Stapley v Towing Masters Pty Ltd (trading as Dynamic Towing) [2009] NSWSC 139 (12 March 2009)

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Stapley v Towing Masters Pty Ltd (trading as Dynamic Towing) [2009] NSWSC 139 (12 March 2009)

Last Updated: 19 March 2009

NEW SOUTH WALES SUPREME COURT

CITATION:
Stapley v Towing Masters Pty Ltd (trading as Dynamic Towing) [2009] NSWSC 139


JURISDICTION:
Equity Division

FILE NUMBER(S):
1697/07

HEARING DATE(S):
24 and 25 February 2009

JUDGMENT DATE:
12 March 2009

PARTIES:
Sandra Stapley (Plaintiff)
Towing Masters Pty Ltd (t/as Dynamic Towing) (Defendant)

JUDGMENT OF:
Palmer J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
J.B. Whittle SC (Plaintiff)
C. Tannous (Solicitor) (Defendant)

SOLICITORS:
Courtenay & Co (Plaintiff)
Sage Solicitors (Defendant)


CATCHWORDS:
LIENS – Whether tow truck operator has general lien arising at law – whether operator has a special lien created by statute – whether tow truck operator is a common carrier – whether tow truck operator has an artificer’s lien – whether operator has lien for salvage.

LEGISLATION CITED:
Common Carriers Act 1902 (NSW)
Tow Truck Industry Act 1998 (NSW) – s 8, s 15, s 18(3), s 50, s 52, s 54, s 84, s 105
Warehousemen’s Liens Act 1935 (NSW) – s.3
Workmen’s Liens Act 1893 (SA) – s 5

CATEGORY:
Principal judgment

CASES CITED:
- Belfast Ropework Company Limited v Bushell [1918] 1 KB 210
- Berkeley Applegate (Investment Consultants) Ltd (in liq), Re [1989] Ch 32
- BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1978) 52 ALJR 20
- Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226
- Drinkrow v Hammond & McIntyre Ltd [1954] NZLR 442
- Eastman Chemical International AG v NMT Trading Ltd [1972] 2 Lloyd’s Rep 25
- Geering v Stewart Transport Ltd [1967] NZLR 802
- Hatton v Car Maintenance Company Ltd [1915] 1 Ch 621
- James v Commonwealth [1939] HCA 9; (1939) 62 CLR 339
- Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 2) [1987] HCA 10; (1987) 162 CLR 153
- Majeau Carrying Co Pty Ltd v Coastal Rutile Ltd [1973] HCA 22; (1973) 129 CLR 48
- Mercantile Credits Ltd v Jarden Morgan Australia Ltd [1991] 1 QdR 407
- Naylor v Mangles (1794) 1 Esp 109 (170 ER 295)
- Nelson v Dahl (1879) 12 Ch D 568
- Nicholson v Chapman [1793] EngR 1598; (1793) 2 Hy Bl 254 (126 ER 536)
- Oppenheim v Russell [1802] EngR 98; (1802) 3 Bos & P 42 (127 ER 24)
- Pinnock v Harrison [1838] EngR 202; (1838) 3 M&W 532 (150 ER 1256)
- Rushforth v Hadfield [1805] EngR 204; [1805] 6 East 519 (102 ER 1386)
- Securitas (NZ) Ltd v Cadbury Schweppes Hudson Ltd [1988] 1 NZLR 340
- Siohn & Company Ltd, A., v R.H. Hagland & Son (Transport) Ltd [1976] 2 Lloyd’s Rep 428
- Skinner v Upshaw & Son [1790] EngR 1910; (1702) 2 Ld Raym 752 (92 ER 3)
- Southern Livestock Producers Ltd, Re [1964] 1 WLR 24
- Vital Learning Aids Pty Ltd and the Companies Act, Re [1979] 2 NSWLR 442

TEXTS CITED:
- “Ashburner’s Concise Treatise on Mortgages, Pledges and Liens” (2nd Ed) (1911) Butterworth & Co
- Fisher & Lightwood’s “Law of Mortgage” (2nd Ed) (2005) LexisNexis Butterworths
- Hall “Possessory Liens in English Law”(1917) Sweet & Maxwell
- Halsbury “Laws of England” (4th Ed) Vol 5(1) at paras 401, 402, 425; Vol 28, para [525]
- Kahn-Freud “The Law of Carriage by Inland Transport” (4th Ed) (1965) Stevens & Sons
- McBain “Time to Abolish the Common Carrier” (2005) Journal of Business Law 545
- Palmer “Bailment” (2nd Ed) (1991) The Law Book Co
- Sykes & Walker “The Law of Securities” (5th Ed) (1993) The Law Book Co

DECISION:
Plaintiff’s Further Amended Summons dismissed; declaration in terms of Cross Claim.



