carriage of goods - action for damage to

cargo - causation - whether inadequate packing of goods into
container also cause of damage - "freight forwarder" - whether
liable for damage resulting therefrom - exclusion clauses - Hague
Rules.

Shipping and Navigation - bill of lading - whether "consignment

note" issued by freight forwarder was "bill of lading or similar
document of title" - Hague Rules - exclusion clauses.
Words and Phrases - "bill of lading or similar document of title".

Trade Practices Act 1974, ss 51A, 52, 6B, 74.

Sea Carriage of Goods Act 1924, ss 4, 6, Sch. (Arts I, III, IV,
VI, VII).

HEARING

SYDNEY, 9-11, 18 and 19 March 1992

#DATE 18:3:1993

Counsel for the Plaintiffs: Mr. A.W. Street and

Mr. G.J Nell

Solicitors for the Plaintiffs: Phillips Fox

Counsel for the Defendants: Mr. H.A. Coonan

Solicitors for the Defendants: Ebsworth and Ebsworth

ORDER

THE COURT ORDERS THAT: 1. There be judgment for the plaintiffs

against the first defendant in the sum of $249,736.12.

2. The first defendant pay to the plaintiffs one half of their costs of
the proceedings.

3. The plaintiffs and the first defendant have liberty to apply

provided that liberty is exercised by notice to the Associate to
Sheppard J on or before 25 March 1993.
4. The plaintiffs have leave to move for judgment against the
second defendant provided notice of that application is given to the
Associate to Sheppard J on or before 1 April 1993.

5. The plaintiffs have leave to discontinue the proceedings against

the third defendant.

Note: Settlement and entry of orders is dealt with in Order 36 of

the Federal Court Rules.

JUDGE1

Introduction SHEPPARD J By its amended statement of claim in this

matter the plaintiffs sue for damage suffered by a cargo of
aluminium coil which was shipped from Sydney to Auckland on
board the vessel "Oceania Trader". The third defendant has not
been served and the plaintiffs do not wish to proceed against it.
Accordingly, I give the plaintiffs leave to discontinue the
proceedings against that defendant. The second defendant has
been served with the writ but out of the jurisdiction. It has not
appeared and the action has proceeded undefended against it. The
first defendant carries on business as a freight forwarder. The
plaintiffs have sued it upon a number of causes of action. It has
strongly defended the matter.

2. I shall come in due course to the proceedings against the

second defendant, but the principal part of this judgment will
be concerned with the plaintiffs' action against the first
defendant to which I shall refer as "Mogal". I shall refer to the
plaintiffs collectively as "Comalco" except where it is
necessary to distinguish between them.

3. The aluminium coil was carried to Auckland from Sydney on

the "Oceania Trader" pursuant to the terms of a bill of lading
issued by the ship's agents on 5 April 1990. The shipper was
described as Mogal and the consignee was a New Zealand
company, Owens International Freight of Auckland. It was
another firm of freight forwarders. Although the bill makes no
mention of it, the aluminium coil was to be delivered to the
premises of the third plaintiff, New Zealand Can Limited.
 4. The aluminium coil was packed - "stuffed" in the language of
the trade - into containers. Each coil weighed approximately
five tonnes. Four coils were stuffed into most containers; some
contained three. On their arrival in Auckland on 12 August
1990 a number of the containers and a number of the coils
were found to be badly damaged. There is no issue about the
question of damage. If the plaintiffs are entitled to judgment,
the amount to which they are entitled is agreed upon in the
sum of $173,264.36 together with interest.

5. The causes of action upon which Comalco has sued Mogal

may be divided into two groups or categories. The first group
consists of causes of action for breach of contract, breach of
Mogal's obligation as bailee, and negligence. The matters
which arise for decision in respect of these causes of action do
not involve substantially different considerations and they
may be dealt with together. In relation to one aspect of the
contractual claim Comalco has raised an estoppel. That
matter was not the subject of submissions and I need not refer
to it further. For each of reference I shall refer to these
causes of action collectively as the contractual claims. Before
mentioning the second group or category of causes of action,
it is convenient to deal with the principal document and the
legislation upon which the contractual causes of action are
based and also to indicate shortly the contentions of the
parties about them.

The Contract and the Legislation relevant to it

6. The contract between Comalco and Mogal consisted principally
of a
document which was described in the evidence as a consignment
note. It was headed with the Mogal name and insignia. The
consignor was the first plaintiff, Comalco Aluminium Limited. A
space headed "Consignee - Receiver" was filled in with the words
"TO ORDER". A third space provided for notification (presumably
when the coil arrived) to be given to New Zealand Can Limited. The
port of loading was said to be Sydney, the departure date, 4 April
1990, the vessel the "Oceania Trader" and the port of discharge,
Auckland. There followed descriptions of the goods which were said
to comprise aluminium can body stock in 12 containers the sizes
and identification numbers of which were specified.

7. There followed a space providing for insurance to which it is

unnecessary to refer in more detail. The next space was
headed "NEGOTIABLE DELIVERY ORDERS". Under this
 heading were two boxes both of which were crossed. The first
comprised an instruction to return a copy of the consignment
note to the sender, i.e. Comalco Aluminium, and the second an
instruction to airmail a copy to the consignee, presumably
New Zealand Can, but this is not clear. Delivery instructions
were then provided for. These were that the coils were to be
moved from door to door, that is from the premises of
Comalco Aluminium at Yennora, a Sydney suburb, to the
premises of the consignee, presumably New Zealand Can.

8. The contract was thus one pursuant to which Mogal was to

undertake the transportation of 46 aluminium coils from
Comalco's premises to New Zealand Can's premises. The
transaction involved the picking up of the coils from Comalco
Aluminium, the packing of the coils into containers at Mogal's
depot, the carriage of the containers to the wharf for
shipment on board the "Oceania Trader", the carriage of the
containers from Sydney to Auckland on that vessel, the
unloading of the containers on to the wharf in New Zealand,
the carriage of the containers to Owens International Freight
depot, the unloading of the containers at the depot and the
delivery of the coils to New Zealand Can.

9. The consignment note issued by Mogal contained on its

reverse side number of printed terms and conditions. In those
terms and conditions Mogal was described as the "carrier",
"carriage" was defined to mean and include the whole of the
operation and services undertaken by Mogal in respect of the
goods, "consignor" was to mean the person by whom the
goods were "deposited" i.e. Comalco Aluminium, "goods"
meant the cargo accepted from the consignor and "sub
contractor" was to include any person who, pursuant to a
contract or arrangement with any other person (whether or
not the carrier), performed or agreed to perform the carriage
or any part thereof or any servant or agent of such person.

10. Condition 2 provided that the carrier was not a common

carrier. Conditions 3, 4, 5, 11, 17 and 18 were as follows:-

"3. (a) The Carrier shall not be under any liability for any loss of or
damage (including concealed damage, deterioration, contamination
and evaporation) to or failure to forward, misforwarding and delay
in forwarding or mis-delivery, non-delivery or delay in delivery of
any goods received by it or any consequential loss arising
therefrom howsoever such loss, damage or consequential loss is
caused whether arising through mis-conduct (sic), negligence of the
Carrier or otherwise (including but without limiting the generality
of the foregoing any act of the Carrier in respect of or in dealing
with the goods including their carriage, packing or handling) and
the Consignor shall indemnify the Carrier from and against all
liability in respect of any goods received by it to any person or
persons, company or companies having or claiming any interest in
the said goods and further the consignor shall indemnify the
Carrier from and against all liability for loss of life and/or personal
injury to any person or persons whatsoever or loss or damage to
any property whatsoever caused or contributed to by the said goods
or any inherent vice thereof or caused or contributed by the
storage, carriage, packing, handling or otherwise dealing with the
said goods, even though such loss of life, personal injury, loss or
damage results from or is contributed to by the negligence of the
Carrier.

(b) In addition to paragraph (a) hereof, the Carrier shall not be

liable for any loss of market, loss of use or consequential loss,
concealed damage or damage caused by inherent vice or nature of
the goods or of the merchandise carried (including chilled, frozen,
refrigerated or perishable goods) either in transit or in storage
whether caused or contributed to by the negligence, wrongful act
or default of the Carrier or from any other cause whatsoever.

