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. ADC brought proceedings in conversion against Allco in respect of the October and November steel. Allco joined White, alleging that White was a joint tort-feasor. The trial judge held that Allco converted the October steel, but in respect of the November steel, that ADC was estopped from asserting ownership of the steel against both White and Allco. Rolfe J held that title to the October steel had passed to ADC and Allco had converted the steel notwithstanding the order of payment by ADC to White and White to Allco. Alternatively, his Honour held that the principle of "feeding of the title" established in Patten v Thomas Motors Pty Ltd (1965) 83 WN (Pt2) NSW 378 applied. On appeal, counsel for Allco submitted that this principle only applied where the purchaser did not know that the vendor did not have title to the goods at the time of sale. Allco also argued that cl13 of the subcontract between Allco and White was not a transfer of title clause, but merely created a charge, describing it as a "reverse Romalpa" clause. Allco also appealed against the trial judge's rejection of its claim against White in representation at general law and under s52 Trade Practices Act 1974 (Cth). ADC appealed from Rolfe J's finding that, although title had passed to it in respect of the November steel, that ADC was precluded, either by estoppel or election from asserting title to the steel, as that issue was not raised by either party at the trial. 2 UNREPORTED JUDGMENTS HELD: (1) The doctrine of "feeding the title" based on the law of estoppel applied: Patten v Thomas Motors Pty Ltd (1965) 83 WN (Pt2) NSW 378 applied. (2) The evidence did not disclose that ADC had knowledge at the relevant times of sale that White had no property in the steel to pass to ADC. (3) In any event, knowledge of the true situation does not defeat a "feeding of title" estoppel. (4) C113 of the subcontract was a transfer of title clause and could not be construed as a "reverse Romalpa" clause (whatever that concept might entail). (5) Neither party sought to maintain Rolfe J's finding that ADC was precluded by estoppel or election from asserting title to the November steel as that matter was not an issue at trial. In any event: (i) neither estoppel nor election were pleaded; (ii) even if the court were entitled to look at estoppel, there were no clear representations contained in the letter of 29 July 1988; (iii) even if there were representations, they were made to White and not Allco; (iv) there was no evidence that White communicated the representations to Allco; (v) there was no evidence that White acted on the representations to its detriment; (vi) ADC was never in a position where it had to elect between two inconsistent remedies (per Meagher JA, Simos AJA agreeing). (6) On the issue argued at trial, namely whether ADC could prove title to the November steel, ADC's attempt to reverse payment for the November steel was not effective to reverse the passing of title, semble in a transaction of sale, the seller is not entitled, absent agreement, to divest itself of title by returning to the purchaser the purchase price: cf re George Inglefield Ltd [1933] Ch 1 (per Beazley JA, Simos AJA agreeing). (7) The trial judge correctly rejected Allco's claim in representation against White as White did not make any representations, either express or by silence, to Allco as to ownership of the steel. (8) White was not a joint tort-feasor because, never having been in possession of the steel, White did not convert the steel. ORDERS The Court orders that: APPEAL BY ALLCO Appeal dismissed with costs. APPEAL BY ADC 1. Appeal allowed. 2. The orders of Rolfe J made 30 March 1993 that: (a) Allco is not liable for conversion of the November steel, and (b) ADC is precluded from asserting title to the November steel against Allco be set aside; 3. Declare that Allco is liable to ADC for conversion of the November steel; 4. There be judgment for ADC against Allco for damages to be assessed in respect of the November steel; and 5. Allco to pay the costs of the appeal. Meagher JA These two appeals from a decision of Rolfe J arise out of the development of the building on a site at Canberra in the Australian Capital Territory known as "The Quadrant'. It was a mixed residential and commercial building. The developer was Australian Development Corporation Pty Ltd ("ADC"); the builder was White Constructions (ACT) Pty Ltd ("White"); and Allco Steel Corporation Pty Ltd ("Allco") was a sub-contractor engaged in the supply and fabrication of steel. The building contract between ADC and White was dated 25 February 1987. It had a short and stormy career: ADC terminated it on 11 August 1988. WRUCO STEEL CORPORATION PTY LTD v AUSTRALIAN DEVELOPMENS CORPORATION PTY LTD; AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD v ALLCO STEEL CORPORATION PTY LTD (Meagher JA) The "sub-contract" between White and Allco was in the form of a Purchase Order dated 7 May 1987. Clearly the parties contemplated that the Purchase Order would be either replaced or supplemented by some more appropriate documentation, but this was never done. The essence of this litigation concerns the passing of property in two lots of steel, called "the October steel" and "the November steel". As far as the head contract between ADC and White was concerned, it provided that White should submit to ADC monthly progress claims which specified the value of unfixed materials fabricated off-site, and also that such materials were clearly to be marked as the property of ADC. More importantly, it said (in cl14.2.2): "upon payment [by ADC] of any progress claim which includes the value of any unfixed materials... property in such material... shall thereupon pass to [ADC]." As far as the "sub-contract" between White and Allco was concerned, the relevant clauses are 12 and 13. They read as follows: "12. Title "The seller warrants that the merchandise is free and clear of all liens and encumbrances and that Seller has a good title to same. "13. Property in Merchandise:- "Where any part payment for merchandise is made by Purchaser, the title to the property in the partly completed or completed merchandise and any materials and parts to be used in its manufacture and then on hand shall pass absolutely to Purchaser and the same shall be appropriately marked as the property of Purchaser provided however the risk of loss or damage thereto shall remain with Seller." It was admitted that the steel with which this case is concerned is "merchandise" within the meaning of cl13. No doubt the parties contemplated that, as is the normal course of a building contract, the sub-contractor would supply goods to, and obtain payment for them from, the builder before the builder obtained payment from the developer. This did not happen. One lot of steel was referred to as "the October steel" That was a lot of 503.27 tonnes of off-site material which was included in Progress Claim no 5 dated 29 October 1987, made by Allco on White, and in Progress Claim no 7 dated 9 November 1987 made by White on ADC. In respect of this lot, ADC paid White on 18 November 1987 and White paid Allco on 18 December 1987. The second lot of steel was referred to as "the November Steel". It was included in Progress Claim no 6 dated 1 December 1987 made by Allco on White and in Progress Claim no 8 dated 9 December 1987 made by White on ADC. ADC paid White on 22 December 1987, and White paid Allco in part on 15 January 1987 and in part on 18 March 1988. Thus, perhaps, contrary to usual expectations, the builder was in each case paid before the sub-contractors. Learned counsel for Allco submitted before his Honour, and has renewed the submission