KERRY LOGISTICS (OCEANIA) LTD v VIENNA GROUP LTD (IN LIQUIDATION) [2023] NZCA 536 [30 October 2023]

KERRY LOGISTICS (OCEANIA) LTD v VIENNA GROUP LTD (IN LIQUIDATION) [2023] NZCA 536[30 October 2023]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA248/2023[2023] NZCA 536BETWEEN KERRY LOGISTICS (OCEANIA)LIMITEDAppellantAND VIENNA GROUP LIMITED (INLIQUIDATION)RespondentHearing: 4 October 2023Court: Mallon, Churchman and Osborne JJCounsel: D J Cooper KC and S D Campbell for AppellantP C Murray for RespondentJudgment: 30 October 2023 at 2.30 pmJUDGMENT OF THE COURTA The appeal is allowed. There is summary judgment for the appellant.B The respondent must pay the appellant costs for a standard appeal on a bandA basis, together with usual disbursements. We certify for second counsel.C The issue of costs incurred in the High Court is remitted to that Court fordetermination.____________________________________________________________________REASONS OF THE COURT(Given by Osborne J)Introduction[1] The respondent, Vienna Group Ltd (Vienna), (now in liquidation), was animporter of beer. Kerry Logistics (Oceania) Ltd (Kerry), pursuant to a contract,provided Vienna with New Zealand Customs Service (Customs) clearance servicesbetween September 2011 and January 2015. On 30 June 2021 (incorrectly referred toin some materials as "29 June 2021"), Vienna issued High Court proceedings againstKerry for breach of contract and negligence, claiming damages for what were allegedto be failings in Kerry's services.[2] Kerry applied to the High Court for summary judgment on the claim or,alternatively, an order striking it out. Kerry asserted that the claim was filed outsidethe limitation period and that liability was excluded by provisions in the contract.[3] In the High Court, Associate Judge Sussock dismissed both applications.1Kerry was granted leave to appeal the High Court decision in relation to the dismissalof both applications.2 The appeal raises issues both as to the application of thelimitation period applying to the claim under s 11 of the Limitation Act 2010 (the Act)and the interpretation of contractual exclusion clauses both generally and in relationto the provisions of the parties' contract.[4] We have concluded the appeal must be allowed on the basis the claim was filedoutside the limitation period — Kerry has established that neither of the causes ofaction in Vienna's claim can succeed. We would also allow the appeal on the basis theexclusion provisions excluded Kerry's liability for the damages claimed.Factual background[5] In the High Court, the Associate Judge set out the factual background:[20] Imported alcohol products are subject to duty in New Zealand. Duty onimported beer products is based on the alcohol strength of the product. Lowerstrength alcohol products attract lower duty than full strength products. If the1 Vienna Group Ltd (in liq) v Kerry Logistics (Oceania) Ltd [2022] NZHC 1473 [High Courtdecision].2 Vienna Group Ltd (in liq) v Kerry Logistics (Oceania) Ltd [2023] NZHC 846 [leave decision].The appeal proceeds by way of a rehearing as a general appeal: Court of Appeal (Civil) Rules2005, r 47.alcohol strength of a product is understated in Customs entries, the importerpays less duty than they are legally required to by the Customs and Excise Act1996 (CEA), the legislation applying at the time.[21] Kerry provided Customs clearance services to Vienna for importedalcohol products from September 2011 to January 2015.[22] The contract between Kerry and Vienna is in the form of an applicationform for a credit account. I record that when the contract was first entered intoon 12 September 2011 Kerry was known as Lead Logistics Limited.[23] The application form is signed by Vienna and says that Vienna has read,understands and agrees to the Terms and Conditions supplied with theapplication. Kerry's standard terms and conditions of trade are attached.[24] Kerry's evidence is that when a consignment of imported beer arrivedKerry would receive a bill of lading from the origin agent. Kerry would alsoreceive a commercial invoice from Mr Browne, Vienna's director, which hadbeen issued to Vienna by the overseas supplier. When the invoice disclosedthe alcohol strength, Kerry used that information to complete the consignmententry. Kerry's evidence is that this was often not the case and so it would thentelephone Mr Browne from Vienna for the alcohol strength information. Kerrysays there was a note to this effect in Kerry's "Cargowise" system. Mr Brownedisputes this but this issue does not need to be resolved for the purposes ofthis application.[25] On 11 February 2015, Kerry and Vienna were advised that Customswould be conducting an audit of 15 entries submitted by Vienna. The auditfound that several entries understated the alcoholic strength of the importedproducts. On 13 March 2015 Vienna was advised of these findings and that afull audit and investigation would be undertaken by Customs of Vienna'simport entries since March 2011.