Carpathia Tin Mining Company v White Crystal Tin Mining Company [1918] HCA 25; (1918) 24 CLR 399 (25 April 1918)

HIGH COURT OF AUSTRALIA

The Carpathia Tin Mining Company, No Liability Appellants; and The White Crystal Tin Mining Company, No Liability Respondents.

H C of A

On appeal from the Supreme Court of New South Wales.

25 April 1918

Barton, Gavan Duffy and Rich JJ.

Campbell K.C. (with him Watt and H. G. Edwards), for the appellants.

Knox K.C. (with him Leverrier K.C. and Mocatta), for the respondents.

The following judgments were read:—

April 25

Barton J.

Upon a reference between these parties under the Arbitration Act of 1902, a Justice of the Supreme Court ordered by consent that the arbitrator should make his award in the form of a special case for the decision of the Supreme Court, and should embody in the special case the matter of his construction of an agreement between the parties dated 17th August 1916 and his findings upon the facts which appeared to him relevant to his award and the construction of that agreement.

The arbitrator complied with the order, and the special case included his findings of fact. The questions stated for the opinion of the Court were (1) whether the arbitrator's construction of the agreement was correct; (2) whether the contention raised by counsel for the respondent Company was correct; and (3) whether the contention raised by counsel for the appellant Company was correct.

To the first of these questions the Supreme Court answered in the negative; to the second in the affirmative; and to the third in the negative. These answers amounted to a determination in favour of the now respondent Company. I need not set out the special case, to which the agreement in question is an annexure.

The appellant Company was in effect claiming damages for an alleged shortage in the delivery of the concentrates from certain tin ore delivered for treatment to the respondent Company. The parcel of ore which the respondent Company agreed to treat was "four thousand tons or more." When tin ore, of a weight estimated at 2,014 tons in accordance with par. 15 of the agreement, had been dealt with, the appellant Company, alleging that the respondent Company had failed to observe the provisions and conditions of the agreement, cancelled it by action under clause 16. The method of approximation adopted by clause 15 for ascertainment of the weight of ore delivered was apparently arrived at because no appliances were available for weighing the ore, either before or after crushing, as was known to the parties when the agreement was made.

Before discussing the agreement it is as well to mention that the parties agreed before the arbitrator, who was of the same opinion, that clause 2 required the respondent Company to extract, in the form of concentrates assaying when dressed not less than 65 per cent. tin, 74 per cent. of the whole metallic tin contents of the ore delivered; but the parties differ radically as to the meaning of the obligation thus imposed on the respondent Company. All the concentrates obtained from the ore delivered were handed over to the appellant Company when dressed to a marketable condition.

The argument on each side rested practically on clauses 2, 12 and 15. But the gist of the contest was as to whether clause 12 was intended for a relative or an absolute criterion. It was indeed argued that it afforded no criterion at all, but I dismiss that contention, because no satisfying reason has been adduced for its inclusion in the agreement unless it was intended as a test of the one kind or the other.

The appellant Company contends that on the result of the assays of samples made under clause 12 it was entitled to receive concentrates of the agreed percentages, and that the percentages must apply to a weight of 2,014 tons of ore, in which case the shortage is as claimed by it. That is to say, that if clause 12 is to afford a test at all, it is a test of the quantity of tin contained in a fixed weight of ore, although the weight of ore is to be assumed as the result of a process substituted for an actual weighing of the ore. On the other hand the respondent Company contends that it has been underpaid. It argues that the test must be purely relative; in other words, that it was a criterion adopted to show approximately the efficacy of the extraction, and that if its extractions were proved by that test to be according to its undertaking, it had performed its contract.

It will be observed that the agreed method was to take samples of the pulp and tailings and assay them. The basis of this was that the proportion of tin in the pulp less the proportion of tin in the tailings would show the proportion of tin in the concentrates. It was open to the parties to have provided for another method. They could have agreed that the samples to be compared should be the concentrates and the pulp, not the tailings and the pulp. It is obvious that either method would yield an approximately accurate estimate. The method adopted has been condemned by the arbitrator as unreliable. Whether that be so or not, it is that to which the parties agreed. There was no dispute as to the results of the assays, so that there was no occasion to submit a sealed referee sample to an independent assayer. Clause 12 concludes with these words: "The assay value of same" (that is, the pulp and tailings) "shall be based on the average of samples taken over a period of a fortnight."

There is to my mind no sign of an agreement that the results shown by the assays should be applied to any specified weight of ore. The whole frame of clause 12 goes to negative such a supposition as that the respondent Company should apply the results obtained under its operation to any assumed weight of ore. It is related to the degree of extraction of tin from the ore treated, much or little, and it would be out of reason to say that such results, manifestly relative in themselves, should be applied so as to bind the White Crystal Company to deliver concentrates of a certain strength computed arbitrarily upon a weight of ore which might vary upwards or downwards according to the accuracy of the method adopted under clause 15. According to the test provided by the parties themselves the White Crystal Company arrived under clause 12 at results which were to satisfy or not to satisfy the contract according to the assay values based on the average of samples. The assays showed by the agreed method that by this process it did what was required. The two factors of ascertainment being the pulp and the tailings, the tin values in the pulp and the tailings when compared established in the manner jointly adopted the tin values in the concentrates. It delivered all the concentrates it made from the ore it received dressed to the required percentage. In my view it performed its contract.

It follows that the appeal should be dismissed with costs.

Gavan Duffy and Rich JJ.

In order to regulate the performance of the contract under consideration and to adjust the rights of the parties, it was necessary to ascertain the quantity of ore delivered by the appellant Company to the respondent Company and the percentage of metallic tin extracted from that ore by the respondent Company. There were no means available for determining the exact quantity of ore delivered, and the parties by clause 15 established a method by which the quantity could be roughly ascertained, and agreed that the quantity so ascertained should be deemed to be the amount actually delivered. It is to be observed that the liability of the respondent Company was not to extract any proportion of the tin contained in any particular part of the ore delivered but to extract 74 per cent. of the aggregate of the tin in the whole of that ore. We are not able to say whether it would be possible to make an exact appraisement on this head, but such an appraisement, if possible, would obviously require much time and labour. In these circumstances one would have expected to find a specific agreement by the parties to take assays, to accept the assays as representative of the whole mass, and to agree that the percentage of tin extracted should be fixed by means of a comparison of the results of the assays. Clause 12 contains elaborate provisions for the making of accurate assays of portions of the ore and of portions of the tailings, and so provides the factors necessary for the determination of the percentage of tin extracted from the ore by the respondent Company, but it does not in terms provide that the question shall be so determined. We think that it is clearly the intention of the parties that it should be so determined and that we must imply an agreement to that effect. If this is so, the decision of the Supreme Court of New South Wales is right and the appeal must be dismissed.

Appeal dismissed with costs.

Solicitors for the appellants, Cecil A. Coghlan & Co.

Solicitors for the respondents, Perkins, Stevenson & Co.