Gillogly v Iama Agribusiness Pty. Limited

[2002] NSWCA 251

CITATION:	GILLOGLY v. IAMA AGRIBUSINESS PTY. LIMITED [2002] NSWCA 251
FILE NUMBER(S):	CA 40397/01
HEARING DATE(S):	11 December 2001
JUDGMENT DATE:	15 August 2002
PARTIES :	Allan Gillogly (Appellant) IAMA Agribusiness Pty. Limited (Respondent)
JUDGMENT OF:	Powell JA at 1; Beazley JA at 71; Grove J at 116

LOWER COURT JURISDICTION :	District Court
LOWER COURT FILE NUMBER(S) :	DC 15/99 (Moree)
LOWER COURT JUDICIAL OFFICER :	Knight DCJ

COUNSEL:	J.S. van Aalst (Appellant) D.J. Russell (Respondent)
SOLICITORS:	Abbott Pardy & Jenkins (Glen Innes) (Appellant) Webb & Boland (Moree) (Respondent)
CATCHWORDS:	SALE OF GOODS - Contract for sale of quantity of grain - Contemplated that grain acquired by vendor would be delivered into third party storage depot - Storage agreement provided that grain for storage might be commingled with other grain of same type and grade - Vendor not entitled to receive back grain delivered into storage but entitled to receive or to transfer grain of same type and grade - Purchaser to be entitled to call for delivery of grain by instalments as and when required - Whether property in grain acquired by vendor passed to third party or to purchaser - SALE OF GOODS - Contract for sale of quantity of grain - Purchaser to be entitled to delivery of grain by instalments as and when required - After about forty per cent of grain had been delivered several quantities of contaminated grain were delivered - Whether purchaser could terminate contract for breach D
LEGISLATION CITED:	Sale of Goods Act 1923
CASES CITED:	Chapman Bros v. Virco Bros and Company Limited (1933) 49 CLR 306 Farnsworth v. Federal Commissioner of Taxation (1949) 78 CLR 504 Freeth v. Burr (1874) LR 9 CP 208 George Wills & Co Limited v. Davids Pty. Limited (1957) 98 CLR 77 Maple Flock Company Limited v. Universal Furniture Products (Wembley) Limited [1934] 1 KB 148 The Mersey Steel and Iron Co (Limited) v. Naylor, Benzon & Co (1884) LR 9 App Cas 434 The South Australian Insurance Company v. Randell (1869) LR 3 PC 101
DECISION:	Appeal dismissed with costs.

CA 40397/01
DC 15/99

POWELL JA
BEAZLEY JA
GROVE J

15 August 2002

GILLOGLY v. IAMA AGRIBUSINESS PTY. LIMITED

Judgment

1 POWELL JA: This is an appeal by an unsuccessful defendant against a Judgment delivered, and verdict found, by Knight DCJ on 11 May 2001 in the District Court.

2 In the proceedings, the Respondent, which at all material times carried on a business of (inter alia) dealing in grains, including barley, sought to recover from the Appellant, a farmer who, at all material times, operated a feed lot on which cattle were fattened for sale, moneys which it claimed to be owing to it pursuant to an agreement for the sale by it to the Appellant of barley.

3 When delivered, and before it was fed to cattle on the feed lot, the barley was cracked by running it through a roller mill, the purpose of that being done being to enable the barley to be properly digested by the cattle.

4 Such difficulties as arise in determining the result of the present appeal are due in part to the fact that, although the hearing before Knight DCJ occupied some nine hearing days, spread over a period of some eight months, the evidence on some matters of importance has been left in a singularly imprecise state, and, in part, to some unusual features of the way in which what was said to be the agreement for sale was carried into effect.

5 The Respondent, which was formerly known as Seed & Sales Pty. Limited and which, at that time, carried on its business under the name and style of “Seed & Grain IAMA”, carried on that business from a number of branches in both Queensland and New South Wales, of which, for present purposes, the only branch which one need note is that at Moree. At all times relevant to the present proceedings and up until the latter part of 1998, the Respondent’s senior grain trader at Moree was a Mr. D. J. Saunders. The duties of the senior grain trader were said by Mr. Saunders (Black AB 17) to include the purchase, subsequent transport and sale of grain from the growers through to the end user.

6 The Appellant’s property, which was known as “Montrose” was situated at Mathieson, about 67 kilometres out of Moree. Although the property appears originally to have been used for grazing beef cattle (Black AB 279) the feed lot operation appears to have been started in the late 1970s. By 1998, so it was said (Black AB 280), the numbers of stock on the property would have been approximately 2000, the quantity of grain – normally barley – used to feed the stock being of the order of 20 tonnes per day.

7 As will be apparent from what I have written in the preceding paragraph, the Respondent’s need to have feed for his stock was a significant one. At least in the case of feed which was collected by the Respondent’s son, that feed was usually carted by a Kenworth prime mover with semi-trailer attached, the capacity of which semi-trailer was about 25 tonnes. When delivered to the Respondent’s property, that feed, so it seems, was stored in – but whether or not after having first been cracked is not clear to me – one or other of three silos – each with a capacity of 50 tonnes (Black AB 2081) - situated on the Respondent’s property or in a shed said to have a capacity of about 200 tonnes (Black AB 328). As will be apparent, if, as was the Appellant’s practice (Black AB 329), silos were to be kept full, it was necessary that one or more loads per working day be delivered to the Appellant’s property.

8 It would seem that the first dealings between the Appellant and the Respondent occurred at some time during 1994, but whether as the result of the Appellant having been canvassed by Mr. Saunders or as the result of the Appellant approaching Mr. Saunders with a view to obtaining grain is not clear (Black AB 18-19). Whatever may have been the manner in which those first dealings came about, it would seem that at that time they involved comparatively small orders – “the first one may have been for a singular load, 25 ton. Maybe it was for 100 ton…” (Black AB 19). The loads that were then supplied were supplied on “standard trading terms”, that is, they would be invoiced at the end of the week in which the load was delivered and would be payable within 30 days from the end of that week. In the event that the Respondent did not already have grain in stock, Mr. Saunders would go into the market, contacting growers, and if able to obtain supply, would then inform the Appellant and, if the Appellant were agreeable, would buy in the grain and arrange for its supply to the Appellant.

