Bindaree Beef Pty Ltd v Chinatex (Australia) Pty Ltd

1. [1]

   HIS HONOUR: The plaintiff, Bindaree, sues the defendant, Chinatex, for damages for breach of a written Service Kill Agreement (the SKA) which they entered into on 1 May 2015.

2. [2]

   For the reasons which follow, Bindaree is entitled to succeed.

3. [3]

   Bindaree operates an abattoir at Inverell, New South Wales. It processes cattle into consumable beef and beef products for sale. It also operates its own feedlot.

4. [4]

   Chinatex is an Australian subsidiary of a Chinese state corporation, whose primary business is the import and export of textiles to and from the People’s Republic of China.

5. [5]

   In late 2014, negotiations commenced between Bindaree and an organisation styled Shenzhen Lianhua Enterprise Development Co. Ltd (SLED), a Chinese meat wholesaler, with a view to entering into an agreement under which Bindaree would slaughter cattle owned by SLED and would process it for a fee, upon payment of which, SLED would take the beef to sell on the market. This type of arrangement is sometimes described as a toll or service kill.

6. [6]

   Mr Andrew McDonald (McDonald), Bindaree’s Chief Executive Officer, represented Bindaree in the negotiations. SLED was represented principally by Mr William Li (sometimes spelt Lee) (Li). Other participants for SLED were a Mr Qu and Mr Huang. Chinatex had some involvement in the discussions. The precise nature of Chinatex’s relationship with SLED is not clear. SLED had no corporate presence in Australia, whereas Chinatex did. For this reason, McDonald suggested that Chinatex guarantee SLED’s obligations.

7. [7]

   However, on 19 December 2014, Li wrote to McDonald requesting that Chinatex be made the formal signatory to the contract rather than SLED, obviating the need for a guarantee. McDonald agreed.

8. [8]

   Chinatex was represented principally by Mr Zhihua Liang (Liang).

9. [9]

   Somewhere in the background, unbeknown to Bindaree, was another entity, Uniwell Group Pty Ltd (Uniwell), an Australian subsidiary of SLED. It was seemingly contemplated on the Chinatex side of the deal that Uniwell would be the ultimate purchaser of the beef products to be produced under the proposed agreement between Bindaree and Chinatex. McDonald, who I found to be an entirely truthful witness, gave evidence that he became aware of Uniwell’s existence for the first time on 14 May 2015 during a visit to Beijing.

10. [10]

    In early 2015, Bindaree instructed its solicitor, Mr Norman Hunt, to prepare a draft agreement. Various drafts were produced. Chinatex had its own solicitor. Discussions between them covered the procedure that would apply to the choice of cattle and the prices which would be paid.

11. [11]

    On 1 May 2015, Bindaree and Chinatex signed the SKA. It defines Chinatex as the Customer and Bindaree as the Processor. The Recitals record that the Processor operates beef abattoir facilities at Inverell and that the Customer has agreed to engage it to purchase cattle and carry out a Service Kill for it on the conditions of the SKA.

12. [12]

    The following are the materially relevant terms of the SKA:

13. [13]

    Schedule 2 of the SKA names Liang as the Customer contact person for Chinatex.

14. [14]

    The SKA contemplated the acquisition and slaughter by Bindaree of 900 head of cattle per week, over the 150 week period from 18 August 2015 to 18 August 2018, with a two week hiatus each year. Chinatex was to pay Bindaree the Total Product Fee comprising the Service Kill Fee of $405 per head, and the Carcass Cost, being the average price paid by Bindaree to acquire the cattle, plus the costs and expenses of transporting cattle bought at auction to Inverell.

15. [15]

    Five days earlier, on 27 April 2015, Chinatex and Uniwell entered into a written Underwriting Contract with each other in contemplation of Chinatex entering into the SKA. Under that instrument, Uniwell would assist Chinatex to reach agreement with Bindaree and would sign the SKA, and Uniwell would pay Chinatex for products according to the Underwriting Contract and the agreed amount in the SKA.

16. [16]

    McDonald travelled to Beijing where, on 14 May 2015, he met, amongst others, with Li, who told him that “they” were now operating as Uniwell, which was going to be the sole sales company for Chinatex for the meat. This is when McDonald says he first learnt of Uniwell’s existence.

