ALLCO STEEL CORPORATION PTY LTD v AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD and ANOR; AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD and ANOR v ALLCO STEEL CORPORATION PTY LTD [1996] NSWCA 11

ALLCO STEEL CORPORATION PTY LID v AUSTRALIAN DEVELOPMENT CORPORATION PTY LID; AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD v ALLCO STEEL CORPORATION PTY LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MEAGHER and BEAZLEY JJA and Simos AJA 23 August 1996, 14 November 1996

[1996] NSWCA 11

SALE OF GOODS — Passing of title — CONTRACTS- Construction and Interpretation — Transfer of title clause — ESTOPPEL — Feeding of title — MISREPRESENTATION — CONVERSION.

In February 1987, Australian Development Corporation (ADC) engaged White Constructions (White) to build a residential and office building in Canberra on the Quadrant site. White subcontracted with Allco for the supply and installation of structural steel for the project. The contract between ADC and White provided that:

"Upon payment by [ADC] of any progress claim which includes the value of any unfixed materials, goods and equipment, property in such materials, goods and equipment shall thereupon pass to [ADC]".

The subcontract between Allco and White provided that:

"Where any part payment for merchandise is made by [White] the title to the property in the partly completed or completed merchandise and any materials and parts to be used in its manufacture... shall pass absolutely to [White] and the same shall be appropriately marked as the property of [White]..."

The central issue in the appeals was the ownership of two lots of steel supplied by Allco to White in October 1987 and November 1987 (the October and November steel) and invoiced by White to ADC in its progress claims Nos. 7 and 8. ADC paid both progress claims before White paid Allco for its respective claims for the October and November steel.

In August 1988, ADC terminated its construction agreement with White. Allco still had possession of the October and November steel at Tomago. In January 1989, Allco and White entered into a deed of release which provided for Allco to retain the steel still in its possession for its own use. Allco subsequently sold the steel and retained the proceeds.