JUDGMENT:

1697/07 Stapley v Towing Masters Pty Ltd t/as Dynamic Towing

JUDGMENT

12 March, 2009

Introduction

1    This case arises from a dispute between a tow truck operator and an insurance company over $870. The reason that the dispute comes before this Court is that it raises for determination an important question of law which affects motor vehicle insurers, car owners and the towing industry: does a tow truck operator have a possessory lien over a towed vehicle to secure payment of the towing charges?

2    The Plaintiff’s car was involved in a collision. The Defendant, a tow truck operator, towed the Plaintiff’s car to a customer service centre of the Plaintiff’s insurer, Australian Associated Motor Insurers Ltd (“AAMI”). AAMI refused to pay the Defendant’s towing charges on the ground that they were unreasonably high and had not been agreed by or on behalf of the Plaintiff. The Defendant refused to deliver possession of the Plaintiff’s vehicle to AAMI or to the Plaintiff until its charges were paid in full. The Defendant claimed that it was entitled to a possessory lien over the vehicle.

3    AAMI commenced these proceedings in the Plaintiff’s name, relying upon its right to do so under the insurance contract. It sought a declaration that the Defendant had no possessory lien. The Defendant has filed a Cross Claim seeking a declaration to the contrary. Subsequently, AAMI paid into Court the disputed debt, whereupon the Defendant released the vehicle.

4    The dispute over the debt was resolved between the parties during the course of the trial but the question of principle raised by the declarations sought remains for determination. It is agreed by both sides that this is a test case and that a decision will be of general utility to the towing industry and to the motor vehicle insurance industry. I proceed on that basis. The facts which gave rise to the dispute over the debt between the Plaintiff and the Defendant require little further reference.

The issues

5    The towing industry in New South Wales is regulated by the Tow Truck Industry Act 1998 (NSW) (“TTI Act”) and the Regulations under that Act. The TTI Act was administered by the Tow Truck Authority (“TTA”) until 2007 when the Act was amended. It is now administered by the Roads and Traffic Authority. For the sake of convenience, I will refer to that part of the Roads and Traffic Authority which administers the Act as “TTA”. The terms of a towing contract, called in s 50 of the Act a “towing authorisation”, are prescribed by the Act and Regulations: s 52. The towing authorisation must be signed by the vehicle owner as an authority to the tow truck operator to tow the vehicle to a specified place and to charge in accordance with a certain specified scale. It is common ground that neither the TTI Act nor the prescribed form of towing authorisation contains any express term entitling the tow truck operator to a lien or to any other form of security over the towed vehicle to secure payment of the towing charge.

6    Mr C. Tannous, solicitor, who has argued the case for the Defendant most ably, says that a tow truck operator who performs towing work on a vehicle has either a general lien or a particular lien over that vehicle. The general lien, he submits, arises because such a term is implied in the towing contract by custom or usage; the particular lien arises because it is impliedly conferred by the TTI Act, or because it is implied by usage or custom as a term in the contract or else because it is arises by operation of law.

Whether a general lien exists

7    A general lien entitles the holder to retain the chattel as security for payment of the full indebtedness of the owner, no matter on what account the indebtedness may be due: Mercantile Credits Ltd v Jarden Morgan Australia Ltd [1991] 1 QdR 407, at 410, 413. A general lien is regarded in law as an exception, rather than the rule, because it advantages one creditor, otherwise unsecured, over the general body of unsecured creditors: Rushforth v Hadfield [1805] EngR 204; [1805] 6 East 519, at 528 [1805] EngR 204; (102 ER 1386). However, over time, certain occupations have been recognised by the Courts as having the benefit of a general lien so that proof of the existence of that right by custom or usage is no longer required and the general lien is said to arise as a matter of law. Those occupations are: solicitors, bankers, factors, stockbrokers, insurance brokers and calico printers: see generally “The Law of Securities”, Sykes & Walker (5th ed) p.739; Halsbury “Laws of England” (4th ed), Vol 28, para [525], “Possessory Liens in English Law” Hall (1917), Sweet & Maxwell.

8    Apart from the recognised categories, a right to a general lien may be proved as arising from by custom or usage in a particular trade or industry. A right to a general lien conferred by contract is, more properly, a pledge rather than a lien: see e.g. Re Vital Learning Aids Pty Ltd and the Companies Act [1979] 2 NSWLR 442; Sykes & Walker (op cit) at 738; Hall (op cit) at 32.

9    As the towing industry is not within the recognised categories, the Defendant must prove that the industry uniformly acknowledges the right to a general lien. The Defendant tendered evidence to establish custom or usage, but none of that evidence even remotely suggested that a tow truck operator had a right to retain possession of a towed vehicle, either as against the owner or as against the owner’s insurer, to secure payment of a general indebtedness by the owner or the insurer.