before us, that the sequence of payments has had the effect that property in the steel never passed to ADC. It was submitted that cll14.2 of the head contract, providing for the passing of property, could not have the effect of passing the property to ADC when ADC paid White, because at that time White itself had no property to pass, having not yet paid Allco. It is surprising that Allco should take this attitude, because at the time all three parties took the view that property passed on payment, no matter in what order the successive payments were made. Thus Allco wrote in a letter to ADC of 5 November 1987, concerning the effect of a payment by White to Allco: "Allco Steel Corp, Ltd 4 UNREPORTED JUDGMENTS Tomago Road Tomago NEWCASTLE NSW 2322 9th November 1987 Australian Development Corp Ltd, GPO Box 2543, SYDNEY NSW 2001 Dear Sir, RE: OFF SITE STRUCTURAL STEEL Allco Steel Corp Ltd contends that upon payment of off-site structural steel located at the above address, clearly identified, such structural steel shall become the property of Australian Development Corporation Ltd, to be used in the construction of the Quadrant building in Canberra, by White Constructions (ACT) Pty limited. Yours faithfully ALLCO STEEL CORP LTD" JOHN ROWLAND PROJECT MANAGER cc White Constructions (ACT) Pty Ltd." However, as a matter of legal interpretation, I think this construction, whereby title to the steel would apparently never get into ADC's hands, is insupportable. When cl14.2.2. of the head contract says "upon payment... property in such material... shall thereupon pass", in my view, "thereupon" must mean something like "thereupon as soon as may conveniently be". Alternatively, I think that his Honour was correct when he applied the doctrine of "feeding" the Vendor's title, which is really a law of estoppel. If a vendor has no title when he sells but later acquires title, the purchaser takes the benefit of it. Hence, here, if White had no title either when it made its Progress Claim on ADC or when ADC paid it, but later obtained title by payment to Allco ADC's title must have become perfect. According to the submission of learned counsel for Allco, no question of "feeding" could arise because at the time ADC paid White it knew Allco had not been Paid by White, and knowledge of the truth will always defeat an estoppel, of which "feeding" is merely a branch. There are two answers to this contention. One is that, as far as the evidence is concerned, ADC did not know. As far as the October steel was concerned, Mr Ward (for ADC) gave the following evidence: "Q. And put this to you: at the time you received progress claim number 7 from white what was your understanding as to the position as to whether Whites had paid Allco for the unfixed steel claimed in progress claim number 7? A: I would not know. "Q: Is that what you say to his Honour? A: I have no way of knowing." As far as the November steel was concerned, this is Mr Ward's evidence: "Q: Do you recall that telephone call? A: I can remember - it is five years ago. I can remember there was a telephone call to Mr Simons at that stage and I did ask him whether payment had been made to Allco by Whites? "Q: He told you *No"? A: He didn't know. I can remember that, that he did not know." He repeated that evidence at a later stage. There is another reason: whilst it is true that knowledge of the truth will prevent an estoppel in pais from arising, (because one can hardly act in reliance on a representation one knows to be false), I can see no reason why knowledge should defeat the sort of estoppel involved in "feeding" a title. Either way, as Mr Liney, learned counsel for ADC put it: WRUCO STEEL CORPORATION PTY LTD v AUSTRALIAN DEVELOPMENS CORPORATION PTY LTD; AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD v ALLCO STEEL CORPORATION PTY LTD (Meagher JA) "The fact that White could not pass title to ADC exactly when cl14.2.2 required did not forever excuse White from performance of its obligation under that clause to pass title, nor did it mean that the clause ceased to have any operation. Rather, White was initially in breach of it, by its failure to pass title, but remedied that breach upon payment to Allco, at which time property passed to ADC." As a result, in my view title to both the October steel and the November steel vested in ADC as soon as Allco was paid. His Honour so found, and correctly so. Insofar as Allco's appeal challenges his Honour's conclusions in this respect, it must fail. But, quite independently of the above arguments, learned counsel for Allco had another point, and this involved the construction of cl13 of the sub-contract. This clause, so the argument ran, had to be construed as a "reverse Romalpa clause", and many hours of the Court's time was occupied with this extraordinary proposition. This argument would have the Court construe the word "title" in cl13 as meaning "legal (but not equitable) title". It was said that "property" was not to pass, but only bare legal "title" to the property. In this regard, the expression "good title" in cll2 was prayed in aid. This argument, in my view, verges on the absurd. "Title" in this context must mean "beneficial" title. The Romalpa cases have nothing to do with cl13. They are all cases which involve the construction of a provision which expressly endeavours to retain title in the vendor; in the present case there are no words endeavouring to pass mere legal title, nor any words aimed at retention of an equitable title. His Honour was correct in rejecting this argument. Why the argument about title raged so furiously both before Rolfe J and in this Court was that eventually Allco sold the steel and pocketed the proceeds of sale. That is why ADC sued Allco for conversion. It made no claim against White (in fact, initially, not even joining it as a party). However, his Honour, whilst finding that title had passed in the case of both lots of steel. found that ADC was estopped from asserting that title in the case of the November steel. The estoppel found by his Honour arose out of a letter of ADC to White of 29 July 1988. The gist of the letter reads as follows: "The last paragraph but one of your letter dated Sth July 1988 states that all unfixed material will become our property when we pay your progress claim but we cannot accept the accuracy of that statement. Indeed we believe you have mix-interpreted cl14.2 which states that a progress claim must show that.... upon payment (by us).... the property in all off-site unfixed material will pass to us. Consequently progress claims for payment for off-site unfixed materials cannot be made unless they do show that the property in those items will pass to us if we pay you for them. We shall accordingly require verification from identification and marking of the items in question. It is noted that the Quantity Surveyor, whose certificate is required in respect of each progress claim, has not certified our title to off-site unfixed material. We are only required to pay for off-site unfixed material on production of evidence that on our making such payment the title therein will pass to us. We will consider any suggested procedure whereby this may be established but we do suggest that the simplest and most direct method would be for you to submit a letter from the Supplier plus evidence that the material has been suitably marked. This would clearly establish ownership of the materials and ensure that the ownership passes to us when we pay the progress payment to you. You submitted to us by letter dated 17th December 1987 a certificate from Allco Steel that they had received payment for 6 UNREPORTED JUDGMENTS $503,270. We understand that the material has not been marked as our property and we require you to obtain acknowledgment from Allco that we have title thereto." In effect, what ADC asserted in that letter was that (a) it should not have paid for the November Steel (b) inferentially, that title to the November steel was still with White; and (c) that the amount of $398,570 paid by it for the November steel should, in effect, be treated as an overpayment. Rolfe J was able to discern six representations arising out of this letter. They were as follows: 1. That there had been no passing of title in the November steel by White to ADC. 2. That the sum of $398,570 paid by ADC in respect of the November steel should no longer be treated as a payment for that steel but that ADC should be given a credit for that amount. 