4. The Carrier shall not be liable for any damage or loss whatsoever
to goods, which the Consignor has requested the Carrier to pack
and which are described on the face hereof, whether in the course
of packing or in transit or otherwise and howsoever occasioned to
the said goods or any of them and whether caused by the Carrier's
negligence or otherwise howsoever. When the Carrier is required
to load or unload any liquids, partly liquids, substances or any
commodities or products into bulk tanks or vessels, drums or
containers, it shall not be liable for any loss, damage or
contamination of product during any such loading or unloading
operation or packing, whilst such product is in transit by any means
of transportation or whilst goods are held in store or bulk storage
tanks for any reason whatsoever whether caused by the Carrier's
negligence or otherwise howsoever.

5. (a) In respect of any clause herein which excludes or in any way

limits the liability of the Carrier in respect of this Contract, the
Carrier in addition to acting for itself is acting as agent of and
trustee for each of its servants and also for any other person or
company with whom the Carrier may arrange for the carriage or
other handling of the goods and the servants of such person or
company so that its servants and such person or company and his
or its servants are or shall be deemed to be parties to this contract
so far as the said clause or clauses containing exclusions or
limitations of liability are concerned and in so far as may be
necessary to give effect to this clause the Carrier shall hold the
benefit of these conditions for its servants and for any such person
or company and his or its servants or agents.

(b) In respect of any term (including any implied term) in any

contract or sub-contract which the Carrier may enter into pursuant
to this contract by which the contractor or sub-contractor
(notwithstanding the provisions of paragraph (a) above) accepts
some measure of liability for loss or damage to the goods the
Carrier will hold the benefit of such term as agent of and trustee for
the Consignor.

11. (a) The Carrier may carry all goods or have them carried by any
method on any usual terms which the Carrier in its absolute
discretion deems fit and notwithstanding any instructions verbal or
otherwise of the Consignor that the goods are to be carried by
another method.

(b) The Consignor authorises the Carrier (if the Carrier should
think fit to do so) to arrange for the Carriage of the goods by an
independent contractor or sub-contractor of the Carrier. The
Carrier may enter into any such contract or sub-contract subject to
the terms of the regular form of Bill of Lading or Sea Waybill in use
by the contracting Steamship Company.

17. The within Contract shall be deemed to be made in the State in

which this consignment note was issued and shall be governed and
construed in accordance with the laws of that State as the proper
law of the contract. In the event that this Contract shall be held to
be subject to the laws of any other State of the Commonwealth or of
the dominion of New Zealand then except where repugnant to the
provisions of that law these terms and conditions shall continue to
apply.

18. Notwithstanding anything herein contained, the Carrier shall

continue to be subject to any implied warranty provided by
the Trade Practices Act 1974 (as amended) if and to the extent that
the said Act is applicable to this contract and prevents the
exclusion, restriction or modification of that warranty."

11. The first cause of action upon which Comalco sues

Mogal is for breach of Mogal's obligation to deliver the
aluminium coils in good order and condition. One of the
 answers made by Mogal to that cause of action was to raise
the provisions of conditions 3 and 4 above quoted as defences
to the cause of action. In the submission of counsel for
Comalco, Mogal was not entitled to rely upon these provisions
because:
(a) The consignment note was a bill of lading or

similar document of title; see 8.6 of the Sea Carriage of Goods Act
1924 ("the Act").

(b) The aluminium coil was not damaged prior to the

loading on to the vessel, nor subsequent to its discharge therefrom;

see Article VII of The Hague Rules set out in the schedule to the Act
("the rules").

(c) Mogal had led no evidence to establish how the

damage had occurred.

(d) The provisions of conditions 3 and 4 of the

consignment note were of no effect because of the provisions of

Article III rule B of the rules.

12. Alternatively to para. (a) above, counsel for Comalco

submitted that it was of no consequence whether the
consignment note was a bill of lading or similar document of
title as referred to in s.6 of the Act. The rules forming the
schedule to the Act apply by reason of the operation of s.4 of
the Act.

13. Subsection 4(1) of the Act is as follows:-

"Subject to the provisions of this Act, the Rules contained in the

Schedule to this Act (in this Act referred to as "the Rules") shall
have effect in relation to and in connexion with the carriage of
goods by sea in ships carrying goods from any port in the
Commonwealth to any other port whether in or outside the
Commonwealth."

14. Section 6 of the Act provides:

"Every bill of lading or similar document of title issued in the
Commonwealth which contains or is evidence of any contract to
which the Rules apply shall contain an express statement that it is
to have effect subject to the provisions of the Rules as applied by
this Act."

15. Article I of the Rules contains a number of definitions.

Carrier includes the owner or charterer who enters into a
contract of carriage with the shipper. "Contract of carriage"
applies only to contracts of carriage covered by a bill of lading
or any similar document of title, insofar as such document
relates to the carriage of goods by sea. "Carriage of goods"
covers the period from the time when the goods are loaded on
to the time when they are discharged from the ship.

16. Article III, rule 2 provides that, subject to the provisions

of Article IV, the carrier shall properly and carefully load,
handle, stow, carry, keep, care for and discharge the goods
carried. Article III rule 8 provides that any clause, covenant or
agreement in a contract of carriage relieving the carrier or
the ship from liability from loss or damage to or in connection
with goods arising from negligence, fault or failure in the
duties and obligations provided for in Article III is to be null
and void and of no effect. The relevant provisions of Article IV
to which Article III, rule 2 is subject are paras. (i), (n), (p) and
(q) of rule 2. Those paragraphs are as follows:

"Neither the carrier nor the ship shall be responsible for loss or
damage arising or resulting from-

(i) act or omission of the shipper or owner of the goods, his agent or
representative;

(n) insufficiency of packing;

(p) latent defects not discoverable by due diligence;

(q) any other cause arising without the actual fault or privity of the
carrier, or without the fault or neglect of the agents or servants of
the carrier, but the burden of proof shall be on the person claiming
the benefit of this exception to show tht neither the actual fault or
privity of the carrier nor the fault or neglect of the agents or
servants of the carrier contributed to the loss or damage."

17. Article VI enables a special agreement to be entered into

in certain circumstances. The Article is not directly relevant
 but is referred to because it was relied upon by counsel for
Comalco in support of the submission made in relation to s.4
of the Act. Article VI does not apply, and could not apply, to
the circumstances of the carriage here because it does not
apply to ordinary commercial shipments made in the ordinary
course of trade but only to shipments where the character or
condition of the property to be carried or the circumstances,
terms and conditions under which the carriage is to be
performed are such as reasonably to justify a special
agreement.

18. Finally Article VII provides that nothing contained in the

rules shall prevent a carrier or a shipper from entering into
any agreement, stipulation, condition, reservation or
exemption as to the responsibility and liability of the carrier
or the ship for the loss or damage to, or in connection with,
the custody and care and handling of goods prior to the
loading on and subsequent to the discharge from the ship on
which the goods are carried by sea.

19. If the consignment note was a bill of lading or similar

document of title and if the coil was damaged between loading
on and discharge from the vessel, Comalco would be entitled
to succeed unless Mogal established one or more of the
matters provided for in Article IV, rule 2.

20. In the submission of Mogal, the consignment note was

not a bill of lading or similar document of title. The rules
applied only to bills of lading or similar documents of title.
Section 4 of the Act did not provide otherwise. In any event,
the evidence established that the coil was damaged as a
consequence of insufficient packing so that Mogal was
exempted from liability by the provisions of Article IV, rule 2.
Furthermore the consignment note, even if it were a bill of
lading, could quite legally include exemption clauses in terms
of conditions 3 and 4 so long as they were read as applying
only to acts and omissions which occurred before loading or
after discharge; see Article VII.

The Trade Practices Causes of Action

21. The second group of causes of action depend in one way or
another
on provisions of the Trade Practices Act 1974. The causes of action
relied upon are for breach of contract and for breach of the
provisions of s.52 of the Trade Practices Act. The contractual cause
of action is for breach of a term of a contract said to have been
implied into the contract by s.74 of the Trade Practices Act that the
services to be performed under the contract would be rendered
with due care and skill. Section 74 needs to be read with s.68 which
provides that any term of a contract that purports to exclude,
restrict or modify the application of any of the provisions of Division
2 of Part V of the Act is void. Section 74 is in Division 2.

22. In the submission of counsel for Mogal, s.74 has no

application to the circumstances of the present case because
the contract between the parties is a contract for or in
relation to the transportation of goods for the purposes of a
business or trade. Such contracts are excluded from the
operation of subsec.74(1); see para. 74(3)(a).

