Fayman International Pty Ltd v Cedar Meats (Aust) Pty Ltd
[2010] VCC 1463
•15 October 2010
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-09-05179
| FAYMAN INTERNATIONAL PTY LTD | Plaintiff |
| (ACN 002 797 079) | |
| v | |
| CEDAR MEATS (AUST) PTY LTD | Defendant |
| (ACN 007 149 402) |
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| JUDGE: | HIS HONOUR JUDGE O'NEILL |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 9, 10, 11, 12, 16, 17, 18, 19 August 2010 |
| DATE OF JUDGMENT: | 15 October 2010 |
| CASE MAY BE CITED AS: | Fayman International Pty Ltd v Cedar Meats (Aust) Pty Ltd |
| MEDIUM NEUTRAL CITATION: | [2010] VCC 1463 |
REASONS FOR JUDGMENT
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Catchwords: Contractual dispute relating to purchase and sale of export meat – dispute as to terms and conditions of the contract – credibility of persons who negotiated the contract.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D I Star | Kliger Partners |
| For the Defendant | Mr J Korman | Kennedy Guy |
| HIS HONOUR: |
Preliminary
1 This proceeding concerns a commercial dispute relating to an agreement between the plaintiff and the defendant to sell two containers of frozen lamb which the plaintiff had arranged to on-sell to a purchaser in Libya. In particular, the dispute concerns whether or not it was a term of the agreement that a label affixed to cardboard cartons which were used to transport the meat in refrigerated containers was to contain an expiry date which was twenty-four months after the date the meat was slaughtered. If such a term did exist, the plaintiff alleges the defendant failed to include such an expiry date, as a result of which the meat was rejected when transported into Libya, and had to be re-sold at a loss. If such a term was not part of the agreement, then the rejection of the meat by the Libyan authorities was not the responsibility of the defendant and any loss suffered in the re-sale of the meat could not be recovered against it.
The Pleadings
2 By its Amended Statement of Claim, the plaintiff pleads, relevantly:
•
That pursuant to an agreement made on or about 1 July 2009[1] (“the agreement”), the plaintiff agreed to purchase and the defendant agreed to sell 50,000 kilograms of “bone in lamb cut six ways and individually wrapped” (“the lamb”) for the price of $194,394.12.
•
There was a term of the agreement, inter alia, that the defendant was to affix on the cartons containing the lamb, and before export, “secondary labels” which bore an expiry date for the lamb which was to be twenty- four months from the date of slaughter (“the expiry date”).
•
That term was partly in writing and partly oral. To the extent that it was in writing, it was constituted by various emails passing between the parties. To the extent that it was oral, it was constituted by various telephone conversations between Mr Dean Schiller of the plaintiff and Mr Dick Merton of the defendant, to that effect.
•
It was a further term of the agreement that the lamb be fit for the purpose of export into Libya.
•
The agreement was breached in that the defendant did not affix the required expiry date, as a result of which the Libyan authorities rejected the lamb.
•
Alternatively, the lamb was not fit for its intended purpose, that is entry into Libya.
•
As a result of the breach of agreement, the lamb was sold to subsequent buyers at a loss of $120,472.21.
[1] In fact, in the documentation subsequently tendered, the date of the agreement was 26 June 2009.
3 By its Amended Defence, the defendant, inter alia, pleads:
• It admits the agreement, but states that it was made on 26 June 2009. •
It denies the agreement contained any provision that the defendant was to affix a twenty-four month expiry date upon the packages containing the lamb.
•
It denies there was any implied provision that the lamb was fit for export to Libya.
•
The cartons were already marked with labels bearing an expiry date twelve months from the production date (“the primary labels”). It was a term of the agreement that the primary labels would remain affixed without amendment.
•
If the lamb was rejected at the Port of Tripoli in Libya, it was rejected as a result of:
ƒ the primary labels which the plaintiff had agreed showed a
twelve-month expiry date;
ƒ the late delivery of the lamb into Libya by the plaintiff or its
agents;
ƒ the presence of the words “Rashad Aziz”[2] on the packaging,
[2] Rashad Aziz is another meat exporting company in competition with the plaintiff. It had previously made a large purchase of meat from the defendant of which the plaintiff’s order was a small proportion.
which was known to the plaintiff prior to shipment;
ƒ the presence of the Libyan Government insignia on the
packaging, which was known to the plaintiff, prior to the
shipment.
•
If the defendant was liable for breach of the agreement, then the plaintiff had failed to mitigate its loss and ought to have returned the lamb to the defendant in accordance with clause 11.1(b) of the standard terms and conditions contained in the agreement, within ninety days. Had this occurred, the measure of the plaintiff’s loss ought to have been the sum of $6,735.87.
•
If the defendant breached the agreement, which was denied, the plaintiff also breached the agreement as:
ƒ the plaintiff had a duty to inspect the lamb to ensure the
secondary label contained the correct expiry date;
ƒ the plaintiff had a duty to ensure the lamb complied with its
contractual obligations it had with its customer.
• The plaintiff owed the defendant a duty of care:
ƒ to ensure the packaging of the lamb conformed to the conditions
of sale under which it acquired the lamb;ƒ
to ensure the expiry date was written on the secondary label so that the party to whom the plaintiff was to sell the lamb was aware of the Libyan Government insignia, and reference to “Rashad Aziz” on the cartons;
ƒ to ensure the party to whom the lamb was being sold was aware
of the twelve-month expiry date.
The Evidence
4 Evidence was given by Mr Dean Schiller, the general manager of the plaintiff. The plaintiff has been and is in the business of the import and export of food products, including meat. Mr Schiller had worked in the industry for approximately twenty-eight years and is experienced, particularly in relation to the export of meat. He worked for a number of companies, and in 1999, was employed by Aspen By-Products Pty Ltd, the predecessor of the plaintiff. He is an accredited Aus-Meat officer.[3] In 2003, Aspen By-Products became the plaintiff, and Mr Schiller remained in employment with the plaintiff through until the present time.
[3] Aus-Meat is an industry body responsible, inter alia, for the setting of standards and codes in the meat industry.
5 Mr Schiller said the plaintiff and the defendant regularly were involved in business dealings and in the period from 2003 to 2009, were engaged in contracts with a gross value of approximately $4.2 million. He was the principal contact in such business dealings on behalf of the plaintiff, and Mr Dick Merton was the principal contact at the defendant.
6 On 12 June 2009, Mr Schiller received a telephone call from Mr Merton, who said he had two container loads of boned lamb, cut six ways[4] which had a production date of September to October 2008. Mr Merton sought $4.20 per kilogram for the lamb. Mr Schiller queried why the lamb had been in stock for that long and Mr Merton indicated that he had held onto the lamb in the expectation the lamb market would rise by June 2009. This telephone conversation was confirmed by an entry in Mr Schiller’s diary.[5] He stated Mr Merton told him the lamb had a twenty-four month production expiry date.[6]
[4] A six-way cut refers to a carcass of lamb being cut into six portions.
[5] Court Book (“CB”) 412, Transcript (“T”) 162
[6] The slaughter date is the date upon which the animal is slaughtered in an abattoir. The production date, or the packaging date is the date, usually within 72 hours of the slaughter date, when the meat portions are packed into cardboard containers and frozen. The expiry date is a date, varying from country to country, deemed by that country as the date by which the meat product may be consumed.
7 Mr Schiller then spoke to a number of the plaintiff’s clients to determine whether any of them would be interested to purchase the lamb. On 16 June 2009, Ms Anna Woods, an employee of the defendant, sent an email to Mr Schiller which attached various photographs of the lamb.[7]
[7] Exhibit E, T 166
8 Amongst the clients of the plaintiff with whom Mr Schiller sought to place the order was a Swiss company, Amiga SA. There were a number of emails passing between Mr Schiller and Mr Kemal Ghazzaoui of Amiga.[8] According to an email from Mr Ghazzaoui to Mr Schiller of 26 June 2009, the former noted:
“1 - The goods are frozen and not chilled as your attachment states. 2 - We may have to put labels on each cut inside the carton and
definitely on the outer carton.”
[8] Exhibit G
9 This was a response to an email from Mr Schiller earlier the same day which asked:
“Also send through any label requirements etc. asap.”
10 In addition to these emails, Mr Schiller said he had discussions with Mr Ghazzaoui as to the latter’s requirement for a twenty-four month expiry date to be affixed upon the packages containing the lamb.
11 In the course of negotiation with Mr Merton as to the price of the lamb, despite an earlier assurance that the lamb had an expiry date of twenty-four months, he told Mr Schiller that in fact the expiry date was twelve months.[9] This caused him to speak to Mr Ghazzaoui to be advised that it would be satisfactory if a secondary label was applied with an expiry date of twenty-four months. The deal was concluded at $3.95 per kilogram on that basis.[10]
[9] T 208-209
[10] T 209
12 Quality Assurance Certificates were obtained to enable the lamb to be exported.[11] There were various other documents relating to certification that the lamb had been frozen and a permit granted for export overseas.[12] The lamb was then packed into two large refrigerated containers at the premises of the defendant, then transported to the wharf for loading onto a ship. The various cuts of lamb were slaughtered and packaged on different dates according to tally sheets.[13] Those tally sheets indicated the lamb had been slaughtered over dates from 11 September 2008 to 3 October 2008 and processed or packaged over the period 15 September 2008 to 6 October 2008 (Container 1) and the slaughter date 11 September 2008 to 28 November 2008 with packaging from 15 September 2008 to 1 December 2008 (Container 2).[14]
[11] Exhibit Q
[12] Exhibits R and S
[13] Exhibit T
[14] see Exhibit U
13 An email from Mr Ghazzaoui to Mr Schiller of 29 June 2009[15] enclosed a draft label[16] and added:
“Shelf life to be twenty-four months.”
[15] Exhibit H
[16] Exhibit H – CB 419.12
14 On 26 June 2009, agreement was reached between the plaintiff and Amiga to purchase the lamb.[17] After a telephone discussion between Mr Schiller and Mr Ghazzaoui relating to the twenty-four month expiry date, Mr Schiller had a further discussion with Mr Merton and told him that it would be necessary to apply a secondary label, a copy of which was to be forwarded in order to overcome the difficulty with the lamb already having a twelve-month expiry date affixed. Mr Schiller said that Mr Merton stated the adding of a secondary label would be “no issue”.
