Osborne Cold Stores (WA) Pty Ltd v Natural Processors Pty Ltd - [1999] WADC 67

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: OSBORNE COLD STORES (WA) PTY LTD & ANOR -v- NATURAL PROCESSORS PTY LTD [1999] WADC 67

CORAM: NISBET DCJ

HEARD: 6 SEPTEMBER 1999

DELIVERED : 15 SEPTEMBER 1999

FILE NO/S: CIV 382 of 1999

BETWEEN: OSBORNE COLD STORES (WA) PTY LTD
First Plaintiff (First Applicant)
FIFESHIRE FISHING PTY LTD
Second Plaintiff (Second Applicant)
AND
NATURAL PROCESSORS PTY LTD
Defendant (Respondent)

Catchwords:

Summary judgment - Principles to be applied - Necessity for arguable defence alternatively a real issue to be tried.

Legislation:

SaleofGoods Act 1895

Result:

Application refused. Defendant granted unconditional leave to defend.

Representation:

Counsel:

First Plaintiff (First Applicant)           :     Mr B Havilah
Second Plaintiff (Second Applicant)    :     Mr B Havilah
Defendant (Respondent)  :     Mr M Cuerdin

Solicitors:

First Plaintiff (First Applicant)           :     Bruce Havilah & Associates
Second Plaintiff (Second Applicant)    :     Bruce Havilah & Associates
Defendant (Respondent)  :     Fiocco Hopkins Nash

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

Cloverdell Lumber Co Pty Ltd v Abbot (1924) 34 CLR 122
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd (1968) 121 CLR 584, 42 ALJR 280
Keetley v Quinton Pty Ltd (1991) 4 WAR 133
Ritter v North Side Enterprises Pty Ltd (1975) 132 CLR

Case(s) also cited:

Nil

NISBET DCJ: The plaintiffs apply out of time for summary judgment against the defendant in respect what it alleges to be a firm contract for the sale of fish. No issue was taken by the defendant in respect of the application being out of time, the reason being advanced for the lateness being the difficulty in obtaining an affidavit within time from a material witness, a Mr Benson.
The operating mind and will of each of the plaintiffs is Mr Ross Love. In his affidavit in support of the plaintiffs' application for summary judgment Mr Love deposes that he delegated one of the plaintiffs' employees, Mr Greg Lauder, to negotiate a contract for the sale of fish on board a vessel operated by the plaintiffs out of Albany (the arrangement between the plaintiffs and the vessel is more complicated than this, but this is its essence).
Mr Lauder deposes in his affidavit sworn in support of the plaintiffs' application that having been delegated to deal with the defendant he had some telephone conversations with its principal Mr Nicolaas Van Roossendael in consequence of which the defendant transmitted two facsimile messages to the plaintiffs each of which speaks in terms of negotiating an onward sale of the fish by the defendant but, it is also fair to say, speaks in terms of an outright purchase of the fish. After receipt of these facsimile messages Mr Lauder deposes:
"20.I immediately telephoned Nicolaas Van Roossendael at Ocean Quest Seafoods. I asked him how he would like confirmation that we would accept his price of $4 per kilogram for the catch on the (F.V.) Fifeshire.
21.He asked me to fax him a letter confirming that Ocean Quest had the exclusive right of refusal on all the product being held on the (F.V.) Fifeshire.
22.He told me that if KFM or any other fish processors went to the vessel that he needed the letter to show them so he had the first option to unload the fish that he wanted prior to any other processor having an option to take any portion of the catch. Annexed hereto and marked "F" is a true copy of the facsimile I worded in accordance with his own instructions."
The facsimile relevantly reads as follows:
"Confirming Ocean Quest have exclusive right of refusal on all product off Fifeshire.
Twelve tonne plus of orange roughy at $4 per kilogram."
It seems to me that on the plaintiffs' case for summary judgment there is, in the face of a denial by the defendant that it ever concluded an agreement in the terms pleaded by the plaintiffs, and an outright assertion that it retained to itself the right of first refusal, then the defendant has an arguable defence to the plaintiffs' claim on this issue alone.
But on the defendant's case in respect of which it seeks unconditional leave to defend, there is more to its defence than whether or not the parties in fact reached a consensus ad idem. This is because, as the defendant through Mr Van Roossendael deposes and the plaintiffs tacitly admit, Mr Love made a complaint to the police in Albany alleging theft by the skipper of the fishing vessel operated by the plaintiffs of the fish in question, and receipt of that fish by the defendant or at least Mr Van Roossendael, such that each of these persons have now apparently been charged with stealing in the case of the skipper of the boat and receiving in the case of Mr Van Roossendael. The circumstances need not be fully explained for the purposes of this judgment. It suffices to say that by reason of conflicting information in respect of the tonnages of fish delivered off the boat Mr Love became concerned that having been told by his skipper that the boat was unloading something a little over 14 tonnes of fish and the fish processor taking delivery of something over 21 tonnes Mr Love then became suspicious that between them, the skipper of his boat and Mr Van Roossendael for the defendant had decided to carve up the "missing" 7 tonnes of fish between them.
Whatever the rights and wrongs of this situation the effect was immediate. The police impounded the fish as an exhibit in the complaint and no one could deal with them. Ultimately the State of Western Australia took out an interpleader summons action in this Court No 200 of 1999 which I dealt with immediately before hearing argument on the summary judgment application in this action. The effect of the interpleader relief sought by the State was that these parties would effect a sale of the fish in question with the proceeds of sale being used to defray processing and storage costs and the balance being held in trust pending the outcome of this action.
These facts, the defendant says, constitute an interference with its quiet possession of the fish such that by the actions of the plaintiffs and the plaintiffs alone the defendant was put in the position that if indeed there had been a sale of the fish by the plaintiffs to the defendant, which sale was enforceable at law, the defendant's right to quiet possession of the fish that it had purchased had been disrupted by the plaintiffs.
The defendant's right to quiet possession is a warranty implied into the contract for the sale of goods by ss12(2) and 12(3) of the Sale of Goods Act 1895 (WA). As was discussed in Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd (1968) 121 CLR 584, 42 ALJR 280, the statutory warranty for quiet possession covers a situation where a buyer (the defendant here) is disturbed in its possession by the lawful acts of third persons (such as the police here impounding the fish) together with breaches of the contract of sale and the acts of the sellers who, it may be seen, have at once asserted the existence of a contract of sale in respect of these fish and at the same time accused the defendant of receiving them or portion of them as stolen property. Additionally, it should be observed, that it is not at all clear on the papers if and when property in these fish passed to the defendant. In the event the defendant's version of the contract is accepted then property probably did not pass until the defendant had by words or deeds or a combination of both accepted delivery of an identifiable portion of the catch, there being no reservation of title to the plaintiffs as sellers. This being the case, and notwithstanding that it is not clear at what time the police impounded the fish, it should be observed that there can be a breach of the warranty of quiet possession even though the property in the fish had not passed to the defendant: Keetley v Quinton Pty Ltd (1991) 4 WAR 133.
Next, whilst is not put in these terms, the defendant deposes through Mr Van Roossendael that it entertained serious concerns about the quality of the fish it had purchased entitling it in the light of its contract with its right of first refusal to reject whole or part of the catch for any reason, they being the terms of its contract. The defendant specifically deposes however that it was intending by entering into a contract giving it the right of first refusal of the fish in question at the price stipulated, to merely assert the right to reject any fish which were not of merchantable quality. On the plaintiffs' version of the contract these fish had been purchased by the defendant by description from them, they being sellers dealing in goods of that description when the defendant buyer had not examined the goods nor had any reasonable opportunity of examining them, in which circumstances the law again implies a condition into the contract that the fish are of merchantable quality: Sale of Goods Act 1895 s14(2).
The plaintiff disputes that the goods were not of merchantable quality and in particular points both to the evidence of Mr Benson who received the fish for processing and stored them, and to the sale negotiated by the defendant itself in the interpleader proceedings where the fish were sold and said to have been of "export quality". But the defendant asserts that at least a portion of the catch was not of a merchantable quality, that it smelt and that his attention to the quality of the fish was drawn by the fish processor who might otherwise be thought to be independent. These of course are issues which cannot be resolved on conflicting affidavit material.
It seems to me therefore that sufficient has been disclosed by the defendant in a condescension to the particulars of its defence that it cannot possibly be said that it has no arguable case to go to trial. Bearing in mind that courts must be slow to order summary judgment and should never exercise the jurisdiction to enter summary judgment unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99, then a defendant showing that it has an arguable defence and deposing to the facts upon which it is based should be given unconditional leave to defend: Cloverdell Lumber Co Pty Ltd v Abbot (1924) 34 CLR 122; Ritter v North Side Enterprises Pty Ltd (1975) 132 CLR 301 (and a host of other authorities besides).
I will hear the parties as to costs.