South Australian Railways Commissioner v McGlew & Co Ltd [1933] HCA 15; (1933) 49 CLR 204 (21 April 1933)

South Australian Railways Commissioner Defendant, Appellant; and McGlew and Company Limited Plaintiff, Respondent.

The question which this appeal raises is whether, upon the true interpretation of the contract of carriage at "owner's risk" prescribed by the by-laws of the South Australian Railways Commissioner, the Commissioner is relieved from liability for the destruction by fire of certain cornsacks of the respondent stacked upon railway premises.

The fire that destroyed the stack of sacks was lit by the Commissioner's servants who, through a want of proper care, as it has been found, allowed it to burn the sacks. The sacks were stacked round a small wooden office standing in the "yard" of the Kadina railway station, about seventy-five yards from it. The running and shunting lines, some wheat sheds and stacking sites and a roadway occupied the intervening space. The office had been put there by a merchant under a licence granted by the Commissioner for an allotment of about fifteen feet square for the sole purpose of placing thereon a portable office. Under the conditions of the licence, the allotment could be used only as an office site for the transaction of business in connection with wheat, cornsacks and superphosphate stacked under a specified stacking licence which the merchant held for Kadina station. Further, the licensee accepted all risk of loss or damage. The merchant for some twelve years had been represented at Kadina by an agent, and it was he who used the office. He also represented other principals and, with the permission of the merchant, he used the office for his other agency work also. With the tacit acquiescence of the local railway officers, he had for about twelve years used the land immediately surrounding the office for his stack of wheat sacks, which, no doubt, he thence distributed to the farmers as they required them. For about three years he had acted as agent for the respondent at Kadina. The respondent's sacks had arrived about a week before their destruction. They were consigned to the agent who gave his carrier instructions to pick them up. The carrier signed for them on the day after their arrival and, on the day before the fire, he loaded them from the truck into a horse-drawn vehicle of his own and carted them over to the office where he stacked them. The respondent had consigned them to its agent at Kadina by a consignment note accepting the "owner's risk" conditions. The consignment note requests the Commissioner to receive and carry the freight therein mentioned, namely the cornsacks, to the agent at the Kadina railway station, subject to the provisions of the Railways Acts and the by-laws, regulations and conditions published by the Commissioner and to the terms and conditions of the consignment note. One of the conditions of the consignment note is that the Commissioner shall be relieved from all liability in respect of loss, detention, injury, delay or damage, whether such loss, detention, injury, delay or damage occurs before, during, or after carriage or during storage, or while under demurrage, except upon proof that such loss, detention, injury, delay or damage arose from the wilful misconduct of the Commissioner.

Of the Commissioner's by-laws which form part of the contract of carriage the following clauses are material:—Clause 25:—"Storage Charges. ... (e) Delivery of all freight must be taken by the consignee immediately on arrival at destination, except where otherwise herein provided ... (h) If the consignee of such freight fails to take delivery as aforesaid, or if the consignor or consignee (as the case may be) allows such freight to remain in or upon the railway premises, either before transit or after arrival at destination, such freight shall be held by the Commissioner solely at the risk of the owner, and the Commissioner shall be relieved of all liability in the case of loss, injury, damage, detention, or delay, except on proof that such loss, injury, damage, detention, or delay arose through the wilful misconduct of the Commissioner. (i) The risk of the owner in respect of such freight shall extend to, and relieve the Commissioner of all liability in respect of, any period during which such freight shall be allowed by the consignor or consignee (as the case may be) to remain in or upon the railway premises, either before transit or after arrival at destination." Clause 49:—"Sale of Freight.—Any freight on the railway premises, or stored elsewhere by the Commissioner which is not claimed and removed by the owners, or freight, the delivery of which has been taken by the owner but which has not been removed from the Commissioner's premises, may be sold by the Commissioner after the expiration of the time hereinafter specified, and after deducting any amount which may be due thereon for freight, storage, and other charges, including the expense of sale, the Commissioner will pay the surplus (if any) to the owner on demand"; then follows a statement of times for different descriptions of goods.

