Clover Communications Pty Ltd v Southern Wire Pty Ltd - [2022] SASC 86

Supreme Court of South Australia
(Magistrates Appeal: Civil)
CLOVER COMMUNICATIONS PTY LTD v SOUTHERN WIRE PTY LTD
[2022] SASC 86
Judgment of the Honourable Chief Justice Kourakis
19 August 2022
MAGISTRATES – APPEAL AND REVIEW – SOUTH AUSTRALIA – APPEAL TO SUPREME COURT
TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – CONSUMER PROTECTION – MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS
TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – CONSUMER PROTECTION – LIABILITY OF MANUFACTURERS OR IMPORTERS FOR DEFECTIVE GOODS
The appellant is a company that operates a sheep grazing property on Kangaroo Island. In January 2009 and May 2010, the appellant purchased a total of 54, 200 metre rolls of fencing wire through an agricultural agent. The respondent is the manufacturer of the fencing wire.
At trial, the appellant alleged that it was induced to purchase the fencing wire by representations made by a sales representative of the respondent. The alleged representations were that the fencing wire was high quality fencing wire, that the fencing wire recommended was the respondent’s best corrosion resistant fencing wire and would last 50 years and that it was appropriate to meet the respondent’s requirements.
The appellant installed all the fencing wire on the Kangaroo Island property by the end of 2010. By December 2015, the appellant found the fencing wire to be corroding and asserts that it continues to corrode.
The Magistrate dismissed the appellant’s claim, finding that the appellant did not establish, on the balance of probabilities, the factual matters necessary to support its allegations. The appellant appeals that decision on the grounds that the Magistrate erred in:
-     not finding that the representations were false;
-     finding that the fencing wire was of merchantable quality;
-     finding that the appellant’s managing director, Mr Atkinson, could not give sufficient evidence to exclude the possibility of chemical overspray;
-     finding that the fencing wire was still functioning as a serviceable fence;
-     given the above grounds, not finding that the appellant was entitled to damages in the sum of $100,000 plus interest and costs.
Held, per Kourakis CJ, allowing the appeal:
1.   Representations were made to the appellant about the fencing wire and those representations were false.
2.   The fencing wire was not of merchantable quality.
3.   The evidence of Mr Atkinson was credible and there was no evidence put contrary to the claim that chemical spraying on the farm was consistent with common farming practices in the area.
4.   The fencing wire is no longer functioning as a serviceable fence.
5.   The appellant is entitled to $78,000 in damages with the questions of interest and costs reserved.
Trade Practices Act 1979 (SA) ss 52, 53; Manufacturers Warranties Act 1974 (SA) ss 4, 51(4); Misrepresentation Act 1972 (SA) s 7; , referred to.
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31, applied.

CLOVER COMMUNICATIONS PTY LTD v SOUTHERN WIRE PTY LTD
[2022] SASC 86
Magistrates Appeal: Civil

KOURAKIS CJ: The appellant Clover Communications Pty Ltd (Clover) brought an action in the Adelaide Magistrates Court against Southern Wire Pty Ltd (Southern Wire) claiming damages for defective cyclone fencing wire it purchased from Southern Wire. The fencing wire was steel wire galvanised with a zinc/aluminium alloy, at a thickness of 125 grams per square metre (gsm), and coated with a green polymer paint. I will refer to it as cyclone green-coat. Clover’s claims were for negligent advice and misrepresentation as to the suitability of the cyclone green-coat for use on Clover’s farm, false and misleading conduct concerning the quality of the cyclone green-coat contrary to ss 52(l) and 53(a) of the Trade Practices Act 1979 (Cth) (the TP Act), and breach of s 51(4) of the Manufacturers Warranties Act 1974 (SA) (the MW Act). It claimed damages up to the jurisdictional limit of the Magistrates Court in the sum of $100,000. The Magistrate dismissed the action.
Clover appeals against that judgment on grounds that the Magistrate erred in finding that:
1.the pleaded misrepresentations that the effective life of the cyclone green‑coat was 50 years, and/or that it was the product which was most likely to meet Clover’s expectations, were not proved;
2.Southern Wire did not engage in false and misleading conduct about the useful life of the cyclone green-coat;
3.the cyclone green-coat was of merchantable quality;
4.Clover had not excluded the possibility that the defective wire was caused by overspray, from fertiliser and from chemicals;
5.the cyclone green-coat fence on Clover’s farm was still functional.
I would allow the appeal.
As to the first two grounds, the Magistrate failed to address the totality of the case put by Clover because her Honour proceeded on an erroneously narrow understanding of the pleaded claim. The Magistrate also mistakenly reasoned that because the representation, if made, was false, Southern Wire’s sales personnel were unlikely to have made it. The pleaded misrepresentations, and false and misleading conduct, were proved by the uncontradicted evidence of Clover’s managing director, Mr Atkinson. He testified that when he asked a Southern Wire salesperson for fencing which would last for 50 years, the salesperson recommended the cyclone green-coat and said that it would last a lifetime. Mr Atkinson’s evidence was corroborated, and the misrepresentation repeated, when Southern Wire’s principal, Mr Sivewright, sent Mr Atkinson a brochure which asserted that cyclone green-coat would last a lifetime.
I would also set aside the Magistrate’s finding that the cyclone green-coat was of merchantable quality. It was sold to Clover as strongly rust-resistant fencing wire, with a long-lasting functional life, relative to other forms of galvanised cyclone fencing wire. The Australian Standard (zinc and zinc/aluminium-alloy coatings on steel hire AS/NZS 4534-2006) for fencing provides that heavily galvanised wire can be expected to remain largely rust free for 45 years in climatic conditions like those on Kangaroo Island, and that fencing wire galvanised with a zinc-aluminium alloy can be expected to last even longer.
Widespread surface rust formed on the cyclone green-coat fencing less than a decade after it was put up, threatening its future functionality. Accordingly, at best, it would match the functionality of fencing lightly galvanised (125 gsm) with zinc only, and without a polymer coat. The serviceable life of wire of that kind is much less than an equivalently priced, heavily galvanised (250 gsm) wire fence. On that basis alone, a finding that it was not of merchantable quality ought to have been made. More importantly, the evidence of Dr Kentish, the metallurgist called by Clover, established that, for reasons which are most probably related to the porosity of the green-coat on the fencing sold to Clover, the zinc/aluminium alloy was corroding in the presence of moisture before a zinc carbonate layer could be formed. It is the zinc carbonate layer which protects the steel at the core of galvanised wire from rusting. The green‑coat polymer paint delayed the formation of the zinc carbonate film because it shielded the wire from exposure to atmospheric gasses, but at the same time allowed moisture to penetrate between the polymer and galvanisation which then hydrolysed the zinc/aluminium alloy galvanisation. That porosity rendered the cyclone green-coat unfit for the purpose specified by Mr Atkinson and it was therefore not of merchantable quality.
As to ground 4, I would set aside the finding that Clover had not excluded the possibility that the corrosion and rust was caused by overspray from fertiliser and farm chemicals. The evidence of Dr Kentish was that the elements commonly found in farm chemicals were not present in the inner corrosive layers of the sample cyclone green-coat from Clover’s farm with which he was provided. Moreover, the evidence of Mr Atkinson, whom the Magistrate found to be a credible witness, was that Clover adopted commonly accepted farming practices on its Kangaroo Island farm. There was no evidence to the contrary adduced by Southern Wire. The corrosion found by Dr Kentish on his examination of a sample of the cyclone green-coat was consistent with exposure to moisture alone, before an adequate protective carbonate layer could be formed. Contrary to the submissions of Southern Wire, the greater presence of rust on the higher strands of wire is as consistent with the mechanism described by Dr Kentish as it is with the action of farm chemicals. The penetration of water into the space beneath the polymer coat from the precipitation and pooling on the upper horizontal wires and seepage down the vertical wires was, as likely, if not more likely, to penetrate the polymer coat as the higher atmospheric moisture at ground level.