10    Accordingly, I conclude that the Defendant did not have a general lien over the towed vehicle.

Whether a particular lien is conferred by statute

11    A particular, or special, lien enables the holder to retain the particular property until payment of the holder’s claims relating solely to that property. At common law, a particular lien may be created by:

– express contract, or

– a term implied into a contract by a course of dealing between the parties, by custom or usage in a trade or industry, or by other means by which a term may be implied into a contract;

– imposition of law in favour of two broad categories of persons:

those compelled by the common law to perform services for, or to receive goods from, the general public, such as innkeepers and common carriers;

those who, in plying their trade, improve the goods of others by the expenditure on those goods of money, skill or labour:

see generally Majeau Carrying Co Pty Ltd v Coastal Rutile Ltd [1973] HCA 22; (1973) 129 CLR 48, at 54; Naylor v Mangles (1794) 1 Esp 109 (170 ER 295); Hall (op cit) at 49.

12    A lien, or right in the nature of a lien, may also be created by statute, regardless of the intention of the contracting parties. Examples may be found in s 3 of the Warehousemen’s Liens Act 1935 (NSW) and s 5 of the Workmen’s Liens Act 1893 (SA). Such legislation usually makes detailed provision for the enforcement of the lien: see, generally, Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 2) [1987] HCA 10; (1987) 162 CLR 153.

13    Mr Tannous submits that the TTI Act and Regulations have impliedly created a particular lien for the benefit of towing operators. The steps in the submission are as follows:

– s 54(2) provides that the Regulations under the TTI Act may prescribe procedures “for or with respect to” charging for towing, salvage or storage of motor vehicles;

– s 84(1)(c) empowers the TTA to give directions in respect of any matter concerned with towing work;

– s 105(1) provides that the Governor may make regulations for the purpose of giving effect to the TTI Act, and ss (4) provides that the Regulations “may adopt any document as in force from time to time”;

– on 4 August 2006, there was published in the New South Wales Government Gazette a notice issued by the TTA under s 54 entitled “Maximum Charges for Towing, Salvage and Storage of Motor Vehicles”, paragraph 7 of which gives the following direction:

“No demand will be made to insurance companies for a cash only payment for vehicle collection. All operators are to ensure that vehicles to be collected by an insurer are placed in an easily accessible location upon payment for all towing, salvage, storage charges and any other itemised expense that are deemed to be within the charges as stated herein”;

– as a matter of construction of paragraph 7, if operators are obliged to place vehicles for easy collection “upon payment of all towing ... charges”, it follows that they are not obliged to place vehicles for collection if they are not paid. They must, therefore, be entitled to retain vehicles until paid, so that a particular lien in favour of towing operators is created.

14    I am unable to accept this submission. As explained by Mr Hickey, former General Manager of TTA (now General Manager of Tow Truck Licensing and Compliance at the Roads & Traffic Authority) and as is evident from terms of paragraph 7 of the Gazetted notice, this direction to the industry was concerned with correcting two particular mischiefs. The first was the requirement of some operators that they be paid in cash rather than by means more appropriate to proper record keeping, both in the towing industry and in the motor vehicle insurance industry. The second was a practice of some operators of placing a vehicle which was to be collected from their holding yards behind numerous other vehicles and then, when the owner or another tow truck operator came to collect it, requiring payment of an additional fee to move the vehicles blocking access.

15    It is inconceivable that had the legislature intended to create a statutory lien in favour of towing operators, it would have done so by the indirect and obscure means of publishing in the Gazette a paragraph in a notice dealing with towing fees which makes no mention at all of the word “lien”.

Whether lien implied by custom or usage

16    The existence of a custom or usage which justifies the implication of a term into a contract is a question of fact: Nelson v Dahl (1879) 12 Ch D 568, at 575; Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226, at 236. There must be evidence that the custom is so notorious and acquiesced in that everyone entering into a contract of that kind can reasonably be presumed to have imported the term into the contract: Con-Stan (ibid); Majeau (supra) at 60-61; Nelson v Dahl (supra) at 575.

17    Mr Tannous submits that a particular lien is implied in towing contracts by custom or usage, the dealings establishing that custom or usage being those between towing operators as a body and motor vehicle insurers as a body.

18    Mr Tannous acknowledges that the towing contract, as embodied in the towing authorisation prescribed under the Regulations, is a contract, not between the towing operator and an insurer but, rather, between the towing operator and the owner of the vehicle. He concedes that there is no evidence which would establish a custom or usage arising from dealings between towing operators and motor vehicle owners.

19    However, Mr Tannous submits that the Court will take judicial notice of the fact that the vast majority of motor vehicles are insured and that, when a motor vehicle involved in a collision requires to be towed, the owner’s insurer will invariably become subrogated to the owner’s rights. In that situation, Mr Tannous says, the insurer stands in the shoes of the owner and negotiates payment of the towing charge and the release of the vehicle by the towing operator. Accordingly, he says, the owner is represented by the insurer so that a custom or usage as between the insurance industry and the towing industry is to be implied into all towing contracts.

20    I am unable to accept this submission. As shown by the evidence of Mr Willis, an experienced towing operator called by the Defendant, there are many cases in which towing charges for a vehicle will not be covered by insurance. Such cases include those in which the vehicle is not involved in a collision but simply breaks down on the road. In those cases, no custom or usage between insurers and towing operators could imply a lien into the towing contract because the contract is between the owner and the towing operator alone, and an insurer has no part to play in its performance.

