Australia: Damage to air cargo and the application of Article 18 of the Montreal Convention

IN BRIEF - AIR CARRIER'S SHARE OF LIABILITY REDUCED IN APPEAL CASE

In Singapore Airlines Cargo Pte Limited v Principle International Pty Ltd [2017] NSWCA 216, the New South Wales Court of Appeal considered the operation of the Montreal Convention 1999 in the context of damage to air cargo, in circumstances where the cargo were live animals. Exporters and air carriers will find the Court's analysis of what constitutes an "event" and "defective packing" under Article 18 interesting to consider.

EXPORTER BRINGS PROCEEDINGS AGAINST AIR CARRIER FOLLOWING DEATH OF CATTLE DURING FLIGHT TO CHINA

The Respondent to the appeal (Principle) conducted business exporting live animals, including cattle, from Australia to Asia. In August 2013, it contracted with the Appellant (Singapore Airlines) for the carriage of cattle from Melbourne to Harbin, China on board three separate flights. Upon their arrival in Harbin, 18 head of cattle that had been transported in two crates in the back section of the lower deck of one of the flights were found to have died during the flight.

It was found that the death of the cattle was due to lack of ventilation on the lower deck.

Principle brought proceedings at first instance against Singapore Airlines in the District Court in New South Wales for damages arising from the death of the cattle pursuant to Article 18 of the Montreal Convention 1999 (which is applicable in Australia by virtue of the Civil Aviation (Carriers' Liability) Act 1958 (Cth)).

"EVENT", "DEFECTIVE PACKING" UNDER ARTICLE 18 AND EXPORTER'S CONTRIBUTION TO LOSS AMONG ISSUES CONSIDERED ON APPEAL

The determination of the appeal involved a consideration of a number of issues, including the following:

1. What was the relevant "event" for the purpose of the Montreal Convention 1999 (issue 1);
2. Whether the deaths of the cattle resulted from the use of crates, which in the circumstances amounted to "defective packing" (issue 2);
3. Whether Principle contributed to the loss and damage by failing to provide load plans to Singapore Airlines or otherwise inform Singapore Airlines that the crates ought to be placed on the upper deck (issue 3).

ARTICLE 18 OF THE MONTREAL CONVENTION 1999

Article 18 provides for a strict liability regime for the liability of air carriers in the event of damage to cargo during carriage by air. The relevant parts of Article 18 of the Montreal Convention 1999 are as follows:

(Emphasis added)

WHAT WAS THE "EVENT" THAT CAUSED THE DAMAGE?

The first issue for determination in the appeal was whether there was an "event" for the purpose of Montreal Convention 1999 (issue 1).

Singapore Airlines recognised that the cause of death was the lack of ventilation to the cattle in those crates on the lower deck. It argued that the relevant "event" was the placing of the cattle into the crates and that, thereafter, whatever happened to the cattle was part of the ordinary carriage by air (such that there was no "event" for the purpose of Article 18). Alternatively, Singapore Airlines sought to characterise the relevant "event" as putting the cattle in the crates without any written warning to the carrier.

President Beazley (with whose judgment Payne JA agreed) noted that that the relevant inquiry for the purpose of determining liability under Article 18 was whether there was an event or happening which caused the damage which took place during the carriage by air. It was not a question of whether what occurred was unusual or unexpected and not part of the usual course of carriage. She examined the decisions in Povey v Qantas Airways Ltd [2005] HCA 33 and In re Deep Vein Thrombosis and Air Travel Litigation [2004] QB 234 in reaching this conclusion and also distinguished the wording in Article 17 (which refers to an "accident") from that in Article 18 (which refers to an "event").

Without more, the loading of the cows into the crates did not result in damage and therefore this could not be characterised as an "event" for the purpose of the Montreal Convention 1999. Rather, it was the placement of the crates containing the 18 heads of cattle on the lower deck of the aircraft, given the ventilation conditions on that deck, which was the "event" which caused the damage during carriage by air.

DID LOADING AND PLACEMENT OF CRATES CONSTITUTE "DEFECTIVE PACKING"?

The Court went on to consider whether there was defective packing for the purpose of Article 18(2) of the Montreal Convention 1999.

The onus of proving this issue in defence to the claim was on Singapore Airlines.

Singapore Airlines submitted that loading nine cows into one crate which was then placed on the lower deck of the aircraft constituted defective packing and that therefore it had no liability to Principle by virtue of Article 18(2).

Against Singapore Airlines' position, Principle argued that there was no evidence that the crates that were used were defective in any way and therefore Singapore Airlines had not discharged the onus of proving defective packing.

The Court noted that the design of the crates was a relevant factor in determining this issue, but was not the only aspect of the packing of the cargo to be considered. The judges acknowledged, by way of example, that a determination of the adequacy of the "packing" of cargo could involve a consideration of the way in which the items were packed or placed in the packaging.

The Court held that due to the finding that the death of the cattle was as a result of inadequate ventilation on the lower deck, it could not be said that the loss resulted from defective packing performed by someone other than the carrier.

PRINCIPLE'S PROPORTIONATE LIABILITY ADJUSTED UPWARDS TO 80% AFTER COURT FINDS IT FAILED TO PROVIDE LOAD PLAN TO SINGAPORE AIRLINES

Finally, the Court considered whether and to what extent negligence, wrongful act or omission on the part of Principle caused or contributed to the loss.

The Court held that a failure by Principle to provide its load plan and to inform Singapore Airlines that the crates containing the cattle were to be placed on the upper deck contributed to the death of the cattle and the loss suffered. The evidence was that a load plan had been prepared but was not provided to Singapore Airlines and that Principle was aware of the risk of injury to the cattle if carried on the lower deck.

In the circumstances, the Court adjusted Principle's proportionate liability upwards from 40% (as determined at first instance) to 80%.

EXPORTERS AND CARRIERS SHOULD TAKE NOTE OF COURT'S ANALYSIS OF "EVENT" AND "DEFECTIVE PACKING"

The case is fact specific and we expect that its precedential significance will be limited.

In circumstances where decisions on the meaning and effect of Article 18 are fairly rare, it is worth noting the Court's treatment and analysis with regards to what constitutes an "event" under Article 18 as well as the commentary on what might constitute "defective packing" in a particular case.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.