Kingstream Steel Ltd v Stemcor UK Ltd

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JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT :   THE FULL COURT (WA)

CITATION:   KINGSTREAM STEEL LTD -v- STEMCOR UK LTD [2001] WASCA 138

CORAM:   SCOTT J

STEYTLER J

HEARD:   23 FEBRUARY 2001

DELIVERED          :   1 MAY 2001

FILE NO/S:   FUL 145 of 2000

BETWEEN:   KINGSTREAM STEEL LTD (ACN 009 224 800)

Applicant (Defendant)

AND

STEMCOR UK LTD
Respondent (Plaintiff)

Catchwords:

Practice and procedure - Leave to appeal from Master's refusal to order summary judgment in favour of defendant - Contract - Rescission - Consecutive contracts - Partial advance of purchase price for goods - Guarantee of repayment

Legislation:

Nil

Result:

Leave to appeal granted
Appeal dismissed

Representation:

Counsel:

Applicant (Defendant)     :     Mr D H Solomon

Respondent (Plaintiff)     :     Mr M J Buss QC & Mr P K Walton

Solicitors:

Applicant (Defendant)     :     Solomon Brothers

Respondent (Plaintiff)     :     Jackson McDonald

Case(s) referred to in judgment(s):

Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd [1981] 1 NSWLR 429

Black v Smallwood (1966) 117 CLR 52

Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91

F Goldsmith (Sicklesmere) Ltd v Baxter [1970] Ch 85

Jackamarra v Krakouer (1998) 195 CLR 516

McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457

Nittan (UK) Ltd v Solent Steel Fabrication Ltd (1981) 1 Lloyd's Rep 633

Robowash Pty Ltd v Robowash Finance Pty Ltd [2000] WASCA 409

Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245

The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40

Trade Indemnity Co v Workington Harbour and Dock Board [1937] AC 1

Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238

Whittam v W J Daniel & Co Ltd [1962] 1 QB 271

Wren v Emmett Contractors Pty Ltd (1969) 43 ALJR 213

Case(s) also cited:

Acorn Consolidated Pty Ltd v Hawkslade Investments Pty Ltd [1999] WASC 218; (1999) 21 WAR 425

Anderson v Effexseven (1999) 10 ANZ Ins Cases 64-424

Australian Broadcasting Commission v Australian Performing Right Associated (1973) 129 CLR 99

Baltic Shipping Company v Dillon (1992) 176 CLR 344

Beach Petroleum NL v Johnson (1993) 43 FCR 1

Belmont Finance Corporation v Williams Furniture Ltd (No 2) [1980] 1 All ER 393

Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd (1981) 1 NSWLR 429

Chan v Chresdon Ltd )1089) 168 CLR 242

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1981) 149 CLR 337

Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Ltd [2000] HCA 35; (2000) 172 ALR 346

Concut Pty Ltd v Worrell [2000] HCA 14; (2000) 176 ALR 693

Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 182

Covus Corporation Pty Ltd v Coastal Launch Services Pty Ltd [2000] WASC 221

Dan v Barclays Australia Ltd (1983) 46 ALR 437

Darrel Lea (Vic) Pty Ltd v Union Assurance Society of Australia Ltd [1969] VR 401

Deputy Commissioner of Taxation v Reading (1991) 22 ATR…

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Details
Case
[2001] WASCA 138
Decision Date

CaseChat Overview and Summary

In the matter of Kingstream Steel Ltd v Stemcor UK Ltd, the dispute revolved around a series of contracts and guarantees related to the purchase of goods. The matter was before the Court of Appeal in Australia, which was asked to decide whether leave to appeal should be granted against a Master's decision to deny summary judgment in favour of the defendant. The core legal issues centred on the interpretation of the contracts, particularly whether the second contract replaced the first, and the implications this had on the guarantees provided by the defendant. The applicant argued that the Master erred in considering the respondent's case arguable and in failing to find that the second contract had replaced the first.