[17] Exhibit K
15 By email of 26 June 2009,[18] reference was made to Mr Schiller having the labels “over the weekend”. The purchase confirmation, as between the plaintiff and the defendant, was set forth in a document dated 26 June 2009.[19]
[18] Exhibit L
[19] Purchase confirmation – Exhibit L
16 Mr Schiller explained the difference between a primary and a secondary label. A primary label is a mandatory requirement of Australian Government regulations which required certain information to be placed on a label attached to meat products for export.[20] A secondary label is not a requirement of the relevant legislation but rather a label which may be requested in the course of commercial negotiations, to provide certain additional information. That secondary label was provided by Amiga to the plaintiff[21] and it was Amiga’s requirement that the label provide an expiry date of twenty-four months from the slaughter date. The label also required the date of slaughter to be stated.
[20] as set forth at CB 45
[21] CB 44
17 The agreement between the plaintiff and the defendant was evidenced by a purchase confirmation.[22] That document referred to standard terms and conditions.[23] Mr Schiller stated those standard terms and conditions applied as at mid 2009.
[22] Exhibit M
[23] Exhibit N – CB 536-542
18 On 2 July 2009, at the invitation of Mr Merton, Mr Schiller attended the defendant’s Brooklyn plant and there was discussion about the secondary label to be applied to the lamb. Mr Schiller suggested it be applied to an appropriate panel on one side of each carton. He requested that the date of slaughter and expiry date be affixed by a date stamp, and suggested a rotating trundle stamp. As the lamb had been slaughtered on various dates,[24] it would be necessary to change the date both as to slaughter date and expiry date on the individual boxes. According to Mr Schiller, Mr Merton agreed to this. Mr Merton suggested Mr Schiller attend the Footscray plant and see Mr Sam Kairouz to discuss the application of the label and to see the lamb. He was at the Footscray plant for only a short time, inspected the lamb, which was stacked on a pallet, and directed that the secondary label be affixed to the carton. There was a discussion about the prospect of the removal of the primary label and it was noted that application would need to be made to AQUIS[25] as any amendment or change to a primary label required approval. Mr Schiller suggested to Mr Kairouz that there should not be double handling and that the secondary label should be applied when the cargo was out of the freezer. There was no discussion about the application of a stamp in relation to the slaughter date or expiry date. That discussion had been had with Mr Merton previously.
[24] CB 150-155
[25] Australian Quarantine Inspection Service
19 Mr Schiller said he had a further discussion with another employee of the defendant, “Doug”, on 3 July 2009. He recorded the conversation in a diary.[26] The diary note records “stamp dates” and reference to the port in Libya into which the lamb was to be shipped. In the conversation, Mr Schiller said that he told Doug not to forget to stamp the dates on the labels.
[26] CB 144
20 As events subsequently transpired, the lamb was rejected at the Port of Tripoli in Libya. The lamb was contained in two transport containers, one of which was later sold into South Africa and the other was returned to Melbourne and placed into cold storage. Eventually it was sold in New Zealand. When the second container was returned to Melbourne, Mr Schiller took photographs of the returned lamb.[27] The boxes of lamb contained both a primary label and secondary label.[28] There was no expiry date recorded on the secondary label.
[27] Exhibit O – photographs – CB 373-399
[28] See photograph CB 382 – primary label with a red surround, secondary label with a green surround.
21 The first he heard that there was a difficulty with admitting the lamb into Libya was when he received a phone call from Mr Ghazzaoui of Amiga on approximately 13 September 2009. Mr Ghazzaoui was upset that the cargo had been rejected. Mr Ghazzaoui, in that telephone call, referred to a range of matters which could have been responsible for the lamb not being admitted.
22 The next day, Mr Schiller spoke to Mr Merton, and made a diary note of that conversation.[29] That diary note records:
“Call from Kemal, Sunday.
Cedar Meats – Libya rejection?
Labels.
Some government logo.
Can’t use.
Try to get letter – OK Dick.Will do – asked me to send draft.”[29] CB 414
23 Mr Schiller stated that meat can be stored in different manners, including as chilled, fresh or frozen. Chilled meat is kept in a vacuum pack and stored at a temperature of zero to 3 degrees Centigrade. As such, it has a life of approximately ninety days. Fresh meat has a short life. Frozen meat is stored at a lower temperature and is initially frozen at temperatures of minus 36 degrees Celsius, and maintained at a core temperature of not less than minus 18 degrees Celsius. Providing frozen meat is packaged properly, it can last many years.
24 After Mr Schiller had been advised of the difficulty of the lamb entering Libya, he had discussed with Mr Merton sending a letter explaining the error with the labelling in an attempt to persuade the Libyan authorities to admit the lamb. A draft was prepared and a letter issued.[30] Mr Schiller also signed a letter.[31] Mr Schiller’s letter blamed a trainee employee placing an incorrect date on the product. This in fact was a ruse attempting to gain sympathy. The letter also stated:
“We are also to blame as we didn’t have the correct checks in place in order that these errors are rectified before the goods leave the premises for export. I now have also installed a failsafe measure to make sure that all labels are checked and re-checked between loading and the plant – prior to shipment taking effect.”
[30] CB 46
[31] Exhibit V – CB 442
25 Mr Schiller had a number of discussions with by Mr Ghazzaoui as to the reason for the rejection of the cargo. He sent various emails to Mr Merton in relation to the situation.[32] According to an email of 15 September 2009, the lamb was rejected by a “Libyan Government company, Al Inma”. Various reasons were proffered, including the goods having previously been rejected.[33] Amiga requested repayment of the purchase price it had earlier paid. Mr Schiller saw it as the plaintiff’s responsibility to repay Amiga in the circumstances, and the appropriate amount was refunded.
[32] Exhibits W, X, Y, Z
[33] Exhibit W, Exhibit X
26 By email of 16 September 2009,[34] Mr Schiller communicated to Mr Merton details of the concerns of Amiga (set forth in bold and underlined). The concerns included:
[34] CB 57-58
• That there was no date affixed to the secondary label; • The name “Rashad Aziz” was stamped upon all of the cartons; •
There was a Libyan Government insignia on the packing which was not permitted.
27 Several emails passed between Amiga and Mr Schiller.[35] The email of 15 September 2009 contained photographs and stated the following:
“Let us face it, the error is clearly from the packer, that is you gave them the right instructions, but from the labels in the photos, they shipped them as they were with September/October 2008 production date and September/October 2009 expiry. How can this not be clear or contested? The packer stupidly screwed up shipping goods near to expiry … . However it is obvious that you sent them the label we gave you which is on the cartons and with no dates. They surely negligibly (sic) screwed up. They kept the old label and added ours without putting any dates. Flagrant Dean!”
[35] Exhibit Y
28 There was further reference to the insignia/logo of the Libyan Government.
29 There were further emails from Mr Schiller seeking the assistance of Rashad Aziz to get the lamb admitted into Libya.[36] Over this period Mr Schiller spent considerable time contacting importers of meat to various countries, attempting to re-sell the two container loads. His enquiries included to Albania, Ghana, Gabon, Ivory Coast, South Africa and Angola.[37] Further emails passed from Mr Schiller to Mr Merton as to the progress of attempting to re-sell the containers.[38] The communication became acrimonious on or about 24 September 2009 when, according to Mr Schiller, Mr Merton swore at him and hung up.[39]
[36] Exhibit Z
[37] see Exhibit AA
[38] Exhibits BB, CC, DD, EE and FF
[39] T 237
30 By email of 24 September 2009,[40] Mr Schiller stated to Anna Woods (Mr Merton’s assistant) that he had only received three photographs from the defendant showing open cartons.[41] In that email, there is reference to another photograph said by Mr Schiller to have been sent by Mr Ghazzaoui.[42] That photograph shows the primary label affixed to two cartons, with an expiry date twelve months after packaging, and a secondary label. There is no date next to the expiry date on the secondary label.
[40] Exhibit GG
[41] These photographs were contained in an email to Mr Schiller of 16 June 2009 – Exhibit E
[42] CB 419.18 – part of Exhibit HH
31 By email of 24 September 2009,[43] Ms Woods referred to the earlier email of 16 June 2009 and attached five photographs which were said to have been sent in the earlier email, and not three as claimed by Mr Schiller. Those five photographs[44] included two additional photographs which Mr Schiller said had not been previously sent.[45] They depicted boxes clearly stamped with “Rashad Aziz Investments Pty Ltd” with an address in Kew. Mr Schiller responded by saying that he had not seen the two additional photographs.[46] Ms Woods claimed that the five photographs had been sent on 16 June 2009.[47]
[43] Exhibit JJ
[44] CB 419.24 – 419.28
[45] CB 419.24, 419.27
[46] Email of 24 September – Exhibit KK
[47] Exhibit LL
32 There were significant delays in attempting to re-sell the two containers. One was sold into South Africa after considerable delay, and the other container was eventually returned to Australia, and then sold to New Zealand. By that time, the expiry date on the primary label had passed and this required, under AQIS supervision, for that expiry date on the primary label to be manually removed, and a new date affixed.
33 Mr Schiller stated that the containers were not returned to Cedar Meats, as he had told by Mr Merton to “eff off basically”.[48]
[48] T 250
34 In the course of cross-examination, Mr Schiller said that some governments of importing countries had specific requirements as to the expiry date to be affixed to imported meat. In other countries, it was simply a matter of commercial negotiation between the parties as to what any such expiry date might be. The only country he could recall which had a government requirement as to expiry dates was the United Arab Emirates. As far as he was aware, Libya had no government requirements as to the expiry date on imported meat products. Mostly, he said, it was a matter for commercial negotiation.
35 In the first conversation with Mr Merton on 12 June 2009, Mr Schiller confirmed that Mr Merton said the meat had been slaughtered in September 2008 but placed it in storage in order to speculate that the market would rise.
