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DSM Wholesales Pty Ltd v National Airline Commission, trading as Air Niugini [1995] PNGLR 81 (8 September 1995)

PNG Law Reports 1995

[1995] PNGLR 81 - DSM Wholesales Pty Ltd v National Airline Commission, trading as Air Niugini 

[1995] PNGLR 81

N1362

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

DSM WHOLESALES PTY LTD

V

NATIONAL AIRLINE COMMISSION TRADING AS AIR NIUGINI

Waigani

Sawong J

13-14 December 1994

8 September 1995

AVIATION LAW - Aircraft operators liability - International carriage by air - Right of carrier to rely on statutory limitations of liability in the absence of evidence of “wilful misconduct” - Meaning of “wilful misconduct” by carrier - Delay in carriage of cargo - Breach of contract of carriage - Damages - Civil Aviation (Aircarft Operators Liability) Act (Ch 292).

WORDS AND PHRASES - “Wilful misconduct” by carrier - Meaning of “Handling of Aircraft”, purposes of Art 20, Warsaw Convention.

Facts

The plaintiff delivered a sample of a proposed container load of cargo to the defendant for carriage to Singapore on that same day and was issued with an airway bill in respect of the cargo. The defendant delayed the carriage of the cargo for 8 days and on delivery the cargo was found to be damaged. The plaintiff’s contract with the purchaser of the container load of cargo in Singapore was terminated by the purchaser due to the damage suffered by the sample. The plaintiff claimed damages for breach of contract and the defendant denied that it was in breach of the contract of carriage.

Two initial issues which the Court had to address were whether the terms of the contract between the parties were contained in the airways bill; and Art 20(2) of the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air incorporated in the Civil Aviation (Aircraft Operators Liability) Act (Ch 292), afforded a defence to the plaintiff’s claim.

Held

1.       That although by Art 20(2) of the Warsaw Convention the carrier is exempt from liability for damage occasioned by the negligent “handling of the ciarcarft”, delay in carrying the cargo has nothing to do with the “handling of the aircraft”.

2.       The provision of the Convention which limits liability of the carrier has no application if the liability is from the “wilful misconduct” on the part of the carrier, however, before the Court can hold that there was “wilful misconduct” it must be satisfied that the damage suffered was not merely the result of an accident or of negligence alone. Wilful misconduct will arise if the carrier does an act knowing it to be wrongful and intending the harmful consequences which will result, or ecklessly, indifferent as to the consequences. “That although by Art 20(2) of the Warsaw Convention the carrier is exempt from liability for damage occasioned delay in carring the cargo has nothing to do with the handling of the aircraft”.

3.       There was no relationship of bailee and bailor between the parties as the airways bill entirely governed the relationship between the parties.

Cases Cited

Horabin v British Airways Corporation [1952] 2 All ER 1016

Rashap v American Airlines (1955) USC Av. R 593 (NY Southern District Court)

Counsel

S Sitapai for the plaintiff.

J Patterson for the defendant.

8 September 1995

SAWONG J:  This is an action for damages by the plaintiff against the defendant for loss of future income and exemplary damages. The defendant denies both liability and damage, if any, alleged to have been suffered by the plaintiff.

The undisputed facts of this care are fairly short. On 21 December, 1991, the plaintiff, through its Managing Director, a Mr Waesa Mollo, delivered a sample of dried sea cucumbers in a carton to the defendants International Cargo Office at the Jackson’s Airport, Port Moresby, for shipment to Twin Luk Trading in Singapore on Air Niugini Flight PX 392 for the same day. Prior to that day, Mr Mollo had telephoned and booked a space on that flight. When Mr Mollo delivered the carton of sea cucumber, it was weighed and he paid for the costs of freight. He was then given an Air way bill. The Airway bill contains the terms and condition of the carriage. It is not disputed that the sample of dried sea cucumbers were not shipped on the flight it was booked on. The sample of sea cucumbers were dispatched to Singapore some eight days later, and when it arrived in Singapore it was found to be damaged.