Whether or not the cyclone green-coat fence was still functional at the time of trial, the evidence clearly established that it was under aggressive corrosive attack. It was left with a shorter functional life than the cyclone green-coat was represented to have, and shorter than could reasonably be expected of the long lasting fencing wire Mr Atkinson requested. The cyclone green-coat fencing is therefore defective. It must now be replaced earlier than would have been the case for comparable wire which was of merchantable quality. The present functional state of the fence, such as it is, and the period of time for which it might remain functional, is relevant only to the assessment of damages. The proper measure of damages is for an amount that allows Clover to erect a fence of the type and standard which Southern Wire represented its product to be, less an amount which reflects the additional years of fencing from which Clover benefitted from the time of the erection of the cyclone green-coat until its replacement.
The legislation
The pleaded provisions of the TP Act provided at all relevant times:
52 Misleading or deceptive conduct
(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2)Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1).
Note: For rules relating to representations as to the country of origin of goods, see Division 1AA (sections 65AA to 65AN).
53 False or misleading representations
A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services:
(a)falsely represent that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use;
…
Section 4 of the MW Act provided at the relevant time:
4—Statutory warrantees
(1)Where any manufactured goods—
(a)     are sold by retail in this State; or
(b)     are delivered, upon being sold by retail, to a purchaser in this State,
the manufacturer warrants—
(c)     that the goods are of merchantable quality;
…
(2) Subject to subsection (3) of this section, goods are of merchantable quality if they are as fit for the purpose, or purposes, for which goods of the kind are ordinarily purchased as it is reasonable to expect having regard to—
(a)     any description applied to the goods by the manufacturer; and
(b)     the price received by the manufacturer for the goods; and
(c)     any other relevant factors.
…
Southern Wire falls within the definition of a manufacturer found in s 3 of the MW Act as the importer of the cyclone green-coat, and because it attached its business name to the material accompanying it, in a way which leads reasonably to the inference that it was the manufacturer.
Section 7 of the Misrepresentation Act 1972 (SA) provides a remedy by way of damages for a person induced to enter into a contract by a misrepresentation:
7—Damages for misrepresentation
(1) Where a contracting party is induced to enter into a contract by a misrepresentation made—
(a)     by another party to the contract; or
(b)     by a person acting for, or on behalf of, another party to the contract; or
(c)     by a person who receives any direct or indirect consideration or material advantage as a result of the formation of the contract,
and any person (whether or not he or she is the person by whom the misrepresentation was made) would, if the misrepresentation had been made fraudulently, be liable for damages in tort to the contracting party subjected to the misrepresentation in respect of loss suffered by him or her as a result of the formation of the contract, that person is, subject to subsection (2), so liable to that contracting party, in all respects as if the misrepresentation had been made fraudulently and were actionable in tort.
(2) It is a defence to an action under subsection (1)—
(a)     that the person by whom the representation was made had reasonable grounds to believe, and did believe, that the representation was true; or
(b)     that the defendant was not the person by whom the representation was made and did not know, and could not reasonably be expected to have known, that the representation had been made, or that it was untrue.
…
(6) In assessing any damages under this section, a court must take into consideration any award of damages under any other provision of this section, or of damages or compensation under any other law, and in assessing damages or compensation in any proceedings under any other law relating to a contract, a court must take into consideration any award of damages under this section.
A pleadings point
Clover pleaded by [5] of the Statement of Claim that Mr Atkinson purchased the cyclone green-coat fencing relying on a representation made by one of Southern Wire’s sales representatives. Clover pleaded that Mr Atkinson told that representative he wanted Southern Wire’s ‘best high quality fencing that would last at least 50 years’. He asked the sales representative for advice ‘as to which type of fencing wire [Clover] should buy to meet [its] requirements’.
By [7] of the Statement of Claim, Clover pleaded that the sales representative responded by recommending cyclone green-coat because it was galvanised fencing wire with an additional green polymer coating and superior wire ties (griplock), making it:
·high quality fencing wire;
·Southern Wire’s best corrosion resistant and long-life cyclone fencing;
·fencing wire that would meet the plaintiff’s requirements.
Clover pleaded that those representations were confirmed by an email from Mr Sivewright which attached a brochure stating that ‘the Griplock Premier range is built to keep its superior strength for a lifetime’. A Southern Wire product information guide also said of cyclone green-coat that it was ‘guaranteed to last a lifetime’.
The pleading point taken by Southern Wire rests on the failure to define whether the word ‘requirements’ used in [7] of the Statement of Claim included both the quality and longevity stipulations made by Mr Atkinson.
During the course of the trial, Clover’s counsel confirmed its case was that the misrepresentation was made when the Southern Wire sales representative recommended cyclone green-coat after Mr Atkinson asked for a fence which would last for 50 years. Nonetheless, Southern Wire contends that it is not clear from the Statement of Claim that Clover was pleading that Southern Wire represented that cyclone green-coat would last 50 years because the word ‘requirements’ was not defined by the pleadings. I reject that excessively semantic submission.
It is clear from Clover’s pleading, and the statement of its counsel at trial, that its case was that the pleaded representation was a necessary implication of the recommendation that Clover purchase cyclone green-coat after Mr Atkinson informed the sales representatives that he wanted fencing wire which would last 50 years. If framed in terms of a positive misrepresentation, the statement ‘I recommend [cyclone green-coat]’ after Mr Atkinson enquired about fencing which would last 50 years, was a representation that cyclone green-coat would last 50 years. If framed in terms of deceptive conduct, the salesperson’s failure to qualify his recommendation of cyclone green-coat by disabusing Mr Atkinson of any belief that the product would meet his longevity stipulation breached s 52 of the TP Act.[1]
[1] Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 40-41 per Gummow J.
There was, in any event, an express representation to the same effect when the sales representative said that the fence would last a lifetime. There is no material difference between representing that the cyclone green-coat will last a lifetime, and saying that it will last 50 years, the latter being in effect the term of the productive working life of a farmer. Moreover, the representation was repeated when the brochure was attached to the email by a reference to the fence lasting a lifetime.
The representations and the Australian Standard
Mr Atkinson testified that towards the end of 2008, he decided to construct new raceways to move sheep between the paddocks on Clover’s Kangaroo Island farm. To complete that job, Clover required about ten kilometres of fencing. He was conscious that the replacement of rusted fences was a problem for farmers and took the view that ‘you only ever want to do [fencing] once and that’s a lifetime thing, you don’t want to have to go back and fix a fence’. He testified that it was for that reason that he wanted, and asked for, fencing that would last 50 years.
Mr Atkinson testified that he phoned Southern Wire and spoke to a sales representative after he saw a reference to Southern Wire in the Stock Journal. He gave evidence that he explained the use to which the fencing would be put on Kangaroo Island. He told the representative that he was looking for the best quality fence that Southern Wire could supply and said that he wanted ‘the thing that’s going to last the longest’. The representative suggested Southern Wire’s griplock fencing. Griplock is a particular method of tying the vertical and horizontal strands of cyclone fencing together with a figure ‘8’ wire knot. Mr Atkinson had heard of griplock’s reputation for strength. He testified that the representative told him that the griplock feature made the fence strong and that ‘the green coating … gives it that lifetime usage’. Mr Atkinson asked for a quote because he intended to compare that to the price of a similar, but blue-coated product sold by Southern Wire’s competitor, Waratah Wire. The sales representative promoted the cyclone green-coat fencing as a better, longer-lasting, wire. In Mr Atkinson’s mind, that fitted with the higher cost of cyclone green-coat in comparison to plain galvanised wire. The sales representative explained that the fencing could not be purchased directly from Southern Wire, but could be purchased through an agent on Kangaroo Island.