17. [17]

    The SKA was a potentially very lucrative arrangement for Bindaree. The risk of movements in the market prices for cattle was Chinatex’s. On the other hand, Bindaree would profit to the extent that its production costs were under $405 per head.

18. [18]

    Market prices for cattle apparently increased after the SKA was signed. Chinatex would have to pay more for the cattle slaughtered and processed under the SKA.

19. [19]

    18 August 2015 was scheduled to be the start of the first Service Kill Week.

20. [20]

    Things did not start well for the SKA.

21. [21]

    On 13 August 2015, after a somewhat extensive exchange of correspondence about prices, Li emailed McDonald as follows:

22. [22]

    On 19 August 2015, McDonald met with Liang and Bindaree’s solicitor, Mr Hunt. A conversation to the following effect took place:

23. [23]

    Liang gave evidence. Notwithstanding significant contemporaneous evidence to the contrary, he denied having acknowledged Chinatex’s obligations under the SKA (then or at any other time) or having made any request for assistance in hiding losses from Beijing. He is an intelligent, articulate and thoroughly unscrupulous man, entirely lacking in any commercial moral compass, whose evidence I reject where it conflicts with that of McDonald, and in any event, where it is not supported by contemporaneous, objective material. Senior Counsel for Chinatex correctly did not seek to support his evidence. Liang’s attitude (which informed his behaviour throughout) can be simply stated: Chinatex cannot lose money.

24. [24]

    At some point in his evidence, Liang said, unconvincingly, that this attitude yields to Chinatex’s legal obligations. His and Chinatex’s behaviour throughout shows otherwise.

25. [25]

    It is clear that Chinatex never intended to perform its obligations under the SKA to take meat products and pay for them if that meant paying prices which it did not like. A limited selection of outward expressions of this attitude is set out below.

26. [26]

    On 27 August 2015, Liang wrote to McDonald:

27. [27]

    On 2 September 2015, Liang wrote, amongst others, to McDonald:

28. [28]

    On 7 October 2015, Liang wrote, amongst others, to Campbell:

29. [29]

    Chinatex gave no instructions to Bindaree for the purchase of any cattle. It did not take delivery of any meat products. Its communications made it clear that it would not do so. It did not make any payments.

30. [30]

    Clause 10 of the SKA required Chinatex to deposit a security bond for its performance. On 15 October 2015, it transferred $364,000 into the trust account of Bindaree’s solicitors.

31. [31]

    McDonald was hopeful that Chinatex would find an acceptable commercial solution so that Bindaree could start delivering the meat processed under the SKA. He was reluctant for Bindaree to commence legal action.

32. [32]

    So that Chinatex could not say that Bindaree had failed to hold up its end of the bargain under the SKA, Bindaree (presciently) adopted the following course: from 19 August 2015 until 5 October 2015 for each Service Kill Week, Bindaree bought cattle from saleyards or farmers and slaughtered, boned and placed them in chillers separate from Bindaree’s own cattle.

33. [33]

    Bindaree generated a daily production summary of this activity. The meat was, of course, never delivered to Chinatex.

34. [34]

    Bindaree carried out the Weekly Service Kill in the hope that Chinatex would take delivery, but in the knowledge that this was hardly likely.

35. [35]

    From 18 August 2015 to 5 October 2015, Bindaree regularly invoiced Chinatex for the difference between the Total Product Fee under the SKA and the amounts which it received from third parties to whom it sold the Products. These invoices totalled $6,916,684.47. Chinatex paid nothing. During the proceedings this period was termed the first non-performance period.

36. [36]

    When payment was not received by Bindaree from Chinatex for a particular week, the Product was sold by Bindaree on a piecemeal basis to make up orders for other customers, via Sanger Australia Pty Ltd (Sanger), a sales and marketing agent to whom Bindaree paid a commission on sales. Sanger received orders from customers which it relayed to Bindaree. Bindaree sourced and processed meat to fill the orders. The sales agency relationship between Bindaree and Sanger had been in place for years.