The Court of Appeal examined the arguments put forth by the applicant, which included the contention that the second contract was intended to entirely replace the first, rendering the guarantees irrelevant. The Court noted that while there was force in this argument, the Master's decision that the respondent's case was arguable was not clearly wrong nor attended with sufficient doubt to warrant the grant of leave to appeal. The Court emphasised that interlocutory appeals should be discouraged unless there is a point of special importance or substantial injustice would result from leaving the decision unreversed. In this case, the Court found that the applicant had not demonstrated that the Master's decision was clearly wrong or sufficiently doubtful to merit an appeal. Therefore, the application for leave to appeal was dismissed.

The Court also addressed the applicant's argument that the Master erred in failing to find that the first contract was replaced by the second, which would have rendered the guarantees irrelevant. The Court found that the Master's interpretation of the guarantees was not clearly wrong or attended with sufficient doubt, as the guarantees could arguably apply to the obligations under the second contract. The Court held that the Master's decision was within the bounds of reason, and the applicant had not shown that the decision was clearly wrong or attended with sufficient doubt to warrant an appeal.

In conclusion, the Court dismissed the applicant's application for leave to appeal, affirming the Master's decision to deny summary judgment in favour of the defendant. The Court held that the respondent's case was arguable and that the Master's interpretation of the contracts and guarantees was not clearly wrong or attended with sufficient doubt. The Court emphasised the importance of discouraging interlocutory appeals unless there is a point of special importance or substantial injustice would result from leaving the decision unreversed.

Orders

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

It is to be borne in mind that at this stage of these proceedings we are dealing with an interlocutory appeal against the decision of a Master on a summary judgment application. In The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40, Malcolm CJ said at 56:"The need to discourage unnecessary interlocutory appeals is such that I do not consider that, except where some point of special importance is involved, the fact that an order works an apparent injustice should warrant a grant of leave to appeal unless it appears that the decision below was clearly wrong or attended by sufficient doubt to warrant the intervention of the appellate court. That being said, what I myself said in Wilson v Metaxas [1989] WAR 285 was only intended to state that, 'In general' it must be shown that the decision was wrong or attended with sufficient doubt to justify the grant of leave and that, in addition, substantial injustice would be done by leaving the decision unreversed. The latter requirement was described as only a 'guideline'." In relation to an appeal against an interlocutory decision by a Master, see also Robowash Pty Ltd v Robowash Finance Pty Ltd [2000] WASCA 409. In our view it cannot be said that the decision of the learned Master that the respondent's case on this point is arguable can be said to be wrong or even attended with sufficient doubt as to warrant the grant of leave to appeal. The applicant's application to strike out Stemcor's claim on the basis of the misdescription of the defendant in the guarantees was, in our opinion, rightly dismissed. The application was argued, next, upon the basis that the learned Master erred in failing to find that the first contract was replaced by the second with the consequence that the various guarantees fell away, each of them having been directed to obligations under the first contract only. This aspect of the application is referred to in proposed ground 3 of the grounds of appeal as follows:"3.The learned Master erred in law in failing to construe the Guarantees strictissimi juris and holding that it is arguable that:-3.1the contract between the respondent and An Feng Steel Co Ltd dated 17 July 1998 (the 'First Contract') was arguably varied, and not replaced by, the contract between the respondent (plaintiff) and An Feng Steel Co Ltd dated 4 August 1998 (the 'Second Contract.');3.2by the Guarantees, or one the Guarantees (sic) the appellant (defendant) arguably guaranteed performance by An Feng Steel Co Ltd under the Second Contract or repayment of $2,000,000 pursuant to the Second Contract;3.3that the ($US)2,000,000 paid by the respondent (plaintiff) under the First Contract to An Feng Steel Co Ltd was not deemed to be repaid on rescission of the First Contract and readvanced on entry into the Second Contract (which events occurred simultaneously);" Counsel for the applicant contended that it is apparent, on a comparison between the first two contracts, that the second was intended entirely to replace the first. There is undoubtedly force behind this contention. The second contract is a stand alone document which, as we have said, expressly replaced the first. It repeated those terms which had been contained in the first contract and which had not been altered. There was, effectively, no work left to be performed by the first contract once the second had been executed. If the proposition that the second contract was substituted for the first is accepted, this presents a difficulty for the respondent in that the first and second guarantees were executed prior to the date of the second contract and the third guarantee (which bears the date 20 July 1998) was, as we have said, executed only in order to correct the misnomers to which we have earlier referred.