Saffron v Societe Miniere Cafrika - [1958] HCA 50

SOCIETE MINIERE CAFRIKA

RESPONDENT. PLAINTIFF,

ON APPEAL FROM THE SUPREME COURT OF Contract-Sale of goods-Payment of price-Establishment of letter of credit

Delivery of goods by seller to buyer-Expiry of letter of credit without payment against it of price-Action by seller to recover price-Denial of liability by buyer-Claim that letter of credit exclusive source of payment-Primary but not exclusive source-Agreement to buy unascertained goods-Whether translated into sale on delivery-Issue not litigated on trial of action as commercial cause- Not open on appeal-To allow point to be taken would destroy value of com- mercial causes procedure-Appropriation of goods to contract-Passing of properly.

A. contracted to sell certain chrome ore to B. and stipulated for payment of the price in the words " payment by opening a letter of credit with the Banque de l'Indochine = 80% on shipment; 20% on delivery' " which was assumed between the parties to require an irrevocable but not a confirmed credit. The seller gave delivery of goods to the buyer but payment therefor was not met out of the letter of credit. The seller sued to recover the price but the buyer disputed his liability to pay, alleging that it had been agreed between the parties that unless payment came from the letter of credit then the seller was not entitled to be paid for the goods.

Held, that the stipulation for payment by letter of credit did not go beyond requiring the establishment of such a letter as the primary but not the exclu- sive source of payment, and, accordingly, the seller was entitled to sue for and recover the price.

Observation upon the question whether a seller who stipulates for or agrees to payment by letter of credit can enforce payment directly against the buyer in the event of payment not being received out of the letter of credit.

It would be wrong and would destroy the value of the commercial causes procedure if a court upon the hearing of an appeal in an action heard as a

100 CLR 232

commercial cause were to decide the appeal by reference to matters which were not raised as issues at the trial.

Accordingly where parties to a commercial cause confined themselves at the trial to issues which assumed both sale and delivery and left for deter mination the obligation of the buyer to pay the seller having regard to the terms of the contract, and the buyer on appeal sought to argue that on the evidence there was no sale and delivery of the goods in question to him.

Held, that the argument ought not to be entertained and that, in any event, it was unsound.

Observations upon delivery of goods pursuant to f.o.b. contracts. Decision of the Supreme Court of New South Wales Kinsella J.), affirmed.

APPEAL from the Supreme Court of New South Wales.

Société Minière Cafrika commenced proceedings in the Supreme Court of New South Wales against Abraham Gilbert Saffron to recover from the defendant the sum of £5,919…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [1958] HCA 50
Decision Date: 14 November 1958

CaseChat Overview and Summary

Société Minière Cafrika (the plaintiff) sued Abraham Gilbert Saffron (the defendant) in the Supreme Court of New South Wales for the price of chrome ore sold and delivered. The action was heard as a commercial cause, and the parties narrowed their dispute to two core issues: whether the plaintiff was entitled to payment only if it came from a specific letter of credit, and if so, whether the unavailability of that credit excused the defendant's non-payment. The trial judge found in favour of the plaintiff on both issues, leading to an appeal to the High Court.

The High Court was required to determine whether the contractual stipulation for payment by letter of credit meant that it was the exclusive source of payment, thereby releasing the buyer from direct liability if payment failed through the credit. The Court also considered whether the parties' conduct and the specific terms of the contract indicated an intention to treat the letter of credit as absolute payment or merely as a primary, but not exclusive, method of payment. Furthermore, the Court addressed whether the defendant's actions, which led to the letter of credit being unusable, excused him from his obligation to pay for the goods.

The Court reasoned that the stipulation for payment by letter of credit did not go beyond establishing it as the primary, but not exclusive, source of payment. It held that to allow the defendant to argue on appeal that no sale or delivery had occurred would undermine the efficiency of the commercial causes procedure, as this issue was not litigated at trial. The Court found that the defendant's conduct, including his role in the preparation of the bill of lading, was responsible for the letter of credit failing as a means of payment. This, coupled with the defendant's acceptance of the delivered goods, meant he remained liable for the price.

Accordingly, the High Court dismissed the appeal with costs, affirming the decision of the Supreme Court of New South Wales.

Orders