Italian Imported Foods Pty Limited v Pucci S.R.L. [2006] NSWSC 1060 | Case summary

JUDGMENT 1 HIS HONOUR: The defendant is a supplier of preserved goods (its place of business is in Italy). In early July 2002, it agreed to supply goods (capers, semi-dried tomatoes, eggplant and capsicum) to the plaintiff (its place of business is in New South Wales). The goods have a shelf life of about three to four years. On or about 22 July 2002, the goods were delivered to the plaintiff's shipping agent in Italy for transportation. Thereafter, the goods arrived at the premises of the plaintiff in Australia. Subsequently, they were sold to customers in Sydney and elsewhere. 2 Whilst no complaint has been made as to the quality of the capers and the eggplant, complaint came to be made concerning the capsicum and the semi-dried tomatoes. No payment was made by the plaintiff. 3 The defendant brought proceedings in the Local Court to recover the price of the goods. The plaintiff claimed by way of set-off, inter alia, costs and loss of profits. 4 The dispute went to a hearing. It was heard and determined by Sweeny LCM. Her Honour found in favour of the defendant. 5 The plaintiff now seeks to challenge the decision in this Court. Subsequent to the filling of the summons, the plaintiff filed a notice of motion, which sought leave to file an amended summons. Commendably, the proposed amendment sought to reduce the numerous grounds to three in number only. However, one of the three grounds raises an issue that was not litigated before Her Honour. This aspect of the amendment was opposed by the defendant. In the circumstances, there was a consensus to the hearing of the application for leave to amend together with the hearing of the appeal itself. 6 The appeal was heard on 9 October 2006. Both parties were represented by Counsel. Counsel relied on written submissions, supplemented by oral argument. 7 For present purposes, the relevant issue raised by the plaintiff in its defence was a failure to supply goods of merchantable quality. The case conducted by the plaintiff in the lower Court was that this term was implied by the provisions of the Sale of Goods Act 1923. 8 Before the Magistrate, the defendant relied on evidence from Marissa Tazzari (its export manager) and Grazia Farneti (its quality control manager). There was also documentation (including control sheets). 9 The plaintiff relied on evidence from Furio Rossi (a director of the plaintiff) and Domenic Mercuri and Robert Genobile (both being customers of the plaintiff). 10 The Magistrate accepted the evidence of both Marissa Tazzari and Grazia Farneti. There was conflict between evidence given by Marissa Tazzari and Furio Rossi. In resolving this conflict, the Magistrate preferred the evidence of Marissa Tazzari. The Magistrate took a poor view as to the credibility of Furio Rossi. 11 The dispute in the Local Court on the merchantable quality issue was identified and resolved by the Magistrate as follows [at page 31]:- "At the end of the plaintiff's case, its evidence could be summarised as being that it supplied goods of merchantable quality to the defendant pursuant to an agreement and it has not been paid. The defendant's solicitor submitted that the plaintiff bore the onus to demonstrate on the basis of its quality control procedures that the goods were of merchantable quality when they arrived in Australia. The plaintiff's council (sic) says the relevant time is the time of delivery to the plaintiff's shipping agent in Europe and I am of the view that that is the appropriate time. The plaintiff cannot be held liable for the goods once they are in the possession of the defendant and its agent. In my view the plaintiff did establish that at the time of delivery the goods were of merchantable quality. I have referred to the evidence of Ms Farneti and Ms Tazzari as to the tests conducted and the quality of the goods. The defendant did not establish otherwise either by impeaching the plaintiff's witnesses or educing (sic) any contrary evidence. Indeed the defendant's position was that it refused to have any testing done as it was of the view that it was not its responsibility. 12 The plaintiff contends that the view taken by the Magistrate was erroneous (she erred in finding that the relevant time to assess merchantable quality was when the goods were delivered to the plaintiff's agent in Italy). The plaintiff now contends that the goods should remain merchantable for a reasonable period subsequent to delivery. In support of that contention, the Court has been taken to a number of decided cases (including Lambert v Lewis [1981] 2 W.L.R. 713). 