21    The evidence does not establish what proportion of towing contracts made in this State involve an insurer. In order to justify the implication of a term in a generic contract in an industry, a custom or usage must be shown to be “uniform” in the relevant industry. “Uniform” does not mean “universally accepted”, but the exceptions must be shown to be rare: Nelson v Dahl (supra) at 575; Con-Stan (supra) at 236.

22    The onus of establishing a uniform custom or usage falls upon the party asserting it. The Defendant has failed to show that towing contracts in this State “uniformly” involve insurers. Accordingly, the custom and usage of insurers cannot affect the terms of towing contracts generally, even if the terms of payment by insurers under towing contracts on behalf of owners were capable of importing a term into the towing contracts after they were made – a highly questionable proposition.

23    Further, in those cases in which the owner’s towing charges under a towing contract are covered by an insurance contract, the insurer’s obligation would usually be merely to indemnify the owner for the expenses incurred. I am unable to find that motor vehicle insurance contracts in New South Wales uniformly, or even generally, appoint the insurer as agent of the owner to enter into towing contracts. There is no evidence to that effect. Accordingly, even in contracts in which insurers are involved, I cannot find that the insurers have entered into such contracts on behalf of the owners so that the insurers’ knowledge of, and acquiescence in, a custom or usage justifies the implication into the contracts of a term conferring a particular lien.

24    For these reasons, I am unable to find that dealings between the towing industry and the motor vehicle insurance industry could import, by custom and usage, a term for a lien in towing contracts between owners and operators.

25    For the sake of completeness, I should state my findings as to whether the evidence proves the custom or usage asserted.

26    Mr Tannous submits that the motor vehicle insurance industry has for some time acquiesced in the practice that towing operators would not release a motor vehicle unless paid at the time of release. From such a practice, Mr Tannous says, it can be inferred that the motor vehicle insurance industry acknowledged that towing operators were entitled to a possessory lien. The evidence does not support that submission.

27    Mr Hickey, who was appointed as General Manager of the TTA in July 2001 and is now General Manager of the Tow Truck Licensing and Compliance Board of the RTA, says that there has been a continuing debate between motor vehicle insurers and the tow truck industry for years over whether towing operators have a possessory lien. He says that the existence of such a lien is not commonly accepted by insurers.

28    Mr Hickey says that a number of insurance companies have special arrangements with particular towing operators regarding time for payment of towing charges. There are some insurers who, by agreement, pay the towing operator after, not at the time of release, of the towed vehicle.

29    Mr Hilder, who is the State Assessing Manager of AAMI, says that in the majority of cases when an insured’s vehicle is taken to an AAMI customer service centre by a towing operator, the operator’s towing charge is paid by cheque upon delivery of the vehicle. This is a matter of administrative convenience for AAMI, not because AAMI recognises that the operator has a possessory lien. He says that he is not aware of any direction by AAMI to its staff to the effect that towing operators have a lien on the towed vehicle and, for that reason, must be paid before the vehicle will be released by the operator to AAMI or the owner.

30    Mr Hickman, the Theft and Investigation Manager of AAMI responsible for tow truck claims, confirms the evidence of Mr Hilder to the effect that AAMI, as a matter of administrative convenience, generally pays the towing operator upon delivery of the vehicle to an AAMI customer service centre. He says, however, that AAMI has disputed operators’ claims for a lien. He gives a number of instances when AAMI did not agree that a towing charge had been reasonable but paid the charge under protest and then commenced proceedings in the Local Court to recover part of the payment.

31    Mr Willis is a towing operator and has been involved in the industry for thirty-three years. He is now the controlling director of a substantial towing company. Mr Willis says that he has always had a practice of informing uninsured drivers before accepting a contract to tow their vehicles that he will require payment upon completion of the tow. He says that if an owner does not agree to this term, he will not accept the towing engagement.

32    It is clear that, as far as Mr Willis’ own experience is concerned, payment of the towing charge before release of the towed vehicle is made an express term of the towing contract with the owner and is not, therefore, implied by custom and usage.

33    Mr Willis says that in about 2000 he was involved in a major dispute with the NRMA over the time taken by it to pay towing charges for insured vehicles. Mr Willis insisted on retaining a substantial number of vehicles until the towing charges were paid. The NRMA disputed his right to retain them. It is clear from the very existence of such a dispute that there was no uniform acknowledgement in the motor vehicle insurance industry at that time that a towing operator had a possessory lien over towed vehicles.

34    Mr Willis says that, ultimately, the NRMA capitulated and entered into a special agreement with his company for the payment of towing charges. He says that his company has, since then, entered into special contracts with other major motor vehicle insurance companies.

