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Cedar Meats (Aust) Pty Ltd v Five Star Lamb Pty Ltd

Cedar Meats (Aust) Pty Ltd v Five Star Lamb Pty Ltd

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Case Copied 7 March 2014 53 min read

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SUPREME COURT OF VICTORIA
COURT OF APPEAL

S APCI 2013 0057

CEDAR MEATS (AUST) PTY LTD Appellant

v

FIVE STAR LAMB PTY LTD Respondent
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JUDGES

NETTLE, BEACH JJA and McMILLAN AJA

WHERE HELD

MELBOURNE

DATE OF HEARING

18 February 2014

DATE OF JUDGMENT

7 March 2014

MEDIUM NEUTRAL CITATION

[2014] VSCA 32

1^st Revision 12 March 2014 [37], [39]

JUDGMENT APPEALED FROM

[2013] VSC 164 (Sifris J)

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CONTRACT – Abandonment – Accrued rights – Whether abandonment of contract discharged rights accrued due up to point of abandonment – Intention – Question to be decided according to objective assessment of parties’ words and actions – Waiver, election and estoppel – Whether gratuitous forbearance to enforce accrued rights sufficient to constitute binding waiver of or election not to enforce rights or sufficient forever to estop enforcement – Penalty – Provision for one party to process agreed daily volumes – Whether provision or contract as a whole imposing implied obligation on other party to deliver agreed daily volumes for processing – Provision for payment of fixed sum if agreed daily volumes not delivered – Whether provision for payment penal – Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; Paciocco v Australia and New Zealand Banking Group Ltd [2014] FCA 35, applied – Summers v Commonwealth (1918) 25 CLR 144; Fitzgerald v Masters (1956) 95 CLR 420; Westralian Farmers Ltd v Commonwealth (1936) 54 CLR 361; Ledingham v Bermejo Estancia Co Ltd [1947] 1 All ER 749; McDermott v Black (1940) 63 CLR 161; Agricultural and Rural Finance Pty Ltd v Gardner (2008) 238 CLR 570, referred to – GW Fisher Ltd v Eastwoods Ltd [1936] 1 All ER 421; Churchward v The Queen (1865) LR 1 QB 173, distinguished.
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Appearances: Counsel Solicitors

For the Appellant Mr I G Waller SC with
Ms R L Thomas Kennedy Guy

For the Respondent Dr Oren Bigos Hunt & Hunt
NETTLE JA
BEACH JA
McMILLAN AJA:
1 This is an appeal from a judgment given in the Commercial Court. The judge rejected the appellant’s (‘Cedar Meats’) claim for amounts alleged to be due from the respondent (‘Five Star Lamb’) under an agreement (‘the Agreement’) for the processing and packaging of lamb products at the Cedar Meats’ abattoir at Brooklyn. His Honour concluded that the parties had abandoned the Agreement with the result that Cedar Meats’ claim was extinguished and, in any event, that the amounts in question were in the nature of a penalty and, therefore, unenforceable.

The agreement

2 According to the uncontested evidence, Five Star Lamb was established in August 2009 with the aim of becoming a high quality lamb producer. The idea was that it would arrange for the processing of lambs by a suitable export accredited lamb processing operator and thereafter for the marketing of the lamb to customers in predominantly overseas markets. To begin with, Five Star Lamb had in mind to engage CRF Group…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] VSCA 32
Decision Date: 7 March 2014

CaseChat Overview and Summary

Cedar Meats (Aust) Pty Ltd, the plaintiff, and Five Star Lamb Pty Ltd, the defendant, were involved in a contractual dispute before the Federal Court of Australia. The primary issue was the abandonment of an agreement concerning the supply and processing of lamb, and the implications of such abandonment on the accrued rights and obligations of the parties. Specifically, the court had to determine whether the abandonment of the contract discharged the accrued rights up to the point of abandonment, and whether the defendant's decision to cease processing constituted a waiver of its rights to enforce the contract terms. Additionally, the court examined whether a clause requiring payment of a fixed sum if agreed volumes were not delivered constituted a penalty, potentially invalidating the clause.

The court's reasoning was grounded in the objective assessment of the parties' intentions as expressed through their words and actions. It was held that abandonment of a contract does not automatically discharge accrued rights unless there is clear evidence of an intention to abandon all rights and obligations. The court found that the defendant's actions did not constitute a waiver or an estoppel preventing it from enforcing accrued rights. The clause requiring payment of a fixed sum was examined under the criteria established by Andrews v Australia and New Zealand Banking Group Ltd, and found not to be penal. The court relied on precedents including Summers v Commonwealth and Agricultural and Rural Finance Pty Ltd v Gardner, among others, to support its decision.

The Federal Court concluded that the abandonment of the contract by the plaintiff did not discharge the defendant's accrued rights up to the point of abandonment. The court further held that the defendant's actions did not constitute a waiver or an estoppel preventing it from enforcing accrued rights. Additionally, the provision for a fixed sum payment in the event of non-delivery was not deemed penal. Consequently, the court ruled in favour of Cedar Meats (Aust) Pty Ltd, with the defendant ordered to pay the accrued processing fees up to the point of abandonment, less any amounts already paid.

Orders