3. That ADC took the position that White had no title to the November steel to pass to it. 4. That the payment of $398,570 was accordingly not a payment for which ADC received any consideration. 5. That ADC would not accept any liability to pay for the November steel until it was satisfied by the further evidence of title. 6. That the $398,570 should be refunded or "perhaps" act-off against other indebtedness if any of ADC to White. The result of the submission was the inability of ADC as against Allco to assert title to the November steel. He also held that ADC had "elected" to abandon its title to the November steel. Against these findings of estoppel and election ADC appeals. Its appeal must, in my opinion, succeed. His Honour's findings on these matters, in my opinion, cannot stand. There are a number of reasons why this is so. First, neither estoppel nor election was pleaded. Secondly, even if it were permissible to consider the alleged estoppel (which in my view it is not), one cannot find any clear representations of anything, least of all the six matters enumerated by his Honour. At most one finds ADC expressing a point of view, acknowledging (even although softly) that it may not be correct. Thirdly, even if the letter does contain relevant representations, they were made to White, not Allco. Fourthly, there is no reason to believe they were communicated by White to Allco. Fifthly, there is no reason to believe that White, the representee, even acted on them to its detriment, and sixthly, ADC was never in a position when it had to elect between two inconsistent remedies. Seventhly, insofar as his Honour's finding involved a finding that the property in the November steel reverted to White, as a matter of law it is impossible for one party to a contract unilaterally to reverse the passing of property. For these reasons I think ADC's appeal should be allowed. There only remains one matter to be dealt with. There was a deed entered into between White and Allco dated 18 January 1989. It recited the sub- contract of 7 May 1987, the determination of the head contract between ADC and White, the making of certain claims by Allco against White, White's denial of those claims, and the settlement of all matters in dispute "without admission of liability" by the giving of mutual releases and by payment of the sum of $350,000 by White to Allco. In addition cl3(b) said: "The contractor and the sub-contractor agree that all materials and goods purchased for the works the subject of the sub-contract still in the possession of the sub-contractor be retained by the sub-contractor for its own use and purpose. WRUCO STEEL CORPORATION PTY LTD v AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD; AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD v ALLCO STEEL CORPORATION PTY LTD (Beazley JA) Allco submitted that this deed, which preceded the sale of the steel, in context amounted to a misrepresentation that there was no impediment to Allco's right to sell the steel. This misrepresentation, as I understand the argument, both rendered White a co-tortfeasor in conversion, and in breach of s52 of the Trade Practices Act. This submission was rejected by his Honour, and rightly so. In context, all that White was saying to Allco in the deed was "If you wish to sell the steel, that is alright by us. We will not complain." That is not a misrepresentation of anything. In my opinion, therefore, the following orders should be made: APPEAL BY ALLCO Appeal dismissed with costs. APPEAL BY ADC 1. Appeal allowed. 2. The orders of Rolfe J made 30 March 1993 that (a) Allco is not liable for conversion of the November steel, and (b) ADC is precluded from asserting title to the November steel against Allco be set aside; 3. Declare that Allco is liable to ADC for conversion of the November steel; 4. There be judgment for ADC against Allco for damages to be assessed in respect of the November steel; and 5. Allco to pay the costs of the appeal. Beazley JA There are two appeals before the Court. The central issue in the first appeal is whether the appellant (Allco) converted two lots of steel referred to in the proceedings as the October steel and November steel respectively. The determination of that issue involves the construction of a clause in each of two agreements, the first, a construction agreement between the first respondent (ADC) and second respondent (White), the second, a sub-contract between Allco and White. If any of the steel was converted, a further question arises whether White was a joint tort-feasor and thus liable to pay contribution to Allco pursuant to s5 of the Law Reform (Miscellaneous Provisions) Act 1946. Allco also appeals against the trial judge's dismissal of Allco's cross claim against White, alleging contravention of s52 of the Trade Practices Act 1974 (Cth). The issue in the second appeal is whether ADC can prove it has title to the November steel so as to maintain its claim in conversion. BACKGROUND The background to the dispute is as follows. On 25 February 1987, ADC as developer, entered into a written construction agreement with White as builder, for the construction of a residential and office building in Canberra on a site known as the Quadrant site. Cl14.2 of the construction agreement provided: "14.2 At four weekly intervals during the design and construction of the Project and at the Date of Practical Completion [White] shall submit to [ADC] a progress claim for payment by the [ADC] which shall show as at the date of claim: 14.2.1... 14.2.2 The value of unfixed materials, goods and equipment delivered to the Site for inclusion in the Project; such items shall be suitably marked as the property of [ADC] to clearly establish ownership; 14.2.3 8 UNREPORTED JUDGMENTS The value of unfixed materials, goods and equipment specially manufactured or fabricated off-site for subsequent inclusion in the Project; such items shall be suitably marked as the property of the [ADC] to clearly establish ownership; 14.2.7 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] but the Company shall remain responsible for loss or damage thereto until Practical Completion of the Project." The construction agreement was terminated on 11 August 1988. On 7 May 1987, White entered into a subcontract with Allco for the supply and erection of structural steel for the building. The subcontract was comprised in a document called Purchase Order No W023809. It provided, relevantly: "13. Property and Merchandise 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 and then on hand shall pass absolutely to [White] and the same shall be appropriately marked as the property of [White], provided however the risk of loss or damage thereto shall remain with [Allco]." "Merchandise" was defined in the Purchase Order to mean: "all goods, chattels, plant, equipment, machinery, stores, services or work as described in the Purchase Order." The merchandise described in the purchase order was: "Supply and erect structural