It is also not disputed that the plaintiff had negotiated with a company in Singapore who was interested in purchasing dried sea cucumbers from the plaintiff. That agreement between the plaintiff and the Singapore company was subject to the plaintiff sending to that Singapore company a sample of the dried sea cucumbers. The plaintiff says that because of the delay caused by the servants or employees of the defendant in not sending the samples of sea cucumbers as originally booked for dispatch on 21 December, the sample of sea cucumbers were rotten and that as a direct consequence of the breach of contract by the defendant, the Singapore company terminated the contract with the plaintiff to purchase sea cucumbers from the plaintiff and thus it lost potential income.

The plaintiff submits that it had entered into a contract of carriage by air with the defendant. The plaintiff and the defendant had agreed that the defendant agreed to carry a box containing dried sea cucumber on its flight PX 392 on 21 December, 1991 for valuable consideration in the consideration being the sum of K195.75 which was paid by the plaintiff. The plaintiff says that the defendant breached that agreement, because the parcel was not uplifted on the agreed date. Further the paintiff submits that, even when the parcel of sea cucumbers were delivered it was delivered late, and that when it was delivered, it was all rotten and were damaged. The plaintiff says that as a direct consequence of the breach by the defendant, the plaintiff not only lost the samples, but also lost a whole container load of sea cucumbers which it had all ready for export to Singapore, which was dependent on the buyer in Singapore, examining the samples.

The plaintiff claimed that, had it not been for the alleged breach by the defendant, it would not have suffered any loss of any income. Put it in another way, the plaintiff submits, that because of the breach of contract of carriage by the defendant, it suffered loss of income.

The defendant denies that it was in breach of the contract of carriage or that it or its servants and or agents were negligent.

The terms of the agreement between the plaintiff and the defendant was contained in the Airway Bill. Their rights and obligations are in my view governed by the terms contained in the Airway Bill. The terms of the Airway Bill, so far as is relevant, incorporates the provisions of the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air. That Convention has the force of law in Papua New Guinea by virtue of the provisions of the (Civil Aviation Air Craft Operators Liability) Act, Ch 292 (“the Act”). In the present case we are concerned with the international carriage of goods by air.

So far as international air carriage is concerned the Act adopts the provisions of various international conventions as part of the law of Papua New Guinea. The preamble of the Act makes this quite plain. It says:

“Being an Act to give the force of law to the provisions of (a) the Warsaw Convention for the Unification of certain Rules Relating to International Carriage by Air, --- and to extend the effect of those provisions in certain circumstances.”

Sch 2 of the Act, sets out the text of the Warsaw Convention (“the Convention”). The Convention has been adopted in Papua New Guinea by the provisions of the Act and has force of law in Papua New Guinea. The provisions of the Convention so far as is relevant, “applies to all international carriage of persons baggage or cargo performed by air craft for reward -” see Art 1.

The expression “international carriage” means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination - are situated either within the territories of two High Contracting Parties or within the territory of a single High Contracting Party ---”

It has not been argued by either party whether or not Singapore and Papua New Guinea are high contracting parties. The arguments that have been put by both parties is on the basis that both Papua New Guinea and Singapore are high contracting parties.

In any case the evidence is quite clear that the carriage was to be an international carriageand I now turn to the issue of liability.

The relevant provisions of the Convention for the present purpose in relation to the issue of liability are Arts 19 and 20.

Art 19 of the Convention reads:

“The carrier is liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo.”

In my view, upon a plain reading of Article 19, a carrier will be liable for damages occasion by delay in the carriage by air of passengers, baggage or cargo.

On the present case, there is clear evidence that the cargo (namely the dried sea cucumber) were not carried on the date and flight agreed upon between the parties. It was carried some days later. There is clear evidence of delay in the carriage, and that delay caused the plaintiff to suffer damage and loss. In the present case, I find that there was a delay in the carriage of the cargo and consequently the carrier must be held liable.

Article 20 of the Convention reads:

“1.      The carrier is not liable if he proves that he and his servants and agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures.

2.       In the carriage of cargo and baggage the carrier is not liable if he proves that the damage was occasioned by negligent pilotage or negligence in the handling of the aircraft or in navigation and that, in all other respects, he and his agents have taken all necessary measures to avoid the damage.”

Article 20 of the Convention provides a qualified defence to the carrier. It provided that the carrier is not liable if he proves that he and his servants and agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures to avoid the damage or that it was impossible for him or them to take such measures. This is set out in Article 20 (1) of the Convention. This is not relevant to the issue in the present, as it applies to, in my view, damages suffered by passengers.

