Paper Products Pty Ltd v Tomlinsons

Paper Products Pty Ltd v Tomlinsons - [1993] FCA 346 - FCA 1993 case summary — Zoe

[26]

5. In the course of the negotiations it is said that Tomlinsons stated that for the purposes of satisfying the requirements specified in the invitation a line of machinery comprising three components, being a paper pulp moulding machine, a continuous hot press and stacker machine and a printing machine, would be required. Tomlinsons said it manufactured machines producing egg boxes but not incorporating hot press facilities. Further it is alleged that Tomlinsons represented that it could supply a complete line of machinery comprising a TR4 paper pulp moulding machine which it manufactured itself, a "Peerless" hot press manufactured in the United States of America and a printing machine manufactured in the United States of America. When used together the three machines would be capable of complying with the requirements of the Board as set out in the invitation and producing 3,000 twelve pocket egg cartons per hour (para.12(b) and (c)). Paper products alleges that Tomlinsons suggested two alternative ways of acquiring a complete line of machinery necessary to satisfy the requirements in the Ministry's invitation. Separate orders could be placed with suppliers for the three components, including an order directed to Tomlinsons for a printing machine. Alternatively, all three components could be acquired through Tomlinsons. In consideration of Paper Products or the joint venturers contracting with Tomlinsons for the supply and installation of all components Tomlinsons allegedly promised to warrant that the three machines would together perform to the standards specified in the invitation and be capable of producing 3,000 twelve pocket acceptable egg cartons per hour (para.13). The representations are said to have been made with the intention and knowledge that they would be relied upon by some entity interested in acquiring the complete line and in the further knowledge that Paper Products would be incorporated specifically for the purpose of conducting the business of the joint venturers and that it would or reasonably would be expected subsequent to incorporation to rely upon the representations (para.14). Paper Products says that in reliance upon the representations it entered into a written agreement dated 9 November 1990 with Tomlinsons under which Tomlinsons agreed to supply it with the three machines for the sum of GBP931,500 (para.15).

[69]

16. Case citations and examples could be multiplied but there is little point. When the language of the arbitration clause in question is sufficiently elastic, then the more liberal approach of the courts to which Kirby P and others have referred can have some purchase. A wide construction of such clauses can be supported on the basis advanced by Clarke JA that it is unlikely to have been the intention of the parties to artificially divide their disputes into contractual matters which could be dealt with by an arbitrator and non-contractual matters which would fall to be dealt with in the courts. When, as here, the parties have agreed upon a restricted form of words which in their terms, and as construed in the courts, limit the reference to matters arising ex contractu, there is little room for movement. I am satisfied that neither the trade practices claim, nor the claims for breach of warranty and negligent mis-statement can be said to arise out of the agreement. They all arise out of matters which are antecedent to the contract even though they may involve questions which also go to its performance. No authority has been cited to me which would support the wide construction of the clause contended for by Tomlinsons and certainly the natural meaning of the words does not support their extension to disputes arising out of matters antecedent to the agreement. I come to this conclusion with some regret because I have no doubt, having regard to the various provisions of the agreement which have been set out, that much of the evidence in this case would go to the actual performance of the machines and would be evidence of the kind that one would expect to hear in an action for breach of contract. It may be that the resort to the Trade Practices Act 1974, negligent mis-statement and breach of collateral warranty is made necessary because of the limiting provisions of the agreement. It is of course possible that the parties may consent to have their dispute referred to arbitration. However, there is nothing in the language of the agreement which would justify an order for the stay of these proceedings. In the circumstances, the motion will be dismissed.

At a glance

Court

Decision date

Before

Source

Judgment (69 paragraphs)

Paper Products Pty Ltd v Tomlinsons (Rochdale) Limited; Nigel Watts and David Murphy [1993] FCA 346; (1993) 116 ALR 163 (1993) 43 FCR 439 (23 July 1993)

Parties

Legislation Cited (7)

Cases Cited (7)