9 That procedure continued to be followed until some time prior to the 1996 harvest (Black AB 20).

10 Although it is not entirely clear that this was so, the probability is that during this period, as each sale was agreed upon, there was forwarded by the Respondent to the Appellant a document entitled “Confirmation of Sale” which recorded (inter alia) the commodity involved, the quality agreed upon, the quantity and price and, on the reverse side, the terms and conditions, which terms and conditions included the following (Blue AB 29):

“ 2. Quantity
(a) Unless otherwise agreed, all Quantities shall be expressed metrically.
(b) Unless otherwise specifically agreed, seller shall have the option of supplying 2.5% more or less than quantity specified on contracts up to one hundred tonnes or 1% more or less on contracts exceeding one hundred tonnes.
………
6. Rejection
………
(b) Where goods are sold on description, the event of rejection through the goods being not in accordance with description the seller shall be required to deliver (and the buyer to accept) other lots in place of the original lots, provided such substituted deliveries are made within contract time or within seven (7) days next following the day of rejection except in the case of immediate delivery when the time shall be three (3) business days. …
(c) Excepting in case of manufactured goods carrying warranty unloading by buyer or his servant or agent shall constitute acceptance and it shall be the duty of the buyer to inspect or arrange for inspection of goods before unloading, such acceptance shall be without recourse to breach of contract.
(d) Unloading for the purpose of sub-clause (c) shall mean the removal of any portion of the contents of the vehicle from the point of unloading unless a deterioration in quality of goods is discovered during unloading.
………
11. Payment
Payment terms are defined as follows:
………
(c) ‘Normal Trade Terms’ or ‘net cash 30 days’ means payment on or before the last day of the month following the month during which goods were involved.
………”

11 In 1996, at some time prior to the commencement of the harvest – which seems to be regarded as commencing in about mid-October of each year (Black AB 24) – the Appellant approached Mr. Saunders with a view to ascertaining whether the Respondent would purchase a larger parcel of grain than was usual to be put into storage for use by the Appellant at a later stage. Although the materials which are before the Court are less than clear, it seems probable that Mr. Saunders discussed the matter with officers of the Respondent with a view to ascertaining whether the Respondent was prepared to consider doing as the Appellant had sought, and, as well – since the Respondent does not appear to have had any significant storage of its own at Moree – that Mr. Saunders made inquiries to ascertain whether, if the Respondent were prepared to accede to the Appellant’s request, it could obtain storage in Moree and, if so, what costs would be involved. It further seems probable that following those discussions, and having made those inquiries, Mr. Saunders informed the Appellant that the Respondent was prepared to accede to his request, and the terms upon which, if the Appellant found them suitable, it was prepared to do so. Those terms which appear to have come to be known as “Crop Terms”, were that interest would be charged at a rate of 1.30% per month on the cost of grain bought in; that the Appellant would not be invoiced for the cost of grain until it was taken out of storage and delivered to the Appellant, payment of the invoice not being required until 30 days after delivery of the grain; and that storage would be charged on a monthly basis (Black AB 25). It seems also to be probable that Mr. Saunders told the Appellant that, after purchase, the grain would be stored in the premises of Grain Corp Operations Limited (“Grain Corp”) at Moree and would be released by Grain Corp on the presentation to it of a Grain Stock Order Form to be provided to the Appellant by the Respondent.

12 It would seem that, the Appellant having indicated that those terms were acceptable to him, the Respondent then entered into a Storage and Handling Agreement with Grain Corp to operate for the season commencing 1 October 1996 to 30 September 1997, the terms of which, so far as relevant, were as follows:

“ STORAGE
2.6 The Client acknowledges that:
(a) Grain received and stored by GrainCorp may be stored in common (i.e. commingled) with grain received from other GrainCorp clients, provided that the commingled grain is of the same type and grade; and
(b) After GrainCorp receives the Client’s Grain or if title to Grain already received and stored by GrainCorp is transferred to the Client, this agreement gives the Client a right (regardless of whether that Grain has been commingled with other grain) to receive back from GrainCorp, on the terms of this agreement, grain of the same type and grade as the Grain originally received from the Client by GrainCorp, but not the right to require re-delivery of the same Grain (i.e, in specie) that was originally received by GrainCorp from the Client.
For the purposes of this clause, the grade will be determined in accordance with the Approved Receival Specifications and Sampling Methodology unless otherwise agreed in writing between GrainCorp and the Client.
………
REMOVAL AND TRANSFER OF GRAIN
2.13 To remove Grain from GrainCorp storage by loading onto ship or rail or road transport, the Client must complete and execute a Grain Stock Order Form and follow the procedure set out in the instructions on that form. GrainCorp is not required to load Grain until:
(a) the Grain Stock Order Form has been properly completed and executed by the Client; and
(b) the procedures set out in the Grain Stock Order Form have been followed.
The loading of Grain is subject to local operating arrangements, availability of rail and road transport, fumigation requirements and prevailing weather conditions. GrainCorp reserves the right to load Grain from an alternative site within the same locality (or a site outside of that locality by agreement with the Client) as the site at which the Client’s Grain was received, provided that the Grain loaded is of the same grain type and grade as that of the Grain received by GrainCorp into storage for the Client or transferred to the Client from another GrainCorp client.
………
3. STORAGE AND HANDLING FEES AND STORAGE PERIOD
Country Receival Fee
3.1 The Client must pay GrainCorp the following Country Receival Fee for Receival of Grain at a Country Site:
………
(c) $8.20 per tonne for feed barley, rye, triticale, lupins, chick peas and peas;
……….
3.2. The Country Receival Fee covers:
(a) receival, quality testing, treatment and hygiene; and
(b) loading onto (if available) rail or (if available) road transport at Country Sites; and
(c) storage up to 28 February 1997 inclusive at Country Sites.
………
Monthly Storage Fee
3.5 The Client must pay GrainCorp a Monthly Storage Fee of 1.00 per tonne per month (or part of a month) for storage of grain at Country Sites … for the period 1 March 1997 to 30 September 1997.
………”

13 In the season commencing October 1996, the Respondent purchased on behalf of the Appellant some 825-850 tonnes of feed barley, which feed barley was delivered into Grain Corp’s storage at Moree and from which storage it was delivered into the Appellant’s semi-trailer as and when required (Black AB 23, 26).

14 In September 1997, the Appellant telephoned Mr. Saunders and asked whether the Respondent would be prepared to enter into a similar arrangement to that which had been entered into the previous year. At the time, so Mr. Saunders said (Black AB 27), he enquired how much grain the Appellant was looking for, to which the Appellant said “Somewhere between 1000 and 1500 tonnes”. At the time Mr. Saunders told the Appellant that he did not think there would be a problem but, having regard to the then current values for barley and the quantities sought, he would have to seek instructions from his superiors.

15 Having obtained those instructions, Mr. Saunders, so he said (Black AB 28-30), telephoned the Appellant and said “that we had been given approval to go ahead with the arrangement and that there were some – I had been asked to pass on that there were some variations on the way, that it would be handled through our accounting system”, which variations, so he said, he then explained to the Appellant who told him that that was agreeable and asked him to go ahead.

16 I must say that what were said to be the new conditions (Black AB 28-29) seem to me to have been identical with the conditions which were said (Black AB 25) to have been applied to the grain which was purchased by the Respondent for the Appellant in the previous year.

17 Having secured the Appellant’s agreement to the terms and conditions proposed, Mr. Saunders then set about seeking to obtain grain to meet the Appellant’s requirements.

18 As in the previous year, the Respondent entered into a Storage and Handling Agreement – on this occasion for the 1997/98 season – with Grain Corp (Blue AB 1-21), that agreement being made on 16 October 1997. The terms of that agreement are said to have been the same as those contained in the agreement entered into in the previous year.