It was put to Mr Atkinson in cross-examination that his primary interest was in the strength of Southern Wire’s griplock feature. Mr Atkinson replied:
I didn’t ask for a strong fence. Let’s get this right. I asked for a fence that would last 50 years. I was asking for something that wouldn’t rust. The griplock was an added bit that added in for the strength. It was the rust issue that I was mainly concerned about.

It was then put to Mr Atkinson that Mr Sivewright would give evidence that he did not say that the wire would last 50 years. Mr Atkinson responded:
Well it’s going to be his word against mine. He can remember better than I can, can he? Is that what you’re saying?
The cross-examination later continued:
Q.To be clear, Mr Sivewright did not say to you the green coat premier griplock product would last for 50 years did he?
A.I can only answer I don’t recall for that. I don’t recall whether he did or he didn’t that’s my answer.
That answer must be viewed in the light of Mr Atkinson’s evidence in chief that it was in response to his request for a fence that would last 50 years that the salesperson, who may not have been Mr Sivewright, responded that cyclone green‑coat would last a lifetime.
After the conversation Mr Atkinson received an email from Southern Wire. Mr Atkinson retrieved the email only shortly before the trial and it was disclosed to Southern Wire the day before the trial commenced. The email reads:
Hello Peter,
I’ve attached some info on the griplock product. Will be speaking to the local resellers on Kangaroo Island for the best option for you. Hope to come back to you later today.
Kind regards,
Jerry Sivewright
The familiarity in tone and content of the email is consistent with Mr Sivewright being the sales representative who spoke to Mr Atkinson. Moreover, on three occasions in the course of cross-examination, counsel for Southern Wire suggested to Mr Atkinson that the sales representative to whom he spoke was Mr Sivewright.
Set out below is a facsimile of page four of a brochure which Mr Sivewright attached to the email:
It is important to note several of the statements made on that page of the brochure. First, it is stated that zinc/aluminium galvanising and the polymer topcoat of the cyclone green-coat provide superior corrosion resistance to that of heavily galvanised wire. Secondly, it is said that the wire is more cost effective and lasts three times longer than galvanised wire. Thirdly, the brochure ‘guarantees’ the wire to last a lifetime, and emphasis is added to that representation by the exclamation mark.
Clover called Mr Chirgwin, a fencing contractor who had looked over the cyclone green-coat on its Kangaroo Island farm in August 2018. He gave evidence of a conversation with Mr Clarence, a salesperson at Southern Wire, in which Mr Clarence said that cyclone green-coat would last for 50 years. It was put to Mr Chirgwin that the conversation might have concerned a new product marketed by Southern Wire called Premier50. Mr Chirgwin maintained that they discussed the cyclone green‑coat. However, there is some reason to doubt Mr Chirgwin’s testimony in that respect because the sales material he downloaded from Southern Wire’s website before that conversation, and which he attached to a report provided to Mr Atkinson, concerned Southern Wire’s Premier50 product. For present purposes however it is significant that Mr Clarence repeated a claim that, contrary to the defence case and the evidence of its expert, Mr Zurhaar, to which I refer below, Southern Wire was prepared to represent that there is fencing material available which has a functional lifetime as long as 50 years.
Mr Atkinson gave evidence about the spreading of superphosphate in granular form on Clover’s Kangaroo Island farm, the use of a liquid fertiliser known as Nutrisoil, and the spraying of weed killers and pesticides. He only performed a little of that work himself. Nonetheless he testified, and his testimony was not contradicted by evidence to the contrary, that Clover’s use of those chemicals was in accordance with ordinary farming practice. He said that the fertiliser was spread through booms that were lower to the ground than the top of the fence. Mr Atkinson also testified that the herbicide was not sprayed hard up against the fence; a gap of about one metre was left.
Contrary to the suggestion put to Mr Atkinson in cross-examination, Mr Sivewright gave evidence that he had no recollection of a conversation with Mr Atkinson. He described the third of the statements taken from the brochure which I identified in the preceding paragraph as mere puffery because of the use of the exclamation mark. His evidence to that effect is of no material weight.
Whether a statement is false or misleading on the one hand, or mere puffery on the other, is to be determined objectively, and not according to the opinion of the alleged wrongdoer who speaks from the perspective of his or her self-interest. The relevant question is whether the target audience of the statement could not reasonably have been misled. On an objective assessment, the exclamation mark adds emphasis and in so doing strengthens, and does not detract from, the assertion as a statement of fact. More importantly, the third statement follows from the first two purportedly factual statements. Finally, the second and third statements are consistent with page 33 of the Australian Standard in that it records that the zinc/aluminium alloy generally extends the life of galvanised wire threefold. The statement is neither a vague opinion nor a rhetorical sales flourish.[2]
[2] Overlook Management BV v Foxtel Management Pty Ltd [2002] NSWSC 17; Optus Mobile Pty Ltd v Telstra Corporation Ltd [2018] FCA 745.
The Australian Standard describes the characteristics of various forms of galvanisation and sets out the expected lifetime of those forms in a range of climatic conditions. It explains that galvanising with an alloy of zinc and five percent aluminium increases the durability of the galvanisation because even though the rate of corrosion of the zinc is greater initially, it slows considerably when the coating becomes aluminium rich. The relative advantage of the alloy is greatest in conditions where there are high levels of atmospheric attack (e.g. salty spray) or where the use of corrosive farm chemicals is greater.
The Australian Standard comments as follows on the extended lifetime of fencing galvanised with a zinc/aluminium alloy:[3]
Studies under Australian (external atmospheric) field conditions, complemented by laboratory salt-spray testing to AS 2331.3.1, have shown that zinc/5% aluminium-alloy coatings on wire offer from about two up to about three times greater protection, per unit coating mass, than do zinc coatings. The higher value (i.e. about three times) is realized at high to very high levels of corrosivity, such as those in close proximity to surf beaches.
[3] Australian/New Zealand Standard, ‘zinc and zinc/aluminium-alloy coatings on steel wire’, AS/NZS 4534-2006, page 33.
The Australian standard explains the effect of microclimatic and other conditions on the rate of corrosion as follows:
F4.2 Microclimatic and other effects
In addition to (macro)climatic effects, the local environment (or microclimate) and the circumstances of use of the coated wire may present an influence, and therefore need to be taken into account, if the duration of corrosion protection sought is to be realized. For example, a wire employed in a climate, classified as mildly corrosive, may have its useful life significantly shortened if due consideration has not been taken of corrosive fumes from a nearby effluent-treatment plant, or from proximity to a busy highway or airport; in other words, microclimatic effects may have transformed a Category B environment, for example, into a localized Category C.
Factors that can significantly affect the corrosion rate of coated steel wire are as follows, and are provided for guidance:
(a)Initial exposure conditions Constant rainfall and/or high humidity, especially under hot conditions, over the first few days of exposure can cause a higher initial corrosion rate of a relatively new zinc coating, since its protective carbonate layer may not have had time to form sufficiently (also see Item (g) below and the Note contained in Appendix D).
(b)Protection from rain The corrosion rate in applications exposed to airborne salt and other contaminants, but shielded from rain, can be many times greater than would occur in rain-washed situations. This applies particularly to areas affected by fertilizer or insecticide drift and sea mist, where a zinc coating may become exhausted in 60% of the time when protected, compared with that when rain washed.
The Australian Standard includes a graph displaying ‘indicative coating durability’ for different climatic zones. In respect of the zone in which Kangaroo Island falls, the graph shows that galvanised zinc coating of 125 gsm will provide about 22 years of protection before the onset of rusting, which is defined as rust appearing on about 10 per cent of the wire surface. For a galvanised coating of 150 gsm the estimated period of protection is a little less than 30 years.