23. The cause of action under s.52 of the Trade Practices

Act is founded upon certain representations alleged to have
been made to Comalco by Mogal and the falsity of those
representations. The first of the two representations relied
upon (para.18 of the amended statement of claim) was that
Mogal represented that it would exercise reasonable care in
stuffing the aluminium coils into the containers and in their
door to door carriage. The second (para. 19 of the amended
statement of claim) was that Mogal represented that it was
sufficiently skilled and competent to perform the door to door
carriage and would use equipment necessary to perform that
task. In its further amended defence Mogal has denied the
making of the representations. It has denied that Comalco
relied on the representations and it has also denied that the
conduct in which it is alleged to have engaged was misleading
or deceptive or likely to mislead or deceive Comalco.

24. The evidence relied upon to establish the two

representations consists of a number of statements made in
various documents and certain statements made orally by an
employee of Mogal.

25. In October 1988 Mogal was asked by Comalco to tender

for the shipment of approximately 20,000 tonnes of aluminium
products (including coil) per annum. Shipments were to be to
countries in the Asia/Pacific region including New Zealand.
On 19 October 1988 Mogal wrote to Comalco saying that it
was "primarily a 'Trans-Tasman Freight Forwarder' and as
specialists in the trade wish to submit rates...". The words
emphasised are those particularly relied upon by Comalco. In
the third paragraph of the letter of 19 October 1988 there
 appeared the words, "Mogal are ideally positioned to provide
the complete door to door service required." This statement
was also relied upon.

26. Reliance was next placed upon certain words in a letter

from Mogal to Comalco dated 13 October 1989 which quoted
certain rates for the carriage of aluminium product to New
Zealand. The words were, "Door Yennora to door New
Zealand ports" and, "consolidate into 6.1 m. container."
Similar statements were made in letters from Mogal to
Comalco dated 22 December 1989, 16 January 1990 and 31
May 1990. All these statements were relied upon as
representations notwithstanding that those contained in the
letter of 31 May 1990 were made after the carriage in
question had been completed.

27. The statements in the three letters together with the

consignment note earlier referred to are apparently relied
upon to support the first of the representations sued upon,
namely, that Mogal would exercise reasonable care in stuffing
the coils into the containers and in the door to door carriage
as well as that relied upon in paragraph 19 that Mogal was
sufficiently skilled and competent to perform the work.

28. Also relied upon for the purpose of establishing the

representation alleged in para. 19 of the statement of claim
were statements made in each of two brochures. The first of
the brochures was sent to Comalco by Mogal with one of its
early quotations. The title page of the brochures prominently
displayed the name "Mogal". Underneath it in large print were
the words, "Trans-Tasman cargo efficiency". On the second
page appeared the statement, "The 18 years of experience
and a high degree of skill and professionalism in the Trans-
Tasman service is now further strengthened with the
combined expertise of Australian and New Zealand personnel,
backed up by a wide range of modern premises, equipment
and service facilities." Page 2 also described Mogal as "a
major trans Tasman freight forwarder" and added, "with over
18 years experience in the trade Mogal have the answers to
every question, with officers and skilled staff at all main ports
ready to smooth away any problems making sure your cargo is
to your buyer FAST. Our rates are keen, our service the
best ...". On the third page were the statements:-

"* Customs approved terminals and specialised equipment. * The

experience that goes with being a 'pioneer' forwarder in the Trans
Tasman service. * A wide range of handling equipment for general,
hazardous, refrigerated cargo and provision for overweight and
overlength loads. * One phone call, one invoice all under one roof. *
Door to Door Trans Tasman and Trans Bass Service."

29. The second of the brochures was sent with Mogal's letter
of 31 May 1990. As noted, the carriage in question was
performed in April 1990 over a month before the letter was
sent. It is difficult to see why any representation made in that
letter or the brochure sent with it could be material to the
circumstances of this case. I do not therefore take time
referring to the specific parts of that brochure relied upon by
Comalco in support of its case. The first of the conversations
relied upon took place between Mr. Martin of Comalco with
Mr. Anderson of Mogal. Mr. Martin is the Manager, Marketing
and Sales Administration, of Comalco and Mr. Anderson was
Mogal's National Marketing Manager. According to Mr.
Martin, Mr. Anderson said that the fee which was to be
negotiated would reflect the whole cost of the operation and
that Mogal would perform the task, in relation to each
consignment, of consolidating and packing the goods after
they were collected from Comalco's premises. Mr. Anderson
also said that loading facilities to properly handle the product
would be available. Mr. Anderson said that Mr. Martin would
provide a more competitive service than that which Comalco
enjoyed and added that Mogal were specialists in the
Australia/New Zealand trade and that it had available the
necessary equipment to deal with the shipment of the coils.
Mr. Anderson said that he understood that the equipment
would include the necessary gluts, chocks and dunnaging.
Gluts are wedges of wood or iron. Chocks are wooden chocks
used to secure cargo in place, here aluminium coil in
containers, and dunnaging is any form of material stowed
among and beneath the cargo of a vessel to keep it from
injury.

30. Finally it was said that the representations relied upon

were implied by reason of an invitation accepted by Mr.
Martin to visit Mogal's premises and inspect its facilities.

31. In his affidavit, Mr. Anderson said that he had not given
any specific undertaking as to how any cargo would be
packed. I think that is probably true. But this is not
inconsistent with his having given assurances concerning the
capacity of Mogal to do the work properly. The probabilities
are that he did give assurances of this general kind. To have
 done so would have involved no more than stating what was to
be found in writing in some of the letters and in the brochure.
To the extent that there is any difference between the two
witnesses, I prefer the evidence of Mr. Martin because I think
it is in accordance with the probabilities. But, in saying this, I
do not consider there to be any significant conflict in the
evidence of the two witnesses.

32. I propose to deal with the causes of action based directly

or indirectly on the Trade Practices Act first of all. I take this
course because my conclusion in respect of these causes of
action may have a bearing on the outcome of what I have
compendiously called the contractual causes of action. That
would be especially so if I acceded to Comalco's submission
that the term provided for in s.74 of the Trade Practices
Act was implied in the contract between the parties. But
before I deal with any of the causes of action, I need to make
findings, so far as the evidence enables me to do so
concerning the cause or causes of the damage to the coils.

The Cause of the Damage

33. Survey evidence was given by Mr. S.L. Mackie of Auckland. His
evidence is not in contest. His evidence was given by affidavit
which verified a report he had made. Mr. Mackie is a marine
surveyor and loss adjuster in the employ of Robins MBS (NZ)
Limited. He is a Lloyds surveyor.

34. Mr. Mackie said that the cargo was discharged from the
"Oceania Trader" on 12 April 1990. Four surveys were
conducted. He referred to the detail of these. Exhibited to his
affidavit is a bundle of photographs that he took of the
containers during his inspection. He observed that four
containers had been heavily damaged and holed. He said that
three other containers were also damaged but I gather not so
severely. When he arrived at the wharf the coils had been
removed from the four damaged containers and placed under
a canopy. Later eight more containers were examined. Three
of these together with their contents were undamaged. The
remaining five were subject to minor impact markings and
showed movement of the stow.

35. Mr. Mackie said the majority of the containers contained

four coils. Three of the 15 containers contained three coils.
Each of the coils was secured to a wooden pallet by way of
steel banded strapping which criss-crosqed each coil and ran
 underneath the pallet base. The steel bands were secured
between wooden skids. The securing of the coils to the pallet
base was performed by Comalco Aluminium. The combination
of the weight of the coil (approximately five tonnes) and the
steel strapping was the method by which the individual coils
were secured to the pallet base. No other restraints were
employed. In particular, no chocks were used. He thought that
the use of wooden chocks nailed around the base of each coil
would have assisted the steel strapping to resist movement of
the coil upon the pallet. Mr. Mackie said that it was his view
that the failure to chock the coils contributed to the
movement of the coils during the voyage, but he also said that
he estimated that 50 per cent of coils which were shipped
from Australia to New Zealand were shipped without the use
of chocks.

36. He concluded that the individual pallets had "rotated"

within the containers during the voyage. Once the pallets
were allowed to move, the strapping became insufficient to
hold down the coils themselves. Consequently they were free
to move about within the container. He thought that the
movement was due to a failure properly to secure the coils
within the containers. The uniformity of damage which he
observed suggested to him that the damage to each container
was caused by the shifting of coils within it.