36 The primary label was affixed as at the time of packaging.
37 Mr Schiller did not think it was unusual that an expiry date had already been affixed to the primary label, notwithstanding the statement by Mr Merton that he had intended to speculate on the meat. It did not strike Mr Schiller as unusual that Mr Merton would place a twelve-month expiry date on the lamb when, by June 2009, that expiry date was approaching.[49]
[49] T 279
38 It was put to Mr Schiller that he had concocted the entire conversation of 12 June 2009. He denied this.
39 On or about 15 September 2009, Mr Schiller found out that the statement by Mr Merton that he was speculating on the lamb was not correct. At that time, he had found out from Amiga that Mr Merton had concealed the fact that the lamb was part of an allotment for Rashad Aziz.[50]
[50] T 281
40 Mr Schiller had no difficulty with the fact that Rashad Aziz was stamped on the box but it would have required him to go to his buyer and apprise him of that fact. Some brands are seen as better than others. Some brands obtain a premium price. It was possible that some clients may not have accepted meat with Rashad Aziz stamped on the boxes. Mr Schiller thought that the boxes containing the lamb would have the defendant’s brand stamped on the boxes. Given the age of the lamb (it had been slaughtered the previous year), the clients to whom he attempted to sell the lamb had wanted to see some photographs. Three photographs were sent by the email of 16 June 2009.[51] The additional two photographs[52] were not included. Mr Schiller disagreed that in fact five photographs had been sent. He accepted that when he attended the Brooklyn plant, there were a series of photographs on a table. Mr Merton asked him whether he wanted to see them, and he said he did not. He thought the top photograph was one of the ones showing the packaged lamb.[53] He said that the defendant did not hold a position at the premium end of the product market. He did not need to look at the photographs as he was about to inspect the lamb at the Footscray premises. Mr Schiller accepted that he had not been told by Amiga that, had they been informed at an earlier time that the lamb had Rashad Aziz stamped on it, they would have rejected the lamb.[54]
[51] Exhibit E
[52] CB 419.18, 419.24
[53] CB 419.20, 21, 22
[54] T 315
41 When Mr Schiller was at the Brooklyn plant, he was not told by Mr Merton or anyone else that the lamb had Rashad Aziz stamped upon the boxes. He did not inspect the primary label when at the Footscray plant. He had told Amiga in the course of negotiations that the lamb had a primary label with an expiry date of twelve months.
42 It was around 24 or 25 June 2009 that Mr Schiller was told by Mr Merton that the lamb had a twelve-month expiry date, and not twenty-four months as had previously been stated. When he was told this, Mr Schiller telephoned Mr Ghazzaoui to inform him. A number of hours later Mr Ghazzaoui rang back and said that the deal could proceed providing a secondary label was placed upon the lamb with a twenty-four month expiry date. This was before a contract was finally issued on 26 June 2009. This conversation was not confirmed in any emails, so far as Mr Schiller could recall.
43 Mr Schiller was shown a cardboard carton which it was suggested was on the table when he attended the Brooklyn plant. He could not recall seeing it although agreed that if it was on the table it would be probably hard to miss. That carton contained the imprint of “Rashad Aziz”. The carton looked similar to those cartons which had been returned to Melbourne in the second container after being rejected in Libya.[55]
[55] Exhibit O
44 Mr Schiller said that approximately ten to fifteen per cent of the meat exported by his company overseas required a secondary label. When he was at the Brooklyn factory he probably told Mr Merton to place the secondary label on a green “end panel” as provided on the side of the box. He suggested that a rotating trundle stamp be used to affix the expiry date to the secondary label. It was usual for the expiry date on a secondary label to be done at the time of packaging and unusual for a label to be affixed by trundle stamp or by hand. This may have occurred on two other occasions in the 1990s in Mr Schiller’s experience. It is somewhat unusual to have meat with a primary and secondary label showing different expiry dates. It did happen occasionally. Amiga was aware that there would be two expiry dates. Mr Schiller was not aware whether this would cause any difficulty with the admission of meat into Libya.
45 The inspection of the cartons at the Footscray plant was after the deal had been confirmed. An email of 15 September 2009 by Mr Schiller to Mr Ghazzaoui[56] was incorrect. Mr Schiller denied that he was shown all five photographs at the meeting at the Brooklyn plant. He said he did not know Rashad Aziz was stamped on the boxes. He denied having deceived Amiga in that knowledge.
[56] CB 419.245
46 Mr Schiller was cross-examined extensively about precisely what he saw of the packaging when at the Footscray plant. He said he walked towards one pallet containing boxes up to about chin height. He was in company with an employee, Sam. The pallet was covered in shrink-wrapped clear plastic. He approached the stack from the left-hand side corner. He could not recall the precise colour nor markings of the box which he inspected, but thought it was white with either blue or green writing. The light was bad and it was difficult to see. The boxes were stacked in a similar manner to that depicted in photographs taken later.[57] He did not see the words Rashad Aziz stamped on the boxes. He thought he could recall the usual Cedar Meats’ boxes which he thought were white with blue writing and possibly a red top. He was not sure, as it had been some time since he had seen one. He saw only one side of the box. This contained the primary label. The box was already open and he opened the flaps to about 135 degrees to look inside. He did not carefully inspect the carton. He checked the lamb packed in plastic inside the box for freezer burn and colour. On this point, Mr Schiller was taken to an email of 24 September 2009 sent to Mr Ghazzaoui,[58] in which he said:
“Also in cold store it appears now that deceit was carried forward and I was shown clean cartons or goods were shown in such a way as to not show Rashad logos for Libya.”
[57] CB 382
[58] part of Exhibit 3
47 Mr Schiller was not able to give any satisfactory explanation for this. He said he believed at the time he was being shown Cedar Meats’ boxes. I formed the view that the email was intended to exculpate himself from any blame and, as far as possible, inculpate the defendant.
48 He denied that any employee of the defendant removed the box from the stack and opened it on the ground.
49 Mr Schiller accepted that he had never organised the exportation of meat to Libya before this transaction. He said there was no reason to think that this parcel of lamb had previously been exported to Libya and rejected. He was unaware of any Libyan Government’ markings.
50 He was taken to another meat export involving a New Zealand company, Wallace Corporation,[59] where under “additional notes” there is reference to a twenty-four month production expiry date and a secondary label to be applied on loadout. This was not done in the subject transaction.
[59] Exhibit 4 – CB 419.203
51 According to the shipping instruction document,[60] the container of lamb was to be received at the docks no earlier than 5 July 2009, nor later than 9 July 2009. Mr Schiller confirmed that he spoke to Mr Merton on 2 July 2009 about applying the expiry date on the secondary label, and it was put to him that that would leave insufficient time for that task to be undertaken. He said it could be done. He denied that Mr Merton had said to him on 2 or 3 July 2009 that he was unable to put the expiry date on the secondary label and was then informed by Mr Schiller not to worry.
[60] Exhibit 6 – CB 139
52 According to an email of 14 September 2009 sent by Mr Ghazzaoui to Mr Schiller,[61] Mr Ghazzaoui said that his client had previously had the goods offered to him and to other traders in Europe and refused to consider them because they had a Libyan Government label attached. Mr Schiller denied knowing this. He accepted that there was no Libyan Government requirement that an expiry date be affixed to imported meat. He believed the lamb had been rejected by the Libyan authorities as the lamb arrived after the stated expiry date. This would appear not to coincide with the details set forth in the tally sheets.[62] He said that Mr Merton was always in a rush to have meat sent to the wharves for export.
[61] CB 419.246
[62] Exhibit T
53 Mr Schiller accepted that when he inspected the packaged lamb at the Footscray cold store of the defendant, it came to about chin height. In accordance with the photograph at CB 394, he could have seen onto the top of the pallet load.
54 He accepted that given the lamb had been produced around September 2008, it was more difficult to sell than meat slaughtered more recently. He said that aged product is always more difficult to move, particularly if close to the expiry date.
55 He was taken to various documentation relating to the repayment to Amiga of the funds.[63] The repayment to Amiga was partially by cash as indicated in those documents, and partially as a contra deal against two containers of lamb which were “on the water” at the time. This required the release of documents through the plaintiff’s bank. The decision to repay Amiga was made by Mr Schiller, Mr Joel Fayman and Mr Marvin Fayman, directors of the plaintiff.
[63] see Exhibit 10, 11
56 Mr Schiller was taken to the terms and conditions of sale between the plaintiff and the defendant.[64] Clause 11 provided for the plaintiff, in its absolute discretion, if it is not completely satisfied with the lamb, to return it to the defendant within ninety days of the date of delivery, as a result of which the defendant would be required to refund the plaintiff’s money. Mr Schiller agreed that the goods were delivered on 6 or 7 September 2009 into Libya and that ninety days from then would be approximately 9 or 10 December 2009. He accepted that the reason the containers were not returned to the defendant was as a result of the verbal barrage he received from Mr Merton on 24 September 2009, which effectively cut off communication. He said that had there not been such a barrage, he would have attempted to sit down and resolve the issue.
[64] Exhibit N
57 Mr Schiller was taken to the emails passing between himself and Mr Ghazzaoui on 15 September 2009.[65] At CB 419.244, Mr Schiller accepted that he had not included the words “the goods may not have been rejected by the authorities because ….” when he sent that email to Anna Woods on 16 September 2009.[66]
[65] Exhibit Y, CB 419.242-253
[66] CB 57-58
58 Mr Schiller accepted that he had a conversation with Mr Ghazzaoui at approximately 2.00 am on 24 September 2009 and that the contents of that telephone conversation were set forth in his email to Mr Ghazzaoui of that date.[67]
[67] CB 192-194
59 In paragraph 2, there is reference to Mr Schiller receiving five photographs. However, he was not aware that there were the extra two photographs until he received the email from Ms Anna Woods of 24 September 2009 at 2.39 pm.[68]
[68] CB 419.23, Exhibit JJ
60 In re-examination, he stated that when meat is removed from a refrigerated area, the cling wrap often gets condensation, and turns a slightly grey colour, making it hard to inspect goods underneath.
61 According to the Aus-Meat Guidelines,[69] meat imported into Libya should enter the country within four months of the slaughter date, providing it is stored at less than minus 18 degrees Celsius. The expiry date is twelve months after slaughter, and thus there should be eight months between the entry of the meat into the port, and the expiry date. He acknowledged, however, that the lamb did not conform to the entry date requirement. He stated that he checked the guidelines before the lamb was exported into Libya. He said that he was not aware of any requirement of Libya or Australia which prevented dual expiry dates.
[69] CB 127-128, Exhibit QQ
62 He explained that he included reference to a secondary label in a subsequent export of meat to New Zealand,[70] as the person with whom he dealt at Wallace was retiring, and he wanted to ensure details of the transaction was carefully noted given his contact would be absent.
[70] Exhibit 8, CB 419.112
63 He stated that Amiga was one of the plaintiff’s top five clients and had been trading with them for two to three years.
64 He stated that in order to return the containers of lamb to Australia, and to the defendant, there was a significant amount of paperwork and documentation required, even accepting that the defendant would agree to receive the lamb.
65 Evidence was then given by Mr Joel Fayman, a director of the plaintiff. He had been employed with the plaintiff for three to four years. His involvement in the transaction came around September 2009 when it was found that the lamb had been rejected into Libya. He overheard the conversation between Mr Schiller and Mr Merton and noted that Mr Merton was very loud and abusive. Shortly after this, he spoke to Mr Joe Kairouz, a director of the defendant. He said to Mr Kairouz that the parties had a problem. Mr Kairouz said there was nothing to say about the matter and when Mr Fayman said that it would become a legal issue he responded, “so be it”. Mr Fayman considered that there was nothing that could be done to resolve the issue.