37. [37]

    McDonald gave evidence, which I accept, that if Chinatex had wanted delivery, Bindaree would have given it. Arrangements to supply Bindaree’s other customers would have been made. Bindaree was at all times ready, willing and able to, and to the extent it could without Chinatex’s cooperation, it did, perform.

38. [38]

    On 6 July 2015, Bindaree and Sanger merged. Sanger continued to sell the meat products, but was no longer paid a commission.

39. [39]

    In August 2015, Mr James Campbell (Campbell) was appointed Chief Executive Officer of Sanger. McDonald assigned to him responsibility for managing the SKA. Campbell was an entirely truthful witness. I prefer his evidence to that of Liang where they conflict.

40. [40]

    On 29 September 2015, Campbell met Liang. Liang told him that the overall arrangement from Chinatex’s perspective had been that Bindaree would sell to Chinatex, which would sell to Uniwell, which would sell to a Chinese “off-taker”, which was unable to import beef in its own right. Liang said that Chinatex had been unable to perform the SKA because the Chinese off-taker had gotten into financial difficulty. Uniwell was unable to facilitate the export of the beef to the off-taker and therefore could not pay Chinatex, which was therefore unable to pay Bindaree. Liang said that Chinatex understood its obligations under the contract and needed to find a solution.

41. [41]

    Liang identified a Chinese company called Hondo as a possible customer for Chinatex to sell the beef from the Service Kill. More than once, Campbell made it clear that Bindaree was willing to work with Chinatex to assist it in meeting its obligations under the SKA.

42. [42]

    From mid-September 2015 to May 2016, Campbell dealt mainly with Liang. He also dealt with a Mr Clement Quan, who he learnt from Liang was an agent for Hondo.

43. [43]

    On 8 October 2015, Campbell had a conversation to the following effect with Liang:

44. [44]

    Hondo started taking meat products produced by Bindaree from 8 October 2015.

45. [45]

    In November 2015, McDonald visited Hondo in Chongqing, China.

46. [46]

    Hondo’s specifications were more onerous than those which the SKA contemplated, but Bindaree met them anyway, according to McDonald, at Chinatex’s direction to satisfy its customer.

47. [47]

    From 8 October 2015 to 15 January 2016, Bindaree invoiced Chinatex $17,583,093.39 for these sales. Chinatex paid. It never suggested it was wrongly invoiced. The parties termed this period the performance period.

48. [48]

    Liang, in my view dishonestly, denied that his understanding was that the Hondo arrangement was Chinatex’s performance of the SKA.

49. [49]

    Hondo stopped buying from Bindaree at the beginning of January 2016.

50. [50]

    Communications between Bindaree and Chinatex about future performance of the SKA ensued. These included the assertion on 5 January 2016, for the first time, by Liang that cl 2.3 of the SKA required Bindaree to seek Chinatex’s authorisation to buy cattle each week, and that without asking Chinatex for authorisation, Bindaree should not buy cattle, and a response by Campbell that under cl 2.4, if Chinatex’s Purchasing Representative did not provide authorisation, Bindaree could choose the mix of Aus-meat descriptors specified in cl 22, and deliver that mix.

51. [51]

    There were exchanges regarding, amongst others, payment of $2,641,048.63 owed for the Service Kill performed by Bindaree during the weeks beginning 21 and 28 December 2015.

52. [52]

    There were negotiations about a settlement agreement to bring the SKA to an end, but these did not reach fruition. In a letter dated 15 January 2016, Campbell referred to a verbal agreement reached on 5 January 2016, that the two week period from 4 – 15 January 2016 had been a period of suspension under the Service Kill Period definition in accordance with the SKA.

53. [53]

    Campbell says that because it appeared to him that Chinatex accepted it had to comply with the SKA, he allowed the weekly kill in accordance with the SKA to continue into 2016.

54. [54]

    Once Hondo stopped buying, Chinatex reverted to form by not performing the SKA because its commercial interests did not suit it to do so.

55. [55]

    On 8 April 2016, Chinatex’s solicitors, Websters, wrote to Campbell denying any liability to pay any amounts to Bindaree, and asserting that the SKA came to an end when Chinatex “long since indicated that it would no longer perform its obligations under the contract”. The letter also asserted that Bindaree, not Chinatex, had been in fundamental breach of the contract.

