SOUTHERN WIRE PTY LTD v CLOVER COMMUNICATIONS PTY LTD [2023] SASCA 18

On Appeal from SUPREME COURT OF SOUTH AUSTRALIA (THE HONOURABLE CHIEF JUSTICE KOURAKIS) [2022] SASC 86 Applicant: SOUTHERN WIRE PTY LTD Counsel: MR R J WHITINGTON KC WITH MR P G QUINN - Solicitor: STEWART-RATTRAY LAWYERS Respondent: CLOVER COMMUNICATIONS PTY LTD Counsel: MR B J DOYLE KC WITH MR F C BROHIER - Solicitor: GARY INGLIS SOLICITOR Hearing Date/s: 28/10/2022 File No/s: CIV-22-010325 B SUPREME COURT OF SOUTH AUSTRALIA (Court of Appeal: Civil) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. SOUTHERN WIRE PTY LTD v CLOVER COMMUNICATIONS PTY LTD [2023] SASCA 18 Judgment of the Court of Appeal (The Honourable President Livesey and the Honourable Justice Bleby) 27 February 2023 APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - FROM SUPREME COURT - BY LEAVE OF COURT - GENERALLY TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - LIABILITY OF MANUFACTURERS OR IMPORTERS FOR DEFECTIVE GOODS The respondent operates a sheep grazing property on Kangaroo Island. Towards the end of 2008, it decided to construct new raceways to move sheep between its paddocks. In January 2009 and May 2010, the respondent purchased a total of 54 x 200-metre rolls of fencing wire through an agricultural agent. The applicant is the manufacturer of the fencing wire. The fencing wire was steel wire galvanised with a zinc/aluminium alloy, at a thickness of 125 grams per square metre and coated with a green polymer paint. The respondent asked for fencing that would last 50 years, only wanting to instal the fencing once. The respondent installed the fencing wire by the end of 2010. By December 2015, the respondent found the fencing wire to be corroding and contended that it continued to corrode. -- 1 of 15 -- The respondent brought an action in the Adelaide Magistrates Court, claiming damages up to the jurisdictional limit of $100,000 for the defective fencing wire it purchased from the applicant. The claims were for negligent advice and misrepresentation as to the suitability of the green polymer paint coating on the fence for use on the respondent’s farm; false and misleading conduct concerning the quality of the fencing wire, contrary to ss 52(l) and 53(a) of the Trade Practices Act 1979 (Cth) (TPA); and breach of s 51(4) of the Manufacturers Warranties Act 1974 (SA) (MWA). The magistrate dismissed the action. The respondent appealed to a single judge of this Court. The judge allowed the respondent’s appeal and awarded damages of $78,000. The applicant seeks leave to appeal against this decision. The Notice of Appeal raises six substantive grounds of appeal and numerous sub grounds. Broadly, the applicant contends that the judge: • failed to have any or any sufficient regard to cogent and admissible evidence which the applicant contends demonstrates the wire supplied to the respondent was not defective and of merchantable quality (Ground 1); • erred in various findings (Ground 2); • failed to consider and apply s 4(3) of the MWA (Ground 3); • erred in in holding that the respondent is entitled to damages because the corrosion was the consequence of exposure to aggressive fertilisers and other farm chemicals (Ground 4); • erred in awarding damages in the sum of $78,000 (Ground 5); and • failed to take into account and/or apply an appropriate discount to the damages assessed on the basis of total expenditure to be incurred by the respondent in the future in replacing all fences (Ground 6). Held, by the Court, refusing leave to appeal: • The only ground that may be reasonably arguable is Ground 6. • None of the grounds raises an issue of general principle or importance, nor would a grant of leave to appeal be otherwise in the interests of justice. Manufacturers Warranties Act 1974 (SA) ss 4(3), 51(4); Trade Practices Act 1979 (Cth) (TPA), ss 52 and 53(a), referred to. Clover Communications Pty Ltd v Southern Wire Pty Ltd [2022] SASC 86; M, K v Chief Executive of the Department for Child Protection [2021] SASCA 27, considered. -- 2 of 15 -- SOUTHERN WIRE PTY LTD v CLOVER COMMUNICATIONS PTY LTD [2023] SASCA 18 Court of Appeal – Civil: Livesey P and Bleby JA 1 THE COURT: The respondent brought an action in the Adelaide Magistrates Court, claiming damages up to the jurisdictional limit of $100,000 for defective cyclone fencing wire it purchased from the applicant. The claims were for negligent advice and misrepresentation as to the suitability of the green polymer paint coating on the fence for use on the respondent’s farm; false and misleading conduct concerning the quality of the fencing wire, contrary to ss 52(l) and 53(a) of the Trade Practices Act 1979 (Cth) (TPA); and breach of s 51(4) of the Manufacturers Warranties Act 1974 (SA) (MWA). The magistrate dismissed the action. 