SCT to pay Woolworths over derailment cargo losses

Case sees ‘force majeure’ defence ruled as related transport failure, not damaged goods

SCT to pay Woolworths over derailment cargo losses
The court sides with Woolworths


The Supreme Court of New South Wales casts greater light on the role of transport contracts when goods are damaged due to an event beyond a transporter’s control.

The judgement comes seven years, almost to the day, after a derailment involving an SCT Logistics train damaged Woolworths’ cargo, and the case centres on how the transport contract was constructed.

Woolworths subsequently sues SCT for its $893,399.25 in losses, using an indemnity contained in the parties’ transport contract involving ‘Transport Terms and Conditions’ and ‘Prescribed Procedures’, and the Australian Rail Track Corporation Ltd (ARTC) for negligence.

SCT argues before Justice Patricia Henry that, as the derailment was caused by extreme weather involving heavy rain and flash flooding, this activated a ‘force majeure’ exception to its liability.

Under the force majeure clauses, SCT has a duty to consult with Woolworths in response to a relevant event and that "neither party is liable to the other for any delay or failure to fulfil its obligations under these Terms or the Procedures that is owing to the Force Majeure Event".

The indemnity clause specifically notes that it relates to "any loss, theft, destruction or damage to the Goods".

But the agreement also states the indemnity "does not apply to Direct Losses incurred by Woolworths during a Force Majeure Event".

Read about the court’s findings in the Transtar Linehaul case, here

There is also a clause involving the need for "insurance, for its full replacement value, of the Goods against damage, theft, destruction or loss in transit", which Henry regards as placing risk in relation to the goods with SCT.

In a comment that acts as a signpost to the judgement’s findings, Henry notes that the parties agree that "SCT’s defence to Woolworths’ claim raises a question of the proper construction of the transport contract". She also mentions in passing that "force majeure’ is undefined in the agreement.

Woolworths argues that there was no "failure to fulfil [SCT’s] obligations" due to the ‘force majeure’ event and that SCT’s position on the agreement that the event allowed it to avoid liability was "not supported by its text or the other provisions of the Agreement".

Henry accepts this, ruling that the agreement "obliges SCT to make good the Losses incurred by Woolworths in connection with the damaged Goods.

"In essence, that obligation requires SCT to pay money to Woolworths. 

"Even if I were to accept that it caused Train 3MP9 to derail and damage the Goods, an extreme weather event does not render SCT unable to fulfill its obligation in the sense of making it difficult, impossible, illegal or impracticable for SCT to indemnify Woolworths for its Losses …

"SCT may incur a cost in doing so, but its ability to perform that obligation is not hindered or prevented owing to the alleged Force Majeure Event."


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