56. [56]

    On 31 May 2016 Bindaree’s solicitors wrote to Chinatex’s solicitors, terminating the SKA effective immediately.

57. [57]

    The parties termed the period from 15 January 2016 to 31 May 2016 the second non-performance period.

58. [58]

    Bindaree says that from the commencement of the SKA on 18 August 2015, it acquired and delivered, or caused to be delivered, 900 head of Service Kill Cattle to the abattoir each Service Kill Week, and carried out a Service Kill of them. It also says that at all material times, from 1 May 2015 until 31 May 2016, it was ready, willing and able to perform the SKA.

59. [59]

    It pleads that, in breach of the SKA, Chinatex failed to pay the Service Kill Fee and the Carcass Cost.

60. [60]

    It pleads that by reason of these breaches, it was entitled to terminate the SKA and, in addition, was entitled to terminate it when on 8 April 2016, in the letter from its solicitors, Chinatex repudiated the SKA by confirming that it no longer intended to perform its obligations under it. Bindaree pleads that on 31 May 2016, it terminated the SKA.

Non-performance periods

1. [61]

   For the non-performance periods of 19 August 2015 to 5 October 2015 and 15 January 2016 to 31 May 2016, Bindaree claims as damages the difference between the Total Product Fee (i.e. the amount equivalent to the Service Kill Fee and Carcass Cost) less the amounts which Bindaree received from third parties to whom it sold the Product.

2. [62]

   It claims the freight costs it incurred in delivering to its other customers on the footing that under cl 7.1 of the SKA, no freight costs would have been incurred by it in selling to Chinatex, because Chinatex had the obligation to take delivery of the refrigerated transport or containers into which the Product was to be loaded, or to pay the cost of transporting what was left to an approved cold store in Brisbane for which Chinatex had to pay in advance.

3. [63]

   Omitting cents, this claim is as follows:

4. [64]

   McDonald’s evidence included provision of the Carcass Cost invoices, tax invoices rendered to Chinatex, and credit notes given to it, for the money received for the beef that had been killed and processed “for Chinatex” but sold to other customers on a weekly basis. Bindaree deducted the average price paid by those customers from the outstanding Service Kill Fee and Carcass Cost payable under the SKA. The prices were calculated according to weight. Bindaree’s Chief Financial Officer, Mr James Jamison Roger (Roger), gave unchallenged evidence of the saleable weight of this meat and the average yield from this cattle. There is no suggestion that Chinatex ever raised any difficulty with the genuineness of the prices achieved by Bindaree.

5. [65]

   There was no suggestion that the sales did not happen, were not genuine arms’ length ones or that Chinatex could or would have been able to sell at better prices. I find that the sales were at market value, although, for reasons which will appear below, it does not matter if they were not.

6. [66]

   Bindaree’s claim does not include any amount referrable to the performance period.

Post-termination period

1. [67]

   For the post-termination period (31 May 2016 to 18 August 2018 – the unexpired portion of the SKA) Bindaree claims loss of bargain damages as follows:

2. [68]

   The calculation of revenue foregone is a simple arithmetical one. It is the Service Kill Fee payable over the unexpired portion of the SKA. The principal evidence on costs savings was that of Roger. Additionally, Bindaree called an expert forensic accountant, Ms Julie Planinic.

3. [69]

   In the alternative, Bindaree claims $9,990,000, being the loss of profit for the remainder of the Term of the SKA. This is on the footing that the $450 Service Kill Fee was originally negotiated on the basis that it would contain a profit component for Bindaree of $100 per head of cattle slaughtered. There were 111 Service Kill Weeks remaining. 900 head per week at $100 profit per head for the remaining period yields the figure claimed.

4. [70]

   A number of untenable, unmeritorious defences and contentions, including mutual abandonment and failure by Bindaree to slaughter cattle that complied with the specifications under the SKA, were abandoned. Ultimately, what Chinatex put is set out below.

