Container detention fees face scrutiny

The NSW Supreme Court has quashed an attempt to make container detention fees unenforceable, but debate still rages for freight forwarders

B Anna Game-Lopata | April 5, 2011

Melbourne transport industry lawyers Hunt and Hunt say the decision to overturn an earlier ruling by NSW’s Consumer Trader and Tenancy Tribunal (CTTT) is not the end of the road for freight forwarders subject to container detention fees.

In 2010, the CTTT ruled container detention fees charged by shipping lines for containers not returned at the agreed time
are unenforceable.

The Tribunal decided the fees constituted a penalty rather than a genuine estimate of damages, and that the fees were far in excess of the real costs and losses sustained.

However in December 2010 the NSW Supreme Court overturned this ruling.

Hunt and Hunt Partner Andrew Hudson says the reason for the rejection lies not in the substance of the CTTT’s ruling but in the fact that the Tribunal was not deemed
the correct legal forum for resolving such claims.

"According to the Supreme Court, the CTTT is not vested with the appropriate jurisdiction to resolve 'maritime' claims," Hudson explains.

"This means that disputes over container detention charges and whether they can be enforced could still be litigated in a court or Tribunal as long as they are not deemed a 'maritime claim'.

"Presumably, it leaves open the possibility that a dispute can be considered
on the basis of a company’s terms and conditions but not through a bill of lading.

"The issue of container detention fees remains a real problem for freight forwarders, customs brokers and importers," Hudson adds.

"A large proportion of inquiries relate to the enforceability of container detention fees being charged by shipping companies and their ability to take action against cargo to recover those fees."

According to Hudson the fundamental issue behind container detention claims remains whether it is fair to understand the failure to return a container on time as a "breach" of contract and whether the amount claimed seems reasonable.

"If the answer to these questions is ‘no’ some part of the fees would be unenforceable and any action taken to recover those fees could also be construed as unenforceable," Hudson says.

Container detention fee disputes still need to be resolved on a case by case basis depending upon facts, circumstances and the documentation based on which detention fees are charged and related enforcement action is taken.

Still to be resolved is the issue around
what level of container detention fees would be accepted as being reasonable.

The original decision of the CTTT included evidence from a shipping company agent as to the estimated cost of a container not being returned in the agreed time frame.

"An ongoing issue will be the use, if any, to which such admission could be put in future disputes," Hudson contends.

"Further, the time taken for the shipping company to discover any issues arising from container returns might have to be incorporated into the cost structure and practices imposed.

"While that would be a complex issue, the necessary disclosure of such information in a substantive dispute would be of significant interest to those who actually pay such detention fees."

"Those charging
the fees may not be entirely comfortable with that information being disclosed and considered
by a court," he says.

All in all, the issue of container detention fees and their recovery remains a live issue which deserves further clarity.

"In an ideal world, an independent party could determine what are appropriate container detention fees," Hudson says.

"However, such an approach would be controversial and presumably would not be welcomed by many parties in a free market economy.

"In the absence of a comprehensive and well litigated decision of a Court with appropriate jurisdiction, there will presumably continue to be regular disputes as to the enforceability of container detention fees and the means taken to enforce them."

You can also follow our updates by joining our LinkedIn group or liking us on Facebook


Trucks For Hire | Forklifts For Hire | Cranes For Hire | Generators For Hire | Transportable Buildings For Hire