66 He accepted that he did contemplate, after this conversation, the prospect of returning the lamb and seeking a refund from the defendant, but considered that the defendant had refused any prospect of resolution by the telephone conversation between Mr Merton and Mr Schiller, and that which he had with Mr Kairouz.
67 Evidence was given by Ms Renate de Kretser.
68 Ms de Kretser worked in logistics and shipping for the plaintiff and was responsible for the preparation and transmission of shipping documents. She was responsible for sending the email of 29 June 2009 to Mr Ghazzaoui in relation to amendments to the proposed secondary label.[71] She was advised by Mr Schiller that the secondary label was to contain both slaughter and expiry dates.
[71] CB 419.10 – 419.12
69 She sent the email to Ms Woods of 30 June 2009 attaching the secondary label.[72] She was responsible for the red amendments to the secondary label.[73]
[72] Exhibit UU, CB 422 and 428
[73] CB 419.12 – part of Exhibit H
70 She sent the email of 2 July 2009,[74] which stated:
“Dear Dick – Thanks for copy of carton label. Please find attached copy of secondary label signed off by Dean. Could you please note that the buyer has requested that the expiry date be twenty-four months from slaughter date.”
[74] CB 43 – Exhibit A
71 That email attached the proposed secondary label.[75]
[75] CB 44
72 On behalf of the defendant, evidence was given by Mr Dick Merton. At the time he was the sales manager for the defendant. He explained that the subject lamb was part of a 1,500 tonne shipment for Rashad Aziz. There was a small portion left over and he tried to sell it amongst his various contacts, and to this end sent photographs. He rang Mr Schiller and explained that he had some meat left over from Rashad Aziz. Mr Schiller agreed to come to Mr Merton’s office to talk about it. He came one morning and they discussed the lamb and Mr Merton told him what it was and Mr Schiller said he would see what he could do. There was negotiation about the price and Mr Merton had wanted $4.20 per kilogram. He had sold the more substantial portion at $4.50 per kilogram.
73 A few days later he arranged for his personal assistant, Ms Anna Woods, to send five photographs, including several photographs of the boxes.
74 Subsequently, Mr Schiller returned to the Brooklyn plant and Mr Joe Kairouz was there. He was the managing director of the defendant. Mr Merton had asked Ms Woods to bring up the photographs which had previously been sent and these were provided to Mr Merton. Mr Kairouz suggested that he and Mr Schiller go to the freezer store at Footscray to inspect the lamb. After the lamb was inspected, a price of $3.95 per kilogram was agreed. At that point there was no mention of any twenty-four month expiry date. Mr Merton knew that the Libyan requirements, in accordance with the Aus-Meat recommendations was for an expiry date of twelve months.
75 On a subsequent occasion Mr Schiller did ring up and requested a twenty-four month expiry date. Mr Merton stated that this would require AQIS inspectors to remove the twelve-month expiry date and replace it with a new one. He rang Mr Schiller back and said that the Libyan requirement was for a twelve- month expiry date. Mr Schiller told him not to worry about the two years. Mr Schiller said that he would send the labels through. It was incomprehensible, according to Mr Merton, that there could be two labels with different expiry dates.
76 Subsequently, Mr Schiller rang and said that there was a problem and that the lamb had been rejected in Libya, and that the same lamb had been earlier rejected by the Libyan authorities. Mr Merton said that this was impossible, as the lamb had not been previously sent from Australia. As well, he said that there was something wrong with the label and that the lamb ought to have had an expiry date of twenty-four months. Mr Merton lost his cool completely and swore at Mr Schiller. He considered Mr Schiller was being deceptive and untruthful. He vowed never again to have anything to do with Mr Schiller.
77 He said that he did not take particular care with emails. These were handled by his assistant, Ms Woods. He denied telling Mr Schiller that meat had been killed and kept to speculate on a rising market. If this was so, why would he have the lamb packaged in cartons with Rashad Aziz on them, and with a twelve-month expiry date on the primary label?
78 He was unable to say whether he received the email from Ms de Kretser on 2 July 2009.[76] He confirmed that he had told Mr Schiller that the requirements for Libya were a twelve-month expiry date and that in the subsequent telephone conversation, Mr Schiller had told him not to worry about the two- year expiry date on the secondary label. He did not look at the labels when the product was sent to Libya.
[76] CB 43
79 Mr Merton was cross-examined extensively. He had dealt with Mr Schiller regularly, both at Fayman and his previous employer and accepted he had a good working relationship with him and had no reason to doubt his integrity or honesty, up until September 2009.
80 When shown the Cedar Meat box[77] which had been the subject of cross- examination, Mr Merton accepted that that was the box used for approximately 95 per cent of the defendant’s packaged meat. There were other boxes. He accepted, when shown five photographs of different boxes,[78] that there were other boxes used from time to time. It was rare for the defendant to arrange specifically printed boxes with the name of the exporter, such as Rashad Aziz. He accepted that the brand “Cedar Meat” was printed on the various purchase and shipping documents and there was no reference to Rashad Aziz. He accepted that, aside from what was stamped on the cartons, there was no written document to suggest that the lamb being sold was packaged in the name of Rashad Aziz.
[77] Exhibit XX
[78] Exhibit YY
81 He said that it was an AQIS requirement that meat not be exported eighteen months after slaughter (save for rare exemptions to, say, third world countries). The bulk of the defendant’s meat products were exported to the Middle East and with a twelve-month expiry date. He accepted that meat could be exported with a twenty-four month expiry date.
82 Rashad Aziz was a significant client for the defendant and the defendant still dealt with it. Mr Merton believed that the shipment the subject of this proceeding was the first shipment by the defendant into Libya, although there may have been one earlier shipment.
83 The lamb was left over from a much larger order with Rashad Aziz. This had come about as the defendant was unable to meet the deadlines in respect of the final part of the shipment, and Rashad Aziz had purchased meat elsewhere. The primary label indicating an expiry date of twelve months had been placed upon the packaged product at or about the time of packaging. Mr Merton accepted that he was keen to sell the lamb as there was a significant time since slaughter and that, in part, was why it was sold to the plaintiff for the lower price of $3.95 per kilogram.
84 Mr Merton had, at an early time, emailed six or eight exporters’ details of the lamb in an attempt to sell it. The plaintiff was not one of those exporters. After this, Mr Merton telephoned Mr Schiller in an attempt to sell the lamb. He accepted this was around 12 June 2009. There was a discussion about the lamb and it was likely Mr Merton advised Mr Schiller of the production date. He denied vehemently there was any discussion that Mr Schiller wanted meat with a twenty-four month expiry date. He categorised this as an outrageous lie. He also denied ever telling Mr Schiller that the lamb was “spec. meat”, that is meat which he had kept in reserve to speculate on a rising market. He said the lamb was clearly described to Mr Schiller as Rashad Aziz meat. There was a series of telephone calls, in the course of which the price was discussed. Mr Schiller asked Mr Merton to email photographs of the lamb and he asked Ms Wood to email five photographs of the product. This was normal practice. Mr Merton said that there were two visits to the Brooklyn plant by Mr Schiller: one at the outset; and a subsequent attendance when he and Mr Joe Kairouz then went on to the Footscray cold store to inspect the lamb. Mr Merton accepted that the second visit was on 2 July 2009 in accordance with the entry in the defendant’s visitor’s book.[79] He accepted that the price must have been agreed before this visit, as the purchase was confirmed on 26 June 2009 by way of purchase confirmation. Mr Merton accepted that the lamb was placed into a carton with “Rashad Aziz” stamped on the side in accordance with the box shown.[80]
[79] Exhibit AAA
[80] Exhibit BBB
85 Mr Merton denied that at any time there was a conversation with Mr Schiller where he was told that the expiry date was in fact twelve months, and not twenty-four, and then Mr Schiller said words to the effect: “Shit, I’ll have to go to the client.”
86 He accepted that he sent a facsimile to the plaintiff showing an example of the primary label.[81] He accepted the word “Renate” was his writing. In relation to the email of 2 July 2009 where reference was made to an expiry date of twenty-four months[82] and the draft secondary label,[83] Mr Merton accepted that this email was received, but he could not recall it. He stated that before this email, he had received a telephone call from Mr Schiller where Mr Schiller had told him not to worry about the twenty-four months. He was uncertain as to the purpose of the secondary label, but it may have been to enable the exporter, the defendant, to display its name. Prior to that telephone conversation, Mr Schiller had requested that there be a twenty-four month expiry date on the label. Mr Merton said he explained that it would be a very tedious task to change the labels given all of the various different dates on the lamb packages. He stated that he said to Mr Schiller words to the effect:
“Do you realise there is a Libyan requirement for a twelve-month expiry
date?”
[81] CB 45 – part of Exhibit A
[82] CB 43 – part of Exhibit A
[83] CB 44
87 He said it would be ludicrous to have contradictory labels showing different expiry dates. As a result of this, Mr Schiller had rung back and said not to worry about the twenty-four month expiry date.
88 The labels would have been handled by the defendant’s shipping manager, Mr Doug Broughton, and he expected that Mr Broughton would have spoken to Ms Renate de Kretser about the labels. In order to apply new date stamps to the secondary labels, it might have taken two to three days and would have required AQIS approval. It would have been a tedious job.
89 He had the conversation with Mr Schiller and then lost his temper because Mr Schiller suggested Mr Merton had not told him that Rashad Aziz was on the cartons. He said this was a blatant lie and that he would never trust Mr Schiller again. He thought that the labelling issue was raised before this conversation.
90 In relation to the letter of 14 September 2009,[84] he said that this was a letter which he was prepared to sign at the request of Mr Schiller so as to attempt to get the lamb into Libya. He simply signed the draft that was provided by Mr Schiller even though what was stated in the letter was incorrect.
[84] part of Exhibit A – CB 46
91 In relation to the meeting of 2 July 2009 at the Brooklyn plant, Mr Merton said he requested Ms Anna Woods to provide the five photographs which had earlier been sent to Mr Schiller, which she did. He was uncertain whether there was any discussion about a secondary label at this meeting but Mr Kairouz suggested to Mr Merton that they should go and have a look at the lamb.
92 Mr Merton could not remember ever having had to deface a primary label by crossing it out and putting a new date on. Mr Merton accepted that there were a number of emails sent by Mr Schiller advising him of the progress of attempting to sell the lamb after it had been rejected in Libya.