[26] Customs advised Vienna of the findings of its investigation by letterdated 5 June 2015 with an Assessment Notice issued for the "short payment"of duties and levies of $2,225,905.95 (Assessment Notice). The due date forVienna to make payment or file an appeal was 3 July 2015. Vienna did neither.As it was unable to pay the assessed duties, Vienna was placed into liquidationby shareholders' resolution on 23 July 2015.[27] In addition, on 11 May 2016, Customs imposed an administrativepenalty on Kerry of $67,702.21 under s 128A of the CEA.[28] Kerry advised Customs that it had relied on alcohol strength informationfrom Mr Browne. However, Customs still imposed a penalty because Customsconsidered that it was not reasonable for Kerry to rely on verbal confirmationonly.[29] In response to a request for reasons, Customs advised Kerry that reg 27of the Customs and Excise Regulations 1996 (CEA Regulations) provided thatwhen making an entry under s 39(1):33 Customs and Excise Regulations 1996, reg 27. Note, this regulation has since been revoked on1 October 2018, by section 443(4) of the Customs and Excise Act 2018. the person making the entry shall specify the volume of alcohol inaccordance with the alcohol strength stated by the manufacturer in theinvoice, or on the label of the product concerned.[6] The Assessment Notice issued to Vienna, also stated to be an "Invoice",contained the statement "Total Payable for this Transaction $2,225,905.95".The operation of the Customs and Excise Act 1996[7] The Customs and Excise Act 1996 (the CEA) applied at the time of Vienna'simports. It applied in this manner:(a) the duty on the beer constitutes, immediately upon its import, a debtdue to the Crown: s 86(1) CEA;(b) the importer is required to enter the imported goods in the prescribedform and manner, with the person making the entry required to specifythe volume of alcohol in the prescribed manner: s 39(1) and (2) CEA;(c) such entry for goods is deemed to be an assessment by the importer asto the duty payable: s 88(1) CEA;(d) the debt to the Crown becomes due and payable when the goods havebeen entered in accordance with s 39 and the entry has been passed forhome consumption: s 86(3)(a) CEA;(e) the Chief Executive may amend an assessment of duty to ensurecorrectness: s 89(1) CEA;(f) if such amendment has the effect of imposing a fresh liability or alteringan existing liability, notice in writing is to be given by the ChiefExecutive to the liable person: s 89(2) CEA;(g) the liable person may appeal the decision within 20 working days afterthe date of the notice of the decision: s 89(3) CEA;(h) upon a reassessment under s 89 CEA, the due date for payment of thereassessed duty is 20 working days after the date on which the noticeof amended assessment is given by the Chief Executive: s 90(1) CEA;and(i) the obligation to pay and the right to receive and recover duty under theCEA is not suspended by any appeal or legal proceedings: s 92(1) CEA.[8] Applying these statutory provisions to Vienna's importations:(a) Vienna incurred a debt to the Crown in respect of each importation asit was entered by Kerry (on various dates from 23 September 2011 to29 January 2015);(b) each such debt became due and payable when the goods were entered;(c) Vienna's existing liabilities were altered (increased) by reason of theChief Executive's amendment of assessment on 5 June 2015; and(d) that total amended liability became due and payable by Vienna on3 July 2015.The contractual exclusion provisions[9] The parties' contract contained extensive provisions as to the limitation ofKerry's liability. Liability was stated to be excluded by reference to a number ofdefined matters, including by reference to the context in which damage or lossoccurred and the nature of such damage or loss. There were also provisions placingfinancial caps on liability.[10] Kerry invoked a number of clauses within the exclusion provisions. Thatincluded cl 13.2 which provided:13.2 Subject to paragraph 13.1 and to any other mandatory provision oflaw to the contrary, [Kerry] shall not be under any liability, liable, howevercaused or arising, and (without limiting the generality of the foregoing)whether arising or resulting from through negligence, breach of contract onthe part of [Kerry] or otherwise for:(c) in connection with any instruction, advice, information or service given orprovided to any person whether in respect of the goods or any other matter orthing;[11] It was common ground that Kerry had been engaged to provide Customsclearance services in relation to Vienna's imported products.Defendants' summary judgment and strike out applications[12] Rule 12.2(2) of the High Court Rules 2016 provides that:The court may give judgment against a plaintiff if the defendant satisfies thecourt that none of the causes of action in the plaintiff's statement of claim cansucceed.