This was an application to set aside a statutory demand, which arose from a shipping contract affected by the grounding of the MV Rena (Rena) in October 2011. The question to decide was whether Resource New Zealand Ltd (the applicant) was legally obligated to pay Mediterranean Shipping Co SA (the respondent) agreed charges for freight given that the goods did not reach their destination.

The applicant contracted with the respondent to transport timber from Napier, New Zealand to the Middle East. The contract was based on the respondent’s standard bill of lading. Clause 16.2 of the bill of lading provided:

All Freight is earned and due upon receipt of the Goods by the Carrier, whether the Freight is prepaid or collect and the Carrier shall be entitled to all Freight due under all circumstances, ship and/or cargo lost or not lost or the voyage abandoned. All Freight shall be paid when due without any set-off, counter claim, or deduction.

The timber was loaded on 3 and 4 October 2011. On 3 October 2011, the respondent issued invoices for the freight for the amount of NZD 101,306.26.

On 5 October 2011, the respondent’s vessel, the Rena, struck and grounded on Astrolabe Reef. A salvor was appointed and the applicant abandoned all interest in the cargo to the salvor.

The applicant did not pay the invoices for freight. The respondent pointed out that freight costs were payable irrespective of the grounding and salvage issues, and advised that proceedings would be issued to recover the costs if payment was not made by 14 December 2012. No payment was made and the respondent issued the statutory demand in July 2013. The applicant applied to set aside the demand or in the alternative to extend the time for compliance. The applicant said that there was a substantial dispute (pursuant to s 290(4) of the Companies Act 1993 (NZ) which allows statutory demands to be set aside if there is a genuine and substantial dispute as to the existence of a debt) as to whether or not the debt was owed and that it had a set-off against the respondent’s demand by virtue of the fact that the contract of carriage of the goods was never completed.

The applicant further argued that art 8 of the Hague-Visby Rules expressly declares null and void any contract of carriage that purports to relieve the carrier or ship from liability arising from negligence, fault or failure.

Held: The applicant did not establish that there was a genuine and substantial dispute as to whether the demanded debt was payable nor did the applicant have a set-off or counterclaim which made it unjust to allow the respondent to pursue its demand. The wording of cl 16.2 was clear and unambiguous. The respondent’s entitlement to freight charges arose before the Rena left port. Art 8 of the Hague-Visby Rules had no application in this case. The respondent acted within its entitlements under the well-established scheme, provided by the Hague Rules, of carriers’ obligations and exemptions in the event of loss. The time bar in art 3.6 of the Hague Rules applied to both claims for the value of lost goods and the recovery of freight charges (following Aries Tanker Corporation v Total Transport Ltd (The Aries) [1977] 1 WLR 185 (CMI2194)).