Australia, March 11 -- New South Wales Land and Environment Court issued text of the following judgement on Feb. 10:

1. ADAMSON JA: The appellants, Sanmik Food Pvt Ltd and Sanmik Natural Food Pty Ltd (together, the purchaser), appeal against orders made by Stevenson J (the primary judge) on 21 June 2024 dismissing their Amended Commercial List Statement filed 17 April 2024. The respondent to the appeal is Alfa Laval Australia Pty Ltd (the vendor).

The appeal turns on the proper construction of a Settlement Deed, Commercial Terms and Supply Terms (together the Settlement Documents) which were entered into by the purchaser and the vendor on 22 March 2023 to resolve proceedings brought by the vendor against the purchaser in the Commercial List of the Equity Division in 2021 (the Initial Proceedings). The purchaser submitted that the primary judge erred in accepting the construction of the Settlement Documents for which the vendor contended.

The relevant facts

The Settlement Documents were entered into in the following circumstances.

The Initial Contract

On 12 April 2018, the vendor agreed to sell two ultra-high temperature plants for the production of coconut milk to the purchaser for the price of $2.7 million (the Initial Contract). Each plant comprised a steriliser, a homogeniser, a steritank and an aseptic filler. Also on 12 April 2018, the purchaser issued a purchase order to the vendor for two complete plants. The purchase order listed the same payment terms as those in the Initial Contract (see below).

The first plant, which had a 4000L/hr capacity, was to be delivered to the purchaser's warehouse in Sri Lanka, and the second, which had a 6000L/hr capacity, was to be delivered to the purchaser's warehouse in the Philippines.

The Initial Contract provided that the purchase price was to be paid in 14 instalments as follows.

Table omitted, can be viewed at: (https://www.caselaw.nsw.gov.au/decision/194d8e27c05e319684bb5c29)

It was common ground that only two of these payments were made (totalling $387,600): the first was payment of the deposit of $270,000 on 7 May 2018, and the second was payment of $117,600 (relating to the delivery of the homogeniser and filler) on 2 August 2019.

The Initial Contract was a cost, insurance and freight (CIF) contract, which provided for the plant (in its various components) to be delivered by the vendor to the purchaser in Sri Lanka (for the first plant) and the Philippines (for the second plant). The terms of the standard CIF contract (which would have had the effect of passing title in the plants to the purchaser when they were loaded onto the ship delivering them) were substantially amended by express terms of the Initial Contract, including as to the passing of title.

The Initial Contract provided that title to each plant would pass from the vendor to the purchaser as follows:

"Reservation of Ownership / Insurance

Ownership of the equipment/module to be delivered shall pass to the Purchaser only upon receipt of the full purchase price by the Seller. Moreover, until that date, the Purchaser will keep the equipment/module insured against all risks, in particular fire for an amount at least corresponding to the agreed purchase price."

On about 11 June 2018, the Initial Contract was varied to increase the capacity of the first plant from 4000L/hr to 6000L/hr which resulted in the purchase price increasing from $2.7 million to $2.81 million. The purchaser issued a new purchase order to this effect.

Between 12 September 2019 and 13 October 2019, the vendor shipped two components of the first plant, the homogeniser and the filler, to the purchaser's warehouse in Sri Lanka. These were the only components of either plant which it shipped to the purchaser pursuant to the Initial Contract, although it had sourced all components for the two plants from third party suppliers ([10]).

*Rest of the document and Footnotes can be viewed at: (https://www.caselaw.nsw.gov.au/decision/194d8e27c05e319684bb5c29)

Disclaimer: Curated by HT Syndication.