19 During the period of October and November 1997, Mr. Saunders, on behalf of the Respondent, purchased some 1609 tonnes of what was described as “2 row feed barley” from five separate suppliers, the grain being delivered into Grain Corp’s Moree Depot during that period. Before each purchase was completed, Mr. Saunders spoke to the Appellant to advise him of the price and to seek his approval for the purchase of the relevant quantity of grain at that price.

20 The first such quantity, some 139 tonnes appears to have been purchased from some person known as Cash and was delivered into the depot between 20 and 30 October 1997. The second such quantity, some 199 tonnes was acquired from “Triple J (Williams)” and was delivered into the depot during the period 20 October 1997 to 30 November 1997. The third such quantity some 588 tonnes was purchased from J & R Williams and delivered into the depot during the period from 20 October 1997 to 30 November 1997. The fourth such quantity some 161 tonnes was purchased from Adanac Farms and delivered into the depot in the period 1-30 November 1997. The final such quantity, some 521 tonnes, was purchased from Merinda (?) Farming and was delivered into the depot in the period 1-15 November 1997 (Blue AB 22). As was contemplated, a Confirmation of Sale was addressed by the Respondent to the Appellant in care of a company or organisation known as CL Squires & Co at Inverell – that company or organisation seemingly being the Appellant’s agents (inter alia) for selling his livestock and paying his accounts (Black AB 373) – in respect of each of the quantities of grain which was purchased by the Respondent for the Appellant.

21 The Confirmation of Sale, said to relate to “Contract No. S12857” relating to the first such quantity of grain contained (inter alia) the following (Blue AB 23):

“Unless otherwise advised, we are pleased to confirm the undermentioned goods, subject to general terms and conditions hereunder and endorsed or attached hereto, are of sound merchantable condition.
Commodity : 2 row feed barley
………
Quantity: 140.000 metric tonne
Price: $162.00/per metric tonne
Payment: See special conditions
Insurance: Buyers care after del is given & taken
Delivery period: 20-10-97 to 30-10-97
Delivery instructions: Delivered Moree Depot
Freight: Sellers account
Weights: Destination weights are final
Special Conditions: 1.30% per mth interest will be charged on this A/c. Term Payment : (Not 30 Days) product purchased into Moree Depot for later delivery. Storage will be charged monthly.”

22 The Confirmation of Sale said to relate to Contract No. S.12895 (Blue AB 24) was in a similar form, the differences being in the detail as to quantity – 175.000 metric tonne – the price – $190.00/per metric tonne – the delivery period – 20-10-97 to 30-11-97 - and the Special Conditions – “1.30% per month interest will be charged on this A/c. Product purchased into Moree Depot.”

23 The Confirmation of Sale, said to relate to Contract No. S12943 (Blue AB 26) relating to the third quantity of grain purchased by the Respondent on behalf of the Appellant was in a similar form, the differences being in relation to matters of detail, the quantity – 500.000 metric tonne – the price - $190.00/per metric tonne – the delivery period – 20-10-97 to 30-11-97 – and the Special Conditions – “1.30% per month interest will be charge (sic) on this account. Product purchased into store Moree. Storage and interest charged monthly.”

24 The Confirmation of Sale, said to relate to Contract No. S12971 (Blue AB 25), relating to the fourth quantity of grain purchased by the Respondent on behalf of the Appellant was also in a similar form, the differences again being in relation to matters of detail, the quantity – 200.000 metric tonne – the price - $162.00/per metric tonne – the delivery period – 1-11-97 to 30-11-97 – and the Special Conditions - “1.30% per month to be charged on this account. Product purchased into Moree Depot. Storage and interest to be charged monthly”.

25 The Confirmation of Sale, said to relate to Contract No. S13102 (Blue AB 27) relating to the fifth quantity of grain purchased by the Respondent on behalf of the Appellant was again in a similar form, the differences being as to matters of detail, the quantity – 525.000 metric tonne – the price - $162.00/per metric tonne – the delivery period – 1-11-97 to 15-11-97 – and the Special Conditions “0.34% per week interest is charged on overdue A/c’s. Tittle (sic) Transfer of 521.45 tonne”.

26 Despite what was said to have been agreed upon as to the terms of payment, invoices (Exhibit E) (Blue AB 30-35) were forwarded by the Respondent to the Appellant in care of C.L. Squires & Co recording the delivery of each individual load forming part of each quantity of grain delivered into Grain Corp’s depot at Moree. At the foot of each of which invoices was a note recording that payment was due on a date 30 days after the day of the invoice in question. Thus, Invoice No. 4409 dated 30-10-97 (Blue AB 30) recording five deliveries into the depot in respect of Contract S12857 contains the notation “Payment due: 1-12-97”. One can but assume that the notation as to payment was made as the result of an oversight on the part of the Respondent’s accounting staff, since that was not the purpose for which those invoices were prepared, as the following evidence given by Mr. Saunders (Black AB 41-42) makes clear:

“Q. How would Mr. Gillogly know how much was at his risk? A. We in turn – this actual payment was developed for Mr. Gillogly so he did know but I also let him know from time to time what we had purchased on his behalf and as accurately as I possibly could at those points in time.
Q. But you see was there any documents sent to him when the goods were received in the Moree Depot to say we now hold this precise quantity for him? A. Every seven days your Honour there is an invoice prepared through our system. Being a 30 day account means there’s a seven day cycle because its 30 days at the end of each week and at the end of that seven day period, there are invoices prepared and sent out to Mr. Gillogly.
Q. But was that prepared … A. Individual loads.
Q. Was that prepared off the Confirmation of Sale or was it prepared off the amounts that were actually received at Grain Corp? A. It’s prepared off the amounts received at Grain Corp your Honour.
Q. So you say that there was an invoice sent out every seven days to Mr. Gillogly setting out the actual deliveries? A. That is correct your Honour. Just to clarify that at this time as you can see on Exhibit B your Honour the address there is care of a company by the name of Seal (sic) Squires, they were acting as a payment agent for Mr. Gillogly and the invoices would have been sent to them as per the mailing address.
Q. You say you sent them every seven days? A. On a seven day cycle yeah.”

27 The grain appears to have remained in storage at Grain Corp’s depot at Moree until 28 May 1998 when there were made two deliveries totalling 48.6 tonnes (Blue AB 77). Thereafter further deliveries totalling some 415.76 tonnes were made on nine separate days up to and including 6 July 1998 (Blue AB 77). Although the position is not entirely clear, it would seem (Black AB 88; Blue AB 77, 87) that at some time – probably in June 1998 - as the result of “a swap” negotiated between the Appellant and Mr. Saunders, the Appellant took delivery of 211 tonnes from the farm of a Mr. Promnitz at Bellata while the Respondent “took ownership of 211 ton (sic) in Moree out of what was stored at Moree”. Thus, by 6 July 1998, the Appellant had taken delivery of 675.36 tonnes of barley against the 1609 tonnes which had been purchased by the Respondent for the purposes of the arrangement which had been negotiated between the Appellant and the Respondent in September 1997.