93 Mr Merton was taken to the Aus-Meat advisory material.[85] He confirmed that there was a recommendation that frozen meat, including lamb ought be stored at less than minus 18 degrees Celsius and entered into the importing country within four months of slaughter. Further, the expiry date into that country for meat was to be twelve months.[86] If the shipment of lamb arrived into Libya on about 7 September 2009, then at least a part of the shipment of lamb would be within days of the expiry date, accepting that the expiry date was twelve months. He considered this to be a risk to be undertaken by the plaintiff, and not the defendant, as the lamb had been sold and packaged in accordance with the plaintiff’s requirements. Mr Merton accepted that if, in accordance with the Aus-Meat Guidelines the lamb had to be exported into Libya within four months of slaughter, and the expiry date was twelve months from slaughter, thus it would need to be in the country for approximately eight months. This was clearly not the case with the subject lamb, but Mr Merton again stated that that was a matter for the purchaser, and not for his company.
[85] Exhibit QQ
[86] CB 127
94 In re-examination, Mr Merton explained that the insignia of the Libyan Government on the inside of the box was not attached to the inside of the box, but on a separate piece of material which was included in the box.
95 Evidence was given by Ms Anna Woods, the office manager of the defendant. She had previously worked, for a period of six years, for the plaintiff. Over the period from February to June 2009, she was asked by Mr Merton to send five photographs of what was called the “Rashad meat” to various customers of the defendant. Photographs of the lamb had been taken by Mario, the accountant. Originally, an email was sent by Mario to her containing the five photographs and most often she would call that email up on her computer, type in the address of a customer when instructed to do so by Mr Merton, and a pro forma email was forwarded. When she knew the customer personally, the email would be personalised. She said in each case she sent the five photographs.
96 Ms Woods was shown the email, which Mr Schiller said he received, of 16 June 2009 which enclosed only three photographs.[87] She said she had sent five photographs. She confirmed that on 24 September 2009 she sent a copy of the original email of 16 June 2009 back to Mr Schiller which contained all five photographs.[88] It was noted that her original email of 16 June 2009 did not refer to any attachments, as the subsequent email of 24 September 2009 did.
[87] Exhibit E – CB 130
[88] Exhibit HHH
97 She said there had been two meetings at the Brooklyn plant attended by Mr Schiller. In the first meeting, Ms Woods was requested by Mr Merton to print off and provide the five photographs which had previously been sent. She handed these to Mr Schiller and at the same time gave him a kiss (she had known him from her previous employment) and offered him coffee.[89] She stated that these were the photographs which had previously been sent by email, at the meeting, Mr Kairouz was there and that the meeting occurred in late June, not early July. On another subsequent occasion, Mr Schiller came again and she thought that was early July. Mr Kairouz was at the second meeting. The meetings were about a week apart. There was a box with the Rashad Aziz emblem on it lying flat on a table at the second meeting.
[89] Exhibit 13 – five enlarged colour photographs
98 Evidence was then given by Mr Joe Kairouz, the managing director of the defendant company. He shared an office with Mr Merton. At some time in 2009 he recalled overhearing a conversation which Mr Merton had where there was reference to two containers of meat in Rashad Aziz boxes and Mr Merton’s desire to sell them. There was some talk of the price.
99 Subsequently, there was a meeting between Mr Merton and Mr Schiller at the Brooklyn premises in the upstairs office. At the outset Mr Kairouz was on the phone, but cut that call short and said to Mr Schiller words to the effect:
“Before you commit, let’s go and see the lamb.”
100 He said this because he knew the boxes were marked with the Rashad Aziz logo which was unusual. He said that both he and Mr Schiller then went to the Footscray plant to see the lamb. The two pallets of lamb had been taken from the cool room and the cool room manager, Sufi, took two boxes from each pallet onto a conveyor belt to enable Mr Schiller to check them. Mr Schiller checked them and took photographs. He said the lighting in the area was good. He denied the suggestion in cross-examination that he had not taken Mr Schiller to the store. He could not remember any discussion with Mr Schiller about labels, in particular the need for a twenty-four month expiry date. He said it was not possible to have two expiry dates on the one box. He was shown Exhibit M, the purchase confirmation of 26 June 2009, but was unable to explain why he would have said to Mr Schiller to inspect the lamb before commitment when the contract had in fact been entered. He said it may have been that he did not know one way or the other whether Mr Schiller had committed.
101 He confirmed a telephone conversation with Mr Joel Fayman in September 2009 where Mr Fayman said that the parties had a problem. Mr Kairouz said it was nothing to do with him and that if Mr Fayman determined it was a legal issue he said to let it go. He was uncertain as to precisely what was said.
102 Evidence was given by Sufi Abdul Kadir, the frozen meat manager for the defendant. He worked for the defendant in June and July 2009. He recalled a telephone call from Mr Merton telling him that Mr Schiller and Mr Kairouz were coming to inspect the lamb. They arrived about forty minutes later and in the interim he had brought out two pallets of lamb and taken the plastic wrapping off completely. He unloaded four boxes onto a conveyor. He saw Mr Schiller open the boxes and photograph them. He said Mr Kairouz and Mr Schiller pulled up in the parking lot in Mr Kairouz’s car. In cross-examination, he stated that he was sure the meeting occurred and that Mr Schiller inspected the boxes. He said that there were no pallet jacks used at the time.[90]
[90] Evidence was given by Mr Schiller that there was a pallet jack against one of the pallets when he inspected them. He stated that the lighting in the area where the inspection was made, was brighter than in the Court.
103 Evidence was given by Mr Douglas Broughton, the cold store manager for the defendant. He worked in the Footscray plant, although went to Brooklyn from time to time. He recalled the two containers of lamb the subject of this litigation.
104 He said he could not recall any telephone conversation with Mr Schiller in which he was required to place a stamp indicating a twenty-four month expiry date on the lamb. If he had been asked that, he would have asked Mr Schiller if he was joking. This was because there was already a stamp upon the packaging and it could not be changed, save with a lot of work and AQIS approval. It may have been possible for the lamb to be packed into different containers with new labels. He said that you could not put a different label over an existing label. He did not recall receiving a telephone call from Ms Renate de Kretser, although he had spoken to her many times, in which she put him through to Mr Schiller to discuss these labels. If that had occurred, and he had been requested to put a different expiry date on a secondary label, he would not have said “no worries”. Rather, he would have said: “You would have to be kidding.” To change the labels would have been a substantial undertaking. He pointed out that if the labels were to be changed, or dates affixed, each and every carton would have to have been looked at, a calculation made as to two years from the slaughter date and the stamp adjusted accordingly. He said it would have been a very substantial endeavour with more than 3,000 cartons.
105 Finally, evidence was given by Dr Stephen Roberts. He is a senior veterinary officer with the Exports Standards Branch of AQIS. He has worked for AQIS over a considerable period and is based in Canberra. His duties include negotiating with foreign governments, marketing access for Australian meat products, and to ensure compliance by Australian meat exporters to overseas regulations.
106 AQIS is a Commonwealth regulatory agency, the role of which is to ensure compliance by Australian meat exporters with Australian legislatory requirements, and with the legislative requirements of overseas countries.
107 Aus-Meat is an industry organisation not set up as a regulatory body, but works closely with AQIS’ officers. Aus-Meat provides advice and recommendations in relation to the commercial requirements of overseas countries, but is not involved in the application of Australian or overseas countries’ import and export regulatory requirements.
108 He was aware of primary and secondary labels. Primary labels under Australian legislation must state certain facts as to the meat, including:
• by whom the meat was produced; • the date of production; • various technical matters, including the registered number of the producer. 109 A secondary label is used in some countries to provide additional information about the product, in particular a translation of information into the importing country’s language to enable the authorities to understand what is being transported.
110 There is no requirement for expiry dates (or shelf dates) to appear on the primary label. Such dates may appear on the primary label so long as the information is not in contravention of any other required information.
111 Application may be made to AQIS to deface a primary label or apply a new label but it must be done with AQIS’ approval. It is further possible to re-package meat into new boxes, but AQIS’ approval must also be sought. Approval need only be sought if the required information on a primary label is to be changed; however this is not widely known in the industry and AQIS has a policy to not discourage the perception that there must never be a change to a primary label.
112 There is no legislative Australian requirement to prevent dual expiry dates. The expiry date of meat products is not a public health issue providing the meat has been stored at the correct temperature and under the correct conditions. The expiry date is a commercial question to be determined between the importer and the exporter. Dr Roberts confirmed that AQIS would not issue a health certificate if there was a breach of the overseas country’s legislative requirement. He said very few overseas countries do have legislative requirements in relation to the importation of meat. In particular, Libya had no such requirement. Commercial considerations dictate conditions of import of meat into Libya.
Credibility of the Various Parties
113 The principal issue to be determined in this proceeding is whether or not it was a term of the agreement between the plaintiff and the defendant that the lamb to be exported to Libya was to have a secondary label affixed to each of the cartons with an expiry date recorded as twenty-four months after the slaughter date.
114 On behalf of the plaintiff, it is alleged that there was such a term, and that while a secondary label was affixed to the packaging, the defendant failed to insert the appropriate expiry date, as a result of which, in whole or in part, the lamb was rejected in Libya. On behalf of the defendant, it is put that it was made clear to Mr Schiller by Mr Merton that the lamb contained a primary label with an expiry date twelve months from the date of packaging. While Mr Merton accepted Mr Schiller did raise the application of a secondary label, when it was pointed out the difficulty in having to change or deface the expiry date on the primary label, under AQIS supervision, he agreed not to proceed.
115 In determining which version of events is to be accepted, it is necessary to assess the credibility of the various witnesses, in particular the credibility of Mr Schiller and Mr Merton. In assessing that credibility, I have concluded that I prefer the version of events given by Mr Merton and the various other witnesses called on behalf of the defendant. I say that for the following reasons:
116 Firstly, Messrs Merton, Kairouz and Broughton all gave evidence that it was incomprehensible that there could be two expiry dates affixed to the same packaging. That evidence, in my view, is far more likely to reflect the correct situation. If, indeed, the meat was rejected in Libya because of the failure to apply a twenty-four month expiry date, then it means that the expiry date was a significant aspect of the transaction for the importing Libyan company. What then would that company make of meat which had two expiry dates?
117 Further, Mr Schiller’s evidence was that he was told by Mr Merton at the outset of the negotiations that the lamb had a twenty-four month expiry date. If so, that was a clear misrepresentation by Mr Merton. It is difficult to understand why he would make such a statement when the lamb had been stamped with a twelve-month expiry date on the primary label. Mr Merton’s’ evidence that there was no reference to a twenty-four month expiry date is far more believable.
