| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : BENCLU PTY LTD -v- WESTERN SALT REFINERY PTY LTD [2003] WADC 71 CORAM : LA JACKSON DCJ HEARD : 23-27 SEPTEMBER 2002, 24, 25 FEBRUARY 2003 DELIVERED : 25 MARCH 2003 FILE NO/S : CIV 3646 of 1996 BETWEEN : BENCLU PTY LTD Plaintiff
AND
WESTERN SALT REFINERY PTY LTD
Defendant
Catchwords: Sale of goods - Reliance on the seller's skill and judgment - Implied condition of fitness of goods for a particular purpose
Legislation: Sale of Goods Act 1895 s 14(1)
Result: Claim dismissed
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Representation:
Counsel:
Plaintiff : Mr M L Bennett
Defendant : Mr D R Clyne
Solicitors:
Plaintiff : Bennett & Co
Defendant : Cocks Macnish
Case(s) referred to in judgment(s):
Ashington Piggeries v Christopher Hill Ltd [1972] AC 441
Cammell Laird & Co Ltd v Manganese Bronze & Brass Co Ltd [1934] AC 402
Grant v Australian Knitting Mills Ltd [1936] AC 85
Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association Ltd [1969] 2 AC 31
Case(s) also cited:
Ashford Shire Council v Dependable Motors Pty Ltd (1960) 60 SR (NSW) 27
Claude B Fox Pty Ltd v Rayner [1978] Qd R 250
David Jones Ltd v Willis (1934) 52 CLR 110
Expo Aluminium (NSW) Pty Ltd v W R Pateman Pty Ltd (1990) ASCC 55-978
Manchester Liners Ltd v Rea Ltd [1922] 2 AC 74
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1 LA JACKSON DCJ: The plaintiff's claim is for damages for breach of a condition implied by s 14(1) of the Sale of Goods Act 1895.
2 The plaintiff is a manufacturer of natural sausage skins (casings). When prepared the sausage casings are preserved using salt. The defendant is a manufacturer of salt. It sold salt to the plaintiff. 3 In 1992 two shipments of sausage casings delivered overseas were found to be faulty. The plaintiff replaced one of those shipments and otherwise incurred loss. 4 There is a dispute as to liability under the Act. There is a dispute as to the cause of the fault in the delivered sausage casings: the plaintiff saying it is a condition called salt rust caused by excessive quantities of calcium and magnesium in the salt; the defendant saying it was caused by a bacteria. 5 Since the late 1940's the defendant (under various names) has been engaged in the salt industry. It has a lease of an area at Lake Deborah near Koolyanobbing at which it harvests salt. In about 1978 the defendant joined with Cheetam Salt. The result was that the defendant acquired a processing plant for better cleaning and processing of salt which it installed at its operations in Hamilton Hill. After 1978, the salt from Lake Deborah was washed and kiln dried. As a result, the defendant was able to supply a much finer grade of salt than it had previously. It could and did provide edible salt for food manufacturing. As a result of this improvement the defendant's managing director, Mr Frank Lister, sought to sell the defendant's product to a wider range of customers than had been possible. Included in those customers was the plaintiff. 6 The plaintiff carried on business manufacturing natural sausage casings. Although it is incorporated, in substance it is the business of Walter Edward Bennett and Brian Sidney Cluning. Both had been involved in the sausage casing industry during the entirety of their working lives. In 1967 they entered into a partnership of Bennett-Cluning which in 1969 was incorporated. 7 A brief description of the process of "manufacture" of natural sausage casings is appropriate. They are made from the small intestines of sheep, pigs and goats. The small intestines are obtained from abattoirs slaughtering those animals. In major abattoirs the plaintiff set up its own preliminary processing and in smaller abattoirs the intestines were selected, frozen and delivered to the plaintiff's processing works.
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8 A small intestine consists of an outer casing called a serosa with a fatty lining called the mucosa. When obtained from the abattoir the small intestine will contain liquid manure. As I understand it the first part of the process is to rinse out the liquid manure. The intestine is then run through a series of machines which crush and squeeze the intestine so as to remove the mucosa leaving the serosa. It is the serosa which is used as a natural sausage casing.