2 On 19 August 2022, Kourakis CJ allowed the respondent’s appeal and awarded damages of $78,000.1 The applicant now seeks leave to appeal against this decision. For the reasons that follow, we refuse leave to appeal. Background 3 The respondent operates a sheep grazing property on Kangaroo Island. Towards the end of 2008, it decided to construct new raceways to move sheep between its paddocks. This required about 10 kilometres of fencing. In January 2009 and May 2010, the respondent purchased a total of 54 x 200-metre rolls of fencing wire through an agricultural agent. The fencing wire was steel wire galvanised with a zinc/aluminium alloy, at a thickness of 125 grams per square metre (‘gsm’) and coated with a green polymer paint (‘cyclone green-coat’). The applicant is the manufacturer of the fencing wire. The respondent asked for fencing that would last 50 years, only wanting to instal the fencing once. 4 At the trial in the Magistrates Court, the respondent alleged that it was induced to purchase the fencing wire by representations made by a sales representative of the applicant. The representations were to the effect that the fencing wire was high quality fencing wire, the fencing recommended was the respondent’s best corrosion resistant fencing wire and would last 50 years, and it was appropriate to meet the respondent’s requirements. The respondent installed all the fencing wire on the Kangaroo Island property by the end of 2010. The Australian standard 5 The Australian Standard sets out that zinc/aluminium alloy generally extends the life of galvanised wire threefold. It describes the characteristics of various forms of galvanisation and sets out the expected lifetime of those forms in a range of climatic conditions. The Australian Standard explains that galvanising with an alloy of zinc and five per cent aluminium increases the durability of the 1 [2022] SASC 86. -- 3 of 15 -- [2023] SASCA 18 The Court 2 galvanisation because even though the rate of corrosion of the zinc is greater initially, it slows considerably when the coating becomes aluminium rich. The relative advantage of the alloy is greatest in conditions where there are high levels of atmospheric attack (e.g., salty spray) or where the use of corrosive farm chemicals is greater. 6 The Australian Standard includes a graph displaying ‘indicative coating durability’ for different climatic zones. In respect of the zone in which Kangaroo Island falls, the graph shows that galvanised zinc coating of 125 gsm will provide about 22 years of protection before the onset of rusting, which is defined as rust appearing on about 10 per cent of the wire surface. For a galvanised coating of 150 gsm, the estimated period of protection is a little less than 30 years. 7 A superior zinc/aluminium galvanisation of 125 gsm should, on a conservative assessment, generally retain its functionality for a lifetime or 50 years, or perhaps longer, if the polymer coating effectively adds to the serviceable life. Signs of rusting 8 The respondent’s managing director, Mr Atkinson, gave evidence that he first noticed the cyclone green-coat fencing losing colour and flaking a little. By December 2015, Mr Atkinson found the fencing wire to be corroding. This had progressed by 2018. Initially, the rust was mainly on the vertical strands of the fence but it then extended to the horizontal strands. 9 Mr Atkinson’s evidence was that by the time of trial, the rusting had become worse. Joints in the fencing had begun to break, causing the fence to fail. Mr Atkinson’s evidence was that once a fence starts to break, it has to be replaced. However, by the time of trial, he had yet to close down a paddock or withdraw livestock. 10 The respondent engaged Dr Kentish, a metallurgist, to examine a sample of the cyclone green-coat. The judge set out the findings of Dr Kentish, contained in a report dated 17 December 2018 and his oral evidence. Similarly, the judge outlined the evidence of Dr Zurhaar, the metallurgist called by the applicant, contained in a report dated 23 August 2019 and oral evidence. 