118 The Aus-Meat recommendations for Libya clearly state[91] that lamb imported into Libya was to have an expiry date of twelve months. It is difficult to understand why Mr Merton, an experienced meat trader, would offer lamb for export into Libya with a twenty-four month expiry date, in the light of this recommendation. It is curious there were no emails sent by Mr Schiller on behalf of the plaintiff to Amiga to confirm or explain that there would be two expiry dates if a secondary label was to be applied to the lamb. Mr Schiller said that he had telephone discussions with Amiga on this point.[92] It is also curious that in another contract with a New Zealand company for the purchase of meat,[93] Mr Schiller saw fit to make reference to an expiry date of twenty- four months on the face of the contract, yet not on the agreement.
[91] Exhibit QQ
[92] T 334, 339
[93] Exhibit 4, CB 419.203
119 Secondly, I found Mr Schiller a somewhat unsatisfactory witness. He prevaricated in the course of his evidence and often refused to answer questions directly.[94] In my view, his answers were often given with a view to what best suited the case of the plaintiff, rather than accurately reporting what had occurred. He did not make the concessions I would expect of a credible witness.
[94] See, for example, T 267, 279, 363-4, T 486-8
120 Thirdly, his evidence was that at the outset he was told by Mr Merton the lamb had been slaughtered and then retained by the defendant to speculate on the lamb market. This was denied by Mr Merton. It is patently unlikely the lamb was retained by Mr Merton “on spec.” given that it was in fact part of a larger shipment purchased by Rashad Aziz for sale to the Middle East, which had already affixed a primary label with an expiry date of September or October 2009.
121 Fourthly, when the lamb was rejected in Libya, a number of emails passed between Mr Schiller and Mr Ghazzaoui, including an email of 15 September 2009.[95] That email was transmitted by Mr Schiller to Mr Merton.[96] In that email, he omitted the words “the goods may not have been rejected by the authorities because …” In my view, this omission was intended to deceive Mr Merton.
[95] Exhibit Y, CB 419.242-253
[96] CB 57-58
122 Fifthly, despite Mr Schiller’s protests to Mr Merton that when the lamb arrived in Libya it had “Rashad Aziz” stamped upon the cartons and that this was a potential reason for the rejection of the lamb, in my view, Mr Schiller well knew, because of the photographs which had earlier been sent to him by Ms Woods, as well as his inspection at the Footscray cold store, that the Rashad Aziz emblem was clear from the cartons. I am of the view that his protests in this regard were an attempt to cover the fact that he was aware of the insignia from the outset. Mr Schiller claims that he was deceived in an email of 24 September 2009 sent to Mr Ghazzaoui[97] when he claimed that he was shown clean cartons. This was not the case.
[97] part of Exhibit 3
123 Sixthly, I was impressed with the evidence of Ms Wood, Mr Kairouz, Mr Sufi Kadir and Mr Broughton. All gave a version of various aspects of the transaction quite different from that given by Mr Schiller. Ms Woods gave evidence that she, at the outset, provided five photographs to Mr Schiller, and not three; in particular, photographs which showed clearly the Rashad Aziz logo on the packaging. Further, she provided those same photographs to Mr Schiller again at the meeting at the Brooklyn plant on 2 July 2009.
124 Mr Kairouz gave evidence that he took Mr Schiller to the Footscray cold store to show him the packages and the meat. Mr Schiller denied this. I prefer the evidence of Mr Kairouz.
125 Mr Kadir gave evidence that he was the frozen meat manager at the Footscray plant and recalled the meeting between Mr Schiller and Mr Kairouz. He stated he unloaded four boxes which clearly showed the meat and its packing, and in fact took the plastic cover completely off the pallet. Mr Schiller denied this. Again, I prefer the evidence of Mr Kadir.
126 Mr Schiller claimed that he telephoned Mr Broughton to ensure the secondary labels had an expiry date twenty-four months after slaughter affixed. Mr Broughton denied he received any such telephone call, and said that it would be incomprehensible for there to be two expiry dates. Again, I prefer the evidence of Mr Broughton.
127 If all these witnesses had made up this evidence, it would indeed have been a considerable conspiracy. I do not accept there was such a conspiracy.
128 Finally, there were significant differences in the evidence of Mr Merton as to:
• The first meeting between the parties. • Whether or not the lamb was retained by Mr Merton for speculation on the market. • The fact that Mr Schiller was advised that the lamb was part of an earlier purchase by Rashad Aziz. • Mr Merton told Mr Schiller that the lamb had a twelve-month expiry date. • While there was a discussion about the application of a secondary label (in fact the label was applied to the packaging), once it was pointed out to Mr Schiller the difficulty in changing or defacing the labels, he accepted the view of Mr Merton and told him not to worry about going ahead with the expiry date on the secondary label. • The evidence of Mr Merton that it is incomprehensible for there to be two expiry dates on the packaging. 129 It is true that some of the evidence given by Mr Schiller on these matters was supported by his diary entries. It is submitted by Mr Star, I ought to more comfortably accept his evidence because of these contemporaneous records. However, I am not persuaded these entries ought to prevail over my assessment of the credibility of the various witnesses called by the defendant.
130 Accepting as I do the evidence of Messrs Merton, Kairouz, Kadir and Broughton, and Ms Woods, the evidence given by Mr Schiller to the contrary, in my view, indicates an attempt by him to cover up his true knowledge of the circumstances of the purchase of the lamb in an attempt to exculpate himself from blame in the affair, once it became known the lamb was rejected at Tripoli.
The Pre-Agreement Negotiations
131 I accept that on 12 June 2009, Mr Merton telephoned Mr Schiller in relation to the lamb and a discussion ensued about the prospect of the plaintiff purchasing it. Mr Schiller’s diary note records:
“Dickie-two by forty 816 kilogram six way 4.20 – production – September
08 – twenty-four month production expiry – spec. meats??”
132 This note relates to the lamb, and, according to the evidence of Mr Schiller,[98] he was told by Mr Merton that the lamb had a twenty-four month expiry date from the date of production. This statement, attributed to Mr Merton by Mr Schiller, stands in stark contrast to the fact that, at that time, the lamb had a primary label with a twelve-month expiry date.
[98] T 162
133 Mr Merton[99] accepted this conversation occurred but differed in three respects. Firstly, he denied having ever told Mr Schiller that the lamb had a twenty-four month expiry date. Secondly, he denied the meat was “spec. meat”. The lamb was in fact a small portion of a very large order from Rashad Aziz and was never purchased to speculate on the meat market. Thirdly, Mr Merton claims he advised Mr Schiller that it was Rashad Aziz lamb.[100]
[99] T 615-619
[100] T 616
134 For reasons which I have stated, I prefer the version of events given by Mr Merton than Mr Schiller. Further, the logic of the situation mitigates against the version given by Mr Schiller. Why would Mr Merton indicate the lamb had a twenty-four month expiry date when that was contrary to the primary labels already affixed? While I accept that Mr Merton was heavily intent upon a sale of the lamb at the earliest opportunity, an attempt to deceive Mr Schiller that “Rashad Aziz” was stamped on the cartons would be foolish in the extreme and deceptive. Further, there would appear to be no reason as to why Mr Merton would state the lamb was “spec. meat”.
135 Thereafter, Mr Schiller spoke to various of Fayman’s clients to on-sell the lamb overseas. This included a Mr Schmocker. The email to Mr Schmocker[101] refers to “twenty-four month prd expiry date” and included three photographs. In my view, it was likely Mr Schiller was mistaken in his understanding that Mr Merton had said a twenty-four month expiry date.
[101] Exhibit F – CB 419.6
136 On 16 June 2009, Mr Schiller received an email from Ms Woods[102] which appears to attach three photographs.[103] There is a distinct conflict in the evidence on this point between Ms Woods and Mr Schiller. Ms Woods said she sent five photographs which she referred to as the “Rashad photographs”. This she confirmed in a subsequent email.[104] The additional two photographs[105] showed clearly the cartons with reference to “exporter – Rashad Aziz Investments Pty Ltd”, together with a primary label indicating a twelve-month expiry date. Again, I prefer the version of events given by Ms Woods, and accept, notwithstanding the email said by Mr Schiller to have been received by him showing three photographs, that he in fact received five. I am unable to say why he did not forward all photographs on to Mr Schmocker and also to Amiga.
[102] Exhibit E – CB 130
[103] CB 131-133
[104] Exhibit HHH
[105] CB 477-478
137 In the days that followed the initial telephone discussion, there were further discussions between Mr Schiller and Mr Merton, particularly as to the price of the lamb. According to Mr Schiller, Mr Merton contacted him to say that the lamb did not have a twenty-four month expiry date, but rather a twelve-month expiry date. Mr Merton did not accept this version of events.
138 In addition, Mr Schiller sent details of the lamb to Amiga and had discussions with Mr Ghazzaoui. Those discussions led to a number of emails[106] in which a price was negotiated for the sale of the lamb from Fayman to Amiga. By email of 26 June 2009,[107] Mr Ghazzaoui referred to the possibility of “put
labels on each cut inside the carton and definitely on the outer carton – is this
OK with you or not … .”? Mr Schiller further had discussions with Mr Ghazzaoui, he said, in relation to a twenty-four month expiry date for the lamb.
[106] Exhibit G – CB 419.71 - 73
[107] CB 419.73
139 On 24 or 26 June 2009, Mr Schiller thought a Wednesday,[108] he claims he received a telephone call from Mr Merton advising him that the expiry date for the lamb was twelve months, and not twenty-four months. According to Mr Schiller, he told Mr Merton he would have to get back to his client (Amiga) to tell them the original advice as to the expiry date was not correct. He did this promptly to Mr Ghazzaoui, who exclaimed that he would have to speak to his (Mr Ghazzaoui’s) client. As a result, according to Mr Schiller, Mr Ghazzaoui sent a draft secondary label with various information, including for the provision of an expiry date. According to the email of 29 June 2009,[109]: “shelf life to be twenty-four months”. As a result, Mr Schiller claims he had a telephone discussion with Mr Merton telling him of this requirement. That is, that a secondary label had to be applied with the expiry date as twenty-four months. According to Mr Schiller, Mr Merton said: “It was all OK, there was no issue”.[110] There was some amendment to the secondary label by an employee of Fayman, Ms Renate de Kretser.[111] In the course of this discussion, Mr Schiller said he told Mr Merton that the secondary label would have to be applied to an end panel on the carton and that a stamp would have to be applied to print the date on the secondary label.
