Note: this decision was overruled by
the New South Wales Court of Appeal on 11 June 2002. For a note on the Court of
Appeal decision, see
Similarly, the carriers could not rely on the limitation provisions in the House air waybill covering the consignment. These provisions applied only to ‘carriage to which the Warsaw Convention does not apply’. In this case, the Warsaw Convention did apply, up to the boundary of the airport at destination. The clear assumption in the waybill was that either the carriage as a whole would be subject to the Convention or the carriage as a whole would not be subject to it. There were no half measures. It was not permissible to regard the carriage under the waybill as divisible into segments, some consisting of carriage subject to the Convention and some not.
DMC Category Rating: Developed
En route to the warehouse, one of the pallets fell from the truck and its contents were damaged beyond repair. The second pallet remained on the vehicle. The cause of the pallet falling was that the strap by which the driver had attempted to secure the load was either defective or inadequate for the purpose.
Given that the damage took place in this case on the road between Melbourne airport and the Schenker warehouse, the presumption in Article 18.3 did not apply. That left the central question ‘whether it can properly be said that the point at which [the] pallet fell to the roadway was ‘in an aerodrome’ or, more precisely, in the Melbourne airport.’ After referring to the Airports Act of 1996 and the Airports Regulations of 1997, the judge concluded that the boundaries of the airport are to be fixed according to the ordinary concepts of the land law of the state of Victoria, in which Melbourne is situated. The judge held accordingly that the roadway on which the accident occurred was not within the airport boundaries and that ‘the appropriate course is .. to regard the incident in which [the] pallet fell from the Schenker Australia vehicle as having taken place outside the Melbourne airport, even though the cargo had not received customs clearance at that time.’
For the purposes of applying Article 18, the judge had to consider the proper interpretation of the phrase ‘in an aerodrome’. The judge, applying the decision in an United States case of Victoria Sales Corporation v. Emery Air Freight Inc. in 1990, adopted the literal construction of the phrase, rather than the ‘functional approach’ advocated by the minority opinion in that case. But he did so not ‘without an element of hesitation’. He recognised that ‘such strict literalism is not altogether consistent with the purposive approach to the construction of the Warsaw Convention preferred in some countries’ – he referred to the decision of the House of Lords in the UK case of Fothergill v. Monarch Airlines  AC 251. In the end, however, he considered ‘the black letter construction to be more in line with decisions of the [New South Wales] Court of Appeal on other aspects of the Convention. It followed that ‘the incident in which [the] pallet fell to the roadway did not occur ‘in an aerodrome’ for the purposes of the Convention and that the liability regime created by the Convention and made part of the law of Australia…. has no application in this case. The contention of [the Schenker interests] that liability is limited by reference to Article 22.2 of the Convention also fails.’
On the second issue, the judge had to consider the terms of the contract of carriage between the Siemens and the Schenker interests. The cargo had been carried under an ‘umbrella’ arrangement of long standing between the Siemens and the Schenker interests, known as the ‘Richtungsverkehr’ (direct traffic). The Richtungsverkehr applied to each individual consignment and when, in accordance with practice, a house air waybill was issued in respect of a particular transportation, its terms supplemented those of the standing agreement. Accordingly, ‘Schenker Deutschland became a bailee of the cargo for Siemens [Australia] at the point at which title and risk passed from Siemens AG to Siemens [Australia] at the Berlin airport and undertook an obligation to transport that cargo to the Schenker Australia warehouse in Melbourne…. a sub-bailment or sub-contract arose when Schenker Australia took possession of the cargo from Singapore Airlines at the Melbourne Airport.’
‘The parties take different views as to the applicability of the provisions of the air waybill. There is no dispute that those provisions were operative, as a part of or adjunct to the overall contract. Siemens [Australia] contends, however, that the air waybill provisions did not extend to the segment of the total transportation involving movement from the Melbourne airport to the Schenker Australia warehouse, even though that segment was part of the overall contract. The Schenker companies regard that segment as covered by the waybill.
The relevant provisions of the waybill provided:
Given that ‘a continuum of services was… provided for in what might be called the ‘umbrella’ contract [the Richtungsverkehr], with individual contractual relationships arising between different parties in relation to different aspects of the transportation of any given consignment between Germany and Australia, which part or parts of that continuum was covered and governed by the air waybill. Although that question presents particular difficulties, [the judge concluded] that the waybill did not extend to the part of the overall journey consisting of transportation from the Melbourne airport to the Schenker Australia warehouse, even though, under the umbrella contract, that element was clearly placed within the responsibility of Schenker [Deutschland] and was to be physically undertaken by Schenker Australia’
The factors that caused the judge to reach this conclusion ‘are found in the air waybill itself… It is, by its terms, confined to air carriage and, except where land transportation becomes a substitute for air carriage…. it does not purport to cover any land element… Particularly compelling are… the provisions which refer to the relationship between the waybill and the the Warsaw Convention, being clauses 2.1 and 4….The clear assumption in each of these provisions is that the carriage as a whole will or will not be within the Convention’s definition of ‘international carriage’ and that the carriage as a whole will or will not be carriage to which the Convention applies. No half measures are contemplated. The carriage is not regarded as consisting of segments, with some being ‘international carriage’ for the purposes of the Convention and others not, or with the Convention applying to some but not to others. It is all or nothing.’
The judge continued:
On the third point, concerning the amount which Siemens could properly claim, the judge accepted expert evidence to the effect that the contents of the undamaged pallet had been rendered valueless once the contents of the first pallet had been damaged to the extent they had.
Judgment was accordingly given in Siemens’ favour for the full value of the two pallets, amounting to DM1.6 million approximately.
These Case Notes have been prepared with care, but neither the Editor nor the International and other Contributors can guarantee that they are free from error, nor that they contain every pertinent point. Reliance should not therefore be placed upon them without independent verification. The Editor and the International and other Contributors disclaim all liability for any loss of whatsoever nature and howsoever arising as a result of others acting or refraining from acting in reliance on the contents of this website and the information to which it gives access. The Editor claims copyright in the content of the website.