11 We do not propose to set out the findings of either metallurgist, as outlined by the judge. The judge expressed the following conclusion as to the respective cases of each party:2 Comparing and contrasting the respective cases of the parties on the metallurgical issues, I am struck by the scientific approach taken by Clover and the unscientific features of Southern Wire’s case. Clover submitted its wire to an independent expert whereas Southern Wire’s principal conducted the salt bath himself and presented no supporting documentation of the method and no microscopic analysis of the results. In contrast with 2 [2022] SASC 86 at [84]. -- 4 of 15 -- [2023] SASCA 18 The Court 3 Dr Kentish’s careful and understated approach, Dr Zurhaar made assumptions about the equivalence of Waratah’s wire and cyclone green-coat, did not independently test a sample of fencing from Clover’s farm, or ask to examine Dr Kentish’s samples and gave opinions about serviceable life which were not reconciled against the Australian Standard. Use of fertiliser 12 Mr Atkinson gave evidence about the spreading of superphosphate in granular form on the farm, the use of a liquid fertiliser known as Nutrisoil, and the spraying of weed killers and pesticides. He testified that the respondent’s use of those chemicals was in accordance with ordinary farming practice. He said that the fertiliser was spread through booms that were lower to the ground than the top of the fence. He said that the herbicide was not sprayed hard up against the fence and rather, a gap of one metre was left. Although he performed little of the work involving the chemicals, his evidence as to the practices on the farm was not contradicted. The primary judge’s findings and the application for leave to appeal 13 The Notice of Appeal raises six grounds of appeal and numerous sub-grounds. What follows is a description of the grounds raised, the findings in respect of which each ground arises and the essential contentions raised in respect of each. Ground 1: failure to have any or any sufficient regard to cogent and admissible evidence which the applicant contends demonstrates the wire supplied to the respondent was not defective and of merchantable quality 14 The primary judge found that the magistrate erred in finding that the cyclone green-coat was of merchantable quality. He identified the following circumstantial evidence from which he drew that conclusion:3 1. Mr Atkinson’s evidence that the rust on the green-coat cyclone fence on Clover’s farm was widespread, although it appeared to be worse in some places. 2. Mr Chirgwin’s evidence that the rust was widespread. 3. The appearance of rust less than a decade after the fence was erected. 4. The absence of farm chemicals in the corrosion product analysed by Dr Kentish. 5. The galvanisation had hydrolysed, and the steel wire had rusted, within the still intact polymer coating. 6. Mr Atkinson’s evidence as to the farm practices which Clover instructed its workforce and contractors to adopt supported an inference that those practices were adopted in the absence of any evidence to the contrary. 3 [2022] SASC 86 at [92]. -- 5 of 15 -- [2023] SASCA 18 The Court 4 7. There was no evidence that some unidentified departure from those practices could cause corrosion as quickly as that apparent on the cyclone green-coat, particularly when the green-coat itself was still intact. 8. Southern Wire did not produce any expert evidence to address the particular phenomenon on which Dr Kentish relied of corrosion within the green-coat, or to explain why rust appeared so much earlier than the onset expected by the Australian Standards and the representations of Southern Wire. 9. The greater corrosion on the upper horizontal wire strands and on the top of the vertical wires, was consistent with a porosity which allowed water to enter between the green-coat and the galvanised coat before any zinc carbonate had formed. 15 The judge expressed his conclusion of a want of merchantability in the following way:4 On that circumstantial evidence I draw the inference that the cause of the corrosion was the porosity, or some similar defect, in the green-coat which allowed water to permeate and then hydrolyse the zinc/aluminium galvanisation before a zinc carbonate coat could be formed. I acknowledge that the precise cause of the porosity was not established by the evidence. However, that is no obstacle to drawing that inference consistently with the opinion of Dr Kentish. For that reason I hold that the Magistrate erred in finding that the cyclone green-coat was of merchantable quality. 16 The applicant pointed to the following as evidence demonstrating that the cyclone green-coat was not defective and of merchantable quality. 17 First, it pointed to photographs taken by Mr Atkinson in situ. It submitted that the photographs showed wire that appeared to be significantly less affected than the sample of the wire depicted in Dr Kentish’s report. It referred to evidence relating to the selection of the sample given to Dr Kentish, differences in apparent levels of corrosion with the photos taken by Mr Atkinson and also with a photograph taken by a Mr Dowell in January 2016 in response to a complaint from Mr Atkinson. The applicant complains that the photograph taken by Mr Dowell does not show the same corrosion as the sample. 