Fryer Holdings v Liaoning MEC Group - [2012] NSWSC 18

Supreme Court

New South Wales

Medium Neutral Citation: Fryer Holdings v Liaoning MEC Group [2012] NSWSC 18
Hearing dates: 30 January 2012
Decision date: 30 January 2012
Jurisdiction: Equity Division - Commercial List
Before: McDougall J
Decision:
Plaintiff entitled to judgment for $1,830,954.50 and interest. Stand over for draft orders to be brought in.

Catchwords: CONTRACT - identifying terms of contract - what terms were implied in the contract from the United Nations Convention on Contracts for the International Sale of Goods (CISG) - whether goods supplied were fit for purpose and of merchantable quality - whether implied warranty of fitness for purpose had been breached - whether circumstances of termination had any direct relevance to the quantification of damages - DAMAGES - contract - assessment of damages - whether direct losses were sustained - whether indemnity for compensation could be claimed - whether plaintiff could claim damages for loss of profit due to breach.
Legislation Cited: Evidence Act 1995 (NSW)
Sale of Goods (Vienna Convention) Act 1986 (NSW)
Cases Cited: Australian Knitting Mills Ltd v Grant (1933) 50 CLR 387
Castel Electronics Pty Ltd v Toshiba Singapore Pte Ltd [2010] FCA 1028
Category: Procedural and other rulings
Parties: Fryer Holdings Pty Ltd (In Liquidation) (Plaintiff) (ABN 75 084 185 017)
Liaoning MEC Group Co Ltd (First Defendant)
Xuzhou Rutai Glass Product Co Ltd (Second Defendant)
Representation: Counsel:
D Edney (Solicitor) (Plaintiff)
Solicitors:
MCW Lawyers (Plaintiff)

File Number(s): 2008/290587

Judgment (ex tempore)

HIS HONOUR: The plaintiff (Fryer) carried on the business of bottling alcoholic and non-alcoholic drinks. That business came to an end when Fryer went into voluntary administration on 4 March 2009. (It is now in liquidation.)

On 1 June 2008, Fryer entered into a written contract with Angostura Limited (Angostura) whereby Fryer undertook to bottle and package drinks manufactured by or to the specifications of Angostura for distribution and sale within Australia. In turn, Angostura undertook that during the term of the agreement (4 years from 1 June 2008) it would not give the bottling business to anyone else.

For reasons that are not entirely clear on the evidence, the practical and commercial relationship that Fryer pursued thereafter was not with Angostura but with a company known as island2island Beverage Co Pty Ltd (i2i). On the evidence, I am satisfied that Fryer and i2i each regarded themselves as doing business with the other on the terms of the agreement made between Fryer and Angostura.

Fryer needed to acquire equipment to perform its obligations under the agreement. (I shall use that term to describe both the formal written agreement and the de facto agreement that undoubtedly arose between Fryer and i2i). It bought a bottle-washing line and bottling line from the first defendant (MEC Group). Fryer also needed to acquire a supply of glass bottles made for the specific requirements of Angostura (or i2i) products. In effect, Fryer arranged with MEC Group that MEC Group (a corporation in the People's Republic of China) would source glass bottles made to…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Fryer Holdings v Liaoning MEC Group

Details

AGLC: Fryer Holdings v Liaoning MEC Group [2012] NSWSC 18
Case: [2012] NSWSC 18
Decision Date: 30 January 2012

CaseChat Overview and Summary

The case of Fryer Holdings v Liaoning MEC Group involved a dispute between an Australian company, Fryer Holdings, and a Chinese company, Liaoning MEC Group. The primary issue was the quality and fitness of goods supplied by the defendant to the plaintiff. The case was heard in the Supreme Court of New South Wales. The plaintiff sought to recover damages for breach of contract and alleged that the goods supplied by the defendant were not fit for their intended purpose and did not meet the required quality standards. The court was tasked with determining whether the terms of the contract implied obligations under the United Nations Convention on Contracts for the International Sale of Goods (CISG) and whether the plaintiff could claim damages for the loss of profit due to the breach.

The court examined whether the goods supplied by the defendant met the standards of fitness for purpose and merchantable quality as implied by the CISG. It considered whether the circumstances surrounding the termination of the contract had any direct relevance to the quantification of damages. Additionally, the court assessed whether the plaintiff had sustained direct losses and if they could claim indemnity for compensation. The plaintiff argued that the breach of contract resulted in significant losses, including loss of profit, and sought to recover these damages from the defendant.

The Supreme Court of New South Wales found that the goods supplied by the defendant were not fit for their intended purpose and did not meet the required quality standards as implied by the CISG. The court determined that the circumstances of the contract's termination were relevant to the quantification of damages. It held that the plaintiff was entitled to claim damages for the direct losses sustained due to the breach of contract. However, the court found that the plaintiff could not claim damages for the loss of profit due to the breach. The court's reasoning was based on the specific terms of the contract and the applicable legal principles governing contract law and damages in such cases.

In conclusion, the court ordered the defendant to compensate the plaintiff for the direct losses incurred due to the breach of contract, but not for the loss of profit. The court's decision provided clarity on the implications of the CISG in the context of international sales contracts and the extent of damages recoverable in cases of breach.

Orders