37. Annexed to Mr. Mackie's affidavit is a survey report

prepared by him. The report is on a standard Lloyds form. The
report said that 15 coils were crushed, abrased and impacted
and that there was fresh water damage to one coil discovered
subsequent to delivery. That is a matter which has been the
subject of an undisclosed agreement between the parties. It is
not a matter which requires separate consideration.

38. The report contains a detailed description of the damage

which was suffered by each container and each coil. It is
noted in the report that a Mr. Stanaway of Owens
International Limited had advised that he received advice
from the vessel's agent that it had encountered heavy seas
during a voyage on 6 and 7 October 1990. I have not
understood the relevance of this bearing in mind that the
voyage in question took place in April 1990. I suppose,
however, it could be said that it is indicative of the likelihood
that vessels crossing the Tasman Sea may encounter heavy
weather. On the other hand, it has also to be said that heavy
 seas are not unusual anywhere and are something which
vessels should have little difficulty in coping with.

39. The remaining evidence which bears on the question of

causation consists of answers to interrogatories made by
Mogal. Interrogatory 1(h) asked what steps, if any, were taken
to prevent the shifting of the contents of each container at the
time of stuffing, advising the nature of any materials used.
The stark answer to this interrogatory was "None".
Interrogatory 1(h) asked whether, at the time of stuffing each
container, Mogal had any written instruction or guideline as
to the steps to be taken to prevent movement of the contents
stuffed into the container. The answer was "No". These
answers to interrogatories, particularly the answer to the first
constitute admissions that the coils were not properly packed.

40. Despite Mr. Mackie's evidence that, in his experience,

only about 50 per cent of coils loaded into containers were
chocked, it seems to me that the tenor of his evidence
establishes that failure to use chocks and to take other steps
to secure the coils safely within the containers amounts to bad
practice. Failure to take these steps is indicative of improper
and negligent packing. In this respect, one must take into
account the fact that the containers will be loaded on to
vehicles by crane, unloaded from those vehicles on to a wharf,
loaded from the wharf into a ship, shipped across a sea which
is noted for its rough weather, unloaded on to a wharf at the
point of discharge, loaded on to another vehicle and unloaded
at the point of destination. The coils weighed five tonnes each.
Any movement of them, or even one of them, inside a
container would be likely to be productive of damage to the
container and to one or more of the coils. Secure packing was
essential to the proper and safe transportation of them. That
is to do no more than state the requirements of common
sense.

41. So much was not contested by counsel for Mogal who

submitted that the sole cause of the damage was inadequate
packing by her client. No doubt that submission suited
Mogal's case because the acceptance of it would place the
case squarely within the exception clauses included in the
conditions endorsed on the back of the consignment note. Bill
of lading or not, conditions 3 and 4 would apply because the
problem arose prior to the loading of the coils on board the
vessel.
42. Counsel for Comalco contended that a cause of the
damage was faulty packing, but he contended that there were
two causes. The other cause, so he submitted, as poor
handling during loading or discharge or inadequate securing
of the containers on board the vessel.

43. I think the most likely cause of the damage was the
movement of the vessel during the voyage with the
consequent disturbance of improperly secured coils in the
containers causing them to move and to damage both the
containers and themselves. It is possible that the damage was
caused during loading or unloading operations, or perhaps
during the carriage of the containers to the wharf but this
seems to me to be unlikely.

44. Counsel for Comalco pressed upon me a submission that

it was unlikely that the damage was caused only by
inadequate packing. The submission was based on the fact
that not all containers were damaged and further, that some
were only slightly damaged whilst to others the damage was
severe. In counsel's submission, if the sole cause were
inadequate packing and the dislodgment of the coils by the
movement of the ship, all containers might have been
expected to be similarly affected. He submitted that I should
infer that, although the inadequacy of the packing played a
part, there must have been a further factor such as a mishap
during loading or a failure properly to secure the containers
on the vessel. Thus two causes operated independently to
produce the damage.

45. I reject the submission. I think it contends for an

improbable explanation of what occurred. It is contrary to the
general tenor of Mr. Mackie's evidence. Furthermore, it is not
quite correct to say that only some of the containers were
damaged. Of the 15, four were badly damaged and three
others were damaged but not as severely as were the first
four. Of the remaining eight, five were the subject of minor
impact markings and showed movement of the stow. Only
three were not damaged at all. I think such unevenness of
effect on the containers and the coils as there was is
explained by the likelihood that, depending on their position
in the ship, some containers, and thus the coils they
contained, must have been affected by the movement of the
vessel at sea to a greater extent than were others. All this
involves a degree of speculation, but I think inadequate
 packing and ordinary movement of the vessel a safer
conclusion than any other.

46. This conclusion has been reached without resort to the

question of onus of proof. I should mention, however, that, if
onus of proof had come into the matter, there may have been
a complication. In relation to the Trade Practices causes of
action, Comalco carries the onus of establishing the cause of
the damage. But, in relation to the contractual claims, the
position may be different. Comalco Aluminium entrusted the
coils to Mogal which was obliged to deliver them in good
order and condition to New Zealand Can in Auckland. For
Mogal to resist liability under the contractual claims, it needs
to establish the cause of the damage and to show that that
cause was not one for which it was responsible or in respect
which it has an immunity from suit. Theoretically at least
there could have been a different outcome for each group of
causes of action. But I can put those considerations aside
because I am satisfied that the cause of the damage was, as I
have said, improper or inadequate packing for the voyage and
the effect on the containers so packed of the ordinary and
expected movement of the vessel.

Trade Practices Act. s.74

47. That being my finding on causation, I can now approach the
causes
of action upon which Comalco relies. The first cause of action with
which I deal is that which depends upon s.74 of the Trade Practices
Act. Section 74 so far as relevant is as follows:

"74. (1) In every contract for the supply by a corporation in the

course of a business of services to a consumer there is an implied
warranty that the services will be rendered with due care and skill
and that any materials supplied in connexion with those services
will be reasonably fit for the purpose for which they are supplied.

(3) A reference in this section to services does not include a

reference to services that are, or are to be, provided, granted or
conferred under

(a) a contract for or in relation to the transportation or storage of

goods for the purposes of a business, trade, profession or
occupation carried on or engaged in by the person for whom the
goods are transported or stored or
(b) a contract of insurance."

48. As mentioned s.68 of the Act avoids any term of the

contract that purports to exclude, restrict or modify, inter
alia, the term implied by s.74.

49. In the submission of counsel for Mogal s.74 has no

application to the contract here because the contract is a
contract for or in relation to the transportation of goods for
the purposes of a business carried on or engaged in by the
person for whom the goods were transported, namely,
Comalco. Counsel for Comalco met this submission by
contending that the contract between Comalco and Mogal was
not one essentially or solely for the transportation of the
goods in question. It was a contract that had a number of
aspects one of which was that Mogal would securely pack the
coils into containers. Insofar as the contract required packing
to be done, it was not a contract for the transportation of
goods but a contract for packing them.

50. I have reached the conclusion that this submission

should be rejected. In my opinion the proper approach to the
construction of the words "contract for the supply ... of
services to a consumer" in subsec. 74(1) is to construe the
expression broadly and in a common sense and commercial
way. A similar approach is required in relation to the words,
"a contract for or in relation to the transportation ... of goods
for the purposes of a business, trade ..." in subsec.74(3). The
purpose of the contract was to secure the movement of a
number of aluminium coils from Comalco's premises at
Yennora near Sydney to the premises of New Zealand Can in
Auckland. Necessary incidents of that contract were the
picking up of the coils from Comalco's premises, the carriage
of them to Mogal's depot, the packing of them into containers
in which they could be shipped and the carriage of the
containers to the wharf where they would be loaded on to a
vessel. In my opinion it is not right to split the contract up into
one involving a contract for the supply of the various types of
services that were required to achieve the purpose of the
contract, namely, the movement of the coils from Sydney to
Auckland. I think this contract was plainly a contract for the
transportation of goods. The provisions of subsec.74(3) of the
Act therefore apply and operate to remove this contract from
the reach of subsec.74(1).
 51. There is no authority directly in point on the question.
But I mention in passing the judgment of Wilcox J at first
instance in E. v. Australian Red Cross Society (1991) 27 FCR
310 at 353 - 355 where his Honour dealt with the suggested
application of ss.71 and 74 of the Trade Practices Act to the
circumstances of that case. I refer also to the judgment of
Lockhart J on appeal in relation to his treatment of the
appellant's argument based on s.71 of the Act ((1991) 31 FCR
299 at 304-306).

