Comalco Aluminium Ltd (Comalco) and Mogal Freight Services Pty Ltd (Mogal), a freight forwarder, had a contract consisting primarily of a document described as a consignment note. A bill of lading was issued for the transaction on 5 April 1990, naming Mogal as shipper. The consignee was Owens International Freight of Auckland, another freight forwarding company. Under the contract, Mogal would pick up, pack, and transport 46 aluminium coils on the Oceania Trader from Comalco's Sydney premises to Auckland, where New Zealand Can Ltd operated. Mogal would then organise the unloading of those containers onto the wharf in New Zealand, their carriage to the Owens International Freight of Auckland depot, the unloading of the containers at that depot, and the delivery of the aluminium coils to New Zealand Can Ltd.

Some of the coils were damaged en route, and Comalco (and others) sued for damages.

Held: Judgment for the plaintiffs against the first defendant (Mogal) insofar as Comalco's case was based on s 52 of the Trade Practices Act 1974 (Cth) (the Act). Its claims based on s 74 of the Act, and its claims for breach of contract, breach of duty as a bailee and for negligence, were dismissed.

The consignment note described Mogal as 'carrier', with 'carriage' defined as meaning the entirety of the operation and services that Mogal undertook in respect of the coils. Condition 2 of the note, however, clarified that Mogal was not a 'common carrier'. Conditions 3, 4, 5, 11, 17, and 18 all detailed exemptions to Mogal's liability as carrier, its rights and discretions, and the effect of implied warranties provided by the Act.

Comalco's first cause of action against Mogal was for breach of its obligation to deliver the coils in good order and condition, to which Mogal responded by raising Conditions 3 and 4 of the consignment note. This dispute brought the Sea-Carriage of Goods Act 1924 (Cth) (SCOGA) and the Hague Rules (as included as a Schedule to SCOGA) into the discussion.

Comalco submitted, first, that Mogal could not rely on Conditions 3 and 4 of the consignment note because it was a bill of lading or a similar document of title, and s 6 of SCOGA states that bills of lading or other documents of title issued in the Commonwealth containing or evidencing a contract to which the Hague Rules apply must contain an express statement that it will have effect subject to the provisions of the Hague Rules. Comalco also submitted that the aluminium coils were not damaged prior to the loading onto the vessel, or after discharge, that Mogal had no evidence to show how the damage occurred, and that Conditions 3 and 4 had no effect because of art 3.8 of the Hague Rules.

Regarding the first submission, art 1 of the Hague Rules defines 'carrier' as including the owner or charterer who enters into a contract of carriage with the shipper, while 'contract of carriage' only applies to contracts of carriage covered by a bill of lading or similar document of title, insofar as these relate to the carriage of goods by sea. 'Carriage of goods' incorporates the entire period from the point of loading goods to the time they are discharged. Article 3.2 details a carrier's responsibilities, subject to the exceptions in art 4. Article 3.8 states that clauses or agreements from a contract of carriage that relieve the carrier from liability for loss or damage to cargo arising from negligence, fault, or failure in the art 3 duties, are to have no effect. Article 7 provides that the Hague Rules do not prevent carriers or shippers from entering agreements, stipulations, conditions, reservations, or exemptions regarding the responsibility and liability of carriers and vessels for loss or damage to goods, in connection with the custody and care and handling of those goods prior to loading and subsequent to discharge of the goods.

Sheppard J considered that if the consignment note was a bill of lading or a similar document of title, and if the coils were damaged between loading and discharge, Comalco would be entitled to succeed in its claim against Mogal unless Mogal could establish a defence under art 4.2. The Hague Rules only applied to bills of lading or similar documents of title, which the consignment note did not appear to be. Looking at the evidence, regardless, the goods were damaged due to insufficient packing, which Mogal was exempted from responsibility for under art 4.2.n. Even if the consignment note was a bill of lading, it could include exemption clauses like Conditions 3 and 4 if these were read as applying only to acts and omissions occurring before loading or after discharge, in compliance with art 7, as described above.

Ultimately Sheppard J reached the conclusion that Comalco's causes of action based in contract must fail, leading on from the findings above as to causation. Even ignoring the questions about whether the consignment note was actually a bill of lading (or similar document of title), and whether s 4 of SCOGA would nonetheless apply, Comalco would fail in its claims because the cause of the damage to the coils happened before loading. Because of art 7 of the Hague Rules (assuming the Hague Rules apply), Comalco and Mogal could have entered into any agreement they liked about the carrier's liability in respect of loss and damage to goods prior to loading, which Conditions 3 and 4 of the consignment note served to do. Article 3.8 would also then have no impact on those conditions. Even by a different route, Mogal would not be liable: assuming the Hague Rules apply, art 3.2 would not render Mogal liable for what happened to the coils because the damage was caused by inadequate packing, which is an exception to liability under art 4.2.n.

The Hague Rules, as made clear by the definition of 'carriage of goods' in art 1, extend only to what happens between loading and discharge, and only to contracts covered by a bill of lading or similar document of title. SCOGA, when read as a whole, also expressed an intention that it would only apply to the kinds of transactions referred to in the Hague Rules.