[13] Rule 15.1(1)(a) relevantly provides that the Court may strike out all or part ofa pleading if it "discloses no reasonably arguable cause of action ".The limitation periodThe legislation[14] Vienna's claim is for damages for breach of contract and/or negligence — thatis, in terms of the Act, for "monetary relief".4[15] As such, the relevant limitation provision within the Act is s 11, whichprovides:11 Defence to money claim filed after applicable period(1) It is a defence to a money claim if the defendant proves that the dateon which the claim is filed is at least 6 years after the date of the actor omission on which the claim is based (the claim's primary period).(2) However, subsection (3) applies to a money claim instead ofsubsection (1) (whether or not a defence to the claim has been raisedor established under subsection (1)) if—4 Constituting a money claim as defined in s 12(1) Limitation Act 2010.(a) the claimant has late knowledge of the claim, and so the claimhas a late knowledge date (see section 14); and(b) the claim is made after its primary period.(3) It is a defence to a money claim to which this subsection applies if thedefendant proves that the date on which the claim is filed at least—(a) 3 years after the late knowledge date (the claim's lateknowledge period); or(b) 15 years after the date of the act or omission on which the claimis based (the claim's longstop period).[16] Historically, the start date for causes of action in contract and tort have beensubject to a formulation based on "the date on which the cause of action accrues".5The Law Commission had recommended a universal start date of "the date of the actor omission on which the claim is based".6 The Law Commission's wording became,in the 2010 Act, the formula for money claims contained in s 11.7 The purpose of thechange in formula was to create a more clearly identifiable start date for the limitationperiod.The High Court decision[17] In the High Court, Kerry argued the claim's primary period commenced onvarious dates up to 29 January 2015 and the late knowledge period commenced nolater than 5 June 2015. Vienna argued the primary period commenced on 3 July 2015and accepted the late knowledge period did not assist it.[18] The Associate Judge viewed the following submissions as reasonably arguable:(a) the act or omission referred to in s 11 of the Act does not have to be thedefendant's act or omission — the act of Customs in issuing theAssessment Notice was an act on which the claim is based;85 Te Aka Matua o te Ture | Law Commission Limitation Defences in Civil Cases: Update Report forthe Law Commission (NZLC MP16, 2007) at [52], referring to s 4(1) of the Limitation Act 1950.6 At [146].7 See [57] and [59].8 High Court decision, above n 1, at [42]–[54].(b) although Customs may have altered an existing liability rather thanimposing a fresh liability, Vienna was not obliged to pay the increasedamount until Customs issued the Assessment Notice;9(c) the acts or omissions on which Vienna's claim is based include theaccumulation of Kerry's errors leading to Customs' reassessment andVienna's inability to recover the duty through the prices charged to itscustomers;10 and(d) omissions by Kerry in failing to correct its errors occurred right up untilthe date of the reassessment.11[19] Two decisions weighed with the Associate Judge:(a) Galway v Pugh — where Associate Judge Paulsen held that, if there ismore than one act or omission essential to a claim for limitationpurposes under s 11 of the Act, the claim is based on the last to occur;12and(b) Duthie v Roose — a claim against an accountant for negligent taxadvice, where the Supreme Court upheld findings that the settlementdate on a sale and purchase agreement was the start date of thelimitation period as that triggered the vendor's tax liability and untilthat date the plaintiff/vendor could have cancelled the transaction so asto avoid the tax liability because the vendor and the purchaser wererelated.139 At [55]–[56].10 At [57].11 At [59].12 Galway v Pugh [2021] NZHC 3431 at [31].13 Duthie v Roose [2017] NZSC 152, [2018] 1 NZLR 355 at [18] and [66]–[67], affirming Roose vDuthie [2016] NZCA 600, (2016) 24 NZCPR 255. In the leave decision, above n 2, at [39], theAssociate Judge recognised that Duthie v Roose was decided under the Limitation Act 1950, which"may mean [she] erred in relying on it as arguably extending the start date for limitation to the duedate for the duty payable". See also the Supreme Court's commentary in Duthie at [43] —"liability did not accrue prior to 2 May 2008 [the actual date of settlement]".