steel Bondeck and Fire Spray to steel for office block car park, office block and residential tower, an as per architectural drawings, specifications and relent [sic] bill of quantity items." The purchase price specified in the Purchase Order was $2,378,000. On 29 October 1987, Allco furnished to White progress claim No 5 in the sum of $480,560.30 being for steel which Allco had purchased for the Quadrant project and which was stored off-site (that is off the Quadrant building site) at Allco's Tomago yards (the October steel). On 9 November 1987, White made its progress claim No 7 on ADC, in an amount of $622,082.00. This amount included a claim for the October steel in the sum of $503,270, the difference in price from Allco's claim on White, representing White's margin. There is no dispute about the price differential. Also on 9 November 1987, White wrote to ADC in the following terms: "In accordance with Article 14.2.3 the unfixed specially manufactured materials content contained in Progress Claim No 7 - $503,270, and in relation thereto please find attached: (1) Letter to (sic) Allco as to ownership. (2) Insurance cover for the principal." The attached letter from Allco was dated 5 November and it stated: "RE: OFF-SITE STRUCTURAL STEEL Allco... contends that upon payment of off-site structural steel located at the above address, clearly identified, such structural steel shall become the property of [ADC], to be used in the construction of the Quadrant building in Canberra, by White..." On 13 November 1987, ADC wrote to its quantity surveyor, Mr Schick, of Cameron and Middleton, requesting him to formalise his assessments to enable ADC to pay White's progress claim No 7. The letter concluded: WRUCO STEEL CORPORATION PTY LTD v AUSTRALIAN DEVELOPMENS CORPORATION PTY LTD; AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD v ALLCO STEEL CORPORATION PTY LTD (Beazley JA) "This authorisation [to pay progress claim No 7] is made on the basis that it is our understanding that all off-site materials claimed have been inspected by your office and that you have satisfied yourself that our interest in the insurance and proprietorship of these off-site elements is adequately covered." Mr Schick responded on the same day, stating that the steel could be: "identified by delivery docket numbers and we have confirmed from order and delivery dockets that the steel has been purchased for this project", and certified that the value of the October steel was not less than $503,270.00, the amount claimed by White. On 13 November 1987, ADC paid White's progress claim No 7. On | December 1987, Allco wrote to White enclosing its progress claim No 6, in the sum of $308,946.00 for steel, which included a claim for the November steel. On 9 December 1987, White submitted to ADC progress claim No 8 in a total amount of $908,122.00 including $398,570 for the November steel (the increase over the $308,946.00 claimed by Allco again representing White's margin in respect of which there is no dispute). In a separate letter on the same day, White wrote to ADC advising: "In accordance with Article 14.2.3 the unfixed specially manufactured materials content contained in Progress Claim No 8 is $398,570, and in relation thereto the ownership and insurance covers provided with our Claim No 7 also covers this claim." It was common ground that the reference to the "unfixed specially manufactured materials" was a reference to the November steel. On 14 December 1987, ADC authorised payment to White of $509,552.00 of the total amount of $908,122.00 claimed in progress claim No 8 and advised White that: "The value of offsite material [the November steel] will be paid when ownership passes in accordance with our telephone advice." On 17 December 1987, ADC advised White that it "must have evidence that [Allco] has no claim on [the November steel] and that [it is] your property". On the same day, ADC wrote to Mr Schick, the quantity surveyor, stating: "We have discussed the matter with our lawyers who advise that payment should only be made when the supplier, Allco..., has no further title to the [November steel]. While [the November steel is in Allco's] possession, it would have title to same to the extend [sic] of any payments not made by [White]. Your certificate shows $901,840.00 of steel [the October and November steel] as "now held" by Allco Steel. Would you please advise whether you have seen receipts as evidence that this amount has been paid. If not, would you urgently contact Whites and ask them to produce receipts, or acknowledgement from Allco as to the amount paid. Alternatively, a letter would be required from Allco to the effect that they have no claim on these goods relating to unpaid moneys." On the same day, White forwarded to ADC a copy of a fax from Allco to White confirming that it had received payment for the October steel. On 18 December, Allco forwarded a fax direct to ADC in relation to "the off site material contained in our November Progress Claim" stating that "Allco...has no claim on [the November steel] related to unpaid monies". Allco forwarded a copy of this fax to White, stating "that title noted [sic] off site materials included 10 UNREPORTED JUDGMENTS in our November 1987 Progress Claim will pass to White... upon payment of that Progress Claim'. These two faxes related to Allco's progress claim No 6, that is, to the November steel. Notwithstanding the terms of its 17 December fax, Allco did not receive any payment for the October steel until 18 December 1987 when White paid part of Allco's progress claim No 5. No issue was taken about the discrepancy at the hearing. On 22 December 1987, ADC paid White's progress claim No 8 in full. Thus, by this date, White had been paid in full for the October and November steel. Sometime prior to February 1988, various disputes had arisen between ADC and White. In particular, ADC alleged that White had claimed for steel to which it could not give title and that ADC had also overpaid progress payment No 9 (which did not relate to the steel in issue in these proceedings). On 15 January 1988, White made a part payment to Allco in respect of progress claim No 6. On 11 March 1988, in response to ADC's allegations in relation to the steel, White advised ADC of the total amount of Allco's claim in respect of the October and November off-site steel, and stated: "We do not consider that there are any monies outstanding [to Allco] on material to which you understand [ADC] has title..." It appears that White made the final payment of Allco's progress claims Nos 5 and 6 on 18 March 1988. Thus, by this date, Allco had been paid in full for the October and November steel and property had passed in both as at that date. (The trial judge stated that it was agreed between the parties that property in the November steel passed from White to ADC on 15 January 1988). Nothing turns on any discrepancy which might arise by the fact of the later date of the final payment of progress claims Nos 5 and 6. White subsequently submitted progress claims Nos 11 and 12 to ADC. During this time, the parties remained in dispute. On 29 July 1988, ADC wrote to White in relation to progress claim No 12 advising that in respect of the off-site materials, the claim of $1,341,008.00 had been reduced to $503,270.00 as White had not verified to the quantity surveyor that ADC had title to off-site material in excess of that amount. It will be recalled that the sum of $503,270.00 was the amount claimed by White for the October steel. ADC specifically referred to the provisions of cll4 of the construction agreement, advising that it required verification from Allco and evidence of proper identification and marking of the off-site steel. It reminded