Sheppard J briefly considered whether the consignment note was actually a bill of lading. Article 3.3 of the Hague Rules states that a carrier, or master, or agent of the carrier must after receiving the goods issue a bill of lading to the shipper, containing certain vital pieces of information including the apparent order and condition of those goods. This bill of lading is to be prima facie evidence of the receipt by the carrier of the goods, as described in accordance with art 3.3 (art 3.4). It has three essential elements: a receipt for goods, evidence of the contract of affreightment, and a document of title. After reviewing the characteristics of the consignment note in this case, Sheppard J thought that the consignment note was a bill of lading. Each of these conditions was fulfilled, and Mogal was even referred to as 'carrier' in the consignment note.

The consignment note was a receipt as it specified the cargo being carried, and the number of containers in which aluminium coils were loaded. The note was not invalidated as a bill of lading because a receipt was given prior to loading, although this was unusual. The consignment note was also a document of title, in the sense that it was described as a negotiable delivery order, and the box headed 'Consignee-Receiver' had the words 'to order' inside it. New Zealand Can Ltd was listed as the party to be notified of the goods' arrival. Each factor indicated the overall intention to have the consignment note act as a document of title. All in all, and although the consignment note also provided for steps outside the carriage by sea, it appeared to be a document of title similar to a bill of lading.

Despite this finding, Comalco still could not depend on the Hague Rules to justify its claims because the cause of the damage to the coils happened before loading. Even as a document of title, the Hague Rules would not apply to the consignment note because their application was limited to documents of title only so far as these related to the carriage of goods by sea.

Causes of action under the Trade Practices Act 1974 (Cth)

Comalco's other causes of action depended on the Act. More specifically, these were for breach of contract, and breach of s 52. In terms of the latter, Comalco claimed there had been misrepresentations from Mogal as to how Mogal would exercise reasonable care when packing the aluminium coils, and that Mogal was sufficiently skilled and competent to complete the whole 'door to door' carriage process. In the course of reviewing these causes of action, Sheppard J looked into the evidence as to how the aluminium coils were damaged. It appeared that, based on survey reports made after discharge, the coils (strapped to pallets) were able to move around inside their containers. Mogal admitted in its answers to interrogatories that it took no steps to prevent the shifting of the coils in each container when the containers were packed, and that it did not have any instructions or guidelines as to how such movement could be prevented. The use of chocks would have assisted in preventing damage to the aluminium coils, and the failure to do this amounted to negligent practice, prior to the loading of the coils onto the vessel. This brought the matter within Conditions 3 and 4 of the consignment note. Sheppard J's conclusion was that the ordinary movement of the ship in conjunction with poor packing were to blame for the damage to the coils, and the fact that there was variation in how damaged the different coils and containers were was simply because of where each container was located on the ship.

As well as the s 52 argument, Comalco argued there had been a breach of contract or implied warranty, as exists between a corporation and a consumer under s 74 of the Act. The implied warranty is that the services provided by the corporation will be 'rendered with due care and skill'. This excludes services provided under contracts relating to the transportation or storage of goods for the purpose of a business, trade, profession or occupation carried on by the person for whom those goods are transported or stored (s 74(3)). Sheppard J concluded that a contract for the supply of services to a consumer, as referred to in s 74(1), should be interpreted broadly and in a commercial sense, along with the wording of s 74(3). In this case, the contract between Comalco and Mogal was intended to enable and secure the movement of aluminium coils from Sydney to Auckland, and it was inappropriate to view the contract as one for the supply of various kinds of services to get those coils to Auckland. Rather, this was a contract for the transportation of goods, bringing it under s 74(3), and meaning that s 74(1) and the 'implied warranty' had no application.

In terms of Comalco's s 52 misrepresentations argument, Sheppard J agreed that Mogal had made both the representations described above. There was a variety of evidence, including witness testimony and letters and brochures presented by Mogal, evidencing these representations had occurred. One of Comalco's witnesses, Mr Martin, indicated generally that he would not have engaged Mogal as a freight forwarder if statements from Mogal and its conduct up to that point had not persuaded him. Sheppard J found that Comalco had relied on the representations made by Mogal. Furthermore, Mogal's failure to properly pack the coils was not a one-off breach of contract or mistake, but demonstrated that its representations of competency were false because it did not have guidelines it followed when packing aluminium coils or any special materials for the job. Its answers to the interrogatories (as noted above) indicated as much. Mogal was incompetent and lacked the necessary skills to transport the aluminium coils properly, and thus it engaged in misleading and deceptive conduct when it represented otherwise.

This finding entitled Comalco to succeed in its cause of action based on s 52 of the Act, but only to the extent that Mogal had alleged it was skilled and competent. Its other claim that it would use the necessary equipment was a different kind of representation, being more a promise to conduct itself a certain way. This latter claim could be likened to Mogal's representation that it would exercise reasonable care when packing the aluminium coils and in the door to door carriage. This representation went alongside Mogal's implied responsibilities under the contract. Sheppard J concluded that this representation, as well as the one about using the necessary equipment, were representations about future conduct, rather than a state of being (like the representation that Mogal was skilled and competent). Representations about future conduct would only be misleading if, at the time they were made, Mogal had no reasonable grounds for making them, which could not be established here.