28 The materials as to when it was that there occurred the events which led ultimately to the commencement of these proceedings are, if I may so, confused and confusing. Thus:

(a) in his oral evidence (Black AB 44-45) Mr. Saunders said that on 3 July 1998, he received a telephone call from the Appellant in the course of which telephone call the Appellant told him “that last load of barley has got rocks in it and it’s jamming up the roller mill.”;

(b) at the same time Mr. Saunders referred to a note which he had made in a day book, apparently on 3 July 1998 (Blue AB 48) which note reads as follows:

“Allan Gillogly – Grain Corp
Will not take anymore of Grain Corp product.
$8,000.00 to $10,000.00 for new rollers for machine.”


(c) in his oral evidence, Mr. Saunders’ said that, having spoken to a Mr. Lennard of Grain Corp, he then spoke on the telephone to the Appellant and told him that Grain Corp did not believe the rocks had come from “their system” and he asked the Appellant if he could have “another go” and see “if we have still got the same sort of problem”;

(d) in his oral evidence Mr. Saunders’ said that he understood that the Appellant’s son then went back into the Grain Corp depot at Moree and picked up another load;

(e) in his oral evidence (Black AB 47) Mr. Saunders said that the Appellant again telephoned him and told him that “this stuff has still got bloody rocks all through it” and “I did go and the same problem is still there”, and then referred to diary notes said to have been made on 10 July 1998 (Blue AB 50) which were as follows:

“Allan Gillogly re Bailey – Legal advise (sic) – will not take anymore (sic) barley – Grain Corp
………
Allan has take (sic) legal advise (sic) and refuses to take anymore (sic) product.”

(f) in his oral evidence (Black AB 48) Mr. Saunders then identified the document (Exhibit F – Blue AB 36) which, so he said, had been faxed to him. That document read as follows:

“ URGENT
Please give to Doug Saunders
‘Montrose’
Moree 2400
10.7.98
Mr. Doug Saunders (Seed & Grain) Moree
Dear Doug
Further to our earlier telephone conversation with you 10.7.98 I wish to advise that A.E. & C.G. Gillogly are refusing to take any further deliveries of grain from you for the following reasons.
Because of Grain Corps (sic) inability to supply grain as per description (clean barley).
i.e. contaminated with rocks and stones.
The damage occasioned to our processing machinery & continued threat of further damage to our plant & their inability to guarantee no further deliveries of uncontaminated grain.
We are no (sic) terminating our contract of any further grain deliveries as of and from this date 10.7.98.
Yours sincerely,
Allan Gillogly
P.S. Allan rang Friday last 3.7.98 complaining of rocks & stones in grain. This is not the first time this has happened.
Coralee took rocks & stones into Doug Saunders last Friday 3.7.98.”


(g) despite the curious form of this document, Mr. Saunders’ said (Black AB 48) that when he received it, it was in that form;

(h) a document (Exhibit 1 – Blue AB 77) tendered on behalf of the Appellant at the trial records (inter alia) that the grain which had been picked up and rejected and returned to the Grain Corp depot represented three trailer loads, two on 9 July 1998, one for 24.86 tonnes and one for 25.08 tonnes and a third on 10 July 1998 for 24.76 tonnes, a total of 74.70 tonnes rejected; and that the product returned was one load of 24.90 tonnes on 13 July 1998, one load of 25.50 tonnes on 18 July 1998 and one load of 24.60 tonnes on 21 July 1998, making a total of 75 tonnes returned;

(i) on 10 July 1998 a Mr. Thomas, a director of T & T Machinery Pty. Limited of Inverell forwarded to Mr. Saunders by facsimile a letter (Blue AB 63) reading as follows:

“Mr. Allan Gillogly has asked me to send you the following quote.
1 set of rollers to suit a 600 Thomas Roller Mill $4,200.00
1 Hydraulic Pump PN 50P027 $750.00
Allan renewed the rollers on 31-01-97 and the pump was renewed on 30-07-97.”

29 In the weeks which followed there, were considerable discussions between Mr. Saunders and the Appellant, in the course of which Mr. Saunders sought to obtain alternative supplies of barley for the Appellant. Those endeavours appear to have been successful and Mr. Saunders obtained what appears to have been some 300 odd tonnes of barley, 100 tonnes from a Mr. Gall at Pallamallawa, 100 tonnes or thereabouts from Garah and another 100 tonnes or thereabouts which was stored in a Grain Corp depot at Delungra. The prices at which those supplies were purchased were significantly lower than the prices which had been agreed upon in respect of the 1609 tonnes the subject of the earlier confirmations of sale. The 300 odd additional tonnes which had been secured by Mr. Saunders for the Appellant were not treated as having been delivered pursuant to the earlier arrangements and were paid for separately.

30 In addition to those discussions, there were negotiations between Mr. Saunders, the Appellant and officers of Grain Corp in an endeavour to settle the dispute which had arisen. As a result of those negotiations, Mr. Saunders, on 6 August 1998 wrote to the Appellant a letter (Blue AB 37) which was as follows:

“RE: DISPUTE OVER BARLEY
Seed & Grain IAMA would like to resolve this matter as quickly as possible and in the light of that offer the following proposal.
1. That Seed & Grain IAMA take responsibility for the repairs to your equipment (roller mill) and that T & T Machinery are to forward the account for said repairs up to a maximum of $7,000.00.
2. In return for this you are to resume the contract for the Barley and GrainCorp are to supply product that meets the specification of the contract.
3. Payments for product received under this contract are to recommence.
All other matters in relation to this dispute are to be taken up on a case by case basis with Seed & Grain IAMA firstly as a mediator to GrainCorp.
Your earliest response to this letter would be greatly appreciated.”

31 According to Mr. Saunders (Black AB 60-61), the Appellant thereafter telephoned him and – to the best of his recollection - said “I’m probably prepared to give it one more go under those conditions in that proposal”. By contrast, the Appellant asserted (Black AB 381) that “(He) was going to take the grain if the grain was bloody clean”. In his Judgment (RAB 28-29) Knight DCJ rejected the Appellant’s assertion.

32 Notwithstanding what was said as to “delivery instructions”, in each of the forms of Confirmation of Sale relating to the 1609 tonnes of barley which had been bought in by the Respondent, in the course of his evidence (Black AB 61) Mr. Saunders said that some of the 1609 tonnes of barley was stored in the Grain Corp depot at Biniguy, a fact which he conveyed to the Appellant whom he told could pick the grain up when it was convenient for him to do so – this, so it seems, was in about the middle of September.

33 Exhibit 1 (Blue AB 78) records that, on 15 September 1998, the Appellant took delivery of three trailer loads of barley from the Grain Corp depot at Biniguy, those loads being for 24.28 tonnes, 25.47 tonnes, and 23.65 tonnes, a total of 73.40 tonnes.

