The core principles of the Carriage of Goods Act 1979 have been consolidated in Part 5 of the Contract and Commercial Law Act 2017 (‘the new Act’), which now governs contracts for the carriage of goods within New Zealand.
It goes without saying that the new act is of fundamental importance to all those in the transport industry who carry goods for reward. It provides for four types of contract for the carriage of goods, each of which set different levels of liability for the loss of or damage to any goods.
It is up to the parties to elect which of the categories of contract they wish to enter into.
Which liability regime applies? The following is a summary of the four types of liability regimes:
- At owner’s risk
- Carrier has minimal liability.
- Carrier not liable for loss or damage unless it was intentionally caused by the carrier or its employees.
- Often used for low-value or bulk goods.
- Declared terms
- Liability is governed by specific terms agreed in the contract.
- Parties can negotiate and customise the extent of liability.
- The terms must be clearly stated in writing.
- Declared value risk
- Carrier is liable up to a declared value of the goods.
- The value must be stated in the consignment note or contract
- Useful for high-value goods where the owner wants more protection.
- Limited carrier’s risk
- Default regime if no other is specified.
- Carrier is liable for loss or damage up to a statutory cap of $2000 per unit of goods.
- Carrier must take reasonable care of the goods.
Transparency and fairness
A case that provides a good illustration of why liability caps must be carefully communicated in order to be enforceable is Goat NZ v GVI Logistics, HC Auckland CIV 2011-404-004407, Fogarty J, 7 December 2011.
In May 2009, Goat NZ exported 648 cartons of goat meat to Japan. It hired GVI Logistics (‘GVI’) as a freight forwarder to arrange transport.
The meat was packed in a refrigerated container set to -1.5°C. GVI mistakenly instructed the port to set the input air temperature to 1°C. This caused the meat to warm before it was shipped overseas, reducing its shelf life. Upon arrival in Japan, the meat was found to have deteriorated and was rejected.
Legal issues
The quantum of loss was over $100,000. GVI did not dispute liability for the loss but claimed that its liability was limited to $1500 per unit under a limited carrier’s risk contract. Today this amount has increased to $2000 per unit under section 259 of the new act.
The High Court had to determine whether GVI was liable under the Carriage of Goods Act 1979, which was in force at that time. If so, the question was whether GVI could limit its liability to $1500.
The outcome
The court held that the damage occurred when the rise in temperature caused a physical change that had the consequence of shortening the shelf life of the meat and this occurred in New Zealand. Therefore, even though this was an international shipment, the court held that the domestic leg of the journey was covered by the Carriage of Goods Act 1979.
However, the act did not permit GVI to limit its liability outside New Zealand, for the consequences of the incorrect setting of the container in New Zealand. The court scrutinised whether the statutory liability cap had been properly disclosed by GVI. In highlighting the importance of clear communication of liability limits, it was determined that GVI had not properly disclosed the limitations on its liability and was held liable for the full amount of the loss.