[20] Upon the basis of these findings as to what was reasonably arguable, theAssociate Judge concluded that the answer on the Limitation Act defence (that iswhether or not the defence applied under s 11 of the Act) was "not so obvious orinevitable that it [was] appropriate to either strike out the claim or grant summaryjudgment to the defendant".14[21] Kerry argued any liability it might have had in respect of the alleged acts oromissions was excluded by the exclusion provisions in the contract. The AssociateJudge found the financial cap provisions within the exclusion provisions introduceddoubt as to whether paragraph 13.2 (quoted above at [10]) comprehensively excludedliability and that extrinsic evidence was required to understand the commercialcontext, both as to industry practice and/or to the dealings between the partiesthemselves — discovery and a full hearing were therefore required.15SubmissionsKerry's submissions[22] Kerry submitted that the last relevant act or omission under s 11 of the Actoccurred with the last incorrect Customs entry on 29 January 2015, and, secondly(should that not be correct), the last relevant act or omission occurred no later than5 June 2015, being the date of the Assessment Notice.[23] Mr Cooper principally focussed his oral submissions on the second propositionthat, on the facts, 5 June 2015 was the last possible date of the act or omission onwhich Vienna's claim is based. By focussing on 5 June 2015, when Customs issuedthe Assessment Notice, it is possible to side-step the two issues (above at [18(a)] and[18(b)) as to whether the "act or omission" referred to in s 11 of the Act can involvemore than one act or omission and, if so, whether the date of an act or omission ofsomeone other than the defendant may fall to be considered under s 11.[24] Mr Cooper submitted that 5 June 2015 remains the correct date whether therelevant events are analysed by reference to the act of Customs (in issuing the14 High Court decision, above n 1, at [62].15 At [84] and [90].Assessment Notice) or the accumulation of the errors or omissions of Kerry in relationto erroneous entries and a continuing failure to correct them. On either approach, inMr Cooper's submission, there was no relevant act or omission on which the claimcould plausibly be based which occurred after the date of the Assessment Notice on5 June 2015.[25] Mr Cooper then addressed an argument signalled in Vienna's synopsis, that thedate of 3 July 2015, identified in the Assessment Notice as the due date for paymentor for any appeal from the assessment decision, was the relevant date under s 11(1) ofthe Act. Mr Cooper submitted the due date for payment of the debt is irrelevant forlimitation purposes.[26] Mr Cooper next referred to reasoning contained in the leave decision. TheAssociate Judge identified 3 July 2015 as a reasonably arguable start date for limitationbased on the Supreme Court's decision in Duthie v Roose, referred to at [19] above.16The Associate Judge recorded:17[35] Although the Judgment could have been more clearly expressed, thepoint I was making was that it was reasonably arguable that the start date forlimitation was the date that the duty payable in the Assessment Notice wasdue or the appeal period had expired, as Vienna had submitted based on Duthiev Roose. This date was not until 3 July 2015 and so it was therefore reasonablyarguable the proceedings filed by Vienna on 29 June 2021 were within thesix-year limitation period.[27] Mr Cooper submitted that Duthie v Roose was distinguishable, having arisenat a time when the Limitation Act 1950 applied and claims in tort had to be broughtwithin six years from the date on which the cause of action accrued — negligence wasactionable on proof of damage. On the facts of that case, the plaintiff's tax liabilityaccrued on the settlement of the sale and purchase agreement. Because the transactionwas between related parties, the plaintiff could simply have cancelled the agreement,whereupon no tax liability would have arisen as no income would have been derived.1816 Duthie v Roose, above n 13.17 Leave decision, above n 2 (footnotes omitted).18 Duthie v Roose, above n 13, at [42] and [53].Vienna's submissions[28] For Vienna, Mr Murray submitted that, until the Assessment Notice was issuedon 5 June 2015, Vienna had no liability obligation to pay any additional duties, havingpaid all deemed duties. Mr Murray submitted the Assessment Notice gave rise to the"entire basis" for Vienna's claim against Kerry.[29] Mr Murray submitted there are two further arguments available to Vienna onthe pleadings, namely that the acts or omissions on which the claim is based includethe accumulation of errors by Kerry through to the reassessment and that Kerry'sobligation to insert the correct alcohol strength was ongoing up until the date of thereassessment.[30] In Mr Murray's submission, the relevant act or omission lay in the approval or(in this case) the disapproval by Customs of the details entered by Kerry, which settime running.