The expressions in pars. (h) and (i) of clause 25 which refer to the consignee's allowing the freight to remain in or upon the railway premises after arrival at destination apply in their natural meaning to freight which has been allowed to remain after delivery has been accepted by the consignee. Evidence that the expressions were intended so to apply is afforded by the inclusion in the power of sale given by clause 49 of freight, the delivery of which has been taken by the owner, but which has not been removed by the owner. We do not think that these clauses should receive a restrictive construction which terminates their operation when the Commissioner delivers the goods to the consignee. We cannot agree with the reasoning which treats the specific reference in clause 49 to freight delivered but not removed as a ground for giving a less extensive meaning to the expression "allowed to remain in or upon railway premises after arrival." But the construction we have adopted of these paragraphs of the by-law does not appear to us to conclude the case against the respondent. What such provisions are directed to is a failure on the part of the consignee effectively to end that connection of the Commissioner with the goods which arose out of the delivery to him for carriage. The words "allows," "remain" and "held" in paragraph (h) of clause 25 show that the case intended to be provided against is that of goods being left with the Commissioner notwithstanding that under the contract of carriage they ought to have been taken away. These paragraphs could not be understood to apply, for instance, to the case of a consignee accepting complete manual delivery of an article of freight at a railway station whence he immediately travelled by train taking the article as luggage; to the case of things consigned on private account to railway servants who put the things into personal use whilst on railway property; to the case of a consignment of goods to a lessee of a railway bookstall or the like who forthwith exposes them for sale on the railway station; or to the case of luggage consigned as freight which is placed by the consignee in a railway cloakroom. It may be true that in each of these examples, the particular relation supposed between the consignee and the Commissioner itself involves special conditions of a contractual character which independently of the contract of carriage may affect the Commissioner's liability for the loss, but the reason why the paragraphs of clause 25 of the by-law do not apply is not to be found in that circumstance, or, at any rate, in that circumstance alone. The reason why the paragraphs do not apply is that the goods do not continue upon railway premises because of the existence of the contract of carriage and of the neglect of the consignee to take them away at its termination, but because the person who is consignee, having taken delivery and assumed an exclusive possession or control of them, proceeds, without relinquishing his possession, to assert in some capacity quite independent of that of consignee, a title to have his goods upon railway premises. In substance we agree with the observation of Richards J. that the reference to the goods being allowed to remain on the premises is to their being there incidentally or referably to or at least consequently upon, the contract to carry, and not referably to some other causa operating independently of that contract. We think that the liability of the Commissioner for loss or damage to the goods is no longer governed by the contract of carriage when actual delivery of the goods has been accepted by a consignee who thenceforward continuously exercises dominion and control over them although in disposing of them he puts them on railway premises, if the place where he deposits them is under his own de facto control and he uses it under some claim unconnected with the contract of carriage. It is doubtful whether the condition, expressed in the body of the consignment note itself, has any operation after actual delivery to the consignee, but if it has, then, in our opinion, it cannot extend to such a case as we have stated. In the application of this view of the conditions to the facts of the case, a difficulty may be thought to arise from the fact that under the licence for an office site there was no right to use it for the respondent's business, or to stack any bags near the office, and from the further fact that the proximity of the office to the railway was, doubtless, a reason for selecting its neighbourhood as a position for the bags. We do not think, however, that these circumstances suffice to bring the case within the protection of the conditions of the contract of carriage as we have construed them. The agent may have arrogated to himself a title to use the place as a repository of the respondent's sacks; the convenience of the site in the railway yard may have arisen from its proximity to trucks by which sacks came. But neither circumstance makes the deposit of the bags a mere prolongation of the Commissioner's connection with the goods under the contract of carriage. Upon the facts we think it is clear that the agent had them taken to the vicinity of his office simply because it was his habitual depot for the distribution of sacks.