9 The small intestines of these animals are long. For example, in a sheep it is 20-25 m in length. The size and quality of the serosa varies from the beginning to the end. At the beginning it is wider and of better quality. Towards the end it is much thinner and of lesser quality. Each serosa is divided up into three sections called an A cut, a B cut and a C cut. The A cut is the best quality and the C cut is the worst. 10 The A and B cuts are readily saleable. In the plaintiff's business the A cuts were predominantly sold to the local market, generally to butchers. The B cut was generally sold to larger manufacturers of sausages both in Western Australia and in other parts of Australia. The C cut had no market within Australia because the cost of dealing with it compared to its value was excessive. It was therefore exported overseas to places where the labour costs were lower and it was therefore economic to use. Amongst other places, the plaintiff exported sausage casings to Brazil and to Italy. 11 Once the serosa had been divided into its three graded parts it was then packed for delivery. The plaintiff used salt as a preservative. In the sausage casing industry it always had been so used. The nature of the use of the salt depended upon the length of time it was likely that the sausage casing would be stored for use. 12 The A cuts were packed in brine. Brine is made by dissolving salt in water. The solution to make the brine was very strong with the maximum amount of salt capable of being dissolved resulting in what is called 100 per cent solution. Brine contains a sufficient quantity of salt to preserve the sausage casings for use in the domestic market in Western Australia. 13 Where the sausage casings are to be delivered further away, such as to other parts of Australia, it is preserved in a salt slurry. A slurry is a salt mixture in which not all of the salt has been dissolved so that whilst the slurry is a thick liquid it contains free salt crystals in it.
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14 Where the casings are to be exported overseas, thus taking considerably longer, the process used is called dry salting. In this process the liquid is substantially removed. The sausage casings are coated with salt on a salting table. They are then tied into bundles called hanks with each hank containing up to 100 sausage casings the length of which might be up to 8 m or so. The hanks are then placed into a de-watering barrel which is a container with holes allowing the water to run off. The salt in this process acts not only as a preservative but also, because it is hydroscopic, it has the capacity to absorb water. The salt absorbs the moisture from the serosa and when the salt become saturated it runs out through the holes in the de-watering barrels. The sausage casings are left in the de-watering barrels at least overnight. After that process they are then packed in barrels which are lined with plastic. On top of the sausage casings a layer of some 10 cm of salt is added. The plastic lining is then closed off and the barrel sealed and stored to await delivery.
15 The plaintiff stored the barrels at its premises in Fremantle. The premises were air-conditioned but not otherwise refrigerated. It is the plaintiff's case that once the sausage casings have been properly salted then no other preservation, such as would be provided by refrigeration, is required. 16 Prior to 1978 the plaintiff used a salt called Crown salt purchased from a manufacturer in South Australia. Cluning T 50 said: "Up until 1990 what was the history of your salt supply? Where did you get your salt from?---Initially when we started in partnership we bought Crown salt from Mauri Bros and Thompson who were the distributors in Western Australia of Crown salt and we used that because we felt – well, we understood from our experience and our knowledge of the industry that Crown salt from South Australia was the salt to use for sausage casings." 17 In 1978 Lister approached the plaintiff with a view to selling salt to it. He was aware that sausage casings were preserved using salt but had no precise knowledge of the process. He assumed that provided the salt was edible it could be used for preservation of sausage casings. He spoke to Richard Burnell, an employee of the plaintiff. The conversation is now about 25 years old and Lister could do no more than give evidence of the nature of the conversation he thought he would have had. He said he was able to give evidence of that nature because at the time he had sought to sell the improved salt to a wide range of customers and that was the way
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he did it. Lister gave his evidence in a somewhat theatrical manner. I put that down to his personality. There is no reason not to accept his evidence. Burnell did not give evidence, so there is nothing to contradict what Lister said occurred. 18 Lister said his understanding was that the salt he was now producing was standard food salt. That it was a dry free flowing salt. 19 Lister thinks he would have advised Burnell that the defendant could supply its needs for Crown salt. He says that he may have described it as kiln dried fine salt. He thinks he would have said that the salt was better than the salt he had previously been able to supply. He thinks he would have offered the plaintiff a sample. It was put to him that he told Burnell that the salt was suitable for the plaintiff's purposes or suitable for the preservation of sausage casings. Lister denied having used such expressions. He said he did not know of the way in which the sausage casing producers used salt and would therefore not have been able to use any such expressions. From Cluning's evidence, it is likely that the plaintiff would have expected Crown salt, because that is what, in its own experience over many years, was suitable for sausage casings. Cluning said they used Crown flossy salt. "Flossy" indicates a fineness of grain. 20 Section 14(1) of the Sale of Goods Act 1895 provides: "Subject to the provisions of this Act and to any statute in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:- (1) where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply (whether he be the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose: … ." 21 There are a number of issues to be dealt with within that section.