Liability

1. [71]

   Chinatex put that the SKA was terminated by frustration when Uniwell unilaterally withdrew (counsel for Chinatex described it as “decamped”) from what Chinatex characterises as “the tripartite arrangements” in August 2015, rendering performance required under the SKA radically different from that which had been agreed. It argues that Bindaree and Chinatex entered into the SKA on the common assumption that delivery to Uniwell would continue, which common assumption was mistaken with the consequence that the SKA was frustrated.

2. [72]

   Chinatex put that Bindaree’s claim with respect to the non-performance periods, despite not being pleaded as a claim in debt but solely as one in damages, is nevertheless one in debt. It put that the existence of the debt is dependent upon Bindaree having performed the SKA. It put that no debt was brought into existence because Bindaree did not undertake Service Kills “for” Chinatex.

3. [73]

   Chinatex put that there was implied into the SKA an obligation on Bindaree to co-operate in the performance by Chinatex of the SKA by offering to Chinatex such information as to the type, mix and price of the Service Kill Cattle as would enable Chinatex to make an informed decision as to the terms of the authorisations which Chinatex was able to give pursuant to cl 2.3 of the SKA. It put that Bindaree breached this term and that the consequence of this breach is that Chinatex did not incur any obligation to pay, so that Bindaree suffered no loss. (An insupportable contention that on their proper construction, cls 2.3 and 2.4 imposed such an obligation on Bindaree, was correctly abandoned. Chinatex could identify no constructional choice to be made.)

4. [74]

   Chinatex put that once it had failed to pay the Service Kill Fee, Bindaree had no obligation to proceed with the Service Kills, and could have simply ceased production altogether. It put that Bindaree took a deliberate and considered decision to acquire and process 900 head of cattle weekly during the non-performance period, and whilst Chinatex’s failure to pay the Service Kill Fee was an anterior cause, the proximate cause of Bindaree’s loss was its free, deliberate and informed decision to proceed with the Service Kills.

Quantum

1. [75]

   Leaving aside a late submission on quantum (referred to later), Chinatex put the following arguments.

2. [76]

   It put that Bindaree’s claim for the post-termination period should be discounted to bring it to its net present value (NPV) for the unexpired portion of the SKA. It put that a discount rate of 2.25 – 2.5% per annum should be adopted.

3. [77]

   It took issue with one aspect of Bindaree’s calculation of the cost savings made (or to be made) by it for the non-performance period. It made no complaint about Bindaree’s methodology.

4. [78]

   From July 2015 through May 2016, Bindaree slaughtered 23,276 head of cattle per month (that is, 5376 per week). From July 2016 through December 2016 (at about the time the calculation was done) this reduced to an average of 14,801 head of cattle per month. This represents an average reduction of 8475 head of cattle per month, or 1956 head of cattle per week. The Service Kill under the SKA was 900 head per week, that is, 46% of the reduction. Bindaree applied that percentage to the categories of costs sensitive to the number of cattle slaughtered and processed to calculate what percentage of those costs should be attributed to not slaughtering under the SKA.

5. [79]

   Evidence elicited by Chinatex during the hearing established that from 1 January 2017 until the time of the hearing, Bindaree’s average weekly kill was between 3700 and 4000 head per week – taking the midpoint, 3850. If these figures are taken together with the figures which Bindaree used, an average weekly kill of 3633 results. On this footing, the difference in the number of cattle killed weekly in the pre and post termination periods is 1739 (i.e. 5372 – 3633), and not 1956. 900 is 52% of 1739. This is the percentage which Chinatex argues should be used in the cost reduction calculation.

6. [80]

   Finally, Chinatex put that freight costs for sales of beef products to other customers are not recoverable under the SKA, and therefore do not form part of Bindaree’s damages.

Liability

1. [81]

   I reject the submission that the SKA was frustrated by Uniwell’s “departure” or “decampment”.

2. [82]

   Delivery to Uniwell, let alone continued delivery for the life of the SKA, was not the object or purpose of the SKA. Its object was slaughter and delivery to Chinatex.

3. [83]

   Performance of and under the SKA is not affected by Uniwell or anything done or not done by it.

