Metal Roofing and Cladding v Amcor Trading

[2000] HCATrans 285

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B81 of 1999

B e t w e e n -

METAL ROOFING AND CLADDING PTY LTD

Applicant

and

AMCOR TRADING PTY LTD

Respondent

Application for special leave to appeal

GLEESON CJ
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON WEDNESDAY, 21 JUNE 2000, AT 2.50 PM

Copyright in the High Court of Australia

MR P.A. KEANE, QC:   May it please the Court, I appear with MR D.J. CAMPBELL of counsel for the applicant.  (instructed by Hemming & Hart Lawyers)

MR G. GRIFFITH, QC:   I appear with MR D.A. SAVAGE for the respondent, your Honour.  (instructed by Denise A. Woolerton)

GLEESON CJ:   I asked the Registrar to inform the parties, Dr Griffith, that I believe I own a small parcel of shares in a holding company of your client.  I am not seeking sympathy for that.  I am just disclosing it in case.

MR GRIFFITH:   No difficulty, your Honour.

GLEESON CJ:   Yes, Mr Keane.

MR KEANE:   Your Honours, for the purposes of section 16 of the Sale of Goods Act the determination of whether a commodity which contains a level of impurity is such that it does not conform to its description is, in our respectful submission, not simply a question of degree nor is it a matter to be decided by reference to chemical composition and use, on the one hand, but rather it falls to be determined by reference to market reaction.

GLEESON CJ:   But that is a question of fact.

MR KEANE:   What the market reaction is is a question of fact.

GLEESON CJ:   The question whether goods correspond with their description is a question of fact, is it not?

MR KEANE:   It is a question of fact but not a question unguided by principle, your Honour.

GLEESON CJ:   Quite, but one of the things that is put against you is that you have concurrent findings of fact against you on that issue.

MR KEANE:   With respect, if one looks at the findings of the majority in the Court of Appeal, one sees that though they accept that the commodity would not answer the commercial description of PVC as commercially pure PVC in that there would be a discount applied if its true composition were known, their Honours nevertheless held that that did not matter because the question of description was really different from the question of quality and that, in any event, because some witnesses said, “Well, I’d still call it PVC because it’s still 98 per cent PVC and therefore essentially PVC in terms of chemical composition”, that resolved the case against us.

Our submission is that the approach taken by Justice McPherson, which is an approach with respectable historical lineage in the cases to which he refers, the Rapeseed Case ‑ ‑ ‑

KIRBY J:   That is put against you.  The respondent says that the lineage is 150 years old, it has been accepted for that long and we do not have to repeat it.

MR KEANE:   Your Honour, it has certainly fallen off the line here and it has done so because the Court of Appeal, by majority, has held that question ‑ ‑ ‑

KIRBY J:   As the Chief Justice says, that is just the application of the 150 year old principle to the facts of the particular case.

MR KEANE:   With respect, it is not.  The process in which the Court of Appeal engaged, the majority engaged, was to say yes, commercial people would perhaps regard it as requiring a discount, but that does not matter because ‑ ‑ ‑

KIRBY J:   Your basic case was that PVC resin, so called, was required to be 99.6 per cent pure PVC and that was just rejected.

MR KEANE:   Perhaps the best thing to do is to take your Honours to what the majority did do.  At page 45 of the record ‑ ‑ ‑

KIRBY J:   Is it not so that that was rejected at trial and that the majority in the Court of Appeal agreed with that rejection?

MR KEANE:   At trial it was rejected on the footing that it was held that a custom or usage to that effect had not been established and, as Justice McPherson explained correctly, with respect, no such custom or usage was being put forward.  What was being put forward was the evidence of the reaction of the market, that is to say of those engaged in buying and selling PVC resin, and to judge by reference to that reaction, that is to say, where a discount would be required for it to be sold.  His Honour held that that was the test rather than accepting, as the majority did, that people in the marketplace had those expectations but those expectations did not matter because it was still possible to say that stuff that was 98 per cent or 99 per cent pure was resin because it was not something else, because it was essentially PVC resin, and that that is decisive of the matter.

In our submission, the principle is not so clearly correct that it does not warrant this Court affirming it.  It is put at its best for us, in our respectful submission, in the speech of Lord Wilberforce in Christopher Hill v Ashington Piggeries and we have to acknowledge that it was a speech in which his Lordship was in dissent.  If your Honours have Ashington Piggeries v Christopher Hill (1972) AC 441 at 489. Your Honours have the excerpt. It is at 489. Your Honours really need to start with letter B to get the factual context but at the letter D his Lordship said:

Whether in a given case a substance in or upon which there has been produced by chemical interaction some additional substance can properly be described or, if one prefers the word, identified, as the original substance qualified by the addition of a past participle such as contaminated or oxidised, or as the original substance plus, or intermixed with, an additional substance, may, if pressed to analysis, be a question of an Aristotelian character.  Where does a substance with a quality pass into an aggregate of substances?

KIRBY J:   Does not that all demonstrate if it is Aristotelian that it is really just a question of fact and evaluation?