34 Mr. Saunders’ day book records, on 16 September 1998, the following (inter alia) (Blue AB 42-44):

“7.45 am. Received phone call from Allan Gillogly re quality of the barley picked up from Biniguy.
He said it was full of rock (small) & a piece of rod 4” long. Didn’t want to pick up anymore ex Grain Corp.
From this call he requested that I come out & have a look.
I said I would come out & take some photos and video.”

then, after a reference to arrangements made with a Mr. Armstrong of Grain Corp to attend at the Appellant’s farm, the note continued:

“We arrived at ‘Montrose’ at approx 10.15 am & meet Paul, Allan and Scott Gillogly. We went up to the mill to have a look. There were numerous rock (sic) that had been collected in a sample. In that sample was also a ½” bolt, 4” x 3/8” rod, wire and rocks. Allan ran some barley thru the system to show what was coming out in the mill. We ran it for only a few minutes & there were 10 to 12 small rock (sic) collected in the top of the mill. The rollers in the mills were severely damaged by the rock that had stone in the past grain. We run some of the barley from Moree (stuff still in storage from original claim) it took only 2 mins before the roller was blocked up. John asked if were possible to get to the bottom of the silo.
Paul removed some covers some (sic) he could. They trickled some barley out over a small screen & he was able to take out rocks as they came over the screen. He only got some there were still quiet (sic) a few rock (sic) getting thru to the mill.
I took photos & video of the mill the rock’s & the set up of the area.
John Armstrong said that he could get in touch with Shane Lennard & report on what he saw. He also said he was keen to get it cleared up.
We left at about 11.40 am.”

35 Exhibit 1 (Blue AB 78) records that, on 17 September 1998, the Appellant returned 23.34 tonnes of the barley which had been picked up at Biniguy to Grain Corp but kept the balance – some 50.06 tonnes – of that barley. At the same time, so it would seem, the Appellant refused to take any more barley in respect of the 1609 tonnes which had been bought in by the Respondent.

36 The position as at 17 September 1998 thus was that in respect of that 1609 tonnes there remained 884.69 tonnes of which the Appellant refused to take delivery.

37 T & T Machinery Pty. Limited appears to have repaired the Appellant’s roller mill on 22 September 1998 at a cost of $6,041.40 (Blue AB 38), which cost was paid by the Respondent.

38 On 18 November 1998, Mr. Wyatt, apparently the Respondent’s Operations Manager at Moree, wrote to the Appellant a letter (Blue AB 62) which was in the following terms:

“OUTSTANDING CROP TERM ACCOUNT
Since Doug Saunders moved to Narrabri, I have undertaken to resolve the dispute you currently have regarding the barley being supplied from Graincorp at Moree.
In your last discussions with Doug Saunders on 24 September you indicated you would not take any further barley from the Graincorp System. According to our records approximately 875 tonne remain on your account in store.
We are concerned that your grain in the Graincorp Depot at Moree is continuing to accrue storage charges and interest charges. In order to mitigate these additional costs we are seeking your permission to market this barley and apply the proceeds against the balance of your Crop Term Account. On current prices the barley should realise approximately $98,000.00 at a price of $112T Moree Depot today.
You will also recall that we paid T & T Machinery $6,041.40 for repairs to your roller mill on the basis that you resumed the collection and payment of barley from Graincorp. This was outlined in a letter from Doug on 6th August, 1998. As these collections ceased we will need to invoice you for those repairs.
I look forward to your instructions with regard to the marketing of the barley. Due to the ever increasing costs could you please let me know within 7 days of receiving this letter. I can be contacted in the office on 02 67591531 or on mobile [phone] if you needed to discuss any of the above.”

39 A diary note (Blue AB 64-65) made by Mr. Wyatt on 11 December 1998 records the following (inter alia):

“Phone call with Allan Gillogly in response to our letter sent to him on 18th November, 1998.
Allan is of the view that the grain is not his, so its (sic) not his decision to sell it. My response was that on reading the grain contracts my interpretation was that we had completed the contracts by delivering the grain to the Moree depot of GrainCorp. The reason it was stored in our name at Graincorp was one of security for our debt which is our normal practice. Whilst the grain was stored then it was attracting storage and interest fees which were being charged to Allan and that payment was due on grain deliveries as per our normal payment terms.
Allan commented that he hadn’t signed the contracts. I questioned him whether he had ever signed contracts with us for grain purchases. His response was ‘some’. I asked him (in an accusing way) whether he was going to walk away from these contracts. He did not answer this question but started discussing how it was Graincorp we should be pursuing because they were unable to supply grain to the right specifications.
………
Allan expressed concern that by selling the grain we would be letting the evidence go. I indicated that most of the old season barley from Moree, Biniguy and Delungra had been co-mingled and put into a bunker storage at Moree. Therefore we could not differentiate any of the grain that had been supplied previously anyway and would not make any difference to the future actions. I undertook to seek our legal advice on this action and if there was (sic) no problems then we would look to market the barley for the best price to mitigate future storage and interest costs.
I also indicated that we wanted to seek recovery of the difference between the cost of the barley and what we could get for it. Our recovery reason would have to be along the lines of the commercial transactions that had taken place and that if my interpretation was correct on the contracts that we would have to enter into legal action to recover the debt. Allan was absolute that he should not have to and would not pay for the difference and that we should be chasing Graincorp and that he should be involved at all.”

40 On 6 January 1999, the Respondent sold to Oakey Holdings some 918.68 tonnes of barley - that quantity comprising 855.25 tonnes, said to represent “Gillology share” and 63.43 tonnes, said to represent IAMA stocks – at a price of $112.00 per tonne (Blue AB 68,73). Of the total purchase price of $102,892.16 payable by Oakey Holdings to the Respondent in respect of that sale, $95,788.00 was said (Blue AB 68) to represent the “Gillogly share”.

41 The total cost which would have been payable by the Appellant to the Respondent in the event that he had taken delivery of the whole of the 1609 odd tonnes of barley which had been bought in by the Respondent would have been $282,857.14 (see invoices Exhibit E – Blue AB 30-35) together with interest on outstanding balances from time to time and storage charges accrued from time to time. Towards that sum the Appellant made three payments – one assumes, in respect of the grain delivered between 28 May 1998 and 6 June 1998 – totalling $120,851.30 leaving a balance on the Appellant’s Group Terms Account of $162,000.84. If one sets off against that sum the $95,788.00 representing the “Gillogly share” of the moneys received on the sale to Oakey Holdings there remains a balance of $66,217.84 to which there needed to be added interest on the outstanding balances from time to time and the grain storage fees.

42 Interest on outstanding balances from July 1998, by which time the Appellant had made the first two payments totalling $59,406.50 until mid-May 1999 amounted to $21,827.50 and storage fees from July 1998 to February 1999 amounted to $7,715.25. Those two sums, when added to the shortfall on grain sales totalled $95,760.59. In addition, as foreshadowed in Mr. Wyatt’s letter to the Appellant of 18 November 1998, the Respondent claimed to be entitled to recover the amount of $6,041.40 which it had paid to T & T Machinery Pty. Limited for the repairs to the Appellant’s roller mill.