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Did the plaintiff make known to the defendant, expressly or by implication, the particular purpose for which the salt was required
22 Despite some reticence, Lister agreed that he was aware that salt was needed by the plaintiff for preservation purposes. And that was always obvious as Lister had approached the plaintiff with a view to selling it salt. 23 In Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association Ltd [1969] 2 AC 31 Lord Pearce at 115 said: "There is no need for a buyer formerly 'to make known' that which is already known." 24 To the extent that the plaintiff was operating a sausage casings business which required salt for preservation of the casings, I have little difficulty in finding that it expressly or by implication made it known to the defendant the salt was for the purpose of preserving sausage casings.
Did the plaintiff show to the defendant that it relied on the defendant's skill or judgment 25 As I have noted, there is no evidence by Burnell. The plaintiff cannot therefore positively demonstrate that it told the defendant it relied upon the defendant's skill or judgment. It is not essential to the plaintiff's case that express advice was given. Reliance can be implicit from all the circumstances. Lister said he did not understand that the plaintiff relied upon his skill or judgment as to the supply of suitable salt. Lister's understanding was that ordinary edible salt could be used for the purposes of preservation of sausage casings. When he approached the plaintiff it was on the basis that the new process would be able to supply such salt, it being the equivalent of Crown salt. 26 Reliance need not be express. It can be implied. Indeed it will often arise by implication from the circumstances. In Grant v Australian Knitting Mills Ltd [1936] AC 85, Lord Wright at 99 delivering the judgment to the Privy Council said: "The first exception, if its terms are satisfied, entitles the buyer to the benefit of an implied condition that the goods are reasonably fit for the purpose for which the goods are supplied but only if that purpose is made known to the seller 'so as to show that the buyer relies on the seller's skill or judgment'. It is clear that the reliance must be brought home to the mind of
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seller, expressly or by implication. The reliance will seldom be expressed: it will usually rise by implication from the circumstances … ." 27 In Cammell Laird & Co Ltd v Manganese Bronze & Brass Co Ltd [1934] AC 402 Lord Wright at 423 said: "The more difficult question remains whether the particular purpose for which the goods were required were not merely made known, as I think it was by the appellants to the respondents, but was made known so as to show the appellants as buyers relied on the sellers' skill and judgment. Such a reliance must be affirmatively shown; the buyer must bring home to the mind of the seller that he is relying on him in such a way that the seller can be taken to or contracted on that footing. The reliance is to be the basis of the contractual obligation." 28 In Hardwick Game Farm, Lord Reid at 82 said: "It can only be in unusual circumstances that a buyer does not rely in part at least on the skill or judgment of the manufacturer, or that a manufacturer is entitled to assume that the buyer is not relying on him at least to some extent." 29 Lister said that when he spoke to Burnell he thinks he would have offered him a sample. I accept that in all probability he would have done that. The purpose of a sample would be to allow the plaintiff to see if it was suitable. But it would not necessarily follow that the plaintiff would not be relying on the defendant's skill and judgment to supply suitable salt. 30 When Lister approached the plaintiff and offered salt for sausage casing preserving, and Burnell on behalf of the plaintiff agreed, it shows that the plaintiff was relying upon the skill and judgment of the defendant to supply salt which is reasonably fit for the purpose for which it is required, namely the preservation of the sausage casings. The plaintiff would be entitled to assume the defendant had knowledge of the particular purpose for which the salt was required. Even though Lister may not have turned his mind to it, that knowledge carries with it an implicit reliance upon the defendant's skill and judgment in supplying the correct salt. 31 In Ashington Piggeries v Christopher Hill Ltd [1972] AC 441 at 505 Lord Diplock said:
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"So far as concerns the conduct of the buyer, the circumstances which gives rise to the implied condition under subsection (1), first, that he should make known expressly or by implication to the seller what is the particular purpose for which the goods are required and, secondly, that he should do so in a way as to make the seller reasonably understand that he is relying upon the seller to exercise sufficient skill or judgment to ensure that the goods are fit for that particular purpose. This he generally does by selecting a seller who makes it his business to supply goods which are used for purposes of that kind. It does not matter that the seller does not possess the necessary skill or judgment nor does it matter that in the then state of knowledge no one could by exercise of skill or judgment detect the particular characteristic of the goods which rendered them unfit for that purpose. This may seem harsh upon the seller, but its harshness is mitigated by the requirement that the goods must be of a description which it is in the course of the seller's business to supply. By holding himself out to the buyer as a manufacturer or dealer in goods of that kind he leads the buyer reasonably to understand that he is capable of exercising sufficient skill or judgment to make or to select goods which will be fit for the particular purpose for which he knows the buyer wants them." 32 In this case the particular purpose for which the salt was required was for the preservation of sausage casings. As I have noted, the salt was used in three quite distinct ways depending on the destination of the casings. There is no evidence that Lister was told anything of the particular methods used. But that does not avail the defendant. When the plaintiff joined with Cheetam Salt in 1978, it employed Arthur Peters as general manager. He brought with him a production manual that included specifications for salt for sausage casings. It provided: "Sausage Casings These are made from the intestines of animals which are cleaned, salted and packed in casks for despatch, mainly to the U.K. and Europe for the preparation of sausages. These casings must be very evenly salted therefore the salt is of a small, even grain; must be dry, free of lumps so that it can be evenly spread on the casings. A major problem that can occur here is due to calcium and magnesium in the salt. The final product is a combination of the phosphate in the casings reacting with calcium to form an insoluble calcium phosphate which is
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embedded in the tissue and therefore as the sausage casing is being filled with meat, these lumps will not expand and the skin breaks at this point. In the formation of this problem magnesium also plays an intermediate part and therefore the salt for this purpose must be very low in both magnesium and calcium. Casings are also subject to attack from halophillic bacteria, and whole drums of casings turn red with what is known as red dog to the industry. Therefore, salt used for this purpose should be old, and heat sterilisation temperatures in the kilns should be excess of 120 degrees C and every precaution taken to see that the salt is kept dry and in perfect condition." 33 It appears that document had been in the possession of the defendant since about 1978. Lister said he was unaware of it and I accept that. However, that is of no assistance to the defendant. The knowledge of the defendant is the knowledge of relevant employees and officers of the defendant. It does not avail a corporation for someone within the organisation to say he knew nothing about it if there were others who did. 34 It appears that the defendant's operations were, at least in the early days, a constant learning curve. Lister said that he would provide different types of salt product depending on his understanding of the needs of the purchaser. But his understanding was generally fairly basic except to the extent that he was given advice by the purchaser. If something went wrong he would fix it. Sometimes there were specific requirements because of a specific manufacturing process and he would respond in those circumstances to the customer's request. 35 Of course, as Lord Diplock in Ashington Piggeries pointed out, the plaintiff's case does not need to rely on actual knowledge of the defendant. The existence or otherwise of the manual would not affect the plaintiff's reliance on the defendant to supply salt suitable for the purpose of preservation of sausage casings. 36 I am satisfied the plaintiff showed it relied upon the defendant's skill and judgment.
Was the salt goods of a description which it is in the course of the defendant's business to supply 37 A simple answer to this question is, yes.
