Wagners Cement Pty Ltd v Boral Resources (Qld) Pty Ltd

[2020] QSC 124

SUPREME COURT OF QUEENSLAND

CITATION: 

Wagners Cement Pty Ltd & Anor v Boral Resources (Qld) Pty Ltd
& Anor [2020] QSC 124

PARTIES: 

WAGNERS CEMENT PTY LTD (ACN 126 029 481)
(first plaintiff)
WAGNERS QUEENSLAND PTY LTD (ACN 122 170
745)
(second plaintiff)
v
BORAL RESOURCES (QLD) PTY LIMITED
(ACN 009 671 809)
(first defendant)
BORAL LIMITED (ACN 008 421 761)
(second defendant)

FILE NO/S: 

BS 4294 of 2019

DIVISION: 

Trial Division

PROCEEDING: 

Claim

DELIVERED ON: 

19 May 2020

DELIVERED AT: 

Brisbane

HEARING DATE: 

6 and 7 February 2020
Further written submissions received on 2, 4 and 6 March
2020

JUDGE: 

Bond J

ORDER: 

The orders of the Court are:

1.	The parties are directed to bring in minutes of orders reflecting the Court’s reasons for judgment by 4:00pm on 2 June 2020.
2.	The proceeding will be listed before Bond J at 9:00am on 4 June 2020 for the making of formal orders reflecting the agreed position or, in default of agreement, for the making of directions as to the means by which any remaining disputes may be resolved.
3.	The parties will be heard as to the orders which should be made as to costs at the hearing referred to in order 2.
4.	Unless further or other order is made, the Court’s reasons for judgment must not be made public before 4:00pm on 4 June 2020.

CATCHWORDS: 

CONTRACTS  – GENERAL CONTRACTUAL

PRINCIPLES  – CONSTRUCTION AND

INTERPRETATION  OF CONTRACTS –

INTERPRETATION  OF MISCELLANEOUS

CONTRACTS AND OTHER MATTERS – where a cement

supply agreement contained a contractual price adjustment mechanism triggered by the purchaser serving a notice containing market pricing evidence – where supplier could elect to supply at reduced price or suspend contract – where purchaser served notice containing an offer for supply at some future date – whether notice was a valid pricing notice – whether supplier waived irregularity of notice – whether supplier elected to suspend contract

Human Rights Act 2019 (Qld), s 31
Cherry v Steele-Park (2017) 96 NSWLR 548, not followed
Commonwealth Steel Company Ltd v BHP Billiton Marine and
General Insurance Ltd [2018] NSWCA 242, not followed
Coronar (Australia) Pty Ltd v Lake Vermont Marketing Pty Ltd
[2017] QSC 120, applied
Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day)
[2002] 2 All ER (Comm) 896, considered
HSH Hotels (Aust) Ltd v State of Queensland [2012] 2 Qd R 252,
cited
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015)
256 CLR 104, applied
Nabalco Pty Ltd v BP Australia Ltd, unreported, New South
Wales Supreme Court, No 4310 of 1974, 27 August 1975,
distinguished
Summer Hill Business Estate Pty Ltd v Equititrust Ltd [2011]
NSWCA 149, cited
Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd [2011] QCA
312, applied
Watson v Scott [2016] 2 Qd R 484, applied

COUNSEL: 

J McKenna QC, with D Chesterman, for the plaintiffs
L F Kelly QC, with S Eggins, for the defendants

SOLICITORS: 

Norton Rose Fulbright for the plaintiffs
Herbert Smith Freehills for the defendants

Introduction

1. On 8 December 2011, the first plaintiff (the Supplier) and the first defendant (the Purchaser) entered into a long-term contract by which the Supplier agreed to supply cement to the Purchaser (the Agreement).[1]

   [1]             The second plaintiff and the second defendant were also parties to the Agreement, but it is not presently necessary to elaborate upon their contractual roles.

2. A number of disputes arose between the Supplier and the Purchaser consequent upon the Purchaser’s attempt in March 2019 to invoke a contractual price adjustment mechanism. As will appear, the resolution of the disputes requires the determination of the legal implications of a relatively uncontroversial factual chronology, and turns primarily on the proper construction of the Agreement.

3. In order to make that determination, it will be necessary to examine sequentially the relevant terms of the Agreement and the issues as framed by the parties.

4. However, before commencing that process, I must first explain how I dealt with certain confidential information which I admitted into evidence during the trial.

Confidential material received during the trial

1. During the interlocutory stages of this proceeding, the parties sought and obtained court orders sealing up all of the affidavit evidence upon which they intended to rely at trial.

2. However, in principle, proceedings in court should be conducted in public unless the dictates of justice clearly require some other course to be taken.[2] Just prior to the commencement of the trial, I questioned the parties as to the impact of the existing orders on the conduct of the trial. It transpired that the content of most of the material upon which the parties intended to rely at trial did not warrant the continuation of the full extent of the confidentiality protection that they had obtained.