43 By letter dated 31 May 1999 the Respondent demanded payment by the Appellant of the sum of $101,801.99 being the total of the shortfall on grain sales, accrued interest and storage charges and the amount for repairs to the Appellant’s roller mill which it claimed to be entitled to recover. The Appellant having failed to make payment of the amount demanded of him, these proceedings were then commenced.

44 In the light of one matter to which Knight DCJ appears to have given significant weight in coming to one of the conclusions which he did in his Judgment, it is as well that, before turning to his Honour’s Judgment, I record what seems to me to have been the evidence which his Honour had in mind in so doing. The transcript record of the Appellant’s cross-examination contains the following (Black AB 394-395):

“Q. So the system, the crop term system, would you agree with me is a financing method the way they fund …? A. Yeah I suppose you’d call it a fund, yes.
Q. They’re funding that purchase? A. Yes.
Q. So for all intents and purposes the agreement at that time that you had with Doug was, yes, he would – Seed and Grain would provide that quantity of grain to you, they’d go out and purchase that and they would store it in their name at Graincorp? A. Yes, that’s right, yes.
Q. Because they had the agreement? A. Yes.
Q. But it was always clearly understood was it not Mr. Gillogly that once the grain arrived at Graincorp, based on the crop term funding system, that grain was your grain? A. Yeah, once I picked it up. It went into a pool system. I didn’t get the – like the system is that they bought the grain but it just goes into a big pool system.
HIS HONOUR: But just a moment. You slid over what counsel was actually putting to you which perhaps you better put the question again Mr. Monzo. Listen to the question very carefully all right?
MONZO: Q. It was clearly understood when you discussed the purchase of that grain with Doug Saunders that the crop term accounting system required that once that grain was delivered, purchased on your behalf and delivered to Graincorp storage that was your grain? A. Well put it this way the grain – I just had that amount of grain to pick up what was allocated to me 1609 tonne of grain.
Q. So do you agree with me therefore that that parcel of grain – no, I withdraw that. That quantity of grain, a quantity of 1609 tonnes that was your grain in that … A. To be picked up.
Q. Well it was your grain? A. To be picked up, yes.
Q. And you could pick it up whenever you wanted? A. Yes, well Doug had authorised it.
Q. That’s right Doug had authorised it. Now Doug explained to you did he not that the reason for that was that grain, these are my words, but the effect of that grain, and you understand this being part of, having you know operated in the system for as many years. It’s a little bit like money, you can’t really identify it so in order to secure, to ensure that the grain in that storage facility at Grain Corp, Moree would not just suddenly disappear because you can’t label it? A. No, that’s true, that’s true.
Q. In order to achieve that result there had to be some security put in place because it was your grain so the only authority that would ever be issued would be issued to you and nobody else? A. That’s right.
Q. And then your son would go and pick up the grain? A. Yeah, correct.
Q. But that’s the only reason why it was in place, security to make sure that the grain didn’t go elsewhere but to the person who owned the grain which was you?
(No verbal reply)
Q. Now I suggest this to you …
HIS HONOUR: Q. Do you agree with that? A. Yeah with what he said, yeah.

45 In his Judgment (RAB 16-17) Knight DCJ identified, as the issues raised at trial, the following:

“1. Was there a contract between the parties in relation to the sale and purchase of barley and, if so, what were its terms?

2. If there was such a contract, did title to the barley pass to the defendant pursuant to it and, if so, when?

3. Was the barley which was taken by the defendant in early July 1998 contaminated by rocks and other debris and, if so, where did such contamination take place?

4. If such barley was so contaminated, did such contamination entitle the defendant to refuse to take any more barley pursuant to any contract with the plaintiff?

5. Did the parties enter into a further contract in or about August 1998 and, if so, what were the terms of such contract?

6. Was the barley which was taken by the defendant in September 1998 contaminated by rocks and/or debris and, if so, when did such contamination take place?

7. If such barley was so contaminated, did such contamination entitle the defendant to refuse to take anymore barley pursuant to any contract with the plaintiff?

8. If the defendant was not entitled to refuse to take any more barley pursuant to the contract with the plaintiff, is the plaintiff entitled to damages and, if so, in what amount?”

Of those issues, the real debate appears to have been concentrated on issues 1, 2, 4, 7 and 8.

46 In his Judgment, Knight DCJ when dealing with issue 1 wrote (inter alia) (RAB 18-19):

“On those factual findings it is doubtful whether there was an enforceable contract as at September 1997 when the initial agreement was entered into because of the lack of firm agreement as to the price to be paid by the defendant. However I consider that it is not necessary for me to make a determination as to whether there was an enforceable contract as at such time because it is clear that there was a definite and enforceable contract as between the plaintiff and the defendant for the sale by the plaintiff of 1609.81 tonnes of barley to the defendant when, with the agreement of the defendant, the plaintiff purchased the 1609.81 tonnes from the third parties in October and November 1997. This is because as at that time the plaintiff and the defendant had agreed that the defendant would purchase the 1609.81 tonnes from the plaintiff and had also agreed as to the price which the defendant would pay to the plaintiff for such barley. Thus there was certainty as to all the requisite elements of the agreement as well consideration moving from the promisee.
Turning to the terms of such contract I am satisfied that the parties were agreed that the 1609.81 tonnes would be stored at Gaincorp’s facilities until the defendant took delivery of it and that he was entitled to take delivery of it by individual loads as and when he wished.
I am further satisfied that under the terms of the agreement the defendant was required to pay storage charges for the grain together with interest at the rate of 1.30% per month but that notwithstanding that invoices were forwarded to him for the grain in storage at Graincorp (see Exhibit E) he was only required to actually pay for each load of the barley within 30 days of his taking delivery of that particular load.
………
As to the terms and conditions on the front of the (Confirmation of Sale documents) again I am satisfied that they form part of the terms and conditions of the contract between the parties having regard to the conversations between the defendant and Mr. Saunders, the ample opportunity the defendant had to read them and the previous dealings between the parties.”

47 Despite the fact that these matters appear to have been the subject of significant dispute at trial, on the hearing of the appeal (T.3-5) no significant challenge was made to his Honour’s finding in this respect.