[31] Mr Murray submitted the primary period commenced on 3 July 2015 throughthe act of Customs imposing a fresh liability on Vienna for the duties due for paymenton that date, and/or Vienna not making payment or appealing the decision in theAssessment Notice by that date.Discussion[32] Vienna can succeed on the causes of action in its statement of claim only if theclaim was filed within the claim's primary period under s 11(1) of the Act. The lateknowledge period under s 11(3)(a) of the Act cannot assist Vienna in this case as theclaim's late knowledge date (under s 14 of the Act), namely 5 June 2015, occurredmore than three years before Vienna filed its claim.[33] Vienna's claim against Kerry arises out of the fact that, as an importer of beer,Vienna was subject to the duty regime under the CEA (as we have summarised it at[7] and [8] above).[34] It is sufficient for the following discussion that we focus on Kerry's propositionthat the last possible date of the act or omission on which Vienna's claim is based is5 June 2015 (the date of the Assessment Notice).[35] Under the Assessment Notice:(a) Vienna had a debt to Customs in the sum it claims as damages fromKerry;(b) the sum was due for payment on 3 July 2015; and(c) any appeal would not suspend Vienna's obligation to make payment.[36] It is unnecessary for us to decide whether the act or omission must refer to anact or omission of the defendant or can be an act or omission of someone else (theplaintiff) or the defendant. That is because, taking the view that it can be someoneother than the defendant, as Vienna submitted, the latest act for the purposes of s 11(1)was 5 June 2021. That was the date of Customs Assessment Notice. Through theAssessment Notice, Vienna became indebted for the sum it now claims from Kerry.[37] The remaining aspects of the Assessment Notice — the period for any appealby Vienna and the date for payment of the debt — are in no sense acts or omissions onwhich Vienna bases its claim. Those matters do not detract from the fact that Vienna,on 5 June 2015, incurred a debt to Customs for the reassessed duty.[38] The decision in Duthie v Roose does not assist Vienna on this issue. It isdistinguishable for the reasons identified by Mr Cooper.19 Foremost among those isthat the (tax) liability of the plaintiff in that case did not accrue until the settlementdate under the sale and purchase agreement — here, the liability of Vienna accruedimmediately upon the issuing of the Assessment Notice.[39] We accordingly find that the last possible date of the act or omission on whichVienna's claim is based was 5 June 2015. This applies to both Vienna's causes of19 Duthie v Roose, above n 13, as discussed at [27] above.action as they both involve money claims. The claim's primary period under s 11(1)of the Act therefore expired on 5 June 2021, with the consequence that the claim (filedon 30 June 2021) was filed outside the primary period.[40] As the late knowledge period under s 11(3)(a) of the Act had expired evenearlier, Kerry has established that it has a limitation defence to Vienna's claim.[41] Accordingly, Kerry has established that neither of Vienna's causes of actioncan succeed. It was and is entitled to summary judgment.The exclusion provisions[42] Our conclusion means that it is strictly unnecessary to decide the separate issueon which summary judgment was sought, namely that Kerry's liability was excludedby the contractual exclusion provisions. However, because it was considered in theHigh Court and argued on appeal, we set out in brief terms why we do not agree withthe decision of the Judge on that issue.[43] Vienna on this appeal relied on the same arguments as had found favour withthe Associate Judge (above at [21]).[44] We do not consider there is any uncertainty in the scope of the contractualexclusion provisions as they apply in this case. In particular, the liability for anydamage or loss arising in connection with Kerry's provision of Customs' clearanceservices was comprehensively excluded by cl 13.2(c) of the contract (above at [10]).Vienna's evidence did not identify the existence or likely existence of any exchangesbetween the parties or any aspect of trade custom that might suggest the otherwiseclear words of cl 13.2(c) were not to be given their plain meaning. Clause 13.2(c),properly construed, means on the facts of this case Kerry was not to have any liability,however caused or arising (whether from negligence or breach of contract) inconnection with the provision of its Customs clearance services.[45] Accordingly, had we not found Kerry to be entitled to judgment by reason ofthe limitation period, we would have found Kerry so entitled by reason of its exclusionof liability under the contract.Result[46] The appeal is granted. There is summary judgment for the appellant.[47] The respondent must pay the appellant's costs of the appeal on a band A basis,together with usual disbursements. We certify for second counsel[48] The issue of costs incurred in the High Court is remitted to that Court fordetermination.Solicitors:Wynn Williams, Christchurch for AppellantFortune Manning, Auckland for Respondent