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Was the salt reasonably fit for the plaintiff's purpose
38 The evidence of what would be an acceptable concentration of calcium and magnesium is imprecise. It is for the plaintiff to show unfitness. In exhibit 1.71, a handwritten note apparently from Blancasings' analyst, there is what appears to be a specification of 1000 parts per million (ppm) of calcium and 600 ppm of magnesium. Glynn William Michael Farrell, a chemist engaged by the plaintiff after the damaged sausage casings were discovered, adopted this standard. Although objection was voiced, it seems to have been adopted by counsel for the defendant. In the absence of any other evidence, I assume a specification to avoid salt rust in sausage casings is less than 1000 ppm of calcium and 600 ppm of magnesium. 39 It appears that no consideration was given during the 13 years from 1978 to 1991 as to the levels of calcium and magnesium in the salt supplied to the plaintiff. Even if such consideration had been given, the fact was that for some 13 years the same kind of salt, made in the same way, was used by the plaintiff (and another sausage casings company called Australian Casings Co) without apparent difficulty. Lister described an occasion when Australian Casings Co complained about some discoloration in the water. Upon investigation it was found that the defendant's kiln was not burning properly and there was some residue finding its way into the salt. But there is no evidence to show that during that 13 years there were problems associated with salt rust occasioned by the defendant's salt. Even if the defendant had turned its corporate mind to the question, it would, on the practical evidence before it, have been entitled to assume that the salt was satisfactory. Certainly the plaintiff thought so because late in 1991 and in February 1992 Lister approached Cluning with a suggestion that the quality of salt being received should be upgraded. That suggestion was rejected. Nothing turns on such rejection because there was no evidence to show that the plaintiff was aware of any danger to its product by using the defendant's salt. 40 The plaintiff regularly supplied sausage casings to overseas customers. Included in those was Kienast & Kratschmer Ltda of Brazil and Blancasings Industriale SRL of Italy. Both of these customers was important because they took the C cuts which otherwise were hard to sell. Kienast & Kratschmer in particular were important because they regularly took container loads of sausage casings. 41 Some time in 1991 Bennett on behalf of the plaintiff agreed to supply quantities of sausage casings to Kienast & Kratschmer and in 1992 to
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Blancasings. The way in which the process worked was, as I understand it, that when the plaintiff had sufficient quantity of C cut sausage casings for a load Bennett would contact various overseas customers and arrange for orders to be placed. The order obtained from Kienast & Kratschmer in about the middle of 1991 was for 42 barrels. These had been accumulating at the plaintiff's factory in Fremantle since about April when the previous shipment to Kienast & Kratschmer had been made. 42 Once a firm order had been obtained the sausage casings needed to be inspected by the Department of Primary Industry. An inspector from that department would attend. Each barrel would be opened and checked by the inspector. The inspection does not appear to have been particularly rigorous. When the barrels were opened often free liquid could be seen on top of the packed sausage casings. This was removed and a fresh layer of about 10 cm of dry salt was spread on top of the casings. The plastic bag was again closed and the lid screwed back onto the barrel. This time a Department of Primary Industry seal was also attached to ensure the quality control of the sausage casings being exported. 43 The barrels were then packed into a container which was delivered to Fremantle for enshipment. The container was not refrigerated. It was acknowledged that the container could remain on the wharf for a few days prior to shipment. The container was loaded onto the ship and the plaintiff does not know onto what part of the ship it was loaded. It was then taken by the ship to Singapore. Again, it was acknowledged by the plaintiff that there was the possibility that a container could be temporarily unloaded in Singapore and left on the wharf for a short time during loading and unloading in that port. Ships then went, relevantly to this case, to Brazil and Italy. It was acknowledged by the plaintiff that during this process there was the potential for the container to become quite hot in the atmosphere. The plaintiff, however, denies that such heat would affect the preservation of the sausage casings in the salt. It pointed to the fact that for many years before and after this time it had using this method exported significant quantities of sausage casings with no difficulties. 44 On 10 March 1992 the plaintiff received a fax from Kienast & Kratschmer advising that the sausage casings were badly affected by salt rust. Samples of salt were taken. They were tested by a chemist in Brazil. Although the handwritten note is not entirely clear, it seems it contained 90-110 ppm of calcium and 100-110 ppm of magnesium. Peter Kratschmer gave evidence of his inspection. He described the casings as being affected by salt rust. He also described them as being discoloured.