White that ADC was "only required to pay for off-site unfixed material on production of evidence that on our making such payment the title therein will pass to us". There was further correspondence between the parties culminating in ADC's termination of the construction agreement on 11 August 1988. On 11 October and 31 October 1988, Allco wrote to ADC advising that, as at that time, it had 510 tonnes of fabricated steel and 662 tonnes of raw steel on site at Tomago, the total steelwork in the project being 1480 tonnes. Allco indicated that White had granted it permission to discuss the completion of the works direct with ADC. Allco proposed that it would complete the steel fabrication and erection for the project on the assumption that no more payments were to be received from White. During the course of the negotiations which followed, by letter dated 28 November 1988, Allco advised ADC that: WRUCO STEEL CORPORATION PTY LTD v AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD; AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD v ALLCO STEEL CORPORATION PTY LTD (Beazley JA) "Further to our recent telephone conversation we confirm that the amounts paid by ADC to White... namely approx $1.3 M paid in total which includes $901,000 for off-site work have been paid by White to Allco." At the same time that Allco was negotiating with ADC, it was seeking to recover monies which it alleged were owed to it by White under the Purchase Order. On 18 January 1989, Allco and White resolved their dispute and entered into a deed of release. Recital E of the deed provided: "[White] and [Allco] have agreed, in full and final discharge of all claims and without admission of liability to settle their differences by giving mutual releases and by the payment of the sum of $350,000 by [White] to [Allco]." Subcl3(b) of the operative clauses of the deed provided: "[White] and [Allco] agree that all materials and goods purchased for the works the subject of the [purchase order] still in the possession of the subcontractor be retained by the subcontractor for its own use and purpose. CLAIM IN CONVERSION FOR OCTOBER STEEL Counsel for Allco submitted that his client could not have converted the October steel as against ADC, as title had never passed to ADC. This submission was based upon the following simple premise. Under cl13 of the Purchase Order, leaving aside for the moment any other issue in relation to the construction of that clause, White did not obtain title to the steel until it had paid Allco. Likewise, pursuant to cl14.2 of the construction agreement, ADC did not obtain title until it paid White. However, at the time ADC paid White for the October steel, White had not paid Allco for that steel. Accordingly, at the time of the event which should have triggered the passing of title to ADC, namely, payment by ADC to White, White had no title to pass as it had not paid Allco. The trial judge resolved this hiatus by construing the subcontract and the construction agreement in such a way that the order of payment did not matter, holding that: "\.. the clear result of the construction exercise is that payment having been made, albeit after the delivery of the steel or in an order different from that contemplated by the agreements, the title to ADC is perfected." His Honour considered that the same legal result could be achieved in a different way, stating, at 22: "Let it be assumed that, contrary to the facts, ADC had paid White and White had not paid Allco. ADC could, in these circumstances, have required White to pay Allco, so that White would perfect its title and, thereby, perfect ADC's title". His Honour then referred to Patten v Thomas Motors Pty Ltd (1965) 83 WN (Pt2) NSW 378, where Collins J (Herron CJ and McClemens J agreeing) said at 380: "The phrase 'feeding the contract' is an unusual one, but it is derived from the law of real property, where the phrase 'feeding the estoppel' has been sanctioned by long usage. The rule applies if a vendor, not having the legal estate but being estopped from denying that he has it, conveys property; then his subsequent acquisition of the legal estate 'feeds the estoppel' and the legal estate vests in the purported purchaser.." In Patten v Thomas Motors Pty Ltd, Collins J accepted that the principle which he applied in that case was derived from the law of real property. His Honour also referred to Benjamin on Sale, 8th Ed, p10, where the following statement is found: "A person who does not purport to sell goods otherwise than as an owner or by the authority of the owner is estopped from denying to the buyer that he was the owner at the time of the sale (Edmonds v Best (1862), 7 L T 279). Any 12 UNREPORTED JUDGMENTS subsequently acquired title goes to feed the contract and the property whose title is acquired by the seller vests in the buyer." This passage does not identify the type of, or basis of, the estoppel necessary or sufficient to trigger the "feeding of the title". However, the language used is typical of the language used to traditionally describe estoppel in pais, or estoppel by convention. Dixon J in Thompson v Palmer (1933) 49 CLR 507 at 547, described it in these terms: "The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment; or because he has exercised against the other party rights which would exist only if the assumption were correct... or because knowing the mistake the other laboured under, he refrained from correcting him when it was his duty to do so... or because he directly made representations upon which the other party founded the assumption. But, in each case, he is not bound to adhere to the assumption unless, as a result of adopting it as the basis of action or inaction, the other party will have placed himself in a position of material disadvantage if departure from the assumption be permitted." The formulation of the principle in these terms served to require the party estopped to make good the assumption. In the case of Patten v Thomas Motors, the effect of 'feeding the title" was to make good the assumption induced by the seller's conduct. There has, of course, been much development of the law of estoppel in Australia: see Legione v Hateley (1983) 152 CLR 406; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; The Commonwealth v Verwayen (1990) 170 CLR 394, such that in Verwayen, Mason CJ stated, at 413, that: "it should be accepted that there is but one doctrine of estoppel, which provides that a court of common law or equity may do what is required, but not more, to prevent a person who has relied upon an assumption as to a present, past or future state of affairs (including a legal state of affairs), which assumption the party estopped has induced him to hold, from suffering detriment in reliance upon the assumption as a result of the denial of its correctness. A central element of that doctrine is that there must be a proportionality between the remedy and the detriment which is its purpose to avoid." Mason CJ had earlier noted, at 412, that estoppel by conduct had itself been the subject of considerable expansion such that "there was no longer any justification for insisting on the making good of assumptions in every case "and that: "there is a very strong case for saying that equity had discarded earlier the notion that the purpose of the rules of estoppel by conduct was to make good the relevant assumption". As the matter was argued in this case, the question did not arise whether, given these developments in the law of estoppel, the result would always be, in a Patten v Thomas Motors situation, that the title would then "feed" through to the ultimate purchaser once the seller acquired title, or whether that result would depend on the facts of each