Bindaree Beef Pty Ltd v Chinatex (Australia) Pty Ltd - [2017] NSWSC 1615

Supreme Court

New South Wales

Case Name:	Bindaree Beef Pty Ltd v Chinatex (Australia) Pty Ltd
Medium Neutral Citation:	[2017] NSWSC 1615
Hearing Date(s):	16, 18, 19, 23, 24 October, 17 November 2017
Decision Date:	24 November 2017
Before:	Hammerschlag J
Decision:	Judgment for the plaintiff for $31,350,364 to be adjusted to net present value for the unexpired portion of the contract (see para [107])
Catchwords:	CONTRACTS - breach of contract - frustration - implied terms - damages - assessment of damages - whether claim in debt - Service Kill Agreement under which the plaintiff was to purchase cattle, slaughter and produce meat products for delivery to the defendant - where defendant breached by failing to pay amounts due and refusing to take delivery
Legislation Cited:	Civil Procedure Act 2005 (NSW) Sale of Goods Act 1923 (NSW)
Category:	Principal judgment
Parties:	Bindaree Beef Pty Ltd - Plaintiff Chinatex (Australia) Pty Ltd - Defendant
Representation:	Counsel: I.M. Jackman SC with T.W. Marskell - Plaintiff M.L.D. Einfeld QC with D. Krochmalik - Defendant Solicitors: Hunt Partners Lawyers - Plaintiff Websters Lawyers - Defendant
File Number(s):	2016/184465

JUDGMENT

BACKGROUND

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.
For the reasons which follow, Bindaree is entitled to succeed.
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.
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.
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.
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.
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.
Chinatex was represented principally by Mr Zhihua Liang (Liang).
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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NSWSC 1615
Decision Date: 24 November 2017

CaseChat Overview and Summary

The plaintiff, Bindaree Beef Pty Ltd, brought a claim against the defendant, Chinatex (Australia) Pty Ltd, in the Federal Circuit Court. The dispute arose from a Service Kill Agreement whereby the plaintiff agreed to purchase cattle, slaughter them, and produce meat products for delivery to the defendant. The defendant breached the agreement by failing to pay amounts due and refusing to take delivery of the meat products. The primary legal issues before the court were whether the breach constituted a frustration of the contract, the existence of any implied terms, the calculation of damages, and whether the claim was for debt or damages.

The court examined whether the defendant's actions constituted a frustration of the contract, which would render the contract void. It was determined that the breach did not amount to frustration as the contract had not been rendered impossible to perform. The court then addressed the issue of implied terms, concluding that certain terms were implied by law into the contract. Regarding damages, the court assessed the plaintiff's loss and determined the appropriate measure of damages. The court held that the claim was for damages rather than debt, as the plaintiff sought compensation for the loss of profit and wasted expenditure rather than a fixed sum owed.

In summary, the court found that the defendant's breach did not frustrate the contract and that implied terms were applicable. The plaintiff was awarded damages for the loss of profit and wasted expenditure, rather than a debt claim. The court ordered the defendant to pay the assessed damages to the plaintiff.

Orders