48 When, in the course of his Judgment, Knight DCJ came to deal with issue 2 which, both at trial and on the hearing of the appeal (T. 6), was regarded as the critical issue, his Honour wrote (RAB 19-22):

“As I have pointed out above there was an enforceable contract between the parties for the sale by the plaintiff to the defendant of 1609.81 tonnes of barley at least from the time the plaintiff purchased such 1609.81 tonnes from various third parties.
When the plaintiff purchased the specific agreed quantities of barley from the individual third parties (see Exhibits B and C) it was loaded onto trucks and delivered to Graincorp (see the evidence of Mr. Saunders and Exhibits C and E). Thus at the time it was so loaded for such delivery the barley which was the subject of the contract between the plaintiff and the defendant was both ascertained and specific.
Pursuant to section 22(1) of the Sale of Goods Act 1923 as amended the property in specific or ascertained goods the subject of a sale is transferred to the buyer at such time as the parties to the contract intended it to be so transferred.
If the front page of each of the documents Exhibit C is, as I have found, part of the terms of the contract, then it is quite plain on the face of the document that the barley was to be at the buyer’s care after the barley was delivered and taken at the Graincorp Moree depot. In other words, property or title to the barley was intended to pass to the buyer when it was delivered and taken into the Graincorp depot. Thus title to the barley passed to the defendant at that time.
If, contrary to my judgment, the terms on the front page of the documents were not part of the terms of the contract, I would still regard the intention of the parties as being that title to the barley passed to the defendant when it was delivered to Graincorp depot. I have come to this conclusion both on the evidence of Mr. Saunders and Mr. Wyatt but more particularly on that of the defendant himself who agreed in cross-examination on 12 March 2001 that he owned the (relevant grain) stored in Graincorp.
If the contract between the plaintiff and the defendant for the sale of the barley is regarded as having come into existence prior to the purchase by the plaintiff of the barley from the third parties, then the barley the subject of the contract between the plaintiff and the defendant would not have been ascertained as at the time of the contract and accordingly no property in the barley could pass until it was ascertained (see section 21 of the Sale of Goods Act). Furthermore in that event Rule 5(1) in section 23 would need to be considered.
Under that rule (as far as is presently relevant) where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract … by the seller with the assent of the buyer …, the property in the goods thereupon passes to the buyer.
Thus in the present case if the contract between the plaintiff and the defendant for the sale of the barley is regarded as having come into existence prior to the purchase of the relevant barley by the plaintiff, it would be a contract for the sale of unascertained or future goods by description and hence the property in the barley would not pass until barley in a deliverable state was unconditionally appropriated to the contract by the plaintiff with the assent of the defendant.
In my opinion barley in a deliverable state was unconditionally appropriated to the contract by the plaintiff with the assent of the defendant when each of the various quantities of barley was purchased by the plaintiff from the particular third party and delivered to the Graincorp depot. Accordingly property in the individual loads of barley would have passed to the defendant at that time.
Of course Rule 5 is subject to a different intention of the parties appearing from the terms of the contract, the conduct of the parties and the circumstances of the case but, if the contract between the plaintiff and the defendant is regarded as having come into existence prior to the plaintiff purchasing the barley for resupply to the defendant, then in my judgment no such different intention appears.
In the final result therefore, I consider that, irrespective of whether the contract between the plaintiff and the defendant is regarded as having come into existence prior to the purchase by the plaintiff of the barley from the various third parties the property (i.e. title) in the barley passed at the time or times that it was delivered to the Graincorp depot.
In coming to that conclusion I have not overlooked that immediately on receipt of the barley at Graincorp’s depots it was intermingled with other barley of the same grade but it seems to me that such intermingling is of no consequence as title had already passed to the defendant. In other words if a person who owns goods chooses to store them in such a way that they become indistinguishable from goods of the same description belonging to other persons he does not, in the absence of some agreement to the contrary, lose title to those goods, although, of course, questions of estoppel may arise.
I have not overlooked that the barley once it was delivered to Graincorp was stored by Graincorp on behalf of the plaintiff pursuant to the contract between Graincorp and the plaintiff (see Exhibit A), but again that fact seems to me to be of no consequence as it was clear from the evidence that both the plaintiff and the defendant understood that it was so stored in order to provide security to the plaintiff for the performance by the defendant of his obligations under the contract. This security was created because the approval of the plaintiff was necessary for Graincorp to release the barley to the defendant.”

49 This part of Knight DCJ’s Judgment, in my view, invites the following observations:

(a) I would question whether the words appearing on each confirmation of sale opposite the heading “insurance” and the heading “delivery instructions” indicate an intention that the barley was to be at the Appellant’s care after it had been delivered to and taken in by Grain Corp at its Moree depot; rather, it seems to me, that they indicate an intention that, as each load of barley was delivered by Grain Corp into the Appellant’s semi-trailer, the property in that particular load was to pass to the Appellant;

(b) the reference in his Honour’s Judgment to the evidence given by the Appellant during the course of cross-examination on 12 March 2001 was, as I have earlier suggested, the evidence which I have set out above (para. 44 (supra)). With respect to Knight DCJ, I would question whether a fair reading of that part of the Appellant’s evidence justifies a conclusion that it amounted to an agreement on his part to the proposition – which would, in any event, in my view, be one of law – that the effect of had been done was that the property in the barley had passed to him when each parcel was delivered into Grain Corp’s depot at Moree.

50 When, in the course of his Judgment, Knight DCJ came to deal with issue 4, he held, first, that it was an express condition of the contract that the barley supplied under it would be of a merchantable quality and that, even if that were not so, as the barley was bought by description it was an implied condition of the contract that the barley the subject of the sale was of merchantable quality (RAB 24-25). Then, after a reference to the decision of the High Court in George Wills & Co. Limited v. Davids Pty. Limited (1957) 98 CLR 77 his Honour held that the contaminated barley was not of merchantable quality and, thus, that that supply constituted a breach of the contract (RAB 25). His Honour then continued (RAB 25-28):

“In summary then I am satisfied that the supply of the contaminated barley in July 1998 constituted a breach by the plaintiff of the contract between the parties. There can be no doubt that the defendant purported to terminate the contract as at 10 July 1998 that date (sic). Thus the question becomes whether the defendant was entitled to terminate the contract as at that date.
In my opinion he was not entitled to do so. I have come to this conclusion for two reasons. First, because of the transfer of title or property in the goods and secondly because of the provisions on the back of the confirmation of sale notices Exhibit C dealing with rejection of the goods.
As stated previously in my opinion the property or title to the barley was transferred from the plaintiff as seller to the defendant as buyer when the barley was delivered to the storage facilities of Graincorp. This took place in October and November 1997 (see Exhibits B,C and E). The defendant had thus been the owner of the barley for over six months as at the time he purported to terminate the contract for breach. Moreover he had as at that time taken possession by instalments of 675.36 tonnes of a total of 1609.81 of the barley the subject of the contract. In my judgment the effect of those facts was that he was not entitled to terminate the contract for breach unless the delivery of the contaminated grain amounted to a repudiation of the contract by the plaintiff which it clearly did not.
I point out that whether a breach of an instalment contract for the sale of goods entitles the innocent party to terminate the contract or only to sue for damages is usually governed by section 34(2) of the Sale of Goods Act. However in this case such section does not in terms apply as the goods were not to be delivered by ‘stated instalments’. Nevertheless it has been held that the provisions of the section are only declaratory of the common law and that therefore the provisions of the section will in effect apply even where, as here, the contract does not provide for delivery by stated instalments. See KCT Sutton – Sales and Consumer Law (Fourth Edition) page 599 at para. 20.38 and the cases there cited. If the provisions of the section are applied then the relevant question is whether considering the terms of the contract and the circumstances of the case the breach of the contract is a repudiation of the whole contract or whether it is a severable breach giving rise to a claim for compensation but to a right to treat the whole contract as repudiated.
As I have stated above, in my opinion, considering the terms of the contract and all the circumstances of the case the supply of the contaminated barley in the present case, although a breach of the contract, did not amount to repudiation of the whole contract, but was simply a severable breach giving rise to a claim for compensation by the defendant but not to a right to treat the whole contract as repudiated or terminated.
The second reason why in my judgment the defendant was not entitled to terminate the contract for breach is because of the provisions on the back of the confirmation of sale notices, Exhibit C, dealing with rejection of the goods.”