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His description ranged from white to brown to beige to grey and to creamy. What is significant is that salt rust is colourless. He said the damage was so extensive that it was not feasible to sort through each one of the strands of sausage casing in the load to see whether any part of the load could be salvaged. There were about 800,000 individual strands of sausage casing. I accept Kratschmer's evidence as to the impracticality of sorting through each one of those to see what could be salvaged. The plaintiff's response was swift. This was a major crisis in its business. Such an event had never occurred before. Cluning telephoned Lister and advised him of the information he had received. Lister, to his credit, made immediate attempts to find out what had occurred. 45 On 27 March 1992 a shipment of eight barrels of sausage casings was sent to Blancasings Industriale SRL in Italy. Those barrels were delivered to Blancasings via the same system as had the container load to Brazil. When they were opened by Blancasings. they were found to be damaged. The had a reddish-brownish colour. David Blanga called it "red dog". The salt on the casings was analysed and found to contain 346 ppm of calcium and 41 ppm of magnesium. The effect was not as great as those delivered to Brazil and an agreement was reached between the plaintiff and Blancasings that those sausage casings would be sorted and those affected by salt rust would be discarded. The cost of sorting was $6,121. 46 When the sausage casings were received in Brazil and Italy there was an initial complaint that they were affected by salt rust. In evidence it does not appear to be as clear as that. Both commented upon a discolouration which is not a feature of salt rust caused by excessive calcium and magnesium. It is an indication of a bacteria called halobacterium solinarium, a condition known as red dog or red heat. Red dog is a bacterial problem caused when the chemicals react with the protein in the sausage casings. 47 The samples of the salt in which the sausage casings were sent to Brazil and Italy were tested found not to be anywhere near the 1000 ppm of calcium and the 600 ppm of magnesium allowable. 48 The best evidence of what happened to the sausage casings would have been to examine the casings themselves. No attempt was made to have them scientifically examined. It may well have been difficult to have had them returned to Australia because of quarantine difficulties but the plaintiff did not try.
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49 When the problem in Brazil was discovered barrels of sausage casings awaiting export were examined by Farrell. Some of them were found to be affected by what appeared to be salt rust and samples of the casings from those barrels were taken for scientific examination. Upon examination they were found not to be affected by salt rust but rather by bacteria. Brine and salt from the barrels and salt in other storage was tested. With one exception, which appears an error, the calcium and magnesium levels were below 1000 ppm and 600 ppm respectively. Farrell who is a chemist was of the opinion that there was salt rust caused by excessive calcium and magnesium in the salt. However, he readily agreed that he would defer to a microbiologist on the subject of bacteria. Dr Raymond Frank Mawson and Paul Geoffrey Drew are experts in microbiology. Their opinion is that the casings were affected by halobacterium solinarium. I accept their opinion.
50 The plaintiff's case was squarely based on salt rust occasioned by excessive levels of calcium and magnesium in the salt. On the evidence before me I am not satisfied that is what happened to the sausage casings sent to both Brazil and Italy. It is more likely they were affected by bacteria. At the end of the trial the plaintiff endeavoured to amend its statement of claim to allege that the delivered sausage casings were affected by salt rust but that the salt rust was caused by bacteria. Such an amendment was very late and it seemed to me to be an entirely different basis upon which the case was being argued with potential significant prejudice to the defendant. Mawson's report identifying halobacterium solinarium on the sausage casings collected from the plaintiff by Farrell was dated 28 April 1992. It was faxed to the plaintiff on 1 May 1992. Despite that information the plaintiff continued to base its case on salt rust caused by excessive calcium and magnesium. It did not claim the salt was not fit for the purpose of preserving sausage casings by reason of bacteria. I therefore disallowed the amendment. 51 Salt was sold by the defendant to CSBP. Low calcium and magnesium was specified. It was found that when the salt was stockpiled at Lake Deborah rain tended to leach calcium and magnesium from the top. The salt supplied to CSBP was taken from the top of the stockpile. CSBP tested for calcium and magnesium and sent the results to the defendant. The tests showed fluctuating levels of calcium and magnesium. The plaintiff tried to use these results to assist in its argument that the salt supplied to the plaintiff was likely to contain excessive calcium and magnesium. But it does not follow. The salt supplied to the plaintiff had been washed. Lister thought 30 per cent of