I am of the view that Article 20 (2) of the Convention is relevant for the purposes of the present case.

In my view Article 20(2) speaks of the carrier not being held liable in the carriage of cargo and baggage, if he proves that the damage was occasioned by negligent pilotage or negligence in the handling of the aircraft or in navigation. Does the handling or non handling of cargo and baggage amount to “handling of the aircraft”? Can it be said that where the servants and or agents of the carrier have failed to ensure that cargo which was agreed to be carried on a particular flight and on a particular date, was not carried on that particular flight, be said to amount to “handling the aircraft”? Put it in another way, can it be said that if there is delay in the carriage of cargo or goods, amount to “handling of the aircraft”. The answer, in my view is quite simply not. In my view the handling of the aircraft and the handling of the cargo or baggage are two quite different and distinctive activities, although there may be some linkage. I am of the view that the “handling of the aircraft” means simply that. It does not mean and could not mean “handling of cargo or baggage. Nor does it mean, in my view, delay in the carriage of cargo or baggage.

I am reinforced in my view by drawing an analogy from contracts of carriage by sea. For instance in Gossee Millard Ltd v Canadian Merchant Marine Ltd [1992] AC 223, workmen had been carrying out some repairs upon a ship in dock. They had been carrying out the repairs for some weeks. The nature of the work required the hatch covers to be left open, but the shipowner’s servants negligently omitted to take any steps to protect the holds when rain fell. As a consequence, the cargo of tin plates was damaged. It was held that the negligence in the management of the hatch covers was not negligence “in the management of the ship” so as to attract the shipowner the protection of the Carriage of Goods by Sea Act, 1924 since the negligent act did not primarily relate to the management of the ship but of the cargo.

Thus, in the present case, the evidence is clear. There was a clear delay, and which delay was caused by the negligence of the ground staff of the defendant at the Jackson’s Airport. The delay in my view had nothing to do with the “handling of the aircraft”.

That being the case, I am of the view that the provisions of Article 20(2) are not available as a defence to the defendant.

There were two witnesses called by the defendant. Their evidence essentially is that any shipment of any goods out of Port Moresby to overseas is dependent on two factors; namely the total volume of cargo to be uplifted on a particular flight. Secondly, the necessary certification and clearances being obtained and is in place.

There is no doubt in my mind that the sample of sea cucumber were not uplifted on 21^st December. I find as a fact there was an agreement between the plaintiff and the defendant that the defendant would carry the parcel of sea cucumber on that particular flight. It never was carried on that flight. I do not accept the evidence of the defendant’ witness and explanation that were offered. The two witnesses for the defendant gave a general explanation of what takes place when a cargo is booked to be shipped etc. However, in the present case. Mr Mollo gave evidence of having booked earlier. He had conversation with employees of the defendant who had assured him that the parcel of sea cucumber would be carried on that flight. Mr Mollo had paid the cost of the freight. The Airway Bill also has the details of the flight number, etc.

The contract of carriage of between the plaintiff and the defendant was for the carriage of a sample of dried sea cucumber contained in a parcel weighing some 33 kilograms. For consideration, the plaintiff paid K195.75 being the total of freight and related charges. The agreement for carriage by air by the defendant was not for anything else other than this.

There is evidence that there was some form of agreement between the Singapore Company and the plaintiff, for the plaintiff to supply dried sea cucumber. However, this was dependent upon the plaintiff supplying satisfactory samples of the product (sea cucumber) to the purchasers. That agreement was not connected to the agreement between the plaintiff and the defendant, in my view.

And so looking at evidence in total, I am of the view that the defendant was in breach of the agreement to carry the consignment or a parcel of dried sea cucumber. I therefore find the defendant liable.

I now turn to consider the question of damages.

Counsel for the plaintiff submits that because of the breach and or negligence of the defendant, the plaintiff suffered huge financial losses. He referred to a number of authorities from overseas jurisdictions to support his submission that a substantial amount of damage should be awarded to the plaintiff. In my view those cases are not really relevant to the facts of the case.