The evidence of Mr Zurhaar, the metallurgist called by Southern Wire, was that a further 10 years of serviceable life can be expected after the first onset of surface rust. It follows that a superior zinc/aluminium galvanisation of 125 gsm should, on a conservative assessment, generally retain its functionality for a lifetime or 50 years, or perhaps longer if the polymer coating effectively adds to the serviceable life.
The expected functional life for galvanised wire set out in the Australian Standard explains why Southern Wire in its brochure, and its sales staff in promoting cyclone green-coat, could confidently have made the pleaded representations, not as puffery, but as representations, which would in the context of the Australian Standards be understood as statements of fact about cyclone green-coat’s longevity. As shall be seen, for reasons identified by the metallurgist called by Clover, Dr Kentish, the cyclone green-coat did not meet that expectation.
Only one other member of the Southern Wire sales team, Mr Clarence, was called but he was not asked whether he had a conversation with Mr Atkinson. Nor was he asked about the conversation with the fencing contractor, Mr Chirgwin. He said that he had never told a customer that Bezinal green-coat would last for 50 years. Neither of the other salespersons, Mr Sivewright’s brother, Jonathon, nor Brenton Moore were called. In one passage in his evidence Mr Sivewright went so far as to say that wire fencing could last 150 years in Alice Springs.
Southern Wire marketed a product called Premier50 from 2013. Its marketing stated that it was expected to offer a lifespan of over 50 years in many regions across Australia and that was the explanation for its name. Mr Sivewright on the other hand testified that the number ‘50’ was added to the word ‘Premier’ just because it sounded like a good name. Mr Sivewright’s explanation has the hallmarks of the disingenuous.
When it was put to Mr Sivewright that his staff were familiar with Southern Wire’s product brochures, he answered that he would expect them to be. He replied ‘absolutely’ when asked whether they would provide information to customers based on the product brochure. However, he later denied that he had trained his salespersons to say that the cyclone green-coat fencing would last for 50 years. The only way in which his answers on this topic can be reconciled is by taking it that his staff did convey to customers the descriptions and statements made in brochures, but that Mr Sivewright had not trained them to do so. I would so find. A practice of the kind described by Mr Sivewright’s first answer, to repeat statements in the brochures, is to be expected in the ordinary course of a salesperson’s, including Mr Sivewright, promotion of a business’s products.
Mr Sivewright was questioned about paragraph [31] of the expert report of Mr Zurhaar which stated:
I am advised by the Defendant that in 2011, the supply line with the Belgium wire manufacturer ceased for commercial reasons and the decision was made by the Defendant to market a heavily zinc galvanised fence instead of the zinc/aluminium alloy product. The zine galvanised wire contained 230 gsm of zinc protection instead of 125 gsm of zinc/aluminium alloy. The Defendant's research had determined that the purported improvements in ductility and corrosion resistance were not cost-beneficial relative to a heavily galvanised zinc product. This is why the previously purchased product was no longer available to the Plaintiff in 2011.
Mr Sivewright answered:
Well that’s got to be taken in the context to the sentence before that, so he’s clearly explaining the sentence before that, why that’s the case. That’s the answer to your question, is the sentence before where he gives you the research. He gives you the reason why that was the case in this one sentence before. The zinc galvanised wire contained 230 grams of zinc protection instead of 125 grams of zinc aluminium alloy.
When pursued about Southern Wire’s decision to cease importing the 125 gms green-coat, Mr Sivewright’s answer was that heavier galvanisation of 230 gsm was likely to offer better protection than the 125 gsm used with the green˗coat, and it was therefore better value for money. Two observations can be made. First, Mr Sivewright’s subsequently formed opinion contradicts the first of the statements identified in the brochure. Secondly, the opinion was not backed by any scientific research but was Mr Sivewright’s judgment, albeit based on his experience.
It was common ground that Clover purchased the following quantities of cyclone green-coat fencing from local agents on Kangaroo Island: on 27 January 2009, twenty-seven 200 metre rolls at a price of $350 per roll, and on 28 May 2010, twenty-seven rolls at a cost of $355 per roll. The fencing was erected on Clover’s Kangaroo Island farm during 2009 and 2010.
Early signs of rust
All of the fencing had been installed by the end of 2010, to erect a raceway of some 20 kilometres in length to allow the movement of sheep across the farm.
Mr Atkinson’s evidence was that he first noticed the green-coat fencing losing colour, and flaking a little. Initially he thought it was simply fading but by December 2015 he saw that the fence was rusting. Mr Atkinson’s evidence was that in 2015 he found the rust in more than one place. He sent a complaint by email to Southern Wire referring to the conversation he had before he had purchased the cyclone green-coat. He also referred to a later conversation with the salesperson, Mr Clarence, steering him away from purchasing more green-coat fencing.
Mr Dowell, a Southern Wire salesperson, took some samples for Southern Wire in January 2016. He did not carry out the testing himself but gave evidence of his understanding that the tests were carried out over nine months. Mr Sivewright’s evidence suggests that he conducted the tests himself. Mr Sivewright said the samples were exposed to a salt chamber which can initiate rusting in 10 days or so and in 30 days leave a ball of rust. He testified that the samples were exposed to saltwater at temperatures of 30 degrees. Although the evidence is not clear, the test was probably performed in September 2016, some nine months after the samples were taken. Mr Sivewright testified that the results confirmed the superiority of green-coat over heavily galvanised product. The comparator was fencing galvanised at 230 gsm. However, there was no independent metallurgical analysis of the result. Mr Dowell sent Mr Atkinson an email on 9 September 2016, attached to which was a photograph of a strand of the green-coat alongside a strand of pure, zinc only, galvanised wire. Mr Dowell claimed in his email that ‘the deterioration of the green-coat seems to have stagnated whereas the pure zinc has begun to loose coat weight’. Mr Dowell must have been relaying information received from others.
Looking at the attached photograph, it appears to me that the green-coat strands seem to still be contained within the polymer coat, and if so, little can be concluded from those photographs alone. Nor can anything be taken from the second photograph attached to an email of October 2016. The samples themselves were not tendered. The delay in conducting the test was not explained nor was evidence given of how the sample fencing from Clover’s farm was stored from January to September.
Mr Atkinson testified that the rusting continued to spread to more locations from 2015.
Mr Atkinson gave evidence that by 2018 the rusting had progressed even further. He explained that at first the rust was mainly on the vertical strands of the fence but later extended to the horizontals. There was generally more rusting on the top of the fence than on the bottom. A bundle of photos showing the fencing at different locations with visible rust was tendered. Mr Atkinson was not challenged in relation to his description and the extent or timing of the rusting.
One photograph showed some original wire fencing which had been erected by the previous owner with relatively less rust than the nearby cyclone green-coat. At the time of trial, Mr Atkinson’s evidence was that the rusting had become worse. Joints in the fencing would break causing the fence to fail. Mr Atkinson’s evidence was that once a fence starts to break, it has to be replaced. However as of the time of trial, he had yet to close down a paddock or withdraw livestock.
Mr Atkinson then decided to engage the metallurgist, Mr Kentish. He provided Mr Kentish with a three to four-metre roll of affected wire from the location known as Group 6 Windmill in late 2018. Mr Kentish cut out strands of wires from that fencing and analysed them.
The schedule of the spraying routine for Clover’s farm was put into evidence. No evidence was called to suggest that it was other than appropriate and the same as was generally undertaken on comparable farms. Mr Atkinson testified that round-up was sprayed with a boom spray which was always half a metre or more out from the fence to avoid the risk of hitting the fence. The boom spray is only 300 millimetres off the ground. Mr Atkinson gave evidence that herbicides are not sprayed in windy weather for obvious reasons. Superphosphate is spread in granular form using a top dressing unit. Fine dust is localised.