The finding of leave and licence to use the place for stacking sacks cannot, on the evidence, be disturbed, and, accordingly, the Commissioner was rightly held liable.

The respondent consigned certain cornsacks at Glanville to be conveyed by the appellant by rail to the respondent's agent at Kadina. The consignment was made on the terms of a consignment note, which, so far as material, is as follows:—

The by-laws or regulations of the Commissioner referred to in this note are, so far as relevant:—"25. Storage Charges.—(a) The following charges shall be made for freight ... when allowed to remain in any shed, or yard, or on any wharf more than (7) seven days." (The charges are then set out). "(e) Delivery of all freight must be taken by the consignee immediately on arrival at destination ... (g) Consignees shall not be exempt from storage charges because of advice not being given to them by the Commissioner of the arrival of their freight. (h) If the consignee of such freight fails to take delivery as aforesaid, or if the consignor or consignee (as the case may be) allows such freight to remain in or upon the railway premises, either before transit or after arrival at destination, such freight shall be held by the Commissioner solely at the risk of the owner, and the Commissioner shall be relieved of all liability in the case of loss, injury, damage, detention, or delay, except on proof that such loss, injury, damage, detention, or delay arose through the wilful misconduct of the Commissioner. (i) The risk of the owner in respect of such freight shall extend to, and relieve the Commissioner of all liability in respect of, any period during which such freight shall be allowed by the consignor or consignee (as the case may be) to remain in or upon the railway premises, either before transit or after arrival at destination." "49. Sale of Freight.—Any freight on the railway premises ... or freight, the delivery of which has been taken by the owner but which has not been removed from the Commissioner's premises, may be sold by the Commissioner after the expiration of the time hereinafter specified ... (d) Any freight remaining on the Commissioner's premises in excess of the time allowed for removal therefrom as set out in clause 25 ... of this by-law, and not removed from such premises after notice in writing has been given to the owner or his agent that the premises are required by the Commissioner, may be sold forthwith."

The cornsacks were despatched from Glanville on 28th October, arrived at Kadina on 29th, remained in the railway truck, in a goods shed, until 4th November, when they were unloaded on to the waggon of a carrier employed by the respondent or its agent; without leaving the railway yard, the cornsacks were then unloaded from the waggon and stacked in the railway yard adjoining an office, at the back of the wheat shed, and on a site licensed by the Commissioner for the sole purpose of placing thereon a portable office. On 5th November the Commissioner's servants were burning off grass in the railway yard, and a puff of wind carried the fire on to the cornsacks and they were destroyed.

It is unimportant to consider when the Commissioner's liability as a carrier ceased, and when his duty as a bailee began, for so long as the goods were subject to the stipulations of the contract, they were at owner's risk, unless damage arose through the wilful misconduct of the Commissioner. The question is whether, when the goods were destroyed, the stipulations of the contract did or did not apply to them. It is plain on the facts that delivery was given to the respondent or its agent. But the respondent or its agent just dumped them on the railway premises without any express permission of the Commissioner, although without any objection on his part or on that of his officers. The respondent simply used the Commissioner's premises for the storage of its goods. Why then should not the provisions of by-laws 25 and 49 govern the position?

More important still, the contract expressly stipulates that the Commissioner shall be exempt from liability though transit is ended. The words are "during storage," and, by incorporation of by-law 25, during any period for which the goods are allowed "to remain in or upon the railway premises, either before transit or after arrival at destination." The goods, though delivery had been taken under the contract, were put upon the railway premises—either under the provisions of by-law 25 (which would be pursuant to the provisions of the contract, because it incorporates the by-law), or without any permission at all, or else under some acquiescence on the part of the Commissioner or his officers which is referable neither to the contract nor to the by-laws, but to some new relationship creating new rights and duties beyond and outside the contract altogether. It would not assist the respondent if it were established that it had no permission to put its goods upon the railway premises, for it would then be in the position of a trespasser. And it is highly improbable, as a matter of fact and of business, that the Commissioner or his officers knowingly assumed a new position, that of a licensee, casting upon him more onerous obligations than those imposed by the contract itself. So it must be an implication of law that is relied upon, arising from the facts that the respondent took possession of its goods and put them upon the railway premises. But it is to just such a case, in our opinion, that the words of the contract extend—"during storage," and during such period as the goods are allowed "to remain in or upon the railway premises."