52. Before leaving s.74, I should mention that, although it

applies only in cases where there is a contract for the supply
of services-to a consumer, the section was capable of applying
to this contract because the amount of the freight payable
under the contract was less than $40,000; see subsec s.4B(1)
and (2).

Trade Practices Act. s.52

53. I turn to the case based on s.52 of the Trade Practices Act. I
find the representations relied upon by Comalco to have been made
by Mogal. The letters and the brochure which are relied upon
provide clear evidence of them as do the statements made by Mr.
Anderson to Mr. Martin. A further factor which supports their
having been made is the course of dealing between the parties.

54. That, is only the starting point. A consideration of Mr.

Martin's evidence reveals that, although Comalco Aluminium
and Mogal had negotiations in 1988 and 1989, Mogal did not
carry aluminium can body stock, i.e. coils, until 1990. Some
other products were the subject of agreements between them
but these were much lighter than the coils. At all times the
freight forwarder used by Comalco Aluminium has been a
company known as Tradex. It was Comalco's practice to call
for tenders from time to time from other freight forwarders
really to see whether Tradex's prices were competitive.
Although Mr. Martin satisfied himself, if not in 1988, then
certainly in 1989, that Mogal was capable of transporting the
coils, he continued to use Tradex.

55. In the early months of 1990 he became, at least

temporarily, dissatisfied with Tradex. I think he decided to use
Mogal for a time, not so much because he really wanted to
change contractors but in order to teach Tradex a lesson by
bringing it home to it that he did have an alternative
forwarder capable of doing the work. It was in this way that
 Mogal was engaged to trnnsport its first consignment of coils
in February 1990. Two further consignments were despatched
in March and the subject consignment in April. Apparently the
February and March consignments arrived undamaged.
Before the February consignment, Mogal had made a further
quotation. It was made on 16 January 1990 and replaced
earlier quotations.

56. Against this background it is necessary to consider

submissions made by counsel for Mogal on the question of
reliance. The first matter to be considered is the significance
of the brochure. Mr. Martin was not sure whether his was
sent in 1988 or 1989. If it was sent in 1989 it was sent after
he had satisfied himself that Mogal was capable of doing the
work. He was cross-examined about the extent to which he
relied on the brochure. He was asked whether, if he had
received the brochure with the quotation of 13 October 1989,
he would have read it prior to agreeing to use Mogal's
services. He said that he would not. The cross-examination
continued:-

"And if you'd only received the brochure with the second quotation
in October 1989, and you'd agreed to use Mogal Services prior to
that nothing in it could have influenced you to use Mogal? Would
you agree with that? ---Well, yes, I would agree with that because
I'd have inspected their premises. Now, you put a lot of emphasis,
did you not, on inspecting the premises of Mogal, is that right? ---
Yes.

You've had a great deal of experience in the shipping of bodystock,

have you not? ---Yes. And do you regard yourself as something of an
expert as to how it should be properly done? ---I wouldn't say I'm an
expert but, yes, I have a pretty good knowledge of it.

Yes. You've seen how it's done with other freight forwarders for
instance? ---Yes. And when you went to the premises of Mogal you
had a good look around, did you? ---Yes. And you satisfied yourself,
at least so far as you could see, that it was adequately fitted out to
be able to handle this product? ---That's right."

57. Leaving aside the significance of Mr. Martin's inspection

of the Mogal premises, with which I shall deal as a separate
matter, the point which counsel for Mogal makes is that it is
not open to Comalco to rely on the brochure because the
evidence does not establish that it played any part in Mr.
Martin's decision to engage Mogal to carry any of the
 consignments. Subject to what will be said a little later, I
think that submission is correct.

58. Then it is said that Mr. Martin made his own judgment of
Mogal's competence to do the work. He made an inspection of
Mogal's premises for the specific purpose of satisfying himself
that it had the equipment and capacity to do the work. So
much emerges from the evidence given by him in the passage
just cited from the transcript. Moreover, Mr. Martin said that
he had been to Tradex's premises to see how the coils were
packed. Before that, trials had been done in the Comalco
aluminium factory. Mr. Martin agreed that the practice was to
interleave the pallets to stop them moving and to wedge them
in. He said that that was one of the ways but that dunnage
could also be used to stop movement against the pallets.
Sometimes, so he said, both dunnage and interleaving were
used. He agreed that there were occasions when all that was
done was to interleave the pallets but added that the correct
way was that dunnage "should be against each one of them,
against each pallet." He aso agreed that it was not the
invariable practice for all coils to be chocked before shipment.
The cross-examination continued:

"Why then do you say in your affidavit, Mr. Martin, that you
understood that the equipment would include the necessary gluts,
chocks and dunnaging and you wouldn't have engaged the services
of Mogal but for that belief? ---Well because one of the factors that
you do use them for is to make sure that your cargo doesn't move.
It's quite possible when you interleave it. I mean they might just
pack it and leave the last coil next to the door and that might just
fly out so we have to make sure that the way they pack containers
is the way other people use it and we are quite happy that it is safe.

Didn't you say a little earlier that you'd seen a different method
used, one with the pallets interleaved - - - ? ---Yes, but there's still
dunnage against it or at least nails nailed to the floor."

59. Mr. Martin agreed that he had had a discussion about

interleaving the pallets with Mr. Anderson and also about
making sure that the pallets did not move.

60. Neither Nr. Martin nor any other employee of Comalco

Aluminium watched the packing process at Mogal's depot in
relation to any of the consignment of coil which it undertook
between February and April 1990. Thus he was not to know in
what manner the coils were actually packed. In particular he
 did not know whether the pallets were in fact interleaved,
whether they were chocked or whether dunnage was used.
But he had made it clear to Mr. Anderson how important it
was that the coils not move in the containers. Plainly enough
Mr. Anderson understood that; and, as I have indicated, it is
only common sense that those precautions should be taken.

61. If one puts aside the brochure, as I think one should in

the light of Mr. Martin's evidence, there remain the two
letters, particularly that written on 19 October 1988 in which
Mogal described itself as a specialist in the Trans Tasman
freight forwarder service. The letter also said that Mogal was
"ideally positioned" to provide the complete door to door
service which was required. The letter was written in
response to the request for a quotation sent by Comalco
Aluminium on 14 October 1988 in which it was plainly stated
that the product to be shipped was aluminium coil, plate,
sheet and foil with at least 80 per cent "predicted to be rolls
of coil" each weighing 5 to 6.5 tonnes. It was also said that up
to four of these coils were to be loaded into each container.
When Mogal made the claims it did about its competence, it
made them well awsre of the nature of the work which would
be involved. In the discussions which followed in 1989 nothing
was said by either party to suggest that Mogal had not
understood the significance of shipping five tonne coils. Mr.
Martin's conversation with Mr Anderson made it clear that, if
the coils moved in the containers, there could be a problem.
Both men proceeded on this basis.

62. The representation made in writing in the letter of 19

October 1988 ought therefore be regarded as one which
continued to have effect during 1989 and into the early
months of 1990 when Mogal began to carry coils. Everything
that Mogal wrote, said and did was predicated upon its
competence to do the job properly. If the brochure was sent
with the letter of October 1989, it simply confirmed, perhaps
in a little more detail, Mogal's competence.

63. It follows that, when Mogal undertook the consignments

which were carried from February to April 1990, it was by
implication continuing to engage in conduct which involved it
in representing itself as, or holding itself out to be, a
competent and skilled freight forwarder which would pack
and transport each consignment with a proper degree of
competence and skill. The assurances given in writing and
orally to Mr. Martin had continuing effect; they are not to be
 regarded only as assurances which were indications of Mogals
future intention to bring a proper degree of skill and
competence to the task. There was no point in their being
made unless they continued to apply, and did apply, at the
critical time of the handling of an actual consignment.

64. In my opinion it is clear from the general tenor of Mr.

Martin's evidence that he would not have engaged Mogal at
all had he not relied upon and been persuaded by the
statements made by Mogal and conduct engaged in by it
which indicated to him that it was claiming to be a reliable
freight forwarder capable of doing the work in question. It is
true that his immediate reason for engaging Mogal was
because of his difficulties with Tradex. But he would not have
been rash enough to use a forwarder in which he had no
confidence simply to teach Tradex the lesson he thought it
needed to learn. Unless he were confident of Mogal's capacity
to do the work properly, he would not have entrusted any
consignment to it.