13 It can be observed at this stage that this represents a change of the position taken by the plaintiff before the Magistrate. The relevant point of time is no longer when the goods arrived in Australia. It is for a reasonable period after delivery was taken by it. 14 This is not the only change of position contemplated by the plaintiff. It is now conceded that the Sale of Goods Act did not apply to the transaction. Instead, it is said that the transaction was governed by the Sale of Goods (Vienna Convention) Act 1986. It is this attempt to rely on the latter legislation which has aroused the opposition to the application to amend the summons. 15 It seems to me that these attempts to change stance now place the plaintiff not only in an awkward position, but an untenable one. 16 There is an implicit concession that the defence litigated before the Magistrate could not succeed. There is an attempt in this appeal to run a new defence. The respective provisions of the Sale of Goods Act and the Sale of Goods (Vienna Convention) Act are not the same. They throw up different considerations and there were questions which were neither argued nor dealt with by the Magistrate. 17 In my view, the plaintiff should not now be allowed to depart from the case that it elected to run at trial and present a case which relies, inter alia, on the Sale of Goods (Vienna Convention) Act. 18 Accordingly, leave to amend is refused in respect of the first of the three grounds. Otherwise, leave to amend is granted. 19 There are two bases for this refusal. Firstly, because if the point had been raised in the Court below the defendant might have conducted its case differently at trial (Chilcoton Pty Limited & Anor v Cenelage Pty Limited & Ors [1999] NSWCA 11). Secondly, in any event it would be futile to do so. 20 I shall now proceed on the assumption that there was a defence that had the capacity to succeed at trial. It first needs to be observed that the plaintiff had the onus to make good that defence (that the goods were not of merchantable quality). 21 The Magistrate described the evidence adduced by the plaintiff on the question of "asserted defects" as being "scant". She had difficulty in concluding whether this evidence revealed any fault or defect. These were views that she was entitled to take. The plaintiff's evidence fell well short of making good a defence that the goods were not of merchantable quality. The result that she reached was consistent with a finding to that effect. This made any error as to point of time immaterial. The plaintiff's evidence failed to demonstrate that the goods were not of merchantable quality at any point of time. 22 Accordingly, the plaintiff's case could be dealt with by reason of its own evidentiary weaknesses. In the circumstances, the defence could be disposed of without having regard to the evidence led by the defendant. 23 Leaving aside that state of affairs, there was powerful non-controversial evidence that militated strongly against the plaintiff's defence. 24 There was evidence that following the arrival of the goods in Australia, Furio Rossi informed the defendant that the goods had arrived in good condition. There was evidence of other conversations had with him prior to the making of any complaint. The Magistrate found that there had been no complaint made about the quality of the goods until December 2002. She also found that there was no written complaint until February 2003. The plaintiff did not itself do any testing of the goods. The goods were a portion of a larger batch delivered to other customers. There was evidence that there had been no complaint from any other customers. 25 In the light of this material, it could not be said that there was no evidence to support a finding that the goods were not of merchantable quality. 26 Apart from this evidence, there was also the evidence of Marrisa Tazzini and Grazia Farneti, together with the documentation. It was argued by the plaintiff that part of this evidence was expert evidence and should not have been received. Having regard to what has already been said, this consideration does not need to be pursued. 27 However, for completeness, I will observe that much of the evidence given by these two persons, and challenged by the plaintiff, would not fall within the category of expert evidence and added more weight to the material confronting the plaintiff. Even if it be assumed that some of it did fall within that category, it would not assist the plaintiff in this appeal. 28 The plaintiff bears the onus of satisfying the Court that there is error in point of law that justifies the disturbing of the decision of the Magistrate. In my view, the plaintiff has failed to discharge their onus. 29 The summons is dismissed. The Plaintiff is to pay the costs of the summons. Exhibits may be returned. **********

Italian Imported Foods Pty Limited v Pucci S.R.L.

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Judgment (13 paragraphs)

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