case. Rather, counsel for Allco contended that the concept of feeding the title only applied where the purchaser did not know that WRUCO STEEL CORPORATION PTY LTD v AUSTRALIAN DEVELOPMENS CORPORATION PTY LTD; AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD v ALLCO STEEL CORPORATION PTY LTD (Beazley JA) the seller had no title to the goods at the time of sale. It was submitted that in this case, ADC knew that White had no property in the steel to pass. This submission was based on an assertion that ADC knew that White did not have title. It is necessary to examine the evidence to see whether this submission can be made good. I have already referred to Allco's letter, addressed to ADC dated 5 November 1987 and White's letter to ADC of 9 November 1987. Mr Ward, the director of ADC stated that this correspondence caused him to assume and believe that when Allco received payment, the off-site steel would cease to be its property. In cross examination, Mr Ward said that at the time he received progress claim No 7 (which included the October steel) from White, he did not know whether White had paid Allco for that steel. He said that his purpose in obtaining the letter of 5 November was so as to be satisfied that ADC would obtain title to the steel if it paid for it. He said that his position was that unless and until he received such assurance, ADC would not pay for the goods. He said that the letter of 5 November 1987 was not adequate to satisfy him title would pass. He required evidence that Allco had been paid as he understood Allco to be asserting in its letter that title would not pass until it had been paid. In other words, he understood Allco's 5 November letter to be conditional and ADC wanted to make sure "that Allco had been paid". He thus instructed the quantity surveyor to satisfy himself that ADC's "interest in the insurance and proprietorship of [the October steel] is adequately covered" [emphasis added]. The quantity surveyor subsequently certified payment of White's progress claim No 7 and that claim was paid. In my opinion, the appellant has not established that ADC knew that Allco had not been paid for the October steel. Rather, the whole tenor of this evidence, including Mr Ward's instructions to the quantity surveyor and the fact that payment was only made after the quantity surveyor's certification had been received, is that Mr Ward believed, at the time that ADC paid White its progress claim No 7, that Allco had been paid for the October steel. The same position applies in relation to the November steel. When it submitted progress claim No 8, White again relied upon Allco's letter of 5 November. However, Mr Ward only authorised so much of progress claim No 8 as did not include the November steel, advising White by letter dated 14 December 1987: "The value of offsite material will be paid when ownership passes in accordance with our telephone advice." The reference to "our telephone advice" was a reference to a call from Mr Ward to Mr Simons of White, in which Mr Ward advised Mr Simons that ADC required "evidence that ownership had passed, that White had capability to give title to us". Mr Ward also wrote to the quantity surveyor seeking his advice: "... whether you have seen receipts as evidence that this amount has been paid. If not, would you urgently contact Whites and ask them to produce receipts, or acknowledgment from Allco as to the amount paid." Mr Ward could not recall whether he had put these three alternatives to Mr Simons, his best recollection being that he "just asked for evidence". Mr Ward again wrote to White on 17 December 1987 stating: "... we must have evidence that the supplier has no claim on the goods and that they are your property." 14 UNREPORTED JUDGMENTS On the same day, White forwarded to ADC a copy of a letter from Allco advising that it had been paid for the October steel. Mr Ward stated in evidence that that information "was not good enough" for him to approve payment of the November steel in Progress Claim No 8. On 18 December, Allco advised ADC as follows: "We refer to the offsite material contained in our November Progress claim and advise that [Allco] has no claim on these goods related to unpaid monies." Mr Ward said that he understood from this letter that Allco had been paid for the November steel. This evidence establishes that ADC, through Mr Ward, did not make payment for the October and November steel until it had been satisfied that White itself had acquired title. As events turned out, ADC's satisfaction was misplaced. That, however, is not the point. On each occasion, White took steps, which caused ADC, through Mr Ward, to believe that White was in a position to transfer title to it. In those circumstances, the principle in Patten v Thomas Motors Pty Ltd applied. I should add that, in my opinion, the principle in Patten v Thomas Motors Pty Ltd is not as confined as counsel for the appellant contended and the developments in the law of estoppel to which I have referred are appropriately incorporated into the concept of "feeding the title". On that basis also, I am of the opinion that ADC had acquired title to the October and November steel. THE "REVERSE ROMALPA" POINT Counsel for the appellant submitted, alternatively, that cll13 was not a transfer of title clause but merely created a charge. He described the clause as a "reverse Romalpa" clause Counsel argued this proposition forcefully and at length. The essence of the argument was as follows. By cl13, Allco "gave away the legal title [to the steel] in the form of a charge". The charge related only to off-site steel and was equal to the amount of progress payments made by White. At all times, the real beneficial title in the off-site steel remained in Allco. The charge was, apparently, to be discharged once the steel was delivered on-site. It was not clear from counsel's submission whether this was so regardless of whether White had paid for the steel in full. These contentions were based upon a construction of cl13 whereby the words: "TITLE TO THE PROPERTY in the partly completed or completed merchandise..SHALL PASS ABSOLUTELY to [White]" (my emphasis) meant that the legal title in the goods, but only in the form of a charge, passed to White. Counsel submitted that this construction of cl13 was supported by the use of the word "title", and that if it was intended that the full legal and beneficial title were to pass, the word "ownership" would have been used. He further relied upon the fact that Allco retained possession of the steel suggesting that it was inconsistent that property passed to White. Other factors which were said to support this construction were: Allco had the right (indeed the contractual obligation) to add its own labour and materials to the steel which was unusual if a complete transfer of title was intended; White could not have demanded the steel from Allco, as Allco could have resisted such demands by asserting its obligation to work on the steel; and White could not have mortgaged the goods as Allco still had work to do on the steel. The difficulty with accepting this construction of cll3 is that it does such violence to the language of the clause that it amounts to its entombment and resurrection in a different form as a "reverse Romalpa" clause, a creature which is new to my legal experience. The violence thus done to the language of cl13 is directly contrary to all principles of construction. As Lord Watson said in WRUCO STEEL CORPORATION PTY LTD v AUSTRALIAN DEVELOPMENS CORPORATION PTY LTD; AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD v ALLCO STEEL CORPORATION PTY LTD (Beazley JA) McEntire v Crossley Brothers Ltd [1895] AC 457 at 467: "...it is entirely beyond the function