Exporters selling into Australia are not directly responsible for ensuring goods comply with Australian regulations. A Queensland buyer of used trucks penalised after Australian regulators shifted the goalposts failed in an attempt to pass the problem back to a New Zealand exporter.
The Court of Appeal was told that Smallmons, a Queensland road transport business, purchased four Volvo trucks from Auckland-based Transport Sales Ltd in 2006. The vehicles, previously operated by Fonterra, were sold for NZ$72,000 each.
Smallmons had trouble registering the vehicles after unloading in Brisbane. The trucks were roadworthy, but did not have compliance plates fitted: plates attached at the time of manufacture which verify the vehicle satisfies Australian regulations. The trucks had been originally assembled in Australia and did in fact comply with Australian regulations at the time of manufacture. No compliance plates were fitted because the vehicles were assembled for immediate export to New Zealand.
Evidence was given that Queensland authorities had previously accepted for registration Australian assembled vehicles imported second-hand from New Zealand without compliance plates. In what was an apparent change in policy, registration was refused in this case.
Following political lobbying, the Smallmons were issued with restricted permits: the four trucks could be used on roads in Queensland, but not New South Wales, and if sold the trucks were again prohibited from being used on the road.
Given these difficulties, the Smallmons sued Transport Sales alleging the Auckland company was in breach of contract by selling vehicles which could not be used legally on Australian roads.
Export contracts are governed by a United Nations convention: Sale of Goods (United Nations Convention) Act 1994. The first rule is that goods delivered must comply with the agreed terms of the contract. There was no explicit agreement in this case about who was responsible for getting the trucks on the road in Queensland. Generally, an exporter is not responsible to see that exported goods comply with any regulations imposed by the importing country unless the same regulations exist in both countries, or the importer told the exporter of any special regulations and required the exporter to ensure the goods complied (exporters cannot be expected to know all the importer’s rules and regulations), or the exporter was in fact aware of the importing country’s regulations.
While part of Transport Sales business involved selling second-hand vehicles to Australia, the court said there was no evidence that the company knew of the detailed Australian registration requirements. There was no breach of contract and Transport Sales was not liable to pay damages.
Smallmon v. Transport Sales Ltd – Court of Appeal (22.07.11)
09.11.001