18 The applicant also submitted that this photograph was taken in an area that was not exposed to fertilisers or farm chemicals. This is significant on the applicant’s case, as the cause of the corrosion is a critical issue. 19 The applicant then pointed to the evidence of Dr Zurhaar, who expressed the opinion that the fence had been ‘aggressively attacked by agricultural chemicals to the point it has shortened its otherwise potential service life or expected service life for a farm fence’. The managing director of the applicant, Mr Sivewright, gave evidence to similar effect. 20 In respect of these pieces of evidence, the applicant complains: 4 [2022] SASC 86 at [93]. -- 6 of 15 -- [2023] SASCA 18 The Court 5  the only reference in the judgment to Mr Atkinson’s photographs was at [52], and then at [91] and [94], where the primary judge referred to the magistrate’s treatment of the photographs;  the judge did not mention the evidence about the selection of the sample given to Dr Kentish;  while there is mention in the reasons of Mr Dowell’s visit and collection of samples, there is no reference to the photograph taken by Mr Dowell;  while the judge referred to the evidence of Dr Zuhaar regarding the life expectancy of the wire, the only reference to Dr Zuhaar’s evidence about the corrosive effect of chemicals on the wire was at [91], in which the judge set out the magistrate’s reasons; and  the reasons contain no reference to the evidence of Mr Sivewright, given during cross-examination, to the same effect as that of Dr Zuhaar with respect to the effect of chemicals on wire. 21 These complaints are not, in our view, of great moment. The judge expressly took into account the variations in corrosion along the fence. The evidence of Dr Kentish was also to the effect that the internal layer of the wire had been compromised in places even where there was no visible rust. The photographs are of limited assistance, if any, in establishing a proposition to the contrary. 22 The primary judge at [91] extracted the magistrate’s reasons for finding that the cyclone green-coat was of merchantable quality. Those paragraphs included Dr Zuhaar’s opinion as to exposure to corrosive agents and the small and unrepresentative size of the sample tested by Dr Kentish. The judge extracted those paragraphs in order to identify the relevant matters not addressed by the magistrate in drawing the conclusion of merchantable quality. The judge then went on to address these, as set out above. Having regard to that context, an ordinary reading of the primary judge’s reasons at [91] and [92] warrants the conclusion that the judge took into account all the matters identified therein, necessarily including the matters on which the applicant now relies. The opinion of Dr Zuhaar as to over-exposure to chemicals was expressed in cross-examination, not in his expert report, and was unaccompanied by supportive analysis. The primary judge devoted considerable attention to the question of why the cyclone green-coat rusted.5 23 In our view, Ground 1 has very limited prospects of success. Ground 2: errors in various findings 24 Ground 2 contains a collection of complaints about findings made by the primary judge. The ground has nine sub-grounds, two of which contain a further three sub-paragraphs. The applicant’s written submissions do not appear to address 5 [2022] SASC 86 at [59]-[84]. -- 7 of 15 -- [2023] SASCA 18 The Court 6 all matters raised under this ground. We address, in the first instance, those matters in respect of which the applicant has made submissions for the purposes of this leave application. 25 The applicant takes issue with the finding, set out above, that:6 9. The greater corrosion on the upper horizontal wire strands and on the top of the vertical wires, was consistent with a porosity which allowed water to enter between the green-coat and the galvanised coat before any zinc carbonate had formed. 