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Court rules resin not responsible for can corrosion

By: Kate Tilley

April 10, 2013

MELBOURNE, AUSTRALIA — An Australian court has ruled a resin supplier is not liable for damages after the ends of tuna cans, which were coated in an epoxy-phenolic resin, corroded.

Court proceedings began in May 2009, when Melbourne-based Visy Packaging Pty. Ltd. sued Melbourne-based ink manufacturer Siegwerk Australia Pty. Ltd, the then Australia and New Zealand business unit of Siegwerk Druckfarben AG & Co. KGaA, headquartered in Siegburg, Germany.

Visy manufactures and supplies PET, cardboard and metal containers, and collects and processes recycled materials. Its products include metal cans with "easy open ends," which open via a ring-pull device attached to the end. Visy supplies the cans to tuna canners.

Siegwerk Australia supplied Visy with a lacquer to seal the inside of the can lids. A component of the lacquer was an epoxy-phenolic resin supplied by Sydney-based resin manufacturer Nuplex Industries (Aust.) Pty. Ltd.

Visy received reports July 2004 of some easy open ends corroding four to six weeks after the cans were filled with fish. Visy paid a tuna processor and a supermarket supplier more than A$7 million in losses.

Visy's court action claimed Siegwerk Australia's lacquer failed to properly seal the cans, causing the corrosion, and it sought reimbursement.

On Sept. 28, 2009, Siegwerk Australia filed a cross-claim against Nuplex, arguing the lacquer failed because Nuplex substituted Epikote 1009 epoxy resin for DER669E epoxy resin in manufacturing the final resin supplied to Siegwerk Australia.

Visy and Siegwerk Australia settled Aug. 17, 2010, eight months after they began court-ordered mediation, with Siegwerk Australia paying Visy A$2.25 million, including interest and costs.

Siegwerk Australia later went into liquidation, so its cross-claim against Nuplex was prosecuted by Sydney-based Zurich Australian Insurance Ltd., which had provided a A$750,000 security to enable the case to proceed.

Mediation failed, so the Federal Court in Melbourne had to decide whether Nuplex's resin caused the lacquer to fail. Siegwerk Australia had to prove a causal link between Nuplex's substitution and the corrosion.

Both parties relied on separate evidence from analytical chemists John Scheirs and Jim Haig. Scheirs argued Epikote 1009 had a lower molecular weight than DER669E, resulting in a less-flexible lacquer, which increased the likelihood of the coating being damaged as the lids were fixed to the filled cans. Consequently the contents penetrated the coating and corroded the metal.

Haig was critical of Scheirs's reasoning and suggested alternative reasons for the lacquer coating breaking down.

Justice Peter Gray said there was "no doubt" Scheirs' thesis was plausible, but Siegwerk Australia had insufficient evidence to prove its two key assumptions: that the two resins' molecular weight differed and a lower molecular weight resulted in a less-flexible coating.

"Without validation of these two assumptions, [Scheirs's theory] remains plausible, but amounts to nothing more," Gray ruled.

Gray dismissed the cross-claim and ordered Zurich to pay A$750,000 of Nuplex's costs.

Nuplex also cross-claimed against its own insurer, Sydney-based QBE Insurance (Aust.) Ltd., which had argued a liability policy issued to Nuplex did not respond. Gray agreed with Nuplex, saying "property damage unquestionably first occurred during the period of insurance," and ordered QBE to pay all remaining legal defense costs, apart from a A$500,000 deductible.