Mr Sitapai submits that the limits of liability do not apply in this case because the loss and damages suffered by the plaintiff was a clear case of wilful misconduct caused by the servants of the defendant in failing to ensure that the plaintiff’s cargo were shipped as per the contract of carriage. Mr Patterson, in his submission has not argued this point at all. Mr Sitapai relies on Article 25 of the Convention.

Article 25 of the Convention reads:

“1.      The carrier shall not be entitled to avail himself of the provisions of this Convention which exclude or limit his liability, if the damage is caused by his wilful misconduct or by such default on his part as, in accordance with the law of the Court seized of the case, is considered to be equivalent to wilful misconduct.

2.       Similarly the carrier shall not be entitled to avail himself to the said provisions, if the damage is caused as aforesaid by any servant or agent of the carrier acting within the scope of his employment.”

The words “wilful misconduct” as it appears in Art 25 of the Warsaw Convention by virtue of Sch 2 of the Act, has not been defined in that Rules nor in the Act . I have been unable to find any authorities in PNG directly or indirectly relating to this issue. However, there are decisions in other jurisdictions which deal with this particular issue. Those decisions are helpful and persuasive. I am of the view that those decisions are applicable and appropriate to the circumstances of this country at this time in relation to this area of the law which has not been developed as yet.

The word “wilful” is defined in the Concise Oxford Dictionary as “... for which compulsion or ignorance or accident cannot be pleaded on excuse, intentional, deliberate, due to perversity or self will, obstinate, selfwill, head strong.”

The phrase “conduct” as defined in the same dictionary means, inter alia, manner of conducting business, mode of treatment.

In Horabin v British Airways Corporation [1952] 2 All ER 1016, the plaintiff, who had suffered injuries when travelling as a passenger in one of the defendant’s aircraft which crashed, alleged wilful misconduct in the defendants. The case was settled before judgment. Barry J instructed the jury in the following terms (at p. 1022):

To be guilty of wilful misconduct the person concerned must appreciate that he is acting wrongfully, or is wrongfully omitting to act, and yet persists in so acting or omitting to act regardless of the consequence, or acts or omits to act with relates indifference as to what the results maybe.”

However, the case was settled before judgment.

In the United States, there are several authorities which have defined these words. For instance see Rashap v American Airline (1955) U.S.C. Av. 593 (N Y Southern District Court) It was said in that case that:

“Wilful misconduct means that in addition to doing the act in question the person must have intended to do the act, or launched on such a line of conduct with knowledge of what the consequences would be and went ahead recklessly despite his knowledge of those conditions. So you can see that there are three elements to wilful misconduct: the first is an intent to the act; the second is an awareness of the consequences of the act and a deliberate or reckless determination to do it regardless of the consequences of the act; and the third is that the accident must be a result of all of the act.”

And so, it is clear that before this Court can hold that there has been “wilful misconduct” on the part of the servants of the defendant, the Court must be satisfied that the damage was not merely the result of an accident or even of negligence alone. The probable consequences of the wrongful act must have been in the mind of the person in question. Clearly, if he does the act knowing it to be wrongful, and intending the harmful consequences which result, he is guilty of wilful misconduct. Further I am also of the view that his behaviour will also fall under this heading, even if he not deliberately desire the consequences, but is merely recklessly indifferent as to whether or not they ensue.

Applying the above principles to the facts of the present case, the question is whether the acts or omissions of the servants of the defendant amounted to wilful misconduct, which would entitle the Plaintiff to recover damages in excess of the limits set out in the provisions of the Convention.

The evidence, so far as it is relevant to this issue, is as follows. There was agreement or contract for carriage by air between the plaintiff and the defendant of a box containing samples of dried sea cucumber on flight PX 392 on 21 December 1991. The parcel was not carried as agreed upon. On 22 December 1991 the consignees representatives rang to advise the plaintiff of the non delivery of the parcel of sea cucumber samples. On 23 December 1991, Mr Mollo of the plaintiff went to the defendant’s premises and to his disappointment saw that the samples were still at the defendant’s premises. The sample of sea cucumbers had not left Port Moresby for Singapore as agreed upon. He then explained to Mr Mape the necessity and urgency of the samples to be flown quickly because he had prepaid for shipment a large packed quantity of dried sea cucumber of 1687 cartons. He informed Mr Mape that the samples were very important for such large shipment. Mr Mape then undertook that the samples would be flown on the next available flight which was to be on 25 December 1991. As a result of the representation by Mr Mollo, Mr Mape on the same date (ie; 23^rd December) went to the plaintiff’s premises and inspected the plaintiff’s premises to confirm that the plaintiff had in fact a large quantify of dried sea cucumber to be shipped and that these depended on the successful delivery in good condition of the dried samples of sea cucumber.

