Upper Hunter Timbers Pty Ltd v Forestry Commission of NSW

Upper Hunter Timbers Pty Ltd (the appellant) and the Forestry Commission of New South Wales (the respondent) were parties to litigation concerning a contract for the supply of timber. The dispute centred on the respondent's alleged breaches of this contract and the consequences of a subsequent legislative change. The case was heard in the Court of Appeal of New South Wales.

The primary legal issues before the Court of Appeal were whether the contract constituted a mere agreement to agree, whether the contract had been validly assigned or novated, whether the contract improperly fettered the respondent's statutory discretion, and the extent to which the contract was frustrated by the commencement of the *Forestry Legislation (Amendment) Act 1991* (NSW) and the appellant's entitlement to damages for loss of bargain.

The Court of Appeal found that the contract was not merely an agreement to agree and that the respondent had breached its obligations under the agreement. It also determined that the commencement of the *Forestry Legislation (Amendment) Act 1991* did not automatically frustrate the entire contract, but rather impacted certain aspects of it. The court applied principles of contract law concerning the interpretation of agreements, the effect of statutory intervention on contractual obligations, and the assessment of damages for breach and frustration, including the application of the *Frustrated Contracts Act 1978* (NSW).

The appeal was allowed in part. The court set aside the previous judgment in favour of the respondent on the Mount Royal Claim and the order for costs. The matter was remitted to the Equity Division for a determination of the respondent's breaches of the agreement between 14 August 1991 and 31 December 1996, and the damages payable by the respondent, considering the *Frustrated Contracts Act*. The costs of the original hearing were to be determined by the judge hearing the remitted proceedings, and there were no orders as to the costs of the appeal.