Pauline Davies, Fee Langstone, New Zealand

New Zealand is a common law country that generally takes its lead in terms of case law, from the UK and other Commonwealth countries.  The New Zealand courts have not, however, been bound by the decisions of any courts outside New Zealand since the abolition of the right of appeal to the Privy Council as from 2004.  Decisions of the House of Lords and other UK courts are considered as persuasive only.

However, in matters of international law and those affecting international trade, New Zealand does look somewhat more widely in the interests of maintaining international consistency, to the extent possible.  It follows that the approach taken to issues such as container detention charges is likely, when it next arises, to consider whether such consistency is able to be achieved.

As matters presently stand, there is only one New Zealand decision that has directly looked at the question of container detention charges.

Cargo Co-ordinators International NZ Ltd v Cubic Transport Services Ltd [2012] NZHC 322 decision of the High Court, this being the higher of the first instance courts.  The decision was, however, one of an associate judge.

Cubic, a freight forwarder, had obtained containers from two shipping companies and then hired them out to Cargo Co-Ordinators (also a freight forwarder) for use by Cargo Co-ordinators’ client.  When the containers were returned late, the shipping companies invoiced the detention charges to Cubic, which paid them and then invoiced the cost to Cargo Co-Ordinators.  Cargo Co-Ordinators, in its turn, attempted to pass the cost on to its client but was unsuccessful in collecting payment.

The argument in the High Court proceeded in the context of a statutory demand issued by Cubic – ie a demand under the Companies Act 1993 for payment of the amount said to be owed.  A failure to meet such a demand constitutes evidence of insolvency and can form the basis of an application to wind up the debtor company.  Cargo Co-Ordinators applied to the court for an order setting aside the demand, and this was the judgment on that application.

It is important to note here that an application for setting aside primarily requires the applicant to show that the amount claimed is the subject of a dispute.  This context is important as it limited the scope of the argument.  For example, it was not contested that Cubic had been liable for the detention and had been entitled to pay it and on-charge the amount to Cargo Co-Ordinators, whereas a challenge to such liability and entitlement may have produced a different outcome.

The court expressly declined to consider whether the amount charged for detention had been reasonable; and it rejected an argument by Cargo Co-Ordinators that it should have been afforded an opportunity to go directly to the shipping companies to negotiate reductions in the detention.

Although Cargo Co-Ordinators argued that the detention had been charged at a level that was a penalty and therefore unenforceable, the point was not determined because there was insufficient evidence to enable the economic factors to be considered.

The result was that the application to set aside was dismissed.

Should a similar issue arise again in a more direct context, it is expected that the court would give serious consideration to adopting the approach taken by the UK High Court in MSC Mediterranean Shipping Company SA v Cottonex Anstalt [2015] EWHC 283 (Comm).