In August 2018 the fencing contractor, Mr Chirgwin, travelled the length of the raceway and into various paddocks. He checked its condition at intervals of about 100 metres. His evidence was that a high percentage of the vertical wires were quite rusty to the point of being flaky, compared to the horizontal wires. His photographs were put into evidence.[4] He had observed other fences, including blue coated fencing, which had only had minimal rust.
[4] Exhibit A1 pages 125-128.
Mr Chirgwin gave evidence that rusty fences cannot be satisfactorily repaired: ‘when wire is aged and rusty it might only take 20 per cent, 50 per cent of the tension before it starts breaking at other places while you are trying to pull it tight’.
Southern Wire called a fencing contractor, Mr Rodney Facey. He agreed that it was important that fencing did not break regularly because stock may need to be moved into different paddocks while repairs are carried out.
Why did the cyclone green-coat rust?
Clover engaged the metallurgist Dr Kentish to examine a sample of the cyclone green-coat. Dr Kentish’s report of 17 December 2018 was received into evidence. He identified and explained that a range of environmental conditions might affect the rate of corrosion of galvanised fencing:
There are a large number of variables that effect aggressiveness of atmospheric corrosion including time of wetness, temperature and atmospheric corrosive pollutants such as chlorides and sulphur dioxide. Chlorides are prevalent at coastal regions, which appears not to be applicable from provided information. Sulphur dioxide is not normally an issue in Australia, particularly in a rural environment. Zinc will usually form a protective carbonate layer as a barrier and this may be restricted under the paint laver. The attack of zinc is enhanced in areas where surface contamination cannot be washed by events such as short period rainfall. Such event may be limited with a coated galvanised wire.[5]
[5] Report of Dr Kentish (17 December 2018), pp 7-8.

He subjected the wire to an examination using electron microscopy. His findings at [3.3] of his report detail extensive corrosion of the galvanising layer encased within the polymer coating. The corrosion was more evident visually on the vertical wires. In a number of samples there were traces of the atmospheric pollutants chlorides and sulphur in the outer corrosion layers, but they were present in either very low levels, or not found at all in the inner corrosion layers. The corroded outer layers were zinc oxide or hydroxide and were porous.
Dr Kentish’s discussion of those findings in his report, with the salient comments underlined by me, is as follows:[6]
The examination revealed extensive corrosion of the metallic coating on all wires and this was more evident visually on the vertical wires, apart from the bottom segment. The metallic coating was severely affected and in places the underlying steel was significantly attacked.
The metallic coating was zinc-aluminium, one of the metallic coatings often used for wires. It was not possible to determine the gravimetric coating mass for the metallic coating because of the organic coating and the variable but extensive corrosion of the zinc‑aluminium layer. However, from the estimated thickness of the remnant zinc and corrosion products, the original zinc/aluminium thickness was likely to be in the vicinity of 25µm. Based on density of zinc, this average thickness would be approximately equivalent to 180g/m²of surface area, which puts it into class W05 for 2.5mm diameter wire (AS/NZS 4534:2006 Zinc and zinc/aluminium- alloy coatings on steel wire, table 1). The hardness of the wires was considered to be consistent with the microstructure and that of cold drawn steel wire.
SEM analyses of the corrosion products indicated that these were mostly free of species such as chlorides and sulphur and phosphorous was not detected within the inner corrosion layers. The outer layers of the polished sections tended to have more traces of chlorides and sulphur bearing species, but these were still small traces and very localised (not widespread). In addition, no phosphorous was detected in the outer layers. The outer (exposed) surface of vertical wire 4 showed iron, zinc and oxygen, consistent with iron and zinc corrosion products, small amounts of elements such as sulphur, phosphorous, titanium, chloride, sodium, potassium, magnesium and calcium along with greater amounts of silicon and aluminium. Elements such as calcium, aluminium, magnesium are common as “dirt” (silicates) and titanium, as titanium dioxide, is a common paint pigment. Sulphur, phosphorous, potassium, probably with other elements, are components in chemicals such as super phosphate, Goldphos and Roundup 540. These types of materials can be detrimental to the corrosion resistance of metals. However, they were not widespread in all parts of the samples examined and were restricted to the outer most areas of the corrosion products and not in the polished sections proper.
(emphasis added)
[6] Ibid, p 7.
Dr Kentish observed that the expected durability of zinc galvanised with a coating mass of 150 gsm was 30 years or more. He explained why the cyclone green-coat might not have achieved that bench mark in the following passages, again with the salient findings underlined by me:[7]
[7] Report by Dr Kentish (17 December 2018), p 8.
Paint coating of zinc coated wires may have a detrimental influence on the ability of the zinc to form its protective carbonate coating. The presence of chemicals such as fertilisers and herbicides can have an adverse effect on galvanised steel, but there was no evidence of significant amounts of elements such as phosphorous and sulphur at the inner corrosion layers. The external surface of vertical wire 4 showed more evidence of these species and if they were derived from fertilisers and herbicides they may have occurred from being deposited during its latter service life such as in May and June of 2017. In addition, some of these elements may be present in paints. Apart from the external surface of vertical wire 4, no phosphorous species were associated with the layers in the polished sections. This tends to eliminate chemicals such as super phosphate, Goldphos (contains ammonium phosphate and ammonium sulphate) and Roundup 540 (potassium salt of glyphosate) as being responsible for the corrosion. Traces of chlorides were detected in some of the spectra but this was not widespread throughout the samples examined. Potassium chloride has been used in agriculture as a solid fertiliser but there was no evidence of associated potassium in the x-ray spectra and no indication that potassium chloride had been used.
The stated location of the fencing as being a minimum of 7km from the coast was considered to be too distant from the coast to be influenced by the marine environment. The origin of very localised traces of chlorides and sulphur was not determined.
5 CONCLUSIONS
5.1Variable corrosion of the zinc-aluminium metallic coating had occurred from not resolvable to complete loss and subsequent corrosion of the steel substrate.
5.2The thickness of zinc alloy metallic coating was difficult to determine because of the extent of corrosion. However, it was estimated to be in the vicinity of 25µm, which would be approximately 180g/m² (class W05 of AS/NZS 4534:2006, which indicates a life for onset of steel corrosion of 30 years or more for climatic category B). This would be for bare zinc-aluminium coatings and not for paint coated galvanised steel.
5.3There was evidence of the presence of agricultural chemicals on the external surface but not an obvious presence on the polished sections, particularly the inner layers of corrosion products. These chemicals were likely to have been from recent spraying when the corrosion was probably well advanced.
5.4The stated distance of the fencing sample from the coast at installation was sufficient as to there not being an influence of a marine environment.
(emphasis added)
A close examination of the photographs attached to Dr Kentish’s report shows, at places, a complete loss of the zinc/aluminium galvanisation and rusting of the steel wire within the intact polymer green-coat. In the course of his evidence, Dr Kentish was taken to particular photographs which supported his hypothesis:
A.There was examples, evidence, and it’s shown in figure 8 and also in figure 14. If you look at figure 8 you can see that the zinc aluminium metallic layer has virtually disappeared. There’s only a few – there’s only a number of white spots in the zinc aluminium remnant layer where the zinc is still present. Most of it or well over 95% or more has gone. But the organic coating which is shown in figure 8 is still intact. Something, the environment has got through the organic coating and has attacked the zinc and you see the same thing in figure 14 where the majority of the metallic zinc aluminium is gone but the organic coating is still evident. Once again, the environment causing the corrosion has got through the paint layer.