MR KEANE:   His Honour gives the answer to the problem in terms of principle which we say should be applied and which we say the majority distinctly did not:

I do not think that it can be solved by asking whether the chemical interaction came about by some natural or normal process –

and he gives an example –

or by some alien intrusion by the production of –

the alien substance ‑

I cannot see any distinction in principle in this difference.  Further I do not believe that the Sale of Goods Act was designed to provoke metaphysical discussions as to the nature of what is delivered, in comparison with what is sold.  The test of description, at least where commodities are concerned, is intended to be a broader, more common sense, test of a mercantile character.  The question whether that is what the buyer bargained for has to be answered according to such tests as men in the market would apply, leaving more delicate questions of condition, or quality, to be determined under other clauses of the contract or sections of the Act.

GLEESON CJ:   I think the next sentence may be of some significance.

MR KEANE:   Yes, your Honour.  Ultimately, it may be a question of impression but impression guided by proper principle not impression governed by an assessment which is as crude as, well, it is 98 per cent PVC, therefore it is not something else, therefore it answers the description PVC.  In our respectful submission, we are not met by concurrent findings of fact that commercial men would not have an expectation to that effect.  Indeed, one of the witnesses upon whom the trial judge relied and who is referred to in the decision of the majority in the Court of Appeal is at page 45 at about line 10:

but if I was to purchase resin I would expect it to contain, as I have stated, .1 per cent of catalysts and other additives and up to –

that should be .3 per cent –

water in the resin and as the final product, yes, I certainly wouldn’t expect less than 99.7 per cent there for PVC resin –

At page 47 lines 20 to 25 one sees the other evidence on which their Honours acted, rather than the evidence of the commercial expectation.  At line 20:

It would still be PVC because essentially the majority of it is PVC.  98, 97 per cent is still essentially PVC.  Its purity would be different.  It would be less.

The point becomes concluded or the next bit of evidence we should refer your Honours to before we go to that is page 48 lines 25 to 30 and this really makes the point as to the process of reasoning in the majority.  Line 25 they:

complete this resume of evidence –

and by reference –

to the evidence of Mr Listaken, a person with some experience in the purchase and selling of PVC resin.  The main thrust of his evidence was that if PVC resin contained a contaminant of between 2 per cent and 3 per cent as was alleged in this case, in his experience it would be discounted in the market place by about 20 to 25 per cent.  His evidence does not in our view support the existence of any cutoff point at which the product would cease to be identified as PVC resin.

Now, with respect, it is as clear as could be that the majority are there saying while that is the view taken in the marketplace, it is not the answer because this stuff is still PVC resin because chemically it is still PVC resin and it is essentially PVC resin.  Their Honours at page 49 paragraph [63] pose the question:

whether the general expectations mentioned by the above witnesses require a finding that resin containing other substances exceeding .4 per cent may not properly be described as PVC resin.  The evidence is capable of supporting the view that a purchaser would generally be surprised to receive anything less than 99.6 per cent purity, but that really deals with a different question.

They are discarding the relevance of the market expectation as a test and they conclude, your Honours, at page 50 paragraph [68] line 30:

Despite the preponderance of evidence supporting a general expectation of a high level of purity, we do not think that the evidence as a whole requires the finding which the purchaser now seeks from this court.

Then they go on to explain that there are differences in the precise level of purity which was expected, about which people gave evidence, and going over the page at paragraph [69]:

It was submitted for the purchaser that there was evidence that the market would discount the price by at least 20 to 25 per cent in respect of a product the quality of that supplied by the vendor.  That however introduces the subject of quality which is quite different from the question under consideration.  A careful purchaser…..might stipulate the quality desired –

with respect, a consideration irrelevant to the question of whether the product does conform with the description and then their Honours conclude at the bottom of page 51 in paragraph [71] that:

Looking at the evidence as a whole we see no reason to think that his Honour erred –

but it is clear they do it on the basis of a different view of the principle which guides the formation of the relevant impression.           Now, his Honour Justice McPherson held on the footing that there was uncontested evidence of tests which showed an impurity level of 2 per cent, and there was uncontested evidence that showed that there would be a discount in that event, Justice McPherson held there should be an award of damages.  In the majority’s judgment at page 52 they indicate they would not be prepared to make that finding, that is to say the finding that the test demonstrated a 2 per cent level of impurity, because there was too much conflicting

evidence for the court to essay satisfactorily the average level of non‑PVC content.  At paragraph [75] they go on to say:

If, contrary to our view, the purchaser is entitled to judgment on its counter‑claim, the question of damages thereon ought to be referred back –

Our primary submission is that the evidence showing a 2 per cent impurity level went in by consent and without cross‑examination and the evidence of Mr Listaken as to the level of discount was unchallenged.  If, contrary to that submission, the matter needs to be sent back in relation to determination of the actual level of impurity, then that would, in our submission, still leave a point worthy of consideration by the Court, a point worthy of consideration in terms of the commercial life of the nation.

GLEESON CJ:   We do not need to hear you, Dr Griffith. 

The outcome of this appeal to the Court of Appeal of Queensland turned upon the application of settled principles to the particular facts and circumstances of the case.  In addition, the applicant has concurrent findings against it on one of the central issues.  The Court is of the view that the case does not give rise to an issue appropriate to a grant of special leave and that, in any event, there are insufficient prospects of success in an appeal to warrant a grant.  The application is refused with costs.

Call matter No 4 please.

AT 3.04 PM THE MATTER WAS CONCLUDED