35    Mr Willis’ evidence undermines the proposition that the motor vehicle insurance industry has uniformly acknowledged, by custom and usage, the right of a towing operator to a possessory lien. His evidence is, in short, that the right to a possessory lien was disputed and that the dispute has led to special contracts as to terms of payment with particular insurance companies. The existence of special contracts between some members of the motor vehicle insurance industry and towing operators cannot create a custom or usage applying to the whole industry.

36    I hold, therefore, that the Defendant has failed to prove that the motor vehicle insurance industry and the towing industry have, by custom or usage, uniformly acknowledged the right of a towing operator to a possessory lien.

37    In the light of these conclusions, I cannot find that the right to a possessory lien is to be implied in a towing contract by reason that it is necessary to give business efficacy to the contract and is so obvious that it goes without saying: cf. BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1978) 52 ALJR 20, at 26.

Whether a towing operator is a common carrier

38    Mr Tannous submits that the Defendant is, at common law, a common carrier and therefore has a possessory lien by implication of law. Mr Whittle SC, in a cogent argument for the Plaintiff, submits that the Defendant is not a common carrier and further says that I should express no views as to whether towing operators generally are common carriers because whether or not a particular towing operator is a common carrier depends upon the particular facts relating to the way that that operator conducts its business.

39    There is very little evidence as to the way in which the Defendant conducts its business and as to how it came to enter into the towing contract with the Plaintiff. That is largely due, I think, to the fact that the circumstances in which the contract came into existence were very straightforward and simple and, in the vast majority of cases, would be very close to, if not identical with, the way in which motor vehicle owners come to contract with towing operators. I will confine my findings in this case to the rights as between the Plaintiff and Defendant but the evidence generally suggests that those findings will be applicable to most, if not all, licensed towing operators carrying on business in this State.

40    However, before I come to the facts, I will review briefly the law relating to common carriers.

41    The expression “common carrier” has a rather fusty and antiquarian tang to it, probably because in most of the cases in this area of the law common carriers rub shoulders with “hoymen”, “lightermen”, “bargemen”, “carmen”, “wharfingers”, innkeepers and others whose professions are more often noticed in the novels of Fielding and Dickens than in contemporary law reports. It has been said that the Courts have tended to diminish, rather than extend, the class of persons who can fall within the description of common carrier: see e.g. Belfast Ropework Company Limited v Bushell [1918] 1 KB 210, at 213-4 per Bailhache J; Kahn-Freud “The Law of Carriage by Inland Transport” (4th Ed) p 204ff.

42    Certainly, in the international carriage of goods the common carrier is an anachronism, since such carriage is governed by international conventions and agreements which do not recognise that legal categorisation: see Halsbury (4th Ed) Vol 5(1) at paras 401, 425. In domestic law, carriage of goods is almost always governed by specific contract and carriers who fail to limit contractual liabilities which would otherwise attach to a common carrier are rare: see generally McBain “Time to Abolish the Common Carrier” (2005) Journal of Business Law 545, at 560-561.

43    However, the common carrier as a species is by no means extinct. There are many modern decisions in the United Kingdom, Australia, New Zealand and in the United States in which the status of a carrier as a “common carrier” has been in issue, usually because the plaintiff claims that the defendant, as a common carrier, has strict liability for goods while in its possession. In New South Wales, the Common Carriers Act 1902, far from being a dead letter, was amended as recently as 1999.

44    Useful descriptions of the defining characteristics of a common carrier may be found in the judgment of Dixon J in James v Commonwealth [1939] HCA 9; (1939) 62 CLR 339, at 367-369; Palmer’s “Bailment” (2nd Ed) at 969; and Halsbury (4th Ed) Vol 5(1) para 402. The passage from Halsbury succinctly summarises the current state of the authorities:

“The test as to whether a carrier of goods is a common carrier is an objective one which does not depend on whether the carrier personally intends to hold himself out as being prepared to carry irrespective of circumstances.

To constitute himself a common carrier of goods, a carrier must hold himself out, either expressly or by a course of conduct, as willing to carry for reward, so long as he has room, goods of all persons indifferently who send him goods to be carried at a reasonable price. He must hold himself out as ready to carry for hire as a business and not as a casual occupation for a particular occasion. A carrier's advertising literature may be material in establishing his willingness to carry goods for all those who may call upon his services. ... If a carrier reserves to himself the right to reject ... goods [which] he is asked to carry according to his usual course of business, or if he carries only certain ... goods for certain customers, he is not a common carrier.

A carrier may be a common carrier even though one of the places between which he carries is out of the jurisdiction or overseas. He may also be a common carrier even though he does not profess to carry between fixed termini at all, but is prepared to carry from or to any terminus. If a carrier professes to carry only particular kinds of goods he is (at most) a common carrier only of such goods; and if he professes to carry only from one place to another place, he is not a common carrier to intermediate places or to any other place.”