In his evidence, Dr Kentish made it clear that the absence of chlorides or sulphur other than in outer layers in all probability excluded the marine environment or superphosphate as the relevant corrosive agent. Having regard to the way in which farm chemicals were spread with the boom spray, Dr Kentish’s evidence was that he would expect there to be greater corrosion towards the bottom of the fencing than on the top. Dr Kentish observed that if dust adhered to moist fence it was still unlikely to adhere to paint-covered wire unless the paint had already deteriorated exposing the zinc.
Dr Kentish elaborated on the observation in his report as to the way in which the adding of an external polymer layer to the wiring could actually undermine the ability of the zinc layer to fulfil its intended cathodic protective purpose. He testified:
[O]ne of the ideas of zinc or aims of zinc is that it will protect the steel at cut surfaces or if the zinc gets mechanically damaged in a local area, because it’s a lot more reactive than steel, it will protect the exposed steel and that’s the purposes of it on sheeting or wire. But if you cut it, the adjacent intact zinc will protect the cut surfaces and its what’s referred to as cathodic protection. …
The second thing that zinc does because it is quite reactive you don’t want it to corrode away at the … point and zinc will form a protective layer on its surface that usually a carbonate and it’s usually so thin that you can’t see it and that film on the surface protects the zinc. So the zinc will act as a barrier and will also cathodally protect the steel and the zinc protects itself of forming a protective layer, generally a carbonate.
… [Zinc] will react with clean dry air and it’s usually the CO2 in the atmosphere that will form the carbonate and it needs to be – have it such that you get air circulation. That’s why the zinc coated steel sheets, if you stack them on top of each other and moisture gets between it, that’s when you’ll start getting what’s referred to as white rust which is a zinc corrosion product and it commonly happens with corrugated iron in overlapping areas. It’s just that there’s restrictions in the free flow of dry air to form that protective layer.
… If you apply something to the zinc surface and it is such that it allows moisture through that layer such as a paint layer. In other words if it is permeable to the atmosphere, to moisture, moisture can get in. You’ve then got the situation where the zinc is going to struggle to form its own protective layer, and if that happens then the zinc is going to tend to corrode.
… [T]hat’s not saying that all protective coatings are detrimental but if it’s such that moisture can get through the coating, and some of the micrographs indicate that, then you’re at risk of corroding the metallic zinc coating.
Dr Kentish also emphasised that on his examination of the sample, it was clear that the paint coating was permeable to the environment. That proposition was not challenged.
In his report of 23 August 2019, received as exhibit A1, Dr Zurhaar describes the manufacturing process of the cyclone green-coat:
21.In Belgium, the 2.5mm diameter steel wire is treated by an in-line galvanising process where it passes through a molten bath of 95% zinc and 5% aluminium and it receives a 125 gram/square metre (125 gsm) loading of protective alloy. The galvanised wire then passes through a liquid polymer bath where it is encapsulated with a green organic polymer coating to a dry film thickness of about 25 microns.
Dr Zurhaar notes that the product information sheet for Waratah Longlife fencing states that it provides a service life of up to 9 times that of standard galvanised wire and up to 1.5 times that of heavy galvanised.
Dr Zurhaar explains the potential benefit of a zinc/aluminium alloy and a polymeric coating in the following way:
24. The use of a zinc/aluminium alloy instead of just zinc in the galvanising process has benefits for wire products. The zinc-iron intermetallic products that are formed in zinc galvanising are very brittle and can result in shear cracking in the coating on the final product. A zinc/aluminium alloy has a thinner intermetallic phase, and this enhances the ductility of the coating, allowing the coated metal to be formed into complex shapes without loss of coating adhesion or formation of internal shear cracks. The zinc/aluminium alloy also provides greater corrosion resistance than that of a pure zing galvanised coating.
25.The encapsulation of the galvanised wire with a supplemental polymeric coating is intended to provide an extra layer of protection against environmental exposure, especially where corrosive agents are involved, such as in coastal locations and farm locations where agricultural chemicals are sprayed. The sample principle is used with chain wire fencing, commonly known as Cyclone Fencing where the zinc galvanised mesh is encapsulated in a green or black PVC sheath for heavy duty applications.
26.The polymer coating is good at protecting the underlying metals against coastal salt, urban pollutants and agricultural chemicals but polymeric coatings have a limited life span in the Australian sun from UV attack and elevated temperatures. In my experience the effective service life of the polymer is only about 5 years in most farming environments. Slightly longer in southern regions and slightly shorter in northern regions of Australia.
27.Once the polymer coating is breached and it starts to wear off, the zinc/aluminium galvanising takes over in providing the corrosion protection. The galvanising layer is, by its chemical nature, sacrificial and it depletes over a period of about 10-15 years, again depending upon the service environment.
It is important immediately to observe that, on Dr Kentish’s analysis of the samples, the polymer coating has failed to protect the zinc/aluminium galvanisation in the way Dr Zurhaar described. The polymer was still in place even though the underlying galvanisation was corroded. That fact is, on Dr Zurhaar’s own explanation, inconsistent with Southern Wire’s defence that the corrosion was caused by heavy applications of farm chemicals because on that hypothesis, the polymer coating should have been removed by the chemicals before the underlying galvanisation started to corrode.
In his report, Dr Zurhaar takes issue with Dr Kentish’s claim that the polymer coating prevented the zinc from forming a protective carbonate layer:
34.I do not agree that the presence of the polymeric coating is detrimental to the performance or corrosion resistance of the fencing product. Testing of the relative corrosion resistance of the polymer coated product with a bare galvanised product has been carried out and is presented in the Waratah leaflet, refer Appendix A. This information confirms that the polymeric coating provides supplemental protection and is not adverse to the product's performance. The use of polymer coatings on galvanised steel fencing has been a proven benefit over the past 30 years that I am aware of, and at least over the past 10 years where the Waratah product and most Cyclone fence suppliers still market a polymer coated version as a superior heavy duty product.
Dr Zurhaar further stated:
48.Dr Kentish concludes that the presence of the polymeric coating on the galvanising alloy is detrimental not beneficial to the corrosion protection of the product. This alleges a design deficiency and questions the use of polymeric coatings as supplemental protection. I do not agree that the presence of the polymeric coating exacerbates corrosion and submit that the widespread use of polymeric coatings over galvanised steel surfaces in the fencing industry is testament to it being beneficial. The polymeric coating whilst having a limited lifespan in the weather does provide a non-metallic barrier which is far more tolerant to corrosive moisture, salts and chemicals than any galvanising layer alone could ever be.
There are three problems with the reasoning employed by Dr Zurhaar in that paragraph. First, Dr Zurhaar assumes an equivalence between the cyclone green‑coat and Waratah Permaseal without himself undertaking any comparative analysis or testing of those products. Secondly, the Waratah leaflet on which Dr Zurhaar relies is a marketing pamphlet which has very little in the way of manufacturing specifications. The diagrammatic representations of the Waratah wire on the pamphlet are not to scale but in any event reveal that Waratah uses three protective coats over the steel wire. The first is described as a ternary layer composed of zinc, aluminium and iron but the gsm value is not disclosed. Southern Wire did not claim that its cyclone green-coat had an equivalent to Waratah’s ternary layer. The second layer is described as a zalcote coating of zinc and aluminium but again the gsm value is not disclosed. The third layer is described as Permaseal Blue-Coating and said to be a polymer which gives a unique colour and adds to the protection. Presumably the second and third coats are the coats which Dr Zurhaar assumed were the equivalent of cyclone green-coat. Thirdly, Dr Zurhaar fails to address Dr Kentish’s finding of significant corrosion under an intact polymer coating.
Dr Zurhaar estimated that localised breaks would begin to occur 10 years after the galvanisation layer was depleted.
Dr Zurhaar concludes that:
29.In my experience with these types of products over the past 30 years, I would expect the functional service life of the Defendant's product and the Waratah product to be in the vicinity of 25-30 years.