65. Counsel for Mogal submitted that the evidence

established that Mr. Martin had relied on his own inspection
of Mogal's premises and equipment and had not relied on any
statements or conduct made or engaged in by Mogal. But his
inspection could have reassured him only about some things.
He could see the nature of Mogals equipment, particularly its
forklift trucks, and that the nature of the premises would
permit the storage of the coils under cover, a matter of great
importance to Mr. Martin. But, although it was clear both to
Mr. Martin and Mr. Anderson that the coils were to be packed
in the containers in such a way as to ensure, so far as
possible, that they would not move inside the containers,
packing was a matter which Mr. Martin had to leave to Mogal.
It was not contemplated that he or any other Comalco
representative would oversee the packing operation. It was
left to Mogal to do it properly. In leaving matters in this way,
Mr. Martin did so reassured by Mogal's statement that it was
competent to carry out packing of the coils, as well as all
other aspects of the work.

66. In all the circumstances, therefore, I am satisfied that

Comalco Aluminium relied upon the representations which
were made to it both expressly and by conduct.

67. The next question is whether Comalco Aluminium has

established that the representation was false, really whether
 the conduct engaged in by Mogal was, in the circumstances,
misleading or deceptive. As counsel for Mogal submitted, the
fact that a person engaged in a profession or trade may
occasionally do work incompetently or badly does not of itself
estsblish a general incompetence or a general lack of capacity
to do what is requred. It may amount to a breach of a contract
or warranty, but it will not be generally indicative of
incompetence. Here we know that there were three earlier
consignments of coils carried out by Mogal for Comalco
Aluminium. Apparently these were undertaken without
damage.

68. The evidence, particularly that of Mr. Mackie,

establishes that the containers and coils in question arrived in
a badly damaged condition. The evidence establishes that that
damage was caused by inadeguate packing. That is the finding
which I have made. However, if there were no more, I would
not regard the case as being one in which Comalco had
established incompetence and lack of skill on Mogal's part. I
would have taken the view that the evidence established no
more than that there had been a lapse on one occasion from a
standard which usually applied. The difficulty for Mogal stems
from the answers it made to Comalco's interrogatories. I have
earlier set these out. Mogal has admitted that it took no steps
whatsoever to prevent the shifting of the contents of each
container at the time of stuffing. It was asked to identify the
nature of any materials used. The answer it has given means
that no materials were used. Furthermore, Mogal has
admitted that it had no written instruction or guideline as to
the steps to be taken to prevent movement of the contents of
each of the containers.

69. The evidence of Mr. Martin establishes that it was

common ground between Mr. Anderson and himself that the
pallets would be interleaved. It also establishes that their
common expectation was that dunnaging, if not chocks, would
be used. The answers to the interrogatories, which ought to
be taken at their face value, establish that none of these
precautions was taken. I could not be satisfied that there was
interleaving of the pallets nor could I be satisfied that any
dunnaging was used. Mr. Mackie's evidence does not tell one
whether there was interleaving of the pallets because, at least
in the damaged containers, the pallets themselves were badly
damaged. The photographs show broken timber in the
bottoms of the containers. His evidence does establish that no
dunnaging was used.
70. It would have been open to Mogal to lead evidence about
its practice in relating to packing the containers. If it were the
fact that interleaving was usually done and was regarded as
sufficient or if it be the fact that that precaution coupled with
the use of dunnaging was usually taken, one might have been
prepared to discount the starkness of the answers to the
interrogatories. But no such evidence was led and no
explanation was offered of how it came about that the damage
occurred. There is not even evidence to the effect that usually
packing was done properly but that there was an omission on
this particular occasion. For all the evidence discloses each of
the consignments may well have involved the packing of the
coils without interleaving the pallets and without any other
precaution.

71. That being the state of the evidence, I think it is clearly

open to me to draw the inference that Mogal was in fact
incompetent in packing the containers. Absence of evidence
from it on this point enables me the more confidently to draw
that inference. I do not think that it is going too far to say
that, once the unexplained answers to interrogatories are
taken into account the whole exercise reeks of incompetence.
The evidence warrants no other conclusion.

72. In the result I find that Mogal was incompetent, lacked

the necessary skill to do the work and thus engaged in
misleading or deceptive conduct when it represented, and
continued to represent, that it was competent and skilled.

73. It follows that I have reached the conclusion that

Comalco is entitled to succeed on the cause of action based
on s.52 of the Trade Practices Act insofar as the first part of
para.l9 of the amended statement of claim is concerned. That
part of the paragaph alleged that Mogal represented that it
was sufficiently skilled and competent to perform the door to
door carriage which was involved. It also alleged that Mogal
would use the necessary equipment to perform the task. That
representation, I am satisfied, was made, but it is of a
different character from the other representation in the
paragraph. Unlike the earlier part of the paragraph it does not
involve a representation that Mogal was generally skilled and
competent to do the work; rather it is a statement that in
performing the work, it would use the necessary equipment.
To that extent it is to be likened to the representation alleged
in para.18 of the amended statement of claim with which I
now deal.
 74. The allegation in para.18 was that Mogal represented
that it would exercise reasonable care in stuffing the coils into
the containers and in the door to door carriage. In a sense
that representation, if made, was co-extensive with implied
terms of the contract between the parties. There is always a
question whether a statement which is promissory may also
be regarded as a representation. That is not always an easy
question to answer. I am saved the need to answer it here for
the following reasons.

75. The representation is a representation as to future

conduct. It differs from the representation made in the first
part of para.l9. A statement as to future conduct will only be
found to be misleading if its maker is shown not to have had
reasonable grounds for making it at the time it was made. The
onus used not to be an easy one for an applicant for relief to
discharge. But more recently proof of lack of reasonable
grounds for belief has been facilitated by the provisions of
subsec.51A(2) of the Trade Practices Act. However, counsel
for Comalco expressly declined to rely on s.51A. I have
accordingly left it out of account. Having done so, I have
reached the conclusion that, although the coils in question
were damaged by improper packing, I cannot be satisfied on
the evidence that, at the time the representation alleged in
para.18 was made, Mogal did not have reasonable grounds for
making it. I therefore reject the causes of action based on
para.18 and the second part of para.l9 of the amended
statement of claim. But, as earlier said, I find the cause of
action based on the first part of para. 19 established.

The Contractual Causes of Action

76. I have reached the conclusion that these must fail. My finding
on
the question of causation is determinative of them. There are
substantial issues concerning the nature and operation of the
consignment note. Is it a bill of lading or simmilar document of title
within the Sea-Carriage of Goods Act? If it is, The Hague Rules are
applicable to it. If it is not, does s.4 of the Act nevertheless operate
to make the rules applicable? For the moment I put these questions
aside and assume, without deciding, that the rules are, for one
reason or another, applicable to the contract between the parties.
Comalco must nevertheless fail because the cause of the damage
was faulty packing by Mogal, an event which happened well prior
the loading of the coil on to the vessel. If the rules are applicable,
Article VII permits the parties to enter into any agreement as to the
liability of the carrier for loss or damage to goods prior to the
loading of them on to the vessel which is to carry them. Conditions
3 and 4 endorsed on the back of the consignment note would thus
be unaffected by the application of the rules. Article III, rule 8
would not operate to modify or override the two conditions in their
application to what occurred at Mogal's depot when the coils were
stuffed into the containers.

77. It is plain that it is the carriage by sea to which the rules

are directed. This is made clear in Article I in the definition of
"Carriage of goods". It covers the period from the time when
the goods are loaded on to the vessel to the time when they
are discharged from it. I refer also to the definition of
"Contract of carriage" which has earlier been set out.

78. The same result may be reached by a different route. If

the rules are applicable, Article III, rule 2 will not operate to
render Mogal liable for the damage if the cause of the damage
was due to one or more of the circumstances provided for in
Article IV, rule 2. Here the cause of the damage was
inadequate packing or stuffing of the coils by Mogal, the
matter specifically provided for in para. (n) of rule 2 of Article
IV. The fact that it was Mogal which was responsible for the
faulty packing does not help Comalco. Again the provisions of
conditions 3 and 4 operate to exempt Mogal from liability.