4. [84]

   Bindaree took Chinatex as a counter-party because of its presence in Australia. There is no tripartite arrangement. Bindaree has only one counter-party. Chinatex had (and for all that is known, still has) a separate back to back arrangement with Uniwell under the Underwriting Agreement, to which Bindaree is not a party. On the face of the Underwriting Agreement, Chinatex has rights against Uniwell which, apparently for reasons of its own, it has not enforced.

5. [85]

   Neither Chinatex nor Bindaree held any assumption that Uniwell’s continued taking of delivery (and, presumably, paying for it) was essential to the existence of the SKA. To the contrary, after Uniwell’s departure, they both acted on the footing (it was no assumption) that the SKA was alive. Chinatex provided the security deposit in October 2015. Chinatex went so far as to find Hondo to take the meat which it was obliged to take under the SKA, and itself to pay for it.

6. [86]

   I reject the submission that Bindaree’s claim is one in debt. It is a conventional claim for damages for breach by Chinatex of its contractual obligations under the SKA, including the obligation to pay the Service Kill Fee and its neglect or refusal to accept and pay for the Product of the Service Kills. Bindaree’s claim is for its loss directly and naturally resulting in the ordinary course of events from Chinatex’s breach. [1]

7. [87]

   The general principle is that when assessing damages for breach of contract, the plaintiff is to be put in the position that it would have been in but for the breach, that is, the position if the contract had been performed. This is what Bindaree is seeking. The Service Kill Fee component of the claim may be a liquidated amount but that does not convert it into a debt claim.

8. [88]

   If Bindaree’s claim were one in debt, Chinatex’s position would be worse.

9. [89]

   The Service Kill Fee was payable in advance and the obligation to pay it was not dependent on any prior performance by Bindaree. If Bindaree had taken the Service Kill Fee and then not performed, Chinatex would undoubtedly have had an entitlement to recovery. But that is not this case.

10. [90]

    Although Bindaree has framed its case as damages for both Chinatex’s breach in failing to pay the Service Kill Fee and for failure to take delivery and pay for Product, no amount is actually claimed for the latter. To the contrary, and as the figures set out earlier demonstrate, Bindaree sold Product for more than the Carcass Cost which Chinatex had to pay, and has given Chinatex credit for $3,884,688 against the Service Kill Fee liability, thereby reducing Chinatex’s overall liability. The question whether Bindaree’s sales were at market value thus does not arise. It might have if Bindaree had made a further loss from those sales and claimed it. Chinatex can hardly complain about Bindaree having taken on a risk which was really Chinatex’s, made a profit and then given Chinatex credit for it, despite Chinatex being in continued breach of the SKA. After all, it is Chinatex’s position that Bindaree had no obligation to slaughter once Chinatex had defaulted in paying the Service Kill Fee.

11. [91]

    If (contrary to what I have found) Bindaree were to be restricted to a claim for the Service Kill Fee (as the asserted debt), Chinatex would get no allowance for sales and Bindaree would be entitled to judgment in the amount of $10,801,372, which would be judgment that the nature of the case would require. [2]

12. [92]

    Chinatex’s suggested proposed implied term is unsustainable.

13. [93]

    The formulation contended for was put up for the first time in final submissions. It differs from the term formulated in Chinatex’s Commercial List Response, which formulation was abandoned. No application to amend the Commercial List Response to plead the formulation was made. Bindaree properly objected to the formulation being argued without an amendment to the pleadings, which it would have opposed had an amendment been sought. As counsel for Bindaree pointed out, the notion of such information as would enable Chinatex to make an informed decision brings with it the enquiries as to what information Chinatex had anyway and what information would be necessary in the particular market to enable Chinatex to make a decision, matters about which Bindaree could have, but did not, call evidence. This would be sufficient to have refused any application for amendment.

14. [94]

    More than this, however, the amendment would be futile because the proposed term fails to meet any of the requirements for the implication of such a term, let alone all of them.

15. [95]

    It is not reasonable or equitable. It casts on Bindaree an unreasonable obligation of gathering and then assessing, from all the information available, what information Chinatex would need to have to make up its mind. For this reason, it is also not so obvious that it goes without saying.

16. [96]

    It is not necessary to give the SKA business efficacy. No good reason was suggested why Chinatex needed Bindaree to give it market information to make the agreement work. As this case demonstrates, the SKA did work without it.