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the calcium and magnesium would thereby have been removed. But no tests were ever done. The CSBP results do not assist. 52 Part of the argument strongly advanced by counsel for the plaintiff was that regardless of whether it was an interreaction between the chemicals or whether it was affected by bacteria, it was the excessive levels of calcium and magnesium that were the ultimate cause of the salt rust and therefore of the damage caused to the sausage casings. I fail to see how, on the evidence before me, such an argument can succeed. The defendant had supplied the plaintiff with salt for some 13 years prior to 1991. This problem had not occurred before. The proposition that on this occasion there were greater levels of calcium and magnesium in the salt than had ever existed before is speculative. There is no evidence of it. It appears to have been a "one off". Such an event is explicable because of problems of bacteria. It may also be explicable by problems of excessive calcium and magnesium. The burden of proof is on the plaintiff to prove its case. It has, in my opinion, been unable to do so with respect to this aspect. 53 Immediately after the discovery of the problems in Brazil, Lister attended upon the plaintiff's premises in Fremantle. With great energy and enthusiasm Lister endeavoured to find out what was wrong. He referred the defendant to a Dr Knight of Cheetam Salt, an expert, so that the defendant could get advice. As a result of these enquiries the possibility of excessive calcium and magnesium was identified because at that stage it was believed the problem was salt rust. As a result of that discovery the defendant offered the plaintiff some salt from South Australia which it had in stock and which was known to have lower calcium and magnesium than the Koolyanobbing salt. 54 After 1992, as I understand it, the defendant continued to supply the plaintiff with salt. The salt came from Esperance and was kiln dried at temperatures of 140 rather than 120 degrees Celsius. No further problems have been experienced with the salt. The plaintiff points to this and suggests it is further evidence that it was either the calcium and magnesium or a bacteria in the salt which caused the problems. I do not think that follows. For 13 years prior to 1991 the defendant had provided salt to the plaintiff. That salt had come from Koolyanobbing. It had been kiln dried at a temperature of 120 degrees Celsius. There had been no problems. It may well be that had the same salt been provided after 1992 there would again have been no problems. To say that the change in the specification of the salt provided after 1992 is evidence that the salt provided up to 1991 was faulty, is simply speculative. It is possible the
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problems were caused at the plaintiff's factory in Fremantle. The system seems good but human error is always a possibility. They may have been caused at an abattoir. Because of the way the plaintiff's case was presented, none of these possibilities was explored. Whilst it is proper for the Court to draw inferences, this is not an occasion when I consider the inference suggested by the plaintiff should be drawn. 55 Accordingly, in my opinion, the plaintiff has failed to prove that the damage to the sausage casings delivered to Brazil and Italy was because the salt was not reasonably fit for the purpose of preserving the sausage casings due to excessive calcium and magnesium.
Sale of goods by description 56 Paragraphs 11 to 13 of the statement of claim plead a breach of s 13 of the Sale of Goods Act. This was described as being not the primary cause of action. The description was of "Crown Salt". Lister maintained the salt supplied was of that description. No evidence was given of the specification of Crown salt and in particular any required levels of calcium and magnesium. That part of the claim was really not pursued. On the evidence before me it would not have succeeded.
Damages 57 Notwithstanding my findings on liability, it is appropriate for a provisional assessment of damages to be made. In this case it is not a difficult task because, notwithstanding the denial in the pleadings, during the course of the trial the defendant did not argue against the quantum claimed by the plaintiff. 58 The plaintiff agreed to re-supply the delivery to Kienast & Kratschmer. That delivery cost the plaintiff $47,306. Blancasings advised the plaintiff that it had engaged additional labour to clean the casings at a cost of $6,121. That claim is accepted by the plaintiff. Other expenses were incurred by the plaintiff. The total losses claimed in the writ amount to $56,679. 59 Interest is also claimed. The losses were all incurred by about mid-1992 and it is appropriate to calculate the interest from that date to judgment. That is about 10 years 8 months. I think 6 per cent to be a reasonable rate over that very long period. $56,679 x 6% x 10.67 years = $36,297.42
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60
I assess damages as follows:
Loss $56,679.00 Interest $36,297.42 $92,976.42 61 For these reasons, the plaintiff's claim is dismissed. |