26 The applicant complains that Dr Kentish’s evidence did not support this conclusion. However, there was evidence consistent with the conclusion, expressed as it was in the primary judge’s own words. Earlier, the judge had noted Mr Kentish’s evidence:7 A. There was examples, evidence, and it’s shown in figure 8 and also in figure 14. If you look at figure 8 you can see that the zinc aluminium metallic layer has virtually disappeared. There’s only a few – there’s only a number of white spots in the zinc aluminium remnant layer where the zinc is still present. Most of it or well over 95% or more has gone. But the organic coating which is shown in figure 8 is still intact. Something, the environment has got through the organic coating and has attacked the zinc and you see the same thing in figure 14 where the majority of the metallic zinc aluminium is gone but the organic coating is still evident. Once again, the environment causing the corrosion has got through the paint layer. (Emphasis added) 27 The applicant then complains that the respondent led no evidence to explain the inconsistent nature of the corrosion. Moreover, there was evidence showing corrosion from the top down, not from the bottom up, in circumstances where Mr Sivewright gave evidence that fencing wire ‘always rusts from the bottom up, where it’s in contact with the grass’. Mr Sivewright’s evidence was that the pattern of corrosion was consistent with the fence having come into contact with something airborne, ‘[w]hether it’s the atmospheric conditions or more likely fertiliser or sprays that has accelerated that corrosion process’. 28 The applicant also relied on evidence of two fencing contractors as to the manner in which galvanised steel fencing wire corrodes over time, depending on environment and chemical exposure, and pointed to the evidence of Dr Kentish to similar effect. It submitted that this evidence was capable of establishing that the work practices of the respondent in relation to the use of fertiliser and farm chemicals caused the surface corrosion on the wire. The applicant here also relied on the evidence given by Dr Zurhaar in cross examination, referred to above. 6 [2022] SASC 86 at [91]. 7 [2022] SASC 86 at [63]. -- 8 of 15 -- [2023] SASCA 18 The Court 7 29 Mr Atkinson had given evidence about the fertilising spreading practices but had not been present when fertiliser was spread in the relevant areas adjacent to the raceway. The judge addressed this evidence in the following way:8 The schedule of the spraying routine for Clover’s farm was put into evidence. No evidence was called to suggest that it was other than appropriate and the same as was generally undertaken on comparable farms. Mr Atkinson testified that round-up was sprayed with a boom spray which was always half a metre or more out from the fence to avoid the risk of hitting the fence. The boom spray is only 300 millimetres off the ground. Mr Atkinson gave evidence that herbicides are not sprayed in windy weather for obvious reasons. Superphosphate is spread in granular form using a top dressing unit. Fine dust is localised. 30 The applicant complains that the evidence it relied on tended to establish over-spraying, contrary to this paragraph and to the findings of the judge at sub-paragraphs [92](6) and (7), set out above. Importantly, in the applicant’s submission, the respondent failed to explain the localised nature of the corrosion. 31 While these pieces of evidence were capable of supporting the applicant’s case that the cause of corrosion was the abnormal application of chemicals, the applicant’s submissions do not engage with the evidence that, in addition to that which was visible, there was also corrosion underneath the protective layer that was not visible. The judge’s reasons and conclusion as to porosity, an important part of which was the evidence of corrosion under the coating, were intimately connected with his rejection of the applicant’s hypothesis.9 He further relied on the evidence of Dr Kentish of an absence of chlorides or sulphur beyond the outer layers, which in his opinion likely excluded the marine environment or superphosphate as the corrosive agent.10 32 As to this last observation, the applicant attacks the judge’s finding with respect to Dr Kentish’s evidence, being that:11 He subjected the wire to an examination using electron microscopy. His findings at [3.3] of his report detail extensive corrosion of the galvanising layer encased within the polymer coating. 33 The applicant complains that Dr Kentish made no finding to that ‘precise effect’. This section of the report does not describe the corrosion in those terms. The point of the report, and in particular this aspect of it, is to emphasise that chlorides and sulphur were only detected to a limited extent. The section does, however, appear to describe corrosion on the inner layers. To the extent that section 3.3 may not be clear whether it is describing corrosion within the polymer coating, Dr Kentish’s oral evidence, set out above and relied on by the judge,12 appears to confirm that this is what was being described. 8 [2022] SASC 86 at [55]. 9 [2022] SASC 86 at [63]-[66]. 10 [2022] SASC 86 at [64]. 