[108] T 172, L20
[109] Exhibit H – CB 419.11
[110] T 173, L26
[111] CB 419.10
140 On 26 June 2009, the purchase by Fayman from Cedar Meats of the lamb was confirmed.[112] On the same day, the agreement for the further sale of the lamb by Fayman to Amiga was confirmed.[113]
[112] Exhibit M – CB 137
[113] Exhibit K – CB 135
141 The evidence of Mr Merton on the negotiations which took place before and at the time of the agreement is somewhat different. He said that Mr Schiller first attended Cedar’s premises at Brooklyn at a date in June and there was general discussion about the lamb. There was then a number of telephone discussions thereafter about the price. There was a second meeting at the Brooklyn plant between Mr Merton, Mr Schiller and Mr Joe Kairouz which he accepted as having occurred on 2 July 2009.[114] Up to that time Mr Merton said that he had had no discussion with Mr Schiller concerning any twenty- four month expiry date.[115] After the agreement was entered, according to Mr Merton, Mr Schiller telephoned him and stated that he wanted to put twenty- four months as the expiry date on the labels. He told Mr Schiller that that would require AQIS inspectors and would be a very tedious job, removing labels or changing them.[116] He said that would require removal of the existing primary label. Around this time, Mr Merton said that he found out that the Libyan requirement for expiry of lamb was twelve months, and he telephoned Mr Schiller to tell him that. According to Mr Merton, Mr Schiller said: “Don’t worry about the two years.” Mr Schiller said Renate (de Kretser) would send some labels through and just apply them to another panel. Mr Merton considered that Mr Schiller had worked out with his buyer that a twelve-month expiry date was OK. He said that he found it incomprehensible that there could be two expiry dates on the same package.
[114] In accordance with the entry in Cedar’s visitor’s book – Exhibit AAA
[115] T 571
[116] T 572
142 Mr Merton explained in evidence that the defacing or amendment of the expiry date would be a very substantial process. This was because the tally sheets[117] showed a range of different production dates. A calculation would have to be made in respect of each carton and a new date written in, or stamped, under AQIS’ supervision. He said that that would be a substantial endeavour requiring considerable time and manpower.
[117] Exhibit T – CB 149-155, 160-166
143 Again, in determining the version of events given by, on the one hand Mr Schiller, and on the other hand Mr Merton, I prefer those given by Mr Merton. Aside from the matters to which I have referred as to the credit of each witness, I am of the view that the version of events given by Mr Merton has a far more logical basis than that provided by Mr Schiller. I accept the evidence of Mr Merton that it is incomprehensible that a packaged food product should be exported overseas displaying two expiry dates. The purpose of an expiry date is clearly to indicate the shelf life of the product. How could it be that a product had two different shelf lives, twelve months apart? Further, it is difficult to understand how Mr Merton, an experienced meat trader, could, on the one hand, tell Mr Schiller that the meat had a twenty-four month expiry date, when it clearly had a twelve-month expiry date.
The Agreement
144 The parties entered the agreement on 26 June 2009. It is evidenced by the “purchase confirmation”.[118] It describes the lamb, and under the heading “Standard Clauses”, it states:
“Terms and Conditions pls see our website
[sic][118] Exhibit M
145 Further, under “Additional Notes” is stated:
“Production dates September October 2008. Each cut IWP. Halal
certificate required. Weight range 8-16 kg. Fat score 1 and 2.”
146 The Fayman website referred to discloses “Standard terms and conditions for purchase of goods or service by Fayman International Pty Ltd”.[119] Those terms and conditions, relevantly, provide the following:
[119] Exhibit N
“5 Delivery and Performance
5.1
The Seller must deliver the goods [to] the location nominated by Fayman no later than 7 business days from the date the agreement to buy and sell has been reached (whether in writing or orally) unless an alternative arrangement has been agreed to by the parties.
5.2
All costs of delivery must be borne and paid for by the Seller and Fayman has no responsibility or liability in relation to those costs unless an alternative arrangement has been agreed between the parties.
5.3 The Seller must perform the Services in the manner and at
such time as directed by Fayman.6 Passing of Risk
6.1 Risk in the goods remains with the Seller until:
(a) the goods have been delivered to Fayman; and (b) Fayman has accepted the goods. 6.2 Fayman will be deemed to have accepted the goods if:
(a) the goods are delivered to Fayman; and (b)
within 60 business days of delivery, Fayman does not communicate its refusal to accept the goods to the Seller.
. . .
11 Guarantee
11.1 If Fayman, in its sole and absolute discretion, is not completely satisfied with the goods for any reason and returns the goods to the Seller within 90 business days of the date of delivery, the Seller must, at the direction of Fayman:
(a) exchange the goods for alternate goods of the same type and description as to the exchanged items and of the same value as the terms being exchanged; or (b) refund Fayman’s money immediately.”
147 It is the plaintiff’s case that in accordance with the evidence of Mr Schiller, Clause 5.3 obligated the defendant to affix secondary labels on the cartons and complete the expiry date provision with a date twenty-four months after the slaughter date. That is, the defendant was obliged to perform this task as a “service” within the meaning of Clause 5.3. I am of the view that Clause 5.3 does not permit such an interpretation. “Services” is defined in Clause 1 to mean:
“The service which the Seller proposes to provide to Aspen and Fayman
proposes to engage the Seller to provide.”
148 Reference to Aspen is apparently a reference to the plaintiff, by an earlier name (Aspen By-Products). However, it would appear the agreement intended services to relate not to the sale of goods, in particular meat, but rather some service to be performed. The reference to the requirement of the “Seller” to perform services bears no relationship to the purchase and sale of the lamb. It is a “carry over” from some pro forma agreement which had a different purpose in mind.
149 Notwithstanding the above, and further notwithstanding the provisions of Clause 1.14 of the agreement, which provides:
“1.14 These terms and conditions cannot be varied except by a subsequent document signed for by an authorised representative of Fayman and which document is expressed to vary or be made in substitution for these terms and conditions.”
I shall proceed upon the presumption that notwithstanding the “Standard Terms and Conditions” of the agreement, the parties had the capacity to import an oral term into the agreement, as alleged by the plaintiff.[120]
[120] paragraph 4(b) of the Statement of Claim
150 The agreement further contained a provision as to warranties:
“9.1 The Seller warrants to Fayman that as at the date an agreement is reached to buy and sell the goods …, and at the date of delivery of the goods … by the Seller, the Warranties are true, complete, accurate and not misleading in any way.”
151 The “Warranties” are set forth in Schedule A to the Terms and Conditions. Schedule A provides, relevantly:
“4 Fit for purpose. The Seller warrants to Fayman that where the goods are acquired by Fayman for a particular purpose that was, expressly or by implication, made known to the Seller, either directly or indirectly, the goods are reasonably fit for that purpose, whether or not that is the purpose for which those goods are commonly supplied.”
152 By its Statement of Claim, the plaintiff alleges that by reason of this provision, it was a term of the agreement that the lamb be fit for export to Libya.[121]
[121] paragraph 5 of the Statement of Claim
153 The plaintiff claims that the lamb was not fit for the intended purpose, that is, for export to Libya, and that it is entitled to recover damages on that basis.
The Post-Agreement Communications
154 In order to determine whether it was a term of the agreement that the defendant apply a secondary label which was to provide an expiry date twenty-four months from the slaughter date, it is necessary to examine the conduct of the parties after the date of the agreement. In particular, the communications passing between them in that regard.
155 In an email dated 30 June 2009,[122] Ms de Kretser of the plaintiff said to Ms Woods:
“… Please find attached the secondary label for the above order certified by the Arabic interpreter. From past experience we have had labels printed and sent to Cedar but Dean tells me things change and you may print them there, please advise. Please pass this on to Dick and confirm that if I need to print, how many labels are required and the size.”
[122] Exhibit UU
156 A copy of a proposed secondary label was attached.
157 Ms de Kretser then sent a further email of 2 July 2009,[123] which stated, relevantly:
“Dear Dick – thanks for the copy of the carton label. Please find attached copy of secondary label signed off by Dean. Could you please note that the buyer has requested that the expiry date be 24 months from the slaughter date.”
[123] Exhibit A – CB 33
158 That email also attached a proposed secondary label.
159 It is clear from the evidence that neither Mr Merton nor Ms Woods made any written reply to these emails. Mr Merton responded, he says, in a telephone conversation to Mr Schiller.[124] He said:
“I said ‘This will take no end of time’ and I said, you know ‘We’ve [sic] going to have to have AQIS’ – I think I explained this yesterday, going to have a Commonwealth meat inspector here, it’s going to be a very tedious change in these things … I thought the secondary label was being sent across after having a discussion with Dean and when he said to me, ‘Don’t worry about the 2 years’, he said ‘Renate’s got a secondary label’ and I thought it would have on it, the Seller, which is Fayman, and the buyer overseas which is where the name was. I thought that was what the secondary label was going to say.”
[124] T 635
160 Further, in the course of his evidence-in-chief, Mr Merton was asked the following:[125]
[125] T 571-572
“Q:
And then after the contract had been concluded with the purchase orders, after that, did you have any more conversations with Mr Schiller?---
A:
Dean rang up and said ‘would it be at all possibly [sic] 24 – to put 24 months, which we really didn’t want to put 24 months on it because it would’ve required AQIS inspectors being there, very tedious job of – of taking labels off and putting them back on and, you know, it would have been quite a lengthy – quite a lengthy period of time to do it and …
. . . would’ve been a very very tedious situation and, anyway, I found out that the Libyan requirement took 12 months and I rang Dean up and I said, ‘Dean, you know that Libyan requirements are 12 months’ and he said – he just didn’t say yes or no, he said ‘don’t worry about the 2 years’. He said – I said ‘why?’ He said ‘Renate will send some labels through to Doug and just put them on the – on the other panel’ and he said, ‘things will be ok’. Now I took that to be that the label they were sending – going to send through, I thought he’d work something out with his buyer that 12 months was ok because that was the norm for Libya and I thought the other label he’d been sending through would say something to the effect that – who the buyer was and Fayman was the seller, that’s all because if he wanted to put 24 months’ expiry date on one side and 12 on the other side, I mean, it’s conflicting, I mean it’s just, it’s incomprehensible someone would do it.”
161 Mr Star, on behalf of the plaintiff, submitted that a significant admission by Mr Merton was contained in the following passage of evidence:[126]
[126] T 709, L24
“Q: You agreed with me yesterday that you were desperate to sell this
meat. That’s correct?----A: Undoubtedly. Q: And that is why you said ‘OK’ to Dean Schiller when he said to you
his buyer wanted a 24-month expiry on the secondary label?---A: He spoke about 24 months, right, yes. Q: And that is why you said ‘OK’ to him when he said that?--- A: At that time. Q: And at load-out, Cedar Meats simply forgot or could not be bothered stamping manually the 24-month period on the secondary label, that’s correct, isn’t it Mr Merton?--- A: No.”