of a court to discard the plain meaning of any term in the agreement unless there can be found within its four corners other language and other stipulations which necessarily deprive such term of its primary significance." Cl13 has none of the elements of a charge which would require it to be construed other than in accordance with its express terms: cf In re Bond Worth [1980] 1 Ch 228, esp at 248-9. Having said that, it is perhaps worth commenting that this case was conducted on a basis which did not, in my opinion, reflect the true contractual relationship between the parties. By that I mean, the case was conducted on the basis that the terms of the Purchase Order solely governed the relationship between Allco and White. The Purchase Order makes no provision for progress claims and progress payments. Upon its proper construction, cll3 probably means that any part payment of the purchase price caused the property in the off-site steel to pass to White. However, White and Allco in fact performed the agreement on the basis that progress claims and payments were to be made. Having regard to the way the parties performed the agreement, I would have found that property in so much of the steel as was the subject of a progress claim from Allco to White passed to White upon payment of the progress claim. Fortunately, the proper resolution of this case can be achieved notwithstanding that the parties relied solely upon the terms of the Purchase Order. THE SECOND APPEAL: THE NOVEMBER STEEL/EFFECT OF LETTER OF 29 JULY 1988 The trial judge held that for the same reason that title in the October steel had passed to ADC, title in the November steel had also passed. He held, however, that ADC was precluded by estoppel or election from asserting its title by reason of representations in its letter to White of 29 July 1988 and White's reliance on its contents. In its appeal ADC contends that estoppel and election were never pleaded and thus it had no opportunity to meet such a claim. Allco does not assert to the contrary and concedes that this aspect of the claim falls to be determined on the basis argued at trial - namely, that ADC can only claim title to the November steel if it can prove it had paid White for the November steel. Allco argues that ADC cannot prove payment because the letter of 29 July 1988 from ADC to White purported to reverse payment for the November steel, resulting in either ADC being credited with that amount or the sum being set off against other debts owed to White. In my opinion, ADC's attempt to deduct the monies for the November steel from a subsequent progress claim was not effective to "reverse" the passing of title, just as in a transaction of sale, the seller is not entitled, absent agreement, to get back the subject matter of the sale by returning to the purchaser the purchase price: cf In re George Inglefield Ltd: [1933] Ch 1 at 27. It follows, therefore, that at all material times, ADC had title to the November steel. The question as to what rights arose in White against ADC in those circumstances is not in issue in the case. ALLCO'S CLAIM AGAINST WHITE CONSTRUCTIONS ADC made no claim against White in the proceedings. However, Allco joined White as a defendant and cross claimed against it. The claim relevant to the appeal was that White had either warranted or represented that White was the 16 UNREPORTED JUDGMENTS owner of and legally capable of dealing with the steel held by Allco at its Tomago site and further that Allco was able to use for its own purposes the steel which it had been paid for by White. Secondly, Allco claimed that White had, by entering into the Deed of Release of 18 January 1989, itself converted the steel at Tomago such that it was a joint tort-feasor with Allco and therefore liable to make contribution to Allco in such amount as Allco was obliged to pay ADC: see s5, Law Reform (Miscellaneous Provisions) Act 1946. THE REPRESENTATION CLAIM The representation claim was brought both under the general law and under the Trade Practices Act. It is not necessary, in the first instance, to distinguish between the two bases of the claim, the initial question being whether the representations alleged were made. The representation claim was based, first, upon alleged oral representations made by Mr Houlahan and Mr Morcom of White; secondly, upon the express terms of para3(b) of the Deed of Release dated 18 January 1989; and thirdly, upon White's silence in not informing Allco that it had been paid for the fabricated steel held by Allco at Tomago; in not informing Allco that the fabricated steel did not belong to White and in not informing Allco that it knew that the fabricated steel belonged to ADC. THE ORAL REPRESENTATIONS Although the claim as pleaded was that representations had been made by both Mr Houlahan and Mr Morcom, there was no evidence of any statements made by Mr Morcom. The claim therefore revolved around the following statement of Mr Houlahan: "We are going to have a large legal battle with ADC for the termination of our contract. The last Progress Claims have not been paid by ADC Whites have made payments to Allco off their own bat without being paid for the same from ADC. The amount that ADC owes Whites is far in excess of the value of the steel. As Whites will obviously have a large legal battle with ADC, we do not want to have a number of legal battles going on at once. We want to resolve your claim and claims of other sub-contractors as well. You won't have to worry about battling with ADC because we will have a much larger battle and the ownership of the steel will pale-off into insignificance in the totality of the dispute." And the further statement: "T am bringing the plant manager up from Sydney to have a look at the steel in your yard. We want to see if the steel is suitable for building a large workshop for maintaining our heavy earthmoving equipment. If we do take the steel, we will pay you its value plus the $350,000. I have had the plant manager up from Sydney. We think the value of the steel is in the order of $300,000". The reference to the $350,000 was a reference to the amount which White said it would pay Allco by way of a settlement between them and which became the subject of the deed of release. The trial judge found that the first of Mr Houlahan's statements did not amount to a warranty or a representation as to ownership of the steel. Rather, the statement drew attention to the fact that there was or may be a dispute as to the ownership of the steel but that that issue would pale into insignificance having regard to the totality of the dispute which Mr Houlahan said was looming between ADC and White. In my opinion, the trial judge's finding in this regard WRUCO STEEL CORPORATION PTY LTD v AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD; AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD v ALLCO STEEL CORPORATION PTY LTD (Beazley JA) was correct. So far as the second of the statements is concerned, I also consider that the trial judge's finding that it contained no warranty or representation as to ownership is correct. REPRESENTATION IN CL3(b) OF THE DEED OF RELEASE In para3(b) of the Deed of Release dated 18 January 1989, White and Allco agreed: "\..that all materials and goods purchased for the works the subject of the Sub-Contract still in the possession of [Allco] be retained by [Allco] for its own use and purpose." I also agree with the trial judge's finding that para3(b) did not involve any representation as to the ownership of the steel. The true position was that there were disputes between all parties in relation to the Quadrant site and tough stances adopted by all. As Meagher JA has stated so succinctly, White in this clause, was