11 [2022] SASC 86 at [60]. 12 [2022] SASC 86 at [63]. -- 9 of 15 -- [2023] SASCA 18 The Court 8 34 Ultimately, the applicant submits that the evidence as a whole contradicted the findings that the wire supplied was defective, and that the porosity of the polymer coating caused the corrosion. However, there was evidence capable of establishing these findings. This ground, in essence, looks to reargue the applicant’s case as to causation on its merits. We are not persuaded that this ground carries more than very limited prospects of success. Ground 3: failure to consider and apply s 4(3) of the Manufacturers Warranties Act 35 Section 4(3) of the MWA, which was in force at the time of sale but has since been repealed, provided: (3) A manufacturer of goods is not liable upon his statutory warranty as to the merchantable quality of the goods if the goods are not of merchantable quality by reason of— (a) any act or default of the consumer or some other person (not being the manufacturer, or his servant or agent); or (b) a cause independent of human control, occurring after the goods have left the control of the manufacturer. 36 The applicant’s complaint that the judge failed to consider the application of this exemption from liability depends on Ground 1, being the complaint that the judge failed to have sufficient regard to evidence showing that there was no inherent defect in the wire. The prospects of success of this ground are therefore inherently dependent, in the first instance at least, on the prospects of success in respect of Ground 1. 37 The claim under the MWA that the wire was not of merchantable quality was expressed in the alternative to that under s 52 of the TPA. The applicant did not plead a defence under s 4(3) of the MWA. Ultimately, however, there was evidence about fertiliser spraying practices on the farm and Mr Kentish gave evidence that there were no relevant traces of corrosive chemicals on the wire. For the reasons discussed above, this complaint has poor prospects of success. Ground 4: error in holding that the respondent is entitled to damages because the corrosion was the consequence of exposure to aggressive fertilisers and other farm chemicals 38 This complaint relies, again, on the prospects of success on the factual contentions raised in respect of Grounds 1 and 2. It consequently has similarly poor prospects. -- 10 of 15 -- [2023] SASCA 18 The Court 9 Ground 5: error in awarding damages in the sum of $78,000 39 In respect of damages, the judge held:13 Mr Chirgwin gave a quote for removal and installation of new Waratah wire fencing, and its tensioning, at a cost of $156,552, inclusive of transportation of machinery, labour and accommodation, explaining that the job would take some weeks. He applied an hourly rate of $140 plus GST. It can be accepted that to award that entire amount at the date of judgment would result in over-compensation, given that the fencing had already served its purpose for a decade or so. Moreover, the replacement of the fencing might not be required immediately (and, in any event, would be required in about 40 more years). Further, there was evidence that some fence posts might be salvaged and reused.14 I would discount the costs of repair by 50 per cent to have regard to the benefit of the fencing already received and for the benefit by way of a discount for the benefit of the judgment sum before the costs of repair are incurred. Having regard to Dr Zurhaar’s evidence, I must wield a blunt axe. (Footnote in original) 40 The judge awarded damages of $78,000. 41 The cost of the original fencing wire supplied was $19,035. The applicant submitted that this disparity warrants the inference that the quote was inclusive of removing and replacing most or all the wooden posts, and that there is no basis for holding it liable for that. It submitted that the respondent did not lead evidence to show that the wire supplied had caused damage to the existing posts, and indeed that Mr Atkinson’s photographs showed serviceable posts in use. 42 The quotation for replacing the wire fencing with a competitor product does not identify any component for supplying new posts. Mr Chirgwin’s evidence was that it included some percentage allowance for replacing posts that are damaged when staples are removed. He did not identify what that percentage was. 43 The applicant’s complaint that the posts remained serviceable did not engage with this aspect of the evidence, namely that replacing posts would, to some extent, be a necessary consequence of removing the wire, other than to complain that this appeared to be a mere cosmetic matter that should not be compensated. However, that complaint is made at a high level. It does not point to any evidence, in cross- examination or otherwise, of components of the quote attributable to labour, accommodation or expenses. Simply pointing to the cost of the original wire supply is of very limited assistance. The judge’s reasons incorporated the evidence that posts might be reused. The applicant has not demonstrated that this ground is reasonably arguable. 