Dr Zurhaar did not explain why his estimate was significantly lower than the Australian Standard, especially after allowing for the additional five years of functional service life which he thought the polymer coat would provide. Dr Zurhaar again assumed without citing evidence that the cyclone green-coat made in Belgium was made in accordance with the same specifications as the Waratah Permaseal Blue-Coat.
In [35] of his report, Dr Zurhaar states that he is not aware of any steel wire, zinc or zinc alloy galvanised, polymer coated or uncoated fence on or off the market that would have an effective service life of 50 years. He expresses the view that anyone expecting such a service life to be technically uneducated in this type of product. That opinion is, as we have seen, not shared by the Australian Standard or Southern Wire.
At paragraph [44] of his report, Dr Zurhaar observed:
From the images of the samples, it appears that after 9‑10 years of service, some parts of the fence wire still appear with the polymer coating intact. Based on that current condition after 10 years, there is no basis for considering that part of the fence would not still have a further service life of 15-20 years. For the segments of wire that show corrosion of the steel wire substrate with almost total depletion of polymer and galvanising protection, I would agree it is likely the further service life would only be another 10 years or so.
Again, Dr Zurhaar fails to address Dr Kentish’s findings that there was significant corrosion beneath the polymer coating. It is also difficult to understand on what basis Dr Zurhaar opines that a fence, which may break in some places but not others, is functional.
In his conclusion Dr Zurhaar stated:
64.If it was the Plaintiff's need that the fence product had a service life of 50 years on his farm, then that need was not and could not be met. I am not aware of any fencing product on the market at that time that could be assured of providing a 50-year service life on the Plaintiff's farm.
Dr Zurhaar did not qualify his statement by reference to the climatic and other environmental factors in which the fence was erected. However, the guidelines provided by the Australian Standards predict a longer functional life than 50 years for various grades of galvanisation in particular climatic conditions. Moreover, even if Dr Zurhaar’s opinion were to be accepted, it would result in a finding that Mr Sivewright represented cyclone green-coat to have a functional service life which he ought to have known no fencing wire could provide.
Dr Zurhaar’s report notes Dr Kentish’s findings of the presence of elements found in farm chemicals but does not address the significance of the absence of those chemicals in the inner corrosive layers.
When it was put to Dr Zurhaar in cross-examination that there was widespread rusting of the wire in 2015, Dr Zurhaar responded that ‘what you are explaining to me is a very rapid level of attack that’s happened in the first six years to have not just depleted the polymer but depleted the zinc and started to get substrate corrosion. I would then say at that rate of corrosion you’d be lucky to get another 10 years of the fence before it starts to fall apart, yes.’

Comparing and contrasting the respective cases of the parties on the metallurgical issues, I am struck by the scientific approach taken by Clover and the unscientific features of Southern Wire’s case. Clover submitted its wire to an independent expert whereas Southern Wire’s principal conducted the salt bath himself and presented no supporting documentation of the method and no microscopic analysis of the results. In contrast with Dr Kentish’s careful and understated approach, Dr Zurhaar made assumptions about the equivalence of Waratah’s wire and cyclone green-coat, did not independently test a sample of fencing from Clover’s farm, or ask to examine Dr Kentish’s samples and gave opinions about serviceable life which were not reconciled against the Australian Standard.
The Magistrate’s Reasons
The Magistrate accepted that all witnesses were credible:[8]
[12]Generally, I considered that all witnesses were truthful and attempted to assist the Court. However, I did not consider the case turned significantly on findings as to the credibility of witnesses. I am of the view that Clover has not established factual matters on the balance of probabilities to found its various claimed causes of action against Southern Wire.
[8] Clover Communications Pty Ltd v Southern Wire Pty Ltd [2021] SAMC 190.
It is difficult to see how the case did not turn substantially on the credibility and reliability of Mr Atkinson at least as to the conversation with a Southern Wire salesperson pleaded in paragraph [6] of the Statement of Claim. Neither Mr Sivewright nor Mr Clarence claimed to recall a conversation with Mr Atkinson. Nonetheless, it was necessary to make findings as to whether or not Mr Atkinson stipulated fencing which would last 50 years, and whether in response cyclone green-coat was recommended as fencing which would last a lifetime, in order to address the pleaded misrepresentation claim.
It is necessary to go to the Magistrate’s more particular finding on that conversation to discover why Clover’s claims failed on the issue of whether the pleaded representations were made to Magistrate found as follows:
[56]I accept Mr Atkinson’s evidence that he telephoned Southern Wire in early January 2009. I am not satisfied that by reason of Mr Sivewright having sent an email to Mr Atkinson that he was necessarily the person that Mr Atkinson spoke to. However, I am satisfied on balance that Mr Atkinson spoke to one of Southern Wire’s sales representatives and that this person made the representations. The representations are consistent with the evidence of Mr Sivewright and Mr Clarence about their understanding of the properties of the Griplock GreenCoat. Mr Sivewright and Mr Clarence both stated that they would have recommended the Griplock GreenCoat for use on a farm on Kangaroo Island. I do not accept that the salesperson would have represented that the Griplock GreenCoat would last 50 years, or that it would last a lifetime, given Mr Sivewright and Mr Clarence were clear that all wire fencing corrodes from the time of installation. Their evidence is supported by the independent evidence of Dr Zurhaar, Mr Facey and Mr Jansen on that point. The representations pleaded do not include such claims about longevity anyway.
There are seven errors of reasoning in that paragraph. First, for the reasons given in [13]-[18] above, the Statement of Claim did plead misrepresentations as to the longevity and in any event, Clover’s counsel made it clear that its case did include that representation. The last sentence of paragraph [56] is premised on an erroneously narrow understanding of paragraphs [6] and [7] of the Statement of Claim. Secondly, Clover’s case was that in recommending cyclone green-coat when Mr Atkinson asked for fencing which would last for 50 years a representation was impliedly made, and advice given, that cyclone green-coat did have a functional life of 50 years. The Magistrate never addressed the question of fact, on which that part of Clover’s case rested, namely whether Mr Atkinson stipulated fencing which would last 50 years. Thirdly, after having observed at the outset that the case did not turn significantly on findings of credit, the Magistrate gave no reasons for rejecting Mr Atkinson’s account when it was not contradicted by Mr Sivewright or Mr Clarence because they had no recollection of speaking to Mr Atkinson. Fourthly, the Magistrate does not refer to the brochure which expressly makes the representation that it would last a lifetime. Fifthly, evidence that a representor knew the statement made to be false is very weak evidence that it was not made and, in any event, there was evidence that both Mr Sivewright and Mr Clarence believed that some wire could last a lifetime depending on the conditions. Sixthly, the reasons ignore the longevity expectations set out in the Australian Standard. Seventhly, evidence that all fencing starts to corrode from when it is installed and eventually rusts does not mean that it cannot have a serviceable life of 50 years.
The Magistrate continued.
[57]Although Mr Atkinson was quite impressed by the content of Southern Wire’s website and brochures, I accept his evidence that the representations were critical to Clover’s decision to purchase two orders of the Griplock GreenCoat and induced those transactions. Given Mr Atkinson was dealing with the manufacturer direct, I consider it was reasonable for Clover to rely upon the representations. However, I consider the representations were true in substance and in fact and therefore Clover’s claims for relief under the Misrepresentation Act, in negligence and under the TPA must fail.
The last sentence of paragraph [57] reinforces my conclusion that the Magistrate was proceeding on a narrow construction of paragraph [7] of the Statement of Claim. Strictly, therefore, the Magistrate’s finding of reliance does not extend to the implied representation as to durability. However, I am persuaded to make that finding, relying in particular on Mr Atkinson’s evidence set out in [21] above, the Magistrate’s general finding that Mr Atkinson was credible and the acceptance that he relied on those representations which the Magistrate did find were proved.