45    Probably the most disputed hallmark of a common carrier, and the most difficult to ascertain, is whether, and in what circumstances, the carrier reserves the right to refuse goods for carriage. In one of the leading cases, Belfast Ropework (supra), Bailhache J admitted that often there was no simple test for discernment of this critical right of refusal, but his Lordship asked whether, on the facts of a particular case, it could be said that the carrier had reserved to himself the right to reject goods for carriage “being guided in his decision by the attractiveness or otherwise of the particular offer and not by his ability or inability to carry having regard to his other engagements” (at 215), emphasis added.

46    His Lordship found on the facts of the case that the Defendant sometimes declined particular jobs if they did not suit his convenience or if he could so manage the movements of his lorries otherwise so as to maximise his profit. In those circumstances his Lordship held that the defendant was not a common carrier.

47    The fact that a carrier reserves the right to refuse to carry particular goods is not, on its own, sufficient to remove him from the category of common carriers. A carrier may refuse to carry any but a particular class of goods, or goods which are too large or otherwise unsuitable for its vehicles, or may refuse if all of its vehicles are engaged, or the goods are inherently dangerous. Nevertheless, in those circumstances the carrier is not excluded as a common carrier because the reasons for refusal arise from the type of business conducted by the carrier and the consequent inherent impracticability of performing a particular contract. If, however, the carrier reserves a right of refusal for reasons not connected with operational practicality but, rather, for reasons attributable to the general profitability of the business, then it will not be a common carrier. Examination of a few modern cases will illustrate the proposition.

48    In Geering v Stewart Transport Ltd [1967] NZLR 802, the defendant carried on a furniture removal business. The plaintiff engaged the defendant to remove certain furniture, which was destroyed in transit and the plaintiff claimed the defendant was strictly liable as a common carrier. Gresson J, at first instance, said at 804:

“Did the defendant, while inviting all and sundry to employ him, reserve to himself the right of accepting or rejecting their offers of goods for carriage, whether his lorries were full or empty, being guided in his decision by the attractiveness or otherwise of the particular offer, and not by his ability or inability to carry, having regard to his other engagements? Mr Stewart, who gave his evidence very fairly, stated in cross examination:

On a Saturday, provided the van was available, we would accept this type of work from anyone within the area, subject to price ... as related to the schedule of charges as authorised by the Transport Department ... and it is often the practice to require payment in advance.

Applying the tests set out above to the facts of the present case, I am of opinion that the defendant company was acting as a common carrier, and was thus an insurer of the safety of the goods.”

The decision was affirmed on appeal.

49    In Eastman Chemical International AG v NMT Trading Ltd ([1972] 2 Lloyd’s Rep 25) the defendants, haulage contractors and carriers, were sued for loss of goods destroyed when a lorry caught fire. The plaintiff claimed that the first defendant, as a common carrier, was strictly liable.

50    The first defendant’s manager gave evidence that the first defendant did not choose its customers but carried goods for anyone without selection, provided he could pay, the only exception being that the first defendant would not carry certain dangerous or goods highly at risk of theft. The first defendant was held to be a common carrier (at 31).

51    In A Siohn & Company Ltd v R.H. Hagland & Son (Transport) Ltd ([1976] 2 Lloyd’s Rep 428) the defendant was a road carrier which advertised itself as carrying goods only of a certain kind, namely “hanging garments”. Its vehicles had rails upon which clothing could hang so that it could be transported without being folded or creased. The defendant’s trade was almost entirely within the clothing industry, although it occasionally carried other light, clean loads. The evidence showed that the defendant had held itself out to all and sundry within the clothing industry as willing to carry garments and associated goods, and it had not expressly or impliedly reserved the right to refuse carriage for any consideration other than availability of vehicles or suitability of the goods to be transported. The defendant was held to be a common carrier (at 430).

52    Drinkrow v Hammond & McIntyre Ltd ([1954] NZLR 442) was an unusual case in that it was the defendant carrier which was asserting its status as a common carrier and the plaintiff who was denying that status. The defendant was seeking to limit its liability to the plaintiff under the Carriers’ Act to a sum much less than the plaintiff was claiming for negligent breach of its duty as a bailee for reward.

53    The defendant was a heavy haulage contractor specialising in the carrying of large equipment. The defendant’s evidence, which the trial judge accepted, was that the defendant would accept any job as long as it had a vehicle available to do it. The defendant would generally quote a price if asked and frequently did not get a job because it was not the lowest tenderer. However, the defendant did not impose other contractual conditions: it was “simply there to do the carting and get on with the job”. The defendant was held to be a common carrier.

54    It is a feature of each of these cases that the contract of carriage was of the simplest kind. The contract stipulated nothing more than the goods to be carried, the location from which and to which they were to be carried, the time for carriage, and the price. No special conditions were incorporated.

55    In Securitas (NZ) Ltd v Cadbury Schweppes Hudson Ltd ([1988] 1 NZLR 340) Securitas had entered into a contract with Cadbury whereunder each week a Securitas vehicle would take a large sum of cash to Cadbury’s offices for staff wages. Securitas employed one or two security guards to carry out the delivery. During a delivery in which only one guard was engaged an armed robber stole the cash. Cadbury’s sued for negligence. Securitas claimed that it was a common carrier so that its liability was limited under the Carriers’ Act to a sum of $40.