13 [2022] SASC 86 at [99]-[101]. 14 There was evidence that removal of staples might damage the posts but might be reused, T264-267. -- 11 of 15 -- [2023] SASCA 18 The Court 10 Ground 6: failure to take into account and/or apply an appropriate discount to the damages assessed on the basis of total expenditure to be incurred by the respondent in the future in replacing all fences 44 The paragraphs quoted above, culminating in the judge’s ‘blunt axe’ discount of 50 per cent were preceded by the following paragraphs:15 Mr Atkinson’s assessment was supported by Dr Zurhaar’s opinion that after rust appeared the raceway fencing would lose is functionality within 10 years. The representations were therefore shown to be false and misleading. Moreover, the cyclone green-coat was not of merchantable quality as defined by the MW Act, having regard to the description of the fencing in the brochure and on the recommendations of Southern Wire’s salesperson that it met Mr Atkinson’s requirements. I accept the submission of the appellant that running repairs are unsatisfactory for the reason given by Mr Chirgwin and summarised in [57] above. Clover is entitled to damages, at least in the claim made pursuant to s 52 of the TP Act, which allow it to procure fencing of the standard cyclone green-coat was represented to be. 45 The applicant complains that having regard to the evidence of Dr Zurhaar, the discount made insufficient allowance for the remaining service life of the wire. Dr Zurhaar’s evidence was to the effect that at 10 years old, the fence was still functional, was not showing further signs of rapid depletion, had more than 10 years left, and that the photos showed that ‘the fence is not continually being exposed to the same level of aggression that it was in the first six years of its life’. 46 As identified above, the judge accepted Mr Chirgwin’s evidence that running repairs would be unsatisfactory. He had earlier noted Mr Chirgwin’s evidence:16 Mr Chirgwin gave evidence that rusty fences cannot be satisfactorily repaired: ‘when wire is aged and rusty it might only take 20 per cent, 50 per cent of the tension before it starts breaking at other places while you are trying to pull it tight’. 47 The applicant submitted that in the absence of a positive finding as to when the respondent might incur any expense in relation to the replacement of the fences, and thereby suffer actual loss, there was no basis to award $78,000. An appropriate measure of damages required a positive finding as to when and why loss and damage would actually be suffered. The evidence of Dr Zuhaar, at least, was that loss may not be suffered for another 10 years. 48 Having regard to all the evidence, we think it is at least arguable that an assessment of damages should have commenced from a finding as to when the fence would have to be replaced. It is arguable that the ‘blunt axe’ approach, as framed, was insufficient in circumstances where no step had yet been taken to replace the fence. A finding as to when replacement would likely have been required may still have been necessarily couched in terms of probabilities and therefore made as an approximation, but it would have served to ground the 15 [2022] SASC 86 at [96]-[98]. 16 [2022] SASC 86 at [57]. -- 12 of 15 -- [2023] SASCA 18 The Court 11 damages finding. It appears that at the hearing before the primary judge, the applicant submitted that in the event of the appeal being successful, the claim should be remitted to the magistrate for an assessment of damages. 49 In our view, this ground is reasonably arguable. Ground 7 50 Ground 7 simply reads: By reason of either Ground 5 or 6, in the event that the appellant is held in any degree liable to the respondent, the appellant seeks an Order that the Appeal be allowed and a reassessment of the damages awarded. 51 Ground 7 therefore does not raise an independent ground of appeal. Leave to appeal 52 The applicant seeks leave to appeal on the grounds that:  the grounds of appeal raise matters of general principle on the issue of liability where liability was based on the judge’s finding that the wire supplied to the respondent was inherently defective;  the grounds of appeal raise matters of general principle on the issue of the assessment of damages and the application of appropriate discounting;  there is reason to doubt the correctness of the decision; and  the decision is likely to work a substantial injustice if it stands. 