then, after a reference to clause 6(b), Knight DCJ continued:

“It was not disputed that the barley in the present case was sold by description. It is therefore apparent that by reason of clause 6(b) the defendant was not entitled to terminate the contract because the plaintiff supplied barley which was not in accordance with the description. Whilst the clause does not on its face apply where the barley supplied was not of merchantable quality it seems to me that where, as here, the barley which was supplied was both not in accordance with description and not of merchantable quality the effect of the clause is that the defendant was required to accept other lots in substitution for the contaminated barley and was not entitled to simply terminate the contract.
Thus for each of the two foregoing reasons I consider that, whilst the defendant was entitled to claim damages for breach of condition in respect of the supply of contaminated barley, he was not entitled to terminate the contract for such breach.”

51 When, in the course of his Judgment, Knight DCJ came to deal with issue 7 he wrote (RAB 30-31):

“As I have stated above in my Judgment, the effect of the contact of 6 August 1998 or thereabouts was that the parties agreed to resume their obligations under the original contract. It follows in my opinion that for the same reasons as I gave in dealing with issue number 4 the defendant was not entitled to refuse to take any more barley pursuant to the contract with the plaintiff. However there are two additional reasons why the defendant was not entitled to terminate the contract as a consequence of the contamination of the barley collected on 15 September 1998.

103 The general rule is that once property passes the buyer loses the right to reject the goods for breach of condition, although retaining the right to sue for breach. In this case, however, on the approach which I consider to be correct, property in the grain actually delivered had passed. There was no complaint as to the merchantability of the grain delivered prior to 3 July and thus no issue as to the rights of the parties under the contract in relation to that grain. The grain delivered on 3 July was not of merchantable quality. On his Honour’s findings, the parties then entered into a new contract in respect of the balance of the grain. A delivery of further grain was taken under the new contract. A portion of that grain was contaminated. The question which then arises is whether, given that some grain of unmerchantable quality in the already delivered loads had been supplied, did the appellant have the right to terminate the contract to the extent that it remained unperformed.

104 I have described the contract as a severable contract to take grain from time to time. A breach of one severable contract does not necessarily give the right to rescind. It is a question of fact in each case whether the conduct of the other party was such as to amount to a repudiation of its obligations under the contract: see KCT Sutton, Sales and Consumer Law 4th Ed p 599, para 20.38; Benjamin’s Sale of Goods (1997) 5th Ed, para 8-076 ff.

105 His Honour posed, correctly in my opinion, the relevant question as being “whether considering the terms of the contract and the circumstances of the case the breach of the contract [by delivery of some grain of unmerchantable quality] is a repudiation of the whole contract or whether it is a severable breach giving rise to a claim for compensation but not to a right to treat the whole contract as repudiated”.

106 His Honour held that the delivery of some contaminated barley did not amount to the repudiation of the whole contract. In reaching this conclusion his Honour relied on the terms of the contract, the fact that the appellant had owned the barley since October 1997 before he purported to terminate, and had taken possession of over a third of the total contract quantity.

107 In addition, his Honour considered that it was relevant that after the parties agreed to resume their contract on the terms and conditions of the original contract, the appellant took delivery of a further 73.40 tonnes in 3 separate loads. Notwithstanding that he alleged that that load was also contaminated, he only returned a portion of it (24.34 tonnes) whilst retaining the balance of 50.06 tonnes. At the same time he purported to terminate the entire contract.

108 I agree that the matters considered by his Honour were the relevant factors to be taken into account in determining whether the appellant had a right to terminate, I have differed from his Honour in one respect in that I consider that property in the unsupplied balance had not passed at the date of purported termination.

109 The question then is whether the last delivery, which was at least partially contaminated, amounted to a repudiation by the respondent of its remaining obligations under the contract, giving the appellant the right to terminate. At that stage, more than a third of the contract quantity had been delivered without problem. The reason why the contamination had occurred was not explored in the evidence so that no inference could be drawn that future loads would be or would be likely to be contaminated. The respondent’s obligation was to continue to deliver barley in accordance with the terms of the contract. There was no direct evidence that the respondent would not fulfil or did not intend to fulfil its obligations under the contract. Nor, in my opinion could an inference be drawn to that effect. In my opinion, the fact that a minor portion of the overall quantity had been contaminated does not automatically lead to the conclusion that the balance would have been contaminated. His Honour also relied upon the fact that the appellant had retained the substantial portion of the last delivery, paid for it and used it as an affirmation of the contract. This finding was not challenged, nor was his Honour’s conclusion, which was clearly open on the facts. A party cannot both affirm a contract and repudiate it. It follows for these reasons that the appellant had no right to terminate the contract when he did. As property had not passed in the barley which remained undelivered the respondent’s remedy was in damages. I have already referred to his Honour’s conclusion, with which I agree, that the quantum of such damages would be the same as the quantum payable if the respondent’s remedy was to sue for the balance of the purchase price.

110 I have reached my conclusion that the appellant was not entitled to terminate in September 1998 without having regard to the provisions of cl 6 of the Terms and Conditions of Contract.

111 Clause 6 of the Terms and Conditions governed the rejection of the goods. His Honour held that the supply of contaminated goods meant that the goods were not supplied in accordance with their description so that under the provisions of cl 6(b) the appellant was not entitled to terminate the contract but was required to accept other lots in substitution for the contaminated barley.

112 In my opinion, there is a difference between supplying goods of unmerchantable quality and supplying goods of a description different from the contractual description. In this case the goods satisfied the contractual description of barley of a certain grade, so that subcl (b) does not operate. Clause 6 however was not confined to a failure to deliver goods in accordance with the contractual description. Sublclauses (c) and (d) specified what constituted acceptance for the purposes of the contract, namely removal of the goods from the truck at the point of unloading. Once the goods were unloaded, and thereby accepted by the buyer, the right of rejection and thereby the right to terminate the contract for breach of condition, was thereby lost. A buyer, in such circumstances is relegated to remedies for breach of contract on the basis that the breach was a breach of warranty: see generally s 54 of the Sale of Goods Act; Alan L Tyree, Sale of Goods, para 21.12; Sutton at 670.

113 As the appellant had unloaded the goods at his property, he had lost his right to terminate for breach.

114 It follows from what I have said that the conclusion reached by the trial judge is correct, although I have reached that result for different reasons.

115 Accordingly, the appeal should be dismissed with costs.

116 GROVE J: I agree with Beazley JA.

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