56    The Court of Appeal, approving the statements of law in Geering and Drinkrow (supra) affirmed the trial judge’s finding that, on the facts of the case, Securitas was not a common carrier.

57    At 343 the Court accepted that the essential question was whether Securitas had dealt indiscriminately with the public. The Court found that there was a high degree of individualisation in the arrangements between Securitas and its customers. The company carried mainly for specialised customers under special contract. Individual long-term contracts with such customers were the norm and the particular security needs of customers formed part of the contractual arrangements. It was of particular significance that the decision of Securitas to limit the class of its customers was a marketing decision, rather than an operational decision. In those circumstances, the Court held, Securitas was not a common carrier.

58    I turn now to the facts of this case which show the circumstances in which the Defendant came to be engaged by Mr Stapley to tow his vehicle.

59    Mr Stapley had an accident while driving his mother’s car. He telephoned his mother and his mother’s insurer, AAMI. A number of tow trucks attended the scene, including the Defendant’s truck. He had a brief discussion with the Defendant’s driver and agreed that that driver would tow the vehicle. Mr Stapley then signed a towing authority. That document identifies the Defendant as the towing operator, the name of the tow truck driver, the name and address of Mr Stapley, the make and registration of the vehicle, the location from which and the location to which the vehicle is to be towed, and the date and time. It does not state the towing charge but the charge is regulated under s 54 TTI Act and Regulations. There were no other terms and conditions.

60    Mr Hickman says that as far as AAMI is concerned, an insured is free to choose any licensed tow truck operator who arrives on the accident scene. There is no evidence to suggest that the way in which the Defendant obtained the towing job in this case is different in any material way from the common experience of licensed towing operators in obtaining towing contracts generally.

61    The Defendant, like other towing operators carrying on business in this State, is licensed under s 15 of the TTI Act to carry on business as a tow truck operator. Section 18(3) of the Act makes it clear that an applicant for a towing operator’s licence will not be approved unless it is carrying on a properly conducted business.

62    The evidence shows that the Defendant holds itself out to the public as prepared to carry or tow motor vehicles for reward at reasonable rates (being those specified under the TTI Act and Regulations). There is nothing in the evidence to suggest that the Defendant, in the usual course of business, expressly or implicitly reserves the right to refuse to carry a particular vehicle or to carry for a particular owner except for reasons of operational practicality. The evidence suggests that a tow truck operator, hearing about an accident or break-down, arrives at the scene, possibly with competitors, and simply offers his services to the driver. The operator will already know the type of vehicle to be towed and that his truck is able to perform the job. The operator, by attending the scene and offering his services, holds out to the driver, whoever he or she may happen to be, that the truck and his time are available if the owner will pay the fee prescribed under the Regulations.

63    If the driver accepts the offer, the contract which results is of the simplest possible kind. It provides only for the towing of a specified vehicle from one place to another. The contract cannot be “specialised” in order to cater to the particular needs of an individual owner, or the particular circumstances of the case, because the towing authority must be in the prescribed form, which is standard for all cases.

64    Mr Whittle submits that a possessory lien cannot arise if it is contrary to the terms of the contract between the parties. In the present case, he says, the towing contract evidenced by the towing authority requires that the vehicle be towed from location “A” to location “B”. It would be inconsistent with the terms of the contract if the towing operator, not having been paid when he arrives at “B”, then takes the vehicle to his own storage yard in exercise of a possessory lien.

65    I am unable to agree with this submission. It is certainly true that a possessory lien cannot arise if its exercise would be inconsistent with the performance of the contract. However, that proposition has never defeated the lien of a common carrier. That is because the lien cannot arise until the carrier has performed its contract by carrying the goods from “A” to “B”. At that point the owner is liable to make payment. The contract is silent as to what is to happen if the owner refuses payment. Into that silence, the law steps with the imposition of the common carrier’s lien: see e.g. Pinnock v Harrison [1838] EngR 202; (1838) 3 M&W 532, at 535 [1838] EngR 202; (150 ER 1256). The lien does not alter the contract for carriage between the parties; rather, it gives to the carrier who has fully performed its part of the bargain the means of enforcing payment under the contract by the owner of the goods.

66    I conclude that the Defendant, in conducting its business in the way which resulted in the contract with Mr Stapley, is carrying on business as a common carrier. Tow truck operators who conduct their businesses in the same way are also common carriers.

67    It has been established since the early 18th century that a common carrier has a particular lien over the goods carried to secure payment of the carrying charge, but the lien does not extend to any storage charge for the goods while they are in the custody of the carrier: Skinner v Upshaw & Son [1790] EngR 1910; (1702) 2 Ld Raym 752 (92 ER 3); Oppenheim v Russell [1802] EngR 98; (1802) 3 Bos & P 42 (127 ER 24); see also Hall (op cit) at 53; McBain (op cit) at 573.