It was further contended that "wilful misconduct" on the part of the Commissioner had been proved, but the learned magistrate who heard the case held that the fact had not been established, and we see no reason for disturbing his conclusion. In this connection, the respondent relied chiefly upon the magistrate's statement—"he took the chance, and the chance broke against him." But, read with the evidence and the rest of the judgment, this statement is no more than a colourful paraphrase for absence of ordinary care. In the proved circumstances, everything depended upon the precise extent of the risk encountered; to encounter knowingly some degree of risk is a long way from being guilty of wilful or wanton misconduct.

The appellant agreed to receive and carry the goods in question subject to the provisions of the Railways Acts and the by-laws, regulations and conditions made in pursuance thereof, and the conditions in the consignment note. By-law no. 210 provides that the rates for the carriage of freight on the appellant's lines and for "shunting, etc.", and the conditions under which freight will be "conveyed, shunted, etc." shall be those set forth in the schedule thereto. The consignment note, which was in the form prescribed by the schedule, recited that there are, as clause 3 of the schedule provides, two rates for the carriage of the class of goods to which those now in question belonged, at either of which rates freight may be consigned at the sender's option. The rates are (1) the Commissioner's risk rate "when the Commissioner takes the ordinary liability of a common carrier"; (2) a lower rate, called the owner's risk rate, "which is adopted when the sender agrees to relieve the Commissioner from all liability" in respect of the matters mentioned in the special condition in the body of the consignment note. In the present case the respondent elected to send the goods at the owner's risk rate and the contract of carriage became subject to the above-mentioned special condition. The question arises whether this condition operated to relieve the appellant from all liability for the loss which occurred except upon proof that it arose from wilful misconduct.

The effect of the respondent's election to send the goods at the owner's risk rate and the consequent introduction of the special conditions did not, in my opinion, extend further than to modify the liability to which the appellant would otherwise have been subject as a common carrier in respect of the matters mentioned in the condition (Robinson v. Great Western Railway Co.[1]; D'Arc v. London and North Western Railway Co.[2]; Phillips v. Clark[3]; Lewis v. Great Western Railway Co.[4]; Price & Co. v. Union Lighterage Co.[5]). It follows from this view that the special condition in question did not govern the relations of the parties beyond the period during which the appellant would have sustained the character and liability of a common carrier at common law. Such liability would have commenced before the journey started and continued after the journey's end. The period during which a carrier is liable as an insurer at common law is defined by Cockburn C.J. in delivering the judgment of the Court in Chapman v. Great Western Railway Co.[6]. But, whatever be the point to which the liability of the appellant as a common carrier would have endured in the present case if that risk had been retained by the consignment note, it would not have been continuing when the goods were burnt. It follows that the appellant's responsibility for the loss of the goods was not at that time governed by the special condition in the consignment note.