79. Although the matters which I have mentioned dispose of

the contractual causes of action, I should say something about
the submissions concerning the suggested operation of the
Act and the rules and the question whether the consignment
note is a bill of lading or similar document of title. I dispose,
first of all, with the submission that, irrespective of whether it
is or not, s.4 of the Act operates to make the rules applicable.
I reject this submission. Section 4 operates to give the rules
contained in the Schedule to the Act effect in relation to and
in connection with the consignment of goods by sea in the
circumstances there provided for. Thus, in order to construe
s.4, one needs to take into account the provisions of the rules.
The expression "Contract of carriage" as defined in Article I of
the rules applies only to contracts of carriage covered by a bill
of lading or any similar document of title. The purpose of the
rules is to provide a code or regime which will govern
contracts of carriage by sea as defined in the rules. The
apparently unqualified words of s.4 of the Act must therefore
be read down so as to limit their operation to what it is to
which the rules apply, namely, contracts of carriage covered
 by bills of lading or similsr documents of title. Furthermore,
s.4 must be read in context. Part of that context includes s.6
which provides that every bill of lading or similar document of
title is to contain an express statement that it is to have effect
especially to the provisions of the rules. Thus s.6 reflects a
general consistency between the Act and the rules set out in
its Schedule. The Act, read as a whole, evinces a clear
intention that it is to apply only to the types of transactions
referred to in the rules, namely, transactions evidenced by
bills of lading or similar documents of title.

80. Before leaving this matter, I should say that I was

referred to no authority which lent support to Comalco's
submissions. On the other hand there are numerous
statements in texts and authorities which proceed on the
assumption that it is only to bills of lading or similar
documents of title that the rules apply. I should also say that I
have considerd the submission made by counsel for Comalco
based on Article VI of the rules. I reject his contention that the
significance of the Article for present purposes is that it lends
support to the view that the only sea carriage of goods outside
the rules which the Act permits is one governed by a special
agreement made pursuant to Article VI. If the submission
were correct, it would mean that any shipment which was the
subject of a charterparty and not a bill of lading could
nevertheless be governed by the rules. That could not be
correct.

81. It remains to consider whether the consignment note is,

or is evidence of, a bill of lading or similar document of title.
In order to assist me, counsel for Comalco provided a helpful
analysis of the contract between the parties stating the indicia
which he claimed should lead me to conclude that it was.

82. "Bill of lading" is not defined in the Act or the rules, but
it has three essential features, namely:-
1. It is a receipt by a ship owner acknowledging that the
goods

have been delivered to it for carriage.

2. It is evidence of the contract of affreightment between the

shipper and the carrier.

 3. It is a document of title by the endorsement of which the

property in the goods for which it is a receipt may be transferred or

the goods pledged or mortgaged.

83. By statute the rights and liabilities of the shipper under

the contract of affreightment may be transferred with the full
property in the goods to the consignee or the indorsee of the
bill of lading. The relevant provision in New South Wales is
the Sale of Goods Act 1923, s.50A. See generally Scrutton on
Charterparties and Bills of Lading, l9th ed. (1984) at 2.

84. Although the rules do not define the expression "bill of

lading", there are indications in them of what it must provide.
Thus Article III, rule 3 provides that, after receiving the goods
into his charge, the carrier, or the master or agent of the
carrier shall issue to the shipper a bill of lading showing a
number of things including the apparent order and condition
of the goods. Rule 4 provides that the bill of lading shall be
prima facie evidence of the receipt by the carrier of the goods
as described in accordance with rule 3.

85. The indicia of a bill of lading contained in the analysis

prepared by counsel for Comalco refers to a large number of
matters not all of which I propose to mention. I have,
however, taken them all into account. Essentially it is claimed
that:-
(a) The consignment note is a formal receipt acknowledging
that

goods as stated therein and in the condition also stated therein

have been received in to Mogal's custody for the purpose of
carriage by sea.

(b) The consignment note purports to be a memorandum or

evidence

of the contract of carriage setting out its terms.

(c) The consignment note purports to be a document of title

because of the reference to the consignee as "to order" and the
description of copies of the consignment note as "Negotiable
delivery orders". The document is not a "non negotiable document".

(d) The consignment note identifies the vessel, the port of

loading, the port of discharge, the voyage, the number of packages

and the expected date of departure of the vessel.

(e) The document relates to the carriage of goods by sea. (f) Mogal
has assumed the obligation of carrier under the

document which describes it as "the Carrier".

(g) The definition of "Carrier" in Article I of the rules is not

an exhaustive definition but an inclusive one so that the rules do

not require the carrier necessarily to be the owner or charterer of a
ship.

86. In her analysis of the consignment note counsel for

Mogal relied upon the provisions of conditions 5 and 11 which
I have earlier set out. Condition 5 confers the benefit of
exemptions or limitations of liability on servants of Mogal and
on any other person or company with whom it may arrange
for the carriage or other handling of the goods. Condition 11
provides that Mogal may carry all goods or have them carried
by any method on any usual terms which Mogal in its absolute
discretion deems fit. Comalco authorises Mogal to arrange the
carriage of the goods by an independent contractor or
subcontractor of Mogal. Mogal is empowered to enter into any
such contract or sub-contract as principal or as agent for
Comalco in aspect of the sea carriage of the goods. Any such
contract is deemed to be made by Mogal as agent for Comalco
and is to be subject to the terms of the regular form of bill of
lading in use by the contracting steamship company.

87. It was contended by counsel for Mogal that, at least in

relation to the sea carriage of the goods, it had entered into
the contract for the sea carriage of the goods as agent for
Comalco Aluminium and not as principal. I reject this
submission because it is my opinion from a reading of the
whole of the consignment note that Mogal contracted as
 principal to undertake the transportation of the goods from
Comalco's premises to those of New Zealand Can. The
carriage, as the consignment note makes clear, was door to
door. Condition 11 conferred upon Mogal the right to employ
an agent especially for the sea carriage of the goods. It was
empowered to enter into a contract with a ses carrier either
as principal or agent for Comalco. There is no express
evidence dealing with the question whether Mogal purported
to enter into the contract with Oceania Shipping Corporation
Limited as principal or agent but the ocean bill of lading
which covered the carriage of the goods in question was one
in which Mogal is described as the consignor and its New
Zealand agent as consignee. Furthermore, I think there is a
real question (which I do not need to decide) whether Mogal
could shed its own responsibility for delivering the goods by
employing agents. The tenor of the consignment note required
Mogal itself to see to the delivery of the goods to the
consignee. If Mogal contracted with a sub-contractor to
perform part of the work, it did so in relation to the sea
carriage of the goods and the pick up and delivery of them in
New Zealand as principal but subject, of course, to the
conditions endorsed on the back of the consignment note. If
Mogal did enter into the bill of lading as agent for Comalco, it
must have done so on the basis that Comalco was its
undisclosed principal. This may mean that Comalco is entitled
to proceed against the sea carrier if there were a failure to
deliver the goods in good order and condition, but it does not
mean that, for that reason, it loses its rights against Mogal.

88. The existence of freight forwarders has led to there

being a body of authority and practice concerning their
methods of operating and their rights and obligations qua
consignors and consignees which deal with them. I refer
generally to Freight Forwarders, D.J Hill (1972), particularly
to paras. 310 et seq., pp.l85 et seq. and to Schmitthoff's
Export Trade, 8th ed. (1986), especially at pp.249-252.

89. In a paragraph headed "Forwarder's Consignment Note"

Hill (op.cit.) says, para.316, p.l88:-

"A forwarder may also accept goods for forwarding under

consignment notes ssued in his own name, to be followed up in due
course by bills of lading issued by or on behalf of the carrier in
question where sea transit is involved. However, where sea and
land transit is to be effected, as in the case of most continental
shipments, this may either be by means of a through bill of lading
covering the whole transit, or else by bill in respect of the sea
transit, together with a waybill or consignment note in respect of
the land part of the carriage. Where a waybill is issued by a
forwarder for an international transit, it will usually be forwarded
to the latter's receiving agent, who will in turn prepare delivery
notes to enable the consignees to obtain possession of the goods.

It can therefore be seen that where documents relating to the

possession or ownership of goods are issued by a forwarder in the
course of his operations, it is essential to determine the exact
nature of the document ...".

