Legal experts say charging entities should look closely at fee arrangements.
New life may have been breathed into the contentious issue of shipping container detention fees from an unexpected quarter.
Both the freight forwarding and container transport sectors have issues with container fees.
While forwarders may bear the initial brunt of them, it is argued they are not always at fault and the burden of paying can end up with transporters as supply chain participants seek to recover the additional costs in the face of what has been seen as a flawed container handling system.
Two recent cases involving ANZ from customers seeking to recoup bank fees will have resonance in other areas where it is asserted that penalty fees are imposed, lawyers say.
The cases were the High Court of Australia decision in Andrews v ANZ Banking Group Limited and the Federal Court of Australia judgment in Paciocco v ANZ Banking Group Limited.
In an advisory to shipping firms, Robert Springall and Maria Migunova of law firm Holman Fenwick Willan note that late bank payment fees were ruled illegal penalties and were, therefore, lawfully recoverable by the customers.
However, while focusing on the law rather than supply chain issues, they argue that container fees are a compensation for loss of use of a container instead of a penalty for non-return by a due date.
“Unless there has been a breach of contract or a failure to make a payment by a due date, which gives rise to an additional excessive cost, it remains open for parties to agree the terms of any arrangement regarding the ongoing hire and use of containers without the risk of the detention charges being held to be a penalty,” the lawyers say.
“Nevertheless, there is clearly going to be an increasing focus on the validity and reasonableness of bank charges of the type considered in Paciocco in the future.”
As a result, shipping companies are being encouraged to review their container detention policies to ensure charges payable represent the greatest loss that could be proved to have resulted from the late return of a container.
Holman Fenwick Willan has also suggested a review to adopt a contractual fixed daily fee for the hire and use of a container beyond the ‘free time’.
“Such an approach would be consistent with the present trends being followed by container operators and shipping companies and also the comments of various judges regarding the importance of maintaining a distinction between a charge that is ‘extravagant and unconscionable’ in amount and one which is a ‘genuine covenanted pre-estimate of damage’,” the lawyers say.
“In the interim, it is doubtful whether the recently announced appeal of Justice Gordon’s decision in Paciocco to the full Federal Court will have any impact on the existing rights of [sea] carriers and container operators to collect container detention charges.”