162 Mr Star submitted, by this passage Mr Merton admitted that he had agreed to place a twenty-four month expiry date on the second label. However, I am not satisfied the admission is as Mr Star would have it. The passage fails to take account of the other evidence given by Mr Merton, as referred to above.
163 Although Mr Merton was somewhat vague on dates, and is a person not given particularly to communication by or expertise with emails (most of the email communication was through his assistant, Ms Woods), I generally accept his version of events in relation to these communications. It is clear that there was a request that a secondary label be applied to the packaging. Secondary labels are not uncommon in the industry and according to the evidence of Dr Stephen Roberts, secondary labels are often used to provide additional information, or even provide a translation of information in the importing country’s language. Thus being requested to apply a secondary label was not something particularly unusual. When asked, however to include an expiry date of twenty-four months post-slaughter as part of the secondary label, Mr Merton stated there would be a very significant and tedious exercise and require approval of AQIS inspectors, and further that the Aus-Meat Guidelines provided for an expiry date of only twelve months. He said that Mr Merton’s response was to say the expiry date on the secondary label was unnecessary.
164 For the reasons referred to above, I prefer the evidence of Mr Merton to that of Mr Schiller.
165 In evidence,[127] Ms de Kretser said that when the lamb was rejected into Libya in September, she spoke to Mr Broughton and asked whether he had stamped the secondary label. Mr Broughton was unable to recall the telephone conversation.[128] Mr Star submits I ought be satisfied that such a telephone conversation took place, and that it was evidence of the existence of the condition that the secondary label be stamped with the expiry date. I accept this telephone conversation took place as stated by Ms de Kretser, but it is clear from Mr Broughton’s evidence that his response was[129] that “there were too many packages and that it would have been too much to do”. That reflected the conversation had by Mr Merton with Mr Schiller, where Mr Schiller conceded that given the difficulty and complexity of replacing the primary label, it was not necessary to proceed with an expiry date on the secondary label.
[127] T 560
[128] T 786
[129] T 560, L24
166 On the same day as Ms de Kretser sent the email in with the secondary label, that is 2 July 2009, Mr Schiller went to the Brooklyn, and then the Footscray cold store of the defendant. This is clear from the defendant’s visitor’s book.[130] By this time, the purchase confirmation of 26 June 2009[131] was in place and the “deal was done”. It is somewhat quizzical as to why Mr Kairouz was concerned to show Mr Schiller the packaged lamb when agreement had been reached and a price fixed. In evidence, Mr Kairouz said he told Mr Schiller “before you commit, Dean” come to the cold store to inspect the lamb. Clearly by this time there had been commitment. However, at that time the parties had a good relationship and had dealt regularly over the years. Mr Kairouz explained[132] that he did not at that time know that there had been any commitment. Further, given the product was part of a larger shipment to Rashad Aziz, it was somewhat unusual. In those circumstances, if Mr Schiller decided he did not like the product, Mr Kairouz was not going to press him to continue with the sale, even notwithstanding the purchase confirmation. I accept Mr Kairouz’s evidence on the point.
[130] Exhibit AAA
[131] Exhibit M
[132] T 765-6
167 As stated, I accept the evidence of Mr Kairouz and Mr Kadir as to what transpired at the cold store on 2 July 2009. I accept that the pallets were taken from the cold store, the plastic wrapping removed and four boxes provided to Mr Schiller for him to inspect. He had the opportunity not only to inspect the meat, but to observe the boxes themselves, the insignias contained on them, and the labelling. I accept Mr Schiller took photos at the time.
The Rejection of the Lamb into Libya
168 When Mr Schiller first received advice from Mr Ghazzaoui that the lamb had been rejected into Libya, there was significant confusion as to the reasons for the rejection. At the outset, the reasons included:
•
That the Libyan Government said the two containers had previously been shipped to Libya and rejected.[133]
• There was a “Libyan stamp” on the packaging.[134] •
The packaging contained a label in the name of “InMaa company” which had previously been rejected.[135]
•
The lamb was sent showing an expiry date of September/October 2009 and as such the goods were received in Libya close to the expiry date.[136]
• The secondary label did not have an expiry date affixed.[137] [133] email of 15 September 2009 – Exhibit W
[134] Exhibit W
[135] email of 15 September 2009 – Exhibit X
[136] email of 15 September 2009 – part of Exhibit Y
[137] part of Exhibit Y
169 This confusion led to the provision of letters by both the plaintiff and the defendant in which each accepted responsibility for various mistakes in an attempt to smooth the way for the lamb to be admitted into Libya.[138] Neither letter, however, reflected the true situation nor, in my view, contained any admission against the interests of either party.
[138] Exhibit V, Exhibit Z
170 However, subsequently on 22 September 2009 and then 6 December 2009, the Libyan Government[139] issued formal orders not to release the lamb. The stated reason for the refusal was “the date of the shipment has expired”[140] and “the date of the expiry of the shipment which was affixed on the labels has expired”.[141]
[139] referred to as the General People’s Committee for the Inspection and Control Centre on Food and Medicine
[140] Exhibit B, CB 79
[141] Exhibit B, CB 81
171 By its notice of admission, the defendant admitted these notices.[142]
[142] Exhibit B
172 The authenticity of these notices is not in issue. The reason given by the Libyan Government is difficult to understand given that according to the tally sheets,[143] the expiry dates as set forth on the primary notice varied, but twelve months from 15 September 2008 up to twelve months from 1 December 2008. Given the lamb arrived at the Port of Tripoli on or about 7 September 2008, the expiry date, even on the first slaughtered lamb, had not yet been reached, albeit it was perilously close. Specifically, there was no reference in the Libyan Government rejection notices to the failure to include an expiry date on the secondary label.
[143] Exhibit T
173 However, it is open to infer that had a twenty-four month expiry date been affixed to the packaging, there would be no basis upon which the meat could be rejected as having expired. Quite what the Libyan authorities would have made of two expiry dates is unknown.
The Fitness for Purpose Provision
174 The plaintiff alleges that it was a term of the agreement that the lamb be fit for the purpose for which it was sold, that is for export to Libya. The plaintiff did not rely upon s.19 of the Goods Act 1958 but rather that such a term was a warranty contained in paragraphs 1 and 4 of Schedule A of the agreement.
175 The plaintiff alleges, and I accept, that the defendant knew that the lamb was intended for shipment to Libya. Further, it is contended by Mr Star that according to the Aus-Meat Guidelines,[144] frozen meat, including lamb, required an expiry date of twelve months from the date of slaughter. Further, Libya required an entry date four months from the date of slaughter. Therefore, the plaintiff rationalises, the lamb ought to have been admitted into Libya with a “shelf life” of eight months. In other words, it ought to have been admitted into Libya eight months before the expiry date.
[144] Exhibit QQ
176 In order to determine whether such a fitness for purpose clause was part of the agreement, it is necessary to again examine the conduct of the parties and their knowledge of the lamb to be exported. For the reasons previously given, I am satisfied that Mr Schiller was aware of the fact that the lamb was a small portion of a larger purchase by Rashad Aziz. I am further satisfied that he knew the lamb had a twelve-month expiry date and that the plaintiff’s agreement to purchase the lamb was made in that knowledge. While Mr Merton did know that the lamb was to be exported to Libya, he knew nothing about the arrangements Mr Schiller had made with Amiga as to the terms and conditions between those parties, save what he had been told by Mr Schiller.
177 As stated, I am further satisfied that there was no provision of the agreement requiring the affixation of a label with a twenty-four month expiry date. It was not a matter of concern to the defendant as to the precise terms and conditions under which the meat was sold to the plaintiff’s client, Amiga. Mr Merton was not aware a condition of the agreement between the plaintiff and Amiga was for the lamb to have a twenty-four month expiry date. He sold the lamb with a twelve-month expiry date. It was not a matter for him to make inquiries of Amiga nor the Libyan authorities to determine the conditions under which the lamb would be admitted to the country.
178 In my view, the fitness for purpose warranty would have application if, for example, the meat was contaminated in some way, rendering it unfit for consumption. That was not the case.
179 I do not accept Mr Star’s interpretation that the Aus-Meat Guidelines required the lamb to arrive in Libya with a shelf life of eight months. In my view, that does not follow from a proper interpretation of those Guidelines. Further, the Guidelines are just that, guidelines, and not mandatory requirements of either the Australian or Libyan Governments.
180 In my view, the contention that the lamb was not fit for the purpose, as alleged, is not made out.
Conclusions
181 I am not satisfied there was a term of the agreement that the defendant affix secondary labels to the lamb which contained an expiry date twenty-four months from the date of slaughter.
182 Nor, in my view, was there any express or implied warranty that the lamb be fit for import into Libya in the terms as alleged.
183 In those circumstances, the plaintiff’s cause of action fails. I will hear from the parties as to costs.
- - -
Glossary
Glossary Term Glossary Definition
Amiga
Amiga SA, a Swiss company dealing with import and export of meat products and who contracted with Fayman to purchase the lamb.
AQIS
Australian Quarantine and Inspection Service, a Commonwealth regulatory agency responsible for inspection and certification of certain prescribed goods, including meat products.
Aus-Meat
A meat industry organisation providing non-regulatory advice and recommendations to the meat industry, including as to the export of meat products.
Cedar Cedar Meats (Aust) Pty Ltd, the defendant Fayman Fayman International Pty Ltd, the plaintiff. Primary label A label required by the orders to include various information on
export meat, including:ƒ the date of production;
ƒ the entity responsible for producing the product; ƒ the species from which it was derived; ƒ the registered number of the producer. Production date
The date upon which the slaughtered lamb was packaged into the cardboard containers, usually within a number of days of the slaughter date.
Rashad Aziz
Rashad Aziz Investments Pty Ltd – an Australian company in competition with the plaintiff in the business of exporting meat products in particular to the Middle East.
Secondary label
A label which may be affixed to export meat products at the request of an overseas importing entity which may require additional information to that disclosed on the primary label, including:
ƒ particular customer requests; ƒ a translation of information into the language of that
country.
the expiry date provision
The provision which Fayman claims was a term of the agreement (paragraph 4(b) of Fayman’s Amended Statement of Claim that Cedar would apply to each of the cartons a secondary label, as provided by Fayman, and which was to contain, inter alia, alongside the words “expiry date” a date twenty-four months after the slaughter date.
the lamb
Approximately 5000 kilograms of bone-in-lamb, six piece, individually wrapped (iw) contained in 3427 cardboard boxes, the subject of this proceeding.
the orders
Export Control and Meat Products Orders 2005 and Export Control Prescribed Goods General Order 2005 made pursuant to the provisions of the Export Control Act (Commonwealth). These orders regulate, amongst other things, requirements in relation to export of meat products.
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