90. Later Hill says (para.332, pp.197-8) that certain of the

larger forwarding companies issue documents of control
which are commonly called house bills of lading. They differ
from orthodox bills of lading in that the forwarder does not
issue a house bill in the capacity of a carrier, but with the
intention of substituting his own doucments of control for a
carrier's bill of lading. Hill says that one of the disadvantages
of a house bill to a shipper is that it is not issued by the actual
carrier but merely by a forwarder who has neither the means
nor the intention to perform any part of the operation.
Virtually all the obligations entered into by the forwarder will
be performed by a third party. Hill goes on to say:-

"Furthermore, by issuing his own house bill of lading, a forwarder

can restrict his liability as regards the transit without the need to
use any further contractual documents. In other words, by issuing a
house bill of lading to his client, a forwarder can often obtain the
benefits of acting as carrier without necessarily suffering any of the
disadvantages thereof. Where, however, the contract of carriage is
effected subject to the actual carrier's bill of lading, the forwarder
must introduce his own trading conditions as a separate
contractual document to limit his liability, or else he will be faced
with the problem of ensuring that they are brought to the notice of
his client in order to bind him, which in practice is not always easy
where a forwarder is dealing with a new client to whom notice of
the terms has not been given prior to a forwarding contract being
entered into."

91. In a paragraph headed "The forwarder acting as

principal or as agent" Schmitthoff (op.cit.) says (p.249):-

"A forwarder may act as a principal or as an agent. Historically,

forwarders acted as agents on behalf of their customers but the
practice has changed and in modern circumstances they often carry
out other services, such as packing, warehousing, cartage,
lighterage, insurance, or, in container transport, the groupage or
consolidation of parcels of various customers into one container.
Often they act as carriers. It follows that, in law, they qualify more
often as principals than as agents. Nevertheless, it has to be
ascertained in every individual case in which legal capacity the
forwarder acted. The answer depends on the construction of the
contract between the forwarder and his customer and the facts of
the case."

92. In Carrinaton Slipways Pty. Limited v. Patrick

Operations Pty. Limited (1991) 24 NSWLR 745, Handley JA,
who wrote the principal judgment, said (752-3):-

"The nature of the contracts that a forwarding agent makes with its
customer and its personal liability or otherwise on the contract of
carriage have been discussed in reported cases and in the
literature. These questions were considered at some length in the
judgment of the trial judge. One of the questions concerns the
nature of house bills of lading issued as such by forwarding agents
and their liability thereunder: see Hill (at 197-198) Tetley, Marine
Cargo Claims, 3rd ed (1988) at 707-708 and the article by Ian C.
Holloway, 'Troubled Waters: The Liability of a Freight Forwarder as
a Principal Under Anglo-Canadian Law' (1986) 17 Journal of
Maritime Law and Commerce

243. These questions do not directly arise in the present case. The
Peace Line bill, on its face, was an ocean bill. It was a house bill in
fact but its true character was concealed. Nevertheless I have
derived considerable assistance from the statement by the editors
of the l9th edition of Scrutton (at 384): 'A 'house bill of lading'
issued by a forwarding agent acting solely in the capacity of an
agent to arrange carriage is not a bill of lading at all, but at most a
receipt for the goods coupled with an authority to enter into a
contract of carriage on behalf of the shipper. It is not a document of
title, nor within the Bills of Lading Act, 1855, and it is unlikely that
it would ever be regarded as a good tender under a cif contract.'"

93. As Hill (op.cit.) has said in para.316 of his work, where

documents relating to the possession or ownership of goods
are issued by a forwarder in the course of his operations, it is
essential to determine the exact nature of the documents.
Likewise Schmitthoff (op.cit.) at p.249 said that it has to be
ascertained in every individual case in which legal capacity
the forwarder acted. The answer depends on the construction
 of the contract and the facts of the case. In the passage from
Scrutton (op.cit.) cited by Handley JA. in Carrington Slipways,
the editor of the relevant edition proceeds upon the basis that
the freight forwarder will be acting solely as an agent. That is
not the position here.

94. I have earlier referred to the three essential elements of

a bill of lading, a receipt for the goods, evidence of the
contract of affreightment, and it being a document of title. In
my opinion each of these elements is here present. The
consignment note is plainly both a receipt for the goods and
evidence of the contract of affreightment which, in my
opinion, was entered into by Mogal as principal. In addition to
the matters with which I have already dealt it may be
observed that it is referred to in the consignment note as
"Carrier".

95. So far as the question whether the consignment note is a

receipt is concerned, it is plainly such a document. It specifies
the cargo and the numbers of the containers into which the
coils are to be loaded. It is true that usually bills of lading are
not signed until goods are on board the vessel on which they
are to be shipped. The practice for masters or ships' agents
then to issue a clean (or qualified) receipt for the goods is the
usual practice. But I have found nothing in the texts or
authorities to which I have referred which suggests that a
receipt given before loading on to the vessel will render the
contract one which is not a bill of lading.

96. The next question is whether the consignment note was

document of title. It has the hallmarks of one. It is described
as a negotiable delivery order. There is a box, unfilled in in
this csse, which provides for endorsements. More importantly
the box headed "Consignee-Receiver" has the words "TO
ORDER" inside it. The name of the consignee which the
evidence makes clear was to be New Zealsnd Can does not
appear otherwise than as the party to be notified of the arrival
of the goods. All these matters point to an intention by the
parties to make the consignment note a document of title.

97. It follows that I am of opinion that the consignment note

is a bill of lading notwithstanding that it provides for steps in
the process of the transportation in question other than, or
additional to, the carriage by sea the details of which
appeared on the face of the note. As previously mentioned, the
name of the vessel, the ports of loading and discharge and the
 date of anticipated departure were all specified. If it should be
thought that the consignment note was not strictly speaking a
bill of lading then, in my opinion, it was plainly a similar
document of title.

98. Unfortunately for Comalco my conclusions about the

nature of the consignment note are of no assistance to it. In
order to succeed on the contractual claims, Comalco needs to
resort to The Hague Rules. It cannot get away from the fact
that these will apply only from the time of loading to the time
of discharge. The cause of the damage here occurred prior to
loading when Mogal failed properly to pack the coils. The
position is no different if one treats the consignment note, not
as a bill of lading, but as a similar document of title, because
the definition of "Contract of carriage" in the rules restricts
the application of the rules to similar documents of title
insofar as such documents relate to the carriage of goods by
sea. The evidence establishes that the sea carriage of the
goods was not the problem.

99. In effect the discussion on whether the consignment

note was a bill of lading or similar document of title has led us
back to where the discussion began. The Hague Rules will not
help Comalco because the damage was caused by negligent
acts or omissions which occurred prior to loading. I have felt
obliged to enter upon the discussion of the nature of the
consignment note in deference to the extensive submissions of
counsel about the matter. In fairness to them, they were not
to know what my findings on the question of causation would
be.

Conclusion
100. In summary Comalco's case, insofar as it is based on s.74 of
the Trade Practices Act and claims for breach of contract, breach of
Mogal's duty as a bailee and for negligence, fails. It succeeds in
respect of its cause of action under s.52 of the Trade Practices Act.
It follows that it is entitled to judgment in the sum of $173,264.36
together with interest. It is agreed by the parties that interest
should run from 11 April 1990 to the date of judgment. Interest up
to 10 March 1992 was agreed upon in the sum of $49,771.76. It
was also agrewd that interwst from 10 March 1992 should run at
$71.20 per day. To the figure of $49,771.76 should therefore be
added the sum of $26,700 making a total of $76,471.76 for interest.
There will accordingly be judgment for Comalco against Mogal in
the sum of $249,736.12.
101. In case my calculations of the amount of the interest are
not correct, I have reserved liberty to the parties to apply
provided that leave is exercised within seven days of today.

102. In relation to costs, a good deal of the time taken up in

the hearing was occupied in relation to matters upon which
Comalco has failed. The hearing occupied five hearing days. I
think justice will be done by an order that Mogal pay Comalco
one half of its costs. That is the order which I make.

103. That then leaves Comalco's action against the second

defendant, Oceania Shipping Corporation Limited. I need to
hear counsel for Comalco further in relation to that matter. In
particular, I need to be satisfied that it is a matter in which
Comalco should have leave to proceed against that defendant,
that Comalco Aluminium, whether as undisclosed principal or
otherwise (eg. by operation of condition 5(b) of the
consignment note), was a party to the ocean bill of lading and
whether I should be satisfied that there is evidence which
enables me to find that the second defendant was responsible
for the damage suffered by Comalco. In this respect I refer to
my finding on the question of causation which suggests to me
that the evidence establishes that the second defendant was
not responsible for the damage to the coils.

104. In the circumstances I propose to reserve leave to

Comalco to move for judgment against the second defendant
provided that any such application is notified to my Associate
within 14 days of today. There will be no need, of course, for
Mogal to be concerned in that application.