Mr Mape was not called to give evidence on behalf of the defendant. The court was told that he was no longer employed by the Defendant and he could not be located. The other two witnesses who were called by the defendant, did not give any evidence relating to this part of facts. And so, I am left with only the evidence of Mr Mollo. This part of his evidence has neither been destroyed nor contradicted. I therefore accept his evidence as to the events that occurred on 23 December 1991.

It is also important to note at this juncture, that Mr Mollo knowing very well the perishable nature of his product and the fact that the samples were not flown as agreed upon on 21 December, and knowing that the next flight would be on 25 December, some 2 to 3 days away, did absolutely nothing, other than to impress upon Mr Mape the absolute necessity to have the samples flown on the next available flight. He could have, for instance, retrieve the samples, take them back to his premises and care for them and put them on the flight on 25 December. But he did not do that. He was quite happy to leave the matters as they were.

Mr Mollo left for Singapore on 25 December 1995. On the same flight was Mr Mape. Mr Mollo says that Mape informed him that the sample of sea cucumbers were on that flight. Once again this evidence of Mr Mollo has not been destroyed or contradicted by the defendant. And so I also accept this piece of evidence as the veracity of what occurred on that particular day.

As the evidence stands, the sample of sea cucumbers did not arrived in Singapore until some eight days later. When it arrived, it was found to be rotten and damaged.

I have considered the evidence and the submissions adduced on behalf of the plaintiff. However, looking at the evidence as I have tried to outline, I am not satisfied on the balance of probabilities that the acts or omissions of the servants of the defendant amounted to wilful misconduct. I am of the view that the acts or omissions fell far short of making a finding to that effect. There is no evidence, in my view, that any of the servants of the defendant intended not to send the samples initially on 21 December or subsequently thereafter. However, there is some evidence that Mr Mape was aware of the need to send the samples and what the possible or probable consequence would be if there were default, but other than that, there is no evidence that despite this knowledge either Mr Mape or any of the other servants of the defendant were reckless despite the knowledge of the conditions. There is no evidence that either Mr Mape or any of the other servants took a deliberate or reckless determination not to send the samples regardless of the probable consequence of their acts or omission.

For these reasons, I reject the submission that the plaintiff is entitled to be awarded damages in excess of the limit set out by the Act. For the same reasons, I am also of the view that the plaintiff is not entitled to any remedy as a bailee. I would add further that the principles of law of bailee and bailor do not arise in this case because, in the present the parties are governed by the terms of the written agreement between the parties as expressed in the airway bill. It is not in dispute the limit of liability is as set in Article 22 (2) reads as follows:

“2.      In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a sum of 250 francs per kilogram, unless the consignor has made, at the time when the package was handed over to the carrier, a special declaration of the value at delivery and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that that sum is greater than the actual value to the consignor at delivery.”

In my view the notice as contained in the airway bill extends and compliments the provisions of the Article 22 (2) of the Convention. It is not in derogation of the provisions of Article 22 (2).

I accept Mr Patterson’s submission that the only amount the Plaintiff is entitled to recover is US$660.00. The evidence as contained in the airway bill is that the parcel was weighed at 33 kilograms. The maximum amount payable is US$20.00 per kilogram. That being the case, the plaintiff is only entitled to recover US$660.00 for the loss of the sample of dried sea cucumber.

For the reasons I have given, I order that judgment be entered against the defendant in the sum of US$660.00 in favour of the plaintiff.

I further order that the defendant pay interest on that sum at the rate of 8% per annum from the date of filing the writ of summons to today, and I further order that the defendant pay the plaintiff’s costs, such costs are to be agreed and if not, to be taxed by the taxing officer.

Lawyer for the plaintiff: Sitapai Lawyers

Lawyer for the defendant: Patterson Lawyers