In Matthew Short & Associates Pty Ltd v Riviera Marine (International) Pty Ltd and Anor [2001] NSWCA 281, the New South Wales Court of Appeal clarified the meaning of future goods under the Sale of Goods Act 1923 (NSW). Further, the Court considered the implications of the exclusion clauses used by agents, but not provided to the owner.

Facts

In 1997, a broker purchased, on behalf of his client, a boat from Riviera. Riviera engaged a forwarder, Short, to arrange for the boat to be transported via overseas freight. It was agreed that Riviera was to transport the boat to a parking lot in the Port of Botany, where a mobile crane operator arranged by Short would lift the boat onto a low-loader.

Short engaged Campbell to pick up the boat with its crane and transfer the boat onto a low-loader. Campbell agreed to provide a low-loader and driver to Riviera under the Conditions of Carriage dated 12 August 1996.

Clause 3 of the Conditions of Carriage stated:

“Subject to cl 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 stated:

“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.”

On 12 August 1997, Campbell lifted the boat onto a low-loader and drove negligently beneath an archway causing damage to the boat.

Riviera sued Short and Campbell for the cost of repairs. Riviera alleged that there was a contract of bailment between it and Short. Short cross-claimed against Campbell for indemnity or contribution by relying on clause 21 of the Conditions of Carriage.

On 19 May 2000, verdict in favour of Riviera was made. Short was ordered to indemnify Campbell under clause 21 of the Conditions of Carriage. Short appealed and Campbell cross-appealed.

Campbell attempted to argue that:

  1. Riviera was not the owner of the boat and therefore lacked standing to sue;
  2. in the alternative, Short was a bailee and Campbell was a sub-bailee, and therefore Riviera was bound by clause 3 of Conditions of Carriage; and
  3. in the alternative, Riviera was bound by clause 3 of the Conditions of Carriage, because Short entered the contract with Campbell as agent for Riviera.

Appeal

Heydon JA (Meagher JA and IPP AJA concurring) in allowing the appeal and dismissing the cross-appeal noting the following:

  1. Riviera and Short were not at the time in a legal relationship of bailment, as Short was not in “possession” of the boat. At best, Short was in “control” of the boat for a short time.
  2. Short was not in breach of duty of care to Riviera.
  3. The Sale of Goods Act 1923 (NSW) (SOGA) governed the relationship between the parties. Since the contract was for future goods, the time fixed by section 23, rule 5 of the SOGA meant that it was replaced by the time of earlier payments. However, that was not the intention of Riviera and the broker to transfer the boat at the time of payments, instead the intention of the parties, supported by documentation, was to pass ownership when the boat was loaded onto the freighter.

Section 5(1) of SOGA defined:

“’Future Goods’ means goods to be manufactured or acquired by the seller after the making of the contract for sale.”

Section 23 rule 5 of SOGA states:

“Unless a different intention appears, the following are rules of ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer.

Rule 5.

  • 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 appropriate is made.
  • 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.”

The Court found that the property was unable to pass until the goods were ascertained. Strictly speaking the contract between the broker and Riviera was not a sale, but an agreement to sell the boat (consider section 6(3) and (4) of the SOGA).

  1. Short was not a bailee at the time of the accident and, therefore, Campbell was not a sub-bailee. The Court found that there was insufficient evidence to suggest that Riviera consent to clause 3 of the Conditions of Carriage.
  2. The exclusion of liability clause in the Conditions of Carriage between Short and Campbell, did not defeat Riviera’s claim against Campbell.

Implications

This case acts as a reminder that everyone should read the Terms and Conditions provided by agents whose services are intended to be utilised. Otherwise, it is possible that a party might be found liable for the costs associated of the agent’s negligence, as was Short in this case.