Visy Packaging Pty Ltd v Siegwerk Australia Pty Ltd

Visy Packaging Pty Ltd sought damages against Siegwerk Australia Pty Ltd for breach of contract. The dispute centred on the substitution of one epoxy resin for another in an epoxy-phenolic resin used to make lacquer to seal the insides of the ends of cans. This substitution allegedly caused corrosion of the can ends by contact between the contents and the can ends. The court also had to determine whether the insurer, QBE, was obliged to defend a claim for loss resulting from the alleged corrosion. The primary issue was whether the substitution of the epoxy resin caused the corrosion of the can ends. Other issues included whether the lower molecular weight of the substitute resin caused reduced flexibility of the lacquer and whether the lacquer was less able to withstand the scoring process. The court had to decide whether these issues were established on the balance of probabilities.

The court held that the substitution of the epoxy resin did not cause the corrosion of the can ends. The court found that the lacquer was not applied by Visy with sufficient thickness to enable the coating to withstand the rigors of Visy's production line processes. The court also held that Visy cracked the coating during the scoring process, which compromised its corrosion barrier properties. The court rejected the argument that the lower molecular weight of the substitute resin caused reduced flexibility of the lacquer. The court also held that the insurer, QBE, was not obliged to defend the claim for loss resulting from the alleged corrosion. The court found that the claim was not covered by the insurance policy.

The court dismissed Siegwerk's cross-claim against Nuplex and Nuplex's cross-claim against QBE. The court ordered Siegwerk to pay Nuplex's costs of the cross-claim. The court also ordered QBE to pay Nuplex's costs of the cross-claim and for the costs to be agreed or assessed on an indemnity basis. The court reserved liberty to apply for further orders.