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CASE NOTE: MATTHEW SHORT & ASSOCIATES -V- RIVIERA MARINE (INTERNATIONAL) & ANOR NSW Court of Appeal

FACTS

A boat manufacturer in Queensland made a boat for a US buyer.

The manufacturer himself transported the boat by truck to Sydney.

The manufacturer engaged a forwarder to arrange for the overseas freight.

The manufacturer (as on prior occasions) arranged for the forwarder to transfer the boat to another truck for transportation to the wharf.

The forwarder engaged a trucking carrier for this purpose.

The carrier’s driver negligently damaged the boat when he drove into a low archway over a road.

The manufacturer sued both the forwarder and carrier for the cost of repairs.

The carrier had an exemption clause in its Terms and Conditions on its Consignment Note which had been signed by the forwarder.

ISSUES

Amongst the relevant issues -

Could the manufacturer sue the forwarder and/or the carrier successfully?

Could the carrier rely on its Terms and Conditions on a Consignment Note as a defence to the claim by the manufacturer?

Could the forwarder rely on the carrier’s Terms and Conditions on the Consignment Note as a defence to the claim by the manufacturer?

HELD

The Court held -

The manufacturer could not sue the forwarder because the forwarder never had “possession” of the goods and had engaged a competent carrier.

The manufacturer could sue the carrier because the carrier, having possession of the goods, owed the manufacturer a duty of care and was liable for its driver’s negligence.

The carrier tried to argue that the forwarder was the manufacturer’s agent when the forwarder signed the Consignment Note and that therefore this bound the manufacturer. The Court said that there was no such agency because:

• There was no written agreement between the manufacturer and the forwarder.
• The manufacturer had no control over who the forwarder engaged.
• The forwarder engaged subcontractors in its own name and did not advise the manufacturer of the terms of engagement.
• The carrier looked to the forwarder for payment - not the manufacturer.
• The carrier was paid by the forwarder. The forwarder was paid by the manufacturer for its fees plus the carrier’s charges which were itemised separately.

CONSEQUENCES

Because of the direct relationship between the forwarder and the carrier, the carrier was entitled to rely on its Terms and Conditions with the forwarder and be indemnified by the forwarder for the manufacturer’s claim.

SO THE FREIGHT FORWARDER ENDED UP WITH THE LIABILITY. He was not an agent and was held to have contracted in his own right with the carrier. He was therefore subject to the carrier’s terms and conditions and had to indemnify the carrier for the liability the carrier incurred to the owner.

The consequence of this case should be carefully noted if you are involved in freight forwarding. On the facts above, which are fairly standard, the freight forwarder has a direct relationship with the carrier and cannot pass on any liability it incurs back to the owner.

That position would be even more so if a freight forwarder “marks up” the costs of the third party services as this would most certainly remove any “agent” nexus between the parties.

If a freight forwarder wants the conditions between it and the carrier to apply to the owner, then THE AGREEMENT BETWEEN THE FREIGHT FORWARDER AND THE CARRIER SHOULD SPECIFICALLY HAVE A CLAUSE TO STATE THAT IT IS ENGAGING THE CARRIER IN THE FREIGHT FORWARDER’S CAPACITY AS AGENT FOR THE OWNER. It should also advise the owner that is going to act as its agent in engaging a carrier.

Louis Gross

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