doing no more than agreeing, as between it and Allco, that Allco could keep all the steel subject of the Purchase Order, then in its possession. REPRESENTATION BY SILENCE There is nothing in either the general law or s52 of the Trade Practices Act, which requires that commercial transactions be carried on in a completely open way or requiring full disclosure at all times. However, a partial disclosure may, in a given case, amount to a misrepresentation or a contravention of s52. Likewise, silence may amount to a contravention "if the circumstances are such as to give rise to a reasonable expectation that silence would be broken if particular matters exist': see Fraser v NRMA (1994) 124 ALR 548. The relevant principle was stated by Black CJ in Demagogue Pty Ltd v Ramensky and Anor (1992) 39 FCR 31. Black CJ, at 32, dealt with the issue of silence in the context of s52, but also in a manner which is applicable to the general law in the circumstances of this case, as follows: "Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there may have been conduct that is misleading or deceptive or that is likely to mislead or deceive. To speak of "mere silence" or of a duty of disclosure can divert attention from that primary question. Although "mere silence" is a convenient way of describing some fact situations, there is in truth no such thing as "mere silence" because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed". In my opinion, there was no conduct here which involved a misrepresentation. I do not consider that there was any obligation on White to make any statement to Allco as to ownership or the position of payment in respect of the October and November steel. The circumstances justifying this conclusion include that White, as Allco knew, was involved in a major dispute with ADC, with itself and with others, and also knew that the settlement with Allco was an attempt by White to minimise the number of conflicts it had to deal with. However, Mr Houlahan had made it apparent that ownership of the steel was an issue in its dispute with ADC. Further, there cannot be a representation by silence in circumstances where the facts are known to the alleged representee. In this case, Allco knew and believed that the October steel was the property of ADC. It had written to White on 17 December 1987 to that effect. All Allco's witnesses agreed that the 17 December letter reflected their understanding at the time and that that understanding was 18 UNREPORTED JUDGMENTS based upon their belief that Allco had been paid by White for the October steel and believed that White had been paid by ADC. Mr Rowland, the author of the 17 December 1987 letter, stated that nothing occurred after that date to change his understanding. Mr Cahill, who had assisted Mr Rowland to draft the letter, said that nothing had changed his understanding except for the terms of the deed of release of 18 January 1989. Further on 7 September 1988, there was a meeting between Mr Fisher from ADC and Messrs Vogel and Rowland from Allco. At that meeting, Mr Vogel informed Mr Fisher that ADC owned "the 300 odd tonnes on site and some of the 510 tonnes in Allco's yard at Tomago." Mr Vogel agreed with Mr Fisher in the meeting that the unfabricated steel was not ADC's property but that part of the fabricated steel was. Subsequently, on 28 November 1988, Mr Vogel spoke to Mr Ward from ADC, in the terms confirmed in his fax of 28 November 1988 set out above. In that conversation, Mr Ward told Mr Vogel: "T am assessing the merits of your proposal and to do that I need to know how much Whites have paid you for the steel ADC has paid Whites $1.3 million of which approximately $901,000 is for the offsite steel." The amount of $901,000 included the October and November steel. There was no suggestion in the evidence that Mr Vogel or Mr Rowland understood anything different. Mr Vogel confirmed this in his fax to ADC of 28 November 1988. Mr Vogel informed Mr Rowland of what he had been told by Mr Ward. Mr Rowland was not able to recall this conversation with Mr Vogel but conceded in cross examination that had he been told it, his evidence that he was unaware what payments had been made by ADC to White in relation to the off-site steel would have been wrong. Absence of recollection does not establish lack of knowledge. The evidence established, therefore, that both believed that ADC had title to the October and November steel as at the date of the deed of release. To the extent that Mr Cahill said that the terms of the deed of release altered his understanding, in relation to the October steel, Mr Cahill did not make the decision to settle with White. That decision was made by Mr Vogel, subject to the formal approval of Mr Turner. There was no evidence that Mr Cahill had communicated his altered understanding either to Mr Vogel or to Mr Turner. Accordingly, this submission should also be rejected. CLAIM FOR CONTRIBUTION S5(1)(c) of the Law Reform (Miscellaneous) Provisions Act 1946 provides: "Proceedings against and contribution between joint and several tort-feasors 5(1) Where damage is suffered by any person as a result of a tort (whether a crime or not) - (c) any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought." The question is therefore, whether White also converted the goods. Fleming on Torts, 8th Edition, defines conversion, at p54, as: "an intentional exercise of control over a chattel which so seriously interferes with the right of another to control it the intermeddler may justly be required to pay its full value." WRUCO STEEL CORPORATION PTY LTD v AUSTRALIAN DEVELOPMENS CORPORATION PTY LTD; AUSTRALIAN DEVELOPMENT CORPORATION PTY LTD v ALLCO STEEL CORPORATION PTY LTD (Simos AJA) There was an issue raised in the case (subject only to the question of title) that ADC did not have the immediate right to possession of the goods so as to entitle it to claim in conversion. White contends, however, that no action in which it engaged constituted an interference with the steel so as to render it liable in conversion. This issue was dealt with by Jordan CJ in Australian Provincial Assurance Company Ltd v Coroneo (1938) 38 SR(NSW) 700 at 716 as follows: "the plaintiff must give evidence of an immediate right to possession in himself when the alleged act of conversion was done by the defendant, and the doing by the defendant of an act which interfered with that immediate right of possession." In the present case, White did not, at any time, have possession of the steel. The 18 January deed whereby Allco retained the steel, did not involve White in any way in "some physical interference" with the steel. Rather, White merely disowned any claim to or responsibility for the steel. It did not convert the steel and accordingly is not liable to Allco under s5. I agree with the orders proposed by Meagher JA. Simos AJA I agree with Meagher JA and Beazley JA and have nothing to add. APPEAL BY ALLCO Appeal dismissed with costs. APPEAL BY ADC 1. Appeal allowed. 2. The orders of Rolfe J made 30 March 1993 that (a) Allco is not liable for conversion of the November steel, and (b) ADC is precluded from asserting title to the November steel against Allco; be set aside; 3. Declare that Allco is liable to ADC for conversion of the November steel; 4. There be judgment for ADC against Allco for damages to be assessed in respect of the November steel; and 5. Allco to pay costs of the appeal. Counsel for the appellant: G McVay Solicitors for the appellant: Messrs Sparke Helmore Withycombe Counsel for the first respondent: P Liney Solicitors for the first respondent: Messrs Colin Biggers and Paisley Counsel for the second respondent: J Stevenson Solicitors for the second respondent: Messrs Moray and Agnew