The appellant relies also, mainly indeed, on clause 25 of the schedule to the by-law. The material parts of this clause have already been set out in detail by other members of the Court. The schedule is of statutory origin, but the parties have agreed that it should be part of the contract. The contracts at Commissioner's risk rate and at the owner's risk rate are each subject to the schedule. The question whether clause 25 (h) and (i) regulated the responsibility of the appellant for the goods when they were burnt may be approached by considering the origin at law of the liability which was thereby modified. Upon the happening of the events described in clause 25 (h) a carrier would have become liable at common law in the capacity of a bailee of the goods (Bourne v. Gatliffe[7]; Cairns v. Robins[8]; Mitchell v. Lancashire and Yorkshire Railway Co.[9]). In Heugh v. London and North Western Railway Co.[10], the carrier was described as an "involuntary bailee." It may in some cases be a question of much nicety to determine when the character of carrier ceased and that of bailee began. In the events described in clause 25 (h) the bailment thereupon ensuing would have involved the appellant in the liability incident to that relationship. That, in my opinion, is the liability which the parts of clause 25 now in question were intended to modify. These parts of the clause did not extend, in my opinion, any further than to regulate the responsibility of the appellant when he was holding, in the character of bailee, goods which came into his possession in the character of carrier. They do not apply to the railway premises as a general respository of goods, but only of the goods carried and held by the appellant by virtue of the contract of carriage. Such goods are held in fulfilment of a duty which is accessory to the contract of carriage. The presence of the goods on the railway premises is therefore not the criterion of the application of clauses (h) and (i). When the respondent's carter fetched the goods away from the appellant's truck in its goods-shed to the place on the premises where they were burnt, the appellant's custody ceased. The dumping of the goods at that place was not connected with the contract of carriage in any way (Shepherd v. Bristol and Exeter Railway Co.[11]). In Story on Bailments, 7th ed. (1863), sec. 542, it is said: "The material consideration is, whether the owner of the goods has taken any exclusive possession of them, or has terminated the custody of the carrier by any act or direction, which does not flow from the duty of the carrier." Upon the facts in the present case, this material consideration avails in favour of the carrier. After the bags were removed by the respondent's workmen and stacked on the premises, where it is said the respondent had a licence from the appellant to put them for the convenience of the respondent, the duty of the appellant in relation to the bags was entirely outside and independent of the contract in the by-law. In Van Toll v. South Eastern Railway Co.[12], Willes J., referring to 17 & 18 Vict. c. 31, said:—"Now, looking at the Act of Parliament, it is clear to my mind, that, when it talks of the receiving, forwarding, and delivering as matters in respect of which contracts are to be entered into, which are to be void, unless signed, it deals with the receipt, forwarding, and delivery of goods by carriers, and does not deal with such accommodation as that which is in question in this case. The accommodation given at the cloakroom of a railway station on persons arriving who do not choose to carry their sacks or their small matters in their hands about with them in town, but prefer to leave them in a convenient place whence they may have them when they call for them, is not a thing which is at all essential to or necessarily connected with the business of a carrier." A fortiori the dumping of the bags at the place where they were burnt was not in any way connected with the contract of carriage or the by-law in the present case.

The finding that the respondent put the bags there under a licence from the appellant, though depending upon proof which is somewhat thin, cannot, I think, be disturbed. The responsibility of the appellant therefore falls to be determined on the footing that the respondent was a licensee. I think that there was evidence to support the finding that there was a breach of the duty which flowed from that relationship.

Solicitor for the appellant, Albert James Hannan, Crown Solicitor for South Australia.

[1] (1865) 35 L.J. C.P. 123.

[2] (1874) L.R. 9 C.P. 325.

[3] [1857] EngR 437; (1857) 2 C.B. (N.S.) 156; 140 E.R. 372.

[4] (1877) 3 Q.B.D. 195.

[5] (1903) 1 K.B. 750; (1904) 1 K.B. 412.

[6] (1880) 5 Q.B.D. 278, particularly at p. 281.

[7] [1841] EngR 1197; (1841) 3 Man. & G. 643; 133 E.R. 1298.

[8] [1841] EngR 573; (1841) 8 M. & W. 258; 151 E.R. 1034.

[9] (1875) L.R. 10 Q.B. 256, at p. 260.

[10] (1870) L.R. 5 Ex. 51, at p. 57.

[11] (1868) L.R. 3 Ex. 189, at p. 193.

[12] [1862] EngR 585; (1862) 12 C.B. (N.S.) 75, at pp. 85, 86; [1862] EngR 585; 142 E.R. 1071, at p. 1075.

High Court of Australia

South Australian Railways Commissioner v McGlew & Co Ltd [1933] HCA 15; (1933) 49 CLR 204 (21 April 1933)

HIGH COURT OF AUSTRALIA