53 The question of whether to grant leave to appeal looks to the following considerations:17 a) whether the decision is attended with sufficient doubt to warrant its reconsideration on appeal; b) whether the decision raises an issue of general principle or importance; and c) whether allowing the decision to stand would work a substantial injustice to the applicant. 54 For the reasons set out above, we consider that the only ground that may be reasonably arguable is Ground 6. That conclusion relies upon the fact that the judge did not make a finding as to when the fence would have to be replaced and otherwise did not remit the matter. However, notwithstanding the absence of a finding, the judge observed that the fencing had served its purpose for a decade or 17 M, K v Chief Executive of the Department for Child Protection [2021] SASCA 27 at [7] (Doyle and Livesey JJA). -- 13 of 15 -- [2023] SASCA 18 The Court 12 so and that the replacement might not be required immediately.18 Thus, while he did not make a finding about when it would need to be replaced, a total discount of 50 per cent indicated a significant buffer for the prospect that the replacement might not be required immediately. Shortly before taking this approach, he had noted the evidence of both Mr Atkinson and Dr Zuhaar supporting the likelihood that the fence would lose functionality within 10 years.19 That suggests a functional life in the order of up to 20 years. 55 In those circumstances, we are not persuaded that Ground 6 raises any issue of general principle or importance. The judge wielded a blunt axe in substitution for what, it may be inferred, was an inability to find with any precision exactly when the fence would need to be replaced. A further, remitted hearing might result in a different assessment of damages, but a significant departure from the award made could not be said to be in strong prospect. 56 Neither do we think that any other ground raises an issue of general principle or importance. Each depends on inferences of fact. 57 As to whether the interests of justice otherwise support a grant of leave, the applicant relies on an affidavit dated 26 October 2022 of Mr Sivewright. This affidavit outlines the scale of the applicant’s business and says that this judgment is the first to hold the applicant liable for supplying a defective product. The affidavit continues: The Chief Justice’s judgment included findings that the wire supplied by the Appellant to the Respondent was inherently defective and that the Appellant misrepresented the quality and characteristics of its products. Those findings are harmful to the Appellant’s reputation as a National supplier of wire products. The potential damage those findings are likely to have on the Appellant’s reputation as a supplier of quality wire products is a matter of serious concern to the Appellant, especially given that it has never had a complaint about the service life or corrosion of any of the wire products it supplies, or a successful claim brought against it for supplying defective or sub-standard wire products, other than the claim pursued by the Respondents. 58 There was also evidence at trial of the absence of any other complaint about the wire of the kind supplied to the respondent. 59 The evidence as to the prospect for reputational harm goes no higher than apprehension on the part of Mr Sivewright. We would accept this to be an informed apprehension, but it remains one of risk of potential damage without any analysis. The respondent pointed to the evidence that the cyclone green-coat product only accounted for about one per cent of the applicant’s sales and comprised wire the applicant imported from Belgium before discontinuing it in 2011. Mr Sivewright’s apprehensions should be viewed against those facts. 18 [2022] SASC 86 at [100]. 19 [2022] SASC 86 at [96]. -- 14 of 15 -- [2023] SASCA 18 The Court 13 60 We are not satisfied that the applicant’s complaints on the Notice of Appeal raise any question of general importance or that a grant of leave to appeal would otherwise be in the interests of justice. The trial before the magistrate took eight days. The single judge appeal occupied two days. The costs to date of both parties must have been significant, especially when compared with the damages awarded or which might otherwise be in prospect, assuming success on Ground 6. Conclusion 61 We refuse leave to appeal. The applicant should pay the respondent’s costs of the application. -- 15 of 15 --