The Magistrate found that the cyclone green-coat was of merchantable quality because:
[60]Dr Kentish did not express an opinion to the effect of that advocated by Clover. While I accept Dr Kentish’s findings on the examinations he conducted, the sample size was extremely limited. Although Dr Kentish was provided with a roll of Griplock GreenCoat by Mr Atkinson, he created six segments of wire from the one vertical wire, and three segments from horizontal wires from the top, middle and bottom lines of the fence. Of these nine segments, only four were the subject of analysis in his report and his expert evidence.[9] There is no expert evidence verifying the appropriateness of extrapolating his findings to conclude that the Griplock GreenCoat is defectively designed or that it has failed on Wallaby Run and requires complete replacement. Dr Zurhaar is of the view that such a single small sampling is not representative of kilometres of fencing.
[61]Further, Dr Kentish has not tested the Bezinal green coat for its composition, or tested the tensile strength of the substrate steel, or inspected the 10.6 km of Griplock GreenCoat installed on Wallaby Run. He has not expressed any view on any other properties of the product.
[62]Dr Kentish’s findings also fail to explain the anomaly of the upper vertical and horizontal wires of the Griplock GreenCoat erected on Wallaby Run having deteriorated at a faster rate than the bottom wires, which would have been exposed to the same elements, plus additional moisture due to their closer proximity to the soil and pasture. This disparity is evident in Mr Atkinson’s photographs and is clearly apparent in Mr Chirgwin’s photographs. Dr Zurhaar is of the opinion that this feature ‘is more consistent with farm chemical overspray and greater exposure to corrosive agents’. Although Mr Atkinson was adamant that this did not occur, his evidence was to the effect that Mr Gale performed most of the chemical applications on Wallaby Run. Consequently, Mr Atkinson could not give sufficient evidence about this to exclude the possibility of chemical overspray contributing to the deterioration in the Griplock GreenCoat on the property. I consider Dr Kentish’s sample size was insufficient to support Mr Atkinson’s contention.
[footnotes in original]
[9] Vertical Wire 1 is the subject of figures 6 and 18; Vertical Wire 4 is the subject of figures 7, 8, 15, 16 and 17; Horizontal Wire 1 is the subject of figures 9 – 12 and 19; Horizontal Wire 3 is the subject of figures 13, 14 and 20.
The Magistrate correctly observed in the above passages that Dr Kentish’s opinion alone did not establish that the fencing wire was not of merchantable quality, but failed to address the totality of the circumstantial evidence adduced by Clover. Those items of circumstantial evidence were:
1.Mr Atkinson’s evidence that the rust on the green-coat cyclone fence on Clover’s farm was widespread, although it appeared to be worse in some places.
2.Mr Chirgwin’s evidence that the rust was widespread.
3.The appearance of rust less than a decade after the fence was erected.
4.The absence of farm chemicals in the corrosion product analysed by Dr Kentish.
5.The galvanisation had hydrolysed, and the steel wire had rusted, within the still intact polymer coating.
6.Mr Atkinson’s evidence as to the farm practices which Clover instructed its workforce and contractors to adopt supported an inference that those practices were adopted in the absence of any evidence to the contrary.
7.There was no evidence that some unidentified departure from those practices could cause corrosion as quickly as that apparent on the cyclone green-coat, particularly when the green-coat itself was still intact.
8.Southern Wire did not produce any expert evidence to address the particular phenomenon on which Dr Kentish relied of corrosion within the green-coat, or to explain why rust appeared so much earlier than the onset expected by the Australian Standards and the representations of Southern Wire.
9.The greater corrosion on the upper horizontal wire strands and on the top of the vertical wires, was consistent with a porosity which allowed water to enter between the green-coat and the galvanised coat before any zinc carbonate had formed.
On that circumstantial evidence I draw the inference that the cause of the corrosion was the porosity, or some similar defect, in the green-coat which allowed water to permeate and then hydrolyse the zinc/aluminium galvanisation before a zinc carbonate coat could be formed. I acknowledge that the precise cause of the porosity was not established by the evidence. However, that is no obstacle to drawing that inference consistently with the opinion of Dr Kentish. For that reason I hold that the Magistrate erred in finding that the cyclone green-coat was of merchantable quality.
On the functionality of the fence the Magistrate found:
[63]It is apparent from the photographs in evidence that the Griplock GreenCoat installed on Wallaby Run is capable of repair when damaged by an animal or other incident. The evidence of Mr Chirgwin, Mr Facey and Mr Jansen is consistent and to the effect that provided a fencing wire retains its strength and ductility, it can be adequately repaired and continue its function as an agricultural fence. There is no evidence about the strength and ductility of the Griplock GreenCoat installed on Wallaby Run to indicate that further repair is not possible and /or that there is any likelihood of an imminent failure of this fencing such that its replacement is currently required. I accept the submission of Southern Wire that all the evidence indicates that the Griplock GreenCoat installed on Wallaby Run is still functioning as a serviceable livestock fence.
[64]In all the circumstances, including Dr Zurhaar’s views about the properties of the Griplock GreenCoat, I am satisfied on the balance of probabilities that the Griplock GreenCoat was of merchantable quality at the time it was supplied to Clover.[10] I find that the Griplock GreenCoat was and remains fit for the purpose for which goods of that kind are ordinarily purchased (being agricultural fencing) as it is reasonable to expect having regard to Southern Wire’s description of the goods and its price, and relevant circumstances, being that the product would be exposed to the elements and an agricultural environment.
(footnotes in original)
[10] Medtel v Courtney (2003) 198 ALR 630 at [70].
It can be accepted that the raceway on Clover’s farm was functional at the time of trial. However, on the assessment of Mr Atkinson, an experienced farmer, the cyclone green-coat needed to be replaced. Mr Atkinson explained that fencing affected by rust tends to break. Mobs of sheep, running in their thousands on Clover’s farm, can place considerable pressure on the runs and fencing. Kangaroos also push up against it. When fencing is damaged in that way, or by reason of the passage of time, it may become necessary to re-tension (strain) the fencing. It is not practicable to do so if the ductility and strength of the wire strands are compromised by rust.
Mr Atkinson’s assessment was supported by Dr Zurhaar’s opinion that after rust appeared the raceway fencing would lose is functionality within 10 years. The representations were therefore shown to be false and misleading.
Moreover, the cyclone green-coat was not of merchantable quality as defined by the MW Act, having regard to the description of the fencing in the brochure and on the recommendations of Southern Wire’s salesperson that it met Mr Atkinson’s requirements.
I accept the submission of the appellant that running repairs are unsatisfactory for the reason given by Mr Chirgwin and summarised in [57] above. Clover is entitled to damages, at least in the claim made pursuant to s 52 of the TP Act, which allow it to procure fencing of the standard cyclone green-coat was represented to be.
Mr Chirgwin gave a quote for removal and installation of new Waratah wire fencing, and its tensioning, at a cost of $156,552, inclusive of transportation of machinery, labour and accommodation, explaining that the job would take some weeks. He applied an hourly rate of $140 plus GST.
It can be accepted that to award that entire amount at the date of judgment would result in over-compensation, given that the fencing had already served its purpose for a decade or so. Moreover, the replacement of the fencing might not be required immediately (and, in any event, would be required in about 40 more years). Further, there was evidence that some fence posts might be salvaged and reused.[11]
[11] There was evidence that removal of staples might damage the posts but might be reused, T264-267.
I would discount the costs of repair by 50 per cent to have regard to the benefit of the fencing already received and for the benefit by way of a discount for the benefit of the judgment sum before the costs of repair are incurred. Having regard to Dr Zurhaar’s evidence, I must wield a blunt axe.
Conclusion
I allow the appeal. I award damages in the sum of $78,000.00. I will hear the parties on the questions of interest and costs.