68    It follows that the Defendant in the present case had a particular possessory lien over the Plaintiff’s vehicle entitling the Defendant to retain the vehicle until payment of the towing charge, but not of any storage or other charge. There will be a declaration to that effect.

Whether an artificer’s lien arises

69    For the sake of completeness I will give my conclusions as to the other bases upon which Mr Tannous submits that the Defendant had a particular lien.

70    Mr Tannous submits that the Defendant had a possessory lien of the kind known as “artificer’s lien”. Such a lien is implied by the law in favour of one who has expended skill, money or labour upon the goods of another: see e.g. Hatton v Car Maintenance Company Ltd [1915] 1 Ch 621. Mr Tannous says that towing a motor vehicle requires skill and labour on the part of the operator so that the operator has a particular lien for the towing charge.

71    Mr Whittle concedes that a towing operator expends skill and labour in towing an owner’s vehicle but he points out that that is not enough to create an artificer’s lien at common law. The law requires that the work done or skill expended “must improve the chattel or increase its value” and that in order to show “improvement” in the chattel one must point to some alteration in its physical characteristics as a result of the labour or skill expended on it: Fisher & Lightwood’s “Law of Mortgage” (2nd Ed) at 2.34; “Ashburner on Mortgages” (2nd Ed) at 89. Mr Whittle says that simply towing a vehicle from one place to another does not alter its condition or improve its value.

72    Mr Whittle is, with respect, correct in his submission as to the law. The cases show that an artificer’s lien arises only where the chattel is improved or increased in value by something done to its physical condition or character, such as where a car is repaired, a suit is made from material delivered, a document is printed on paper provided, goods are packed into a container, a horse is broken, or a mare is covered so as to be in foal. By way of contrast, a lien does not arise where a car is merely garaged or horses are agisted or a document is delivered so that the recipient is entitled to make a certain application because, in such cases, the physical nature or character of the thing over which the lien is claimed has not been altered. For a compendious review of the cases see Fisher & Lightwood (op cit) at 2.35. One may query the justice and logic of these distinctions but they are too well established now for a judge at first instance to change them: see the remarks of Pennycuick J in Re Southern Livestock Producers Ltd [1964] 1 WLR 24, at 28.

73    Mr Tannous submits that when a motor vehicle, damaged in an accident or simply broken down, is towed from its location in a public road to a place where it can be repaired, there is a change in its condition or an improvement in its value.

74    I do not think that a change in location is a change in condition of the type referred to in the authorities. The motor vehicle, damaged or broken down, is in the same physical state when delivered at the end of the towing journey as it was when it began that journey.

75    As to any difference in value of the vehicle as a result of the towing, I would need to be persuaded by evidence that its market value at the end of the tow was higher than at the start. There is no such evidence.

76    It follows that I cannot find that the Defendant was entitled to an artificer’s lien over the Plaintiff’s lien. That conclusion would also seem to apply generally to all motor vehicle towing contracts.

Salvage

77    Mr Tannous submits that towing a motor vehicle after a collision, particularly if it has left the road, can be regarded as “salvage” – a term recognised by the TTI Act and Regulations as attracting a special rate of charge.

78    Mr Tannous says that, by analogy with the maritime lien for salvage, the common law should recognise a possessory lien as enuring to the benefit of a towing operator. I do not accept this submission and may deal with it briefly.

79    The lien for salvage is a special creation of the maritime law. It depends upon a number of factors, not the least of which was that the property had to be saved at sea. Another was that there had to be some risk of personal safety to the salvor. The recovery of property on land was never, in itself, a ground which the common law recognised as sufficient to establish a lien: Nicholson v Chapman [1793] EngR 1598; (1793) 2 Hy Bl 254 (126 ER 536); Hall (op cit) at 60.

80    Mr Tannous relies upon a passage in Fisher & Lightwood (op cit) at 2.30 which states that “salvage” in modern cases is used to denote “a claim made by a person for the skill and labour expended in preserving property, in which circumstance a lien is usually granted”. However, that passage, read in its context, is referring to equitable liens, not liens at common law. The cases cited are instances in which equity protects the position of a person acting in a fiduciary character, such as a trustee or liquidator, when that person preserves property for the benefit of others: see e.g. Re Berkeley Applegate (Investment Consultants) Ltd (in liq) [1989] Ch 32, at 51. This equitable principle has no application, even by analogy, to a common law possessory lien. It is unnecessary to seek to draw such an analogy when the common law itself provides a well developed rationale for the imposition of possessory liens.

Orders

81    The Plaintiff’s Further Amended Summons will be dismissed. There will be a declaration to the effect sought in the Cross Claim. I will make an order, by consent, as to the payment of the money paid into Court. I direct the Plaintiff to bring in Short Minutes of Order. I will hear argument as to costs.

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LAST UPDATED:
19 March 2009