17. [97]

    It is inconsistent with cl 2.4 of the SKA. That provision is intended to give Bindaree authorisation without having to do anything in addition, when the Customer does not provide prior authorisation.

18. [98]

    Given that there was no such obligation on Bindaree, it committed no breach of the SKA.

19. [99]

    In my view, Bindaree did carry out the Service Kill “for” Chinatex, albeit on the contingency that Chinatex would take delivery. It did so in the face of Chinatex’s failure in breach of the SKA to pay the Service Kill Fee. It was an eminently sensible thing to do in the face of Chinatex’s evident lack of commercial probity. However, under cl 9.1 of the SKA, Bindaree’s obligation to carry out the Service Kill ceased on Chinatex’s default in paying the Service Kill Fee. Its decision to carry out the Service Kill was therefore entirely its own. Had it resulted in some further loss, Chinatex’s submission would have some substance. But it did not. Bindaree sold the meat for prices in excess of the Carcass Cost, and has given Chinatex credit. Bindaree’s claim does not include any amount referrable to the carrying out of the Service Kill. Chinatex has benefited from what Bindaree determined to, and did, do.

Quantum

1. [100]

   Bindaree accepted that an NPV discount is to be applied. It suggested that a midpoint of the range of percentages selected by Chinatex, 2.375%, should be adopted to give an NPV at the date of judgment. It is appropriate to adopt this figure. A calculation will be required to be made with reference to the judgment date.

2. [101]

   Chinatex’s proposed methodology with respect to the proportion the Weekly Service Kill bears to the overall reduction in Bindaree’s kill is unsound. Bindaree has applied the percentage reduction to the actual costs incurred by it over the period of the reduction. Chinatex suggests a percentage reduction derived over a longer period, but does not apply it to the actual costs incurred over that period. Notionally, at least, the costs for the additional period may have increased in accordance with inflation or otherwise. The Service Kill figures may, at the present time, be different again.

3. [102]

   Bindaree has provided a logical and rational basis upon which to assess its cost savings and Chinatex has not provided any compelling or reasonable alternative.

4. [103]

   Bindaree is (indirectly) entitled to an amount equivalent to the freight costs incurred by it. As I have said, the decision to carry out the Service Kill was its own, and it would not be entitled to claim damages if a further loss had been incurred as a consequence of that decision. But, having taken the decision, and having profited by it, it fairly and correctly gives Chinatex credit for it. The true amount of the benefit that Bindaree has received is the sales less the freight. The allowance which it must make thus properly includes the freight.

5. [104]

   Some three weeks after the hearing, Chinatex sought to put an additional submission supporting Bindaree’s alternative quantification of damages for the post-termination period if damages are awarded. Leave was granted. Bindaree responded with a brief written submission.

6. [105]

   I have concluded that Bindaree is entitled to damages for the non-performance period calculated in accordance with its primary methodology.

7. [106]

   It is therefore unnecessary to deal with its alternative calculation, and the late submission. It suffices to say that I do not consider that the alternative calculation represents Bindaree’s true loss for the post-termination period, which was $405 per head (with Chinatex taking the risk of the Carcass Cost) less cost savings which Bindaree made (McDonald gave evidence that the weekly kill was reduced as a consequence of the termination of the SKA). This is the correct comparator for the position that Bindaree would have been in had Chinatex performed. There is no reason why the calculation of Bindaree’s loss should assume some artificial figure.

8. [107]

   Bindaree is entitled to judgment in the amount of $31,350,364, as adjusted by bringing the amount attributable to the unexpired portion of the post-termination period to net present value by application of a discount of 2.375%.

9. [108]

   Bindaree is entitled to pre-judgment interest in respect of the non-performance period claims. Strictly, this calculation is to be done on a weekly basis. Bindaree, however, suggested that a practical approach would be to calculate interest from the mid-point of each non-performance period.

10. [109]

    I will stand the matter over for the necessary calculations to be done, and to give the parties an opportunity to reach agreement on the calculation of interest and costs.

11. [110]

    I will hear the parties on costs, should this be required, and on any issues that remain to be decided.

12. [111]

    The exhibits are to be returned.