The New South Wales Court of Appeal has allowed in part, an airline’s appeal against the decision of Norton DCJ in the NSW District Court, reducing the airline’s share of liability from 60% to 20% for the death of cattle on board one of its flights after the shipper failed to provide it with a load plan.
Background
Principle International Pty Ltd (Principle), contracted with the airline for the carriage of cattle between Melbourne and Harbin, China. The cattle were transported on three separate flights. On a flight that departed Melbourne on 27 September 2013, 18 cattle were found to be dead on arrival. Those cattle had been loaded by Principle into two crates with nine cattle in each crate and had been placed by the airline on the lower deck of the aircraft cargo hold.
Principle brought proceedings against the airline claiming damages of $72,160, being the claimed value of the dead cattle. The Trial judge held that the airline was liable but that because Principle had contributed to the loss by not providing a load plan, liability was apportioned 60% to the airline and 40% to Principle and a verdict was entered for Principle in the sum of $43,296.
The airline appealed the decision to the NSW Court of Appeal which was heard before Beazley P, Meagher JA and Payne JA on 16 May 2017.
The Appeal
Under Article 18(1) of the 1999 Montreal Convention relating to International Carriage by Air (“Montreal Convention”), which is incorporated into Australian Law by the Civil Aviation (Carrier’s Liability) Act 1959 (Cth), “the carrier is liable for damage sustained in the event of the destruction or loss of, or damage to, cargo upon condition only that the event which caused the damage so sustained took place during the carriage by air”.
Under Article 18(2) “the carrier is not liable if and to the extent it proves that the destruction, or loss of, or damage to, the cargo resulted from……(b) defective packing of that cargo performed by a person other than the carrier or its servants or agents;”
Under Article 20 “if the carrier proves that the damage was caused or contributed to by the negligence or other wrongful act or omission of the person claiming compensation, or the person from whom he or she derives his or her rights, the carrier shall be wholly or partly exonerated from its liability to the claimant to the extent that such negligence or wrongful act or omission caused or contributed to the damage“.
The primary issues on appeal were:
- Whether the airline was liable under Article 18(1), and in particular whether Principle had proven a relevant ‘event which caused the damage.”
- Whether the death of the cattle resulted from the use of the crates, which amounted to “defective packing” within the meaning of Article 18(2).
- Whether the Trial Judge erred in finding that the airline contributed to the death of the cattle and whether the Trial Judge erred in apportioning liability 60 per cent to the airline and 40 per cent to Principle.
The Trial Judge had concluded that:
- The relevant ‘event’ was the lack of ventilation to the cattle in the 2 crates in the lower hold which took place during the period of carriage by air and the airline was liable under Article 18(1) of the Montreal Convention.
- The airline had not established that the death of the cattle resulted from defective packing. The crates complied with relevant Australian regulations, and crates of similar design had been used for many years without complaint.
- Principle’s failure to provide the load plans to the airline was an omission which contributed to the death of the cattle. However, the final loading of the crates was entirely under the control of the airline who must have been aware that the export of live cattle was “a high risk activity” but it made no attempt to seek guidance from Principle with respect to the loading of the cattle onto the aircraft.
The airline submitted that the relevant ‘event’ was the placing of the cattle into crates and that the Trial Judge’s formulation (i.e. the lack of ventilation in the lower hold) merely describes the normal operation of the aircraft. Secondly, it submitted that the loss of cattle was due to defective packing as the crates were not suitable for carriage of the cattle in the lower hold. Thirdly, it submitted that had Principle requested the airline to place the crates on the upper deck it would have adhered to the request and as such Principle bore the greater degree of responsibility for the death of the cattle and the airline should be wholly exonerated.
Was there an event under Article 18(1)
Beazley P concluded at [68] that:
“when the question in issue, as it is for the purposes of Article 18(1), is whether “the event which caused damage…took place during carriage by air”, the inquiry is not directed to ascertaining whether something occurred that was unusual or unexpected, that is, something that was not part of the usual course of carriage, as (the airline) argued. Rather, the inquiry is to identify, as Article 18(i) by its terms expressly specifies, whether there was an event or happening which caused the damage”.
The Appeal Court held that there was no damage to the cattle by being placed in the crates and as such that could not have been the ‘event’ and neither is it relevant that the lack of ventilation was merely a condition of the flight. The ‘event’ which caused the damage was the placement of the crates on the lower deck given the conditions on the lower deck and the airline was liable for damage sustained, this being the loss of the cattle.
Was there defective packing
It was agreed by the experts at first instance that the crates were an unsuitable design for the purpose of transporting small cattle in a lower cargo hold because of inadequate ventilation at cattle height, but the crates were suitable for transporting cattle by air.
Beazley P concluded at [101]:
‘In this case, the placing of the cargo comprised the placement of nine head of cattle in crates of a particular design, which were not found to be defective in any way. Given the effect of the finding that the death of the cattle was due to lack of ventilation on the lower deck, a matter which was agreed between the parties, it could not be said that the loss resulted from defective packing’.
Apportionment of liability
The Appeal Court upheld the airline’s submissions that pursuant to the Export Control (Animals) Order 2004 (Cth), Principle was responsible for including a load plan with its application for permission to export cattle and whilst it prepared a load plan describing how the livestock would be loaded and carried, including space or crate and ventilation requirements, it did not provide a copy to the airline. The airline was justified in assuming that the load plan did not require that any particular crates be stowed in the upper or lower deck as Principle had given no such instructions. Had it done so, contrary to the Trial Judge’s finding, it was highly likely that the relevant crates would have been carried on the main deck. However, accepting that the airline could have checked the correctness of its assumption by requesting a copy of the load plan, the Court held that the airline should be exonerated from 80% of its liability to Principle.
Meagher JA and Payne JA agreed with her Honour. Accordingly, the Appeal was allowed in part and damages to Principle were reduced to $14,432 plus interest.
What does this mean for Air Carriers and Shippers?
This decision highlights the need for clear communication between air carriers, shippers and freight forwarders in relation to the carriage of cargo, particularly livestock, fragile and perishable cargo. Air carriers should ensure that all shippers and/or freight forwarders submit load plans prior to the preparation of Loading Instruction Reports and where special handling instructions are provided, including placement, space or crate and ventilation requirements that those instructions are adhered to. Otherwise, Article 20 defences may not be available to exonerate air carriers from liability.
Singapore Airlines Cargo Pte Limited v. Principle International Pty Ltd ( 2017 ) NSWCA 216.
This article was written by Matthew Brooks, Partner, Simon Liddy, Partner, and Jeanette Woollacott, Senior Associate.