   [2]            I have here used the language of David Syme & Co Ltd v General Motors-Holden’s Ltd [1984] 2 NSWLR 294 at 299G.

3. After receiving submissions from the parties and, by leave, from an interested non-party which had produced documents pursuant to non-party disclosure, I vacated previous confidentiality orders which would have impacted upon the conduct of the trial, and at the commencement of the trial made orders in the following terms:

   2.           In this order the term “confidential exhibit” is a reference to a document admitted into evidence at the trial and identified by the tendering party as a document containing confidential material.

   3.           Unless any Court order to the contrary is made, confidential exhibits will be dealt with in the following manner:

(a)	the tendering party will provide the Court with two versions of the confidential exhibit, one containing no redactions and the other containing redactions of the material said to be confidential;
(b)	if the Court is satisfied that the exhibit contains confidential material to the extent contended by the tendering party, at the end of the evidence of the relevant witness:

(a)	the unredacted version of the confidential exhibit will be admitted as a confidential exhibit and placed on the Court file in a sealed envelope marked “Confidential Exhibit No [number to be inserted] – Not to be opened without further Court order”;
(b)	the redacted version of the confidential exhibit will be placed on the Court file; and
(c)	the trial judge and his associate will have access to the unredacted version without the need for further order.

(c) to the extent that, at the time of tender, there is any controversy as to the degree to which the confidential exhibit should be redacted, the Court will rule on that controversy and the exhibit will be dealt with in the way referred to in the previous paragraph to the extent which is consonant with the Court’s ruling.

4.           If, during the trial, any party provides the Court with written submissions which the providing party identifies as containing confidential material, the procedure referred to in the preceding paragraph of this order will be followed mutatis mutandis.

1. During the course of the trial there was no significant controversy about which material should be kept confidential by the implementation of the regime contained in my orders. I was persuaded by material which had been placed before me that the information proposed to be redacted did warrant the protection sought. Generally speaking, the evidence which was accorded such protection comprised information which would have revealed the actual prices of various types of cement products as expressed in the Agreement, or in communications by and between the parties and/or the non-party, or in the parties’ submissions before me.

2. The reception into evidence at trial of such confidential information operates to impose a constraint upon the manner in which I should formulate these reasons. The course I will adopt is that which I took in Coronar (Australia) Pty Ltd v Lake Vermont Marketing Pty Ltd [2017] QSC 120 (applying an approach authorised by David Syme & Co Ltd v General Motors- Holden’s Ltd [1984] 2 NSWLR 294). I will try to formulate reasons (1) which convey an adequate account of the litigation and the reasons underlying the orders which I will make; (2) which are expressed in terms which seek to ensure the protection of any confidentiality which a party may be entitled to have protected; and (3) which, because they will be available to the public, will give effect to the public’s right to know what orders are being made in the courts and why they are being made.

3. There remains the possibility that my reasons, once formulated, will contain inadvertent disclosure of information which should have been kept confidential. The orders which I made at the commencement of the trial were in terms which postponed public release of my reasons for a short period so as to give the parties an opportunity to seek a remedy from me in such a case, namely:

   The publication of judgment after the trial will occur in the following manner:

(a)	The trial judge will give the parties 2 clear business days’ notice in writing of his intention to publish judgment;
(b)	Orders made by the Court will be announced in open court and reasons for judgment will be published to the parties in open court.
(c)	Unless further or other order is made, the reasons for judgment must not be made public until after the expiration of 10 business days after the date of their publication to the parties.

1. An interesting question might one day arise as to whether constraints on the public availability of a judgment of the Supreme Court of the nature of those to which I have referred continue to be lawful after the commencement on 1 January 2020 of relevant provisions of the Human Rights Act 2019 (Qld). As to this:

(a)	Section 31(3) of the Human Rights Act creates an apparently unqualified human right in these terms: “All judgments or decisions made by a court or tribunal in a proceeding must be publicly available”.
(b)	Section 48(1) of that Act instructs Courts to interpret statutory provisions “to the extent possible that is consistent with their purpose, … in a way that is compatible with human rights.”
(c)	Section 8 provides that a statutory provision is “compatible with human rights” if it does not limit a human right or if it “limits a human right only to the extent that is reasonable and demonstrably justifiable in accordance with section 13”. Section 13 admits of the possibility that human rights may be subject under law to “reasonable limits that can be demonstrably justified in a free and democratic society based on human dignity, equality and freedom” and identifies factors which might be relevant to that determination.
(d)	Would s 13 admit of the conclusion that the apparently unqualified s 31(3) human right could be regarded as the subject of qualification by the exercise of judicial power in the ways to which I have referred?
(e)	It presently strikes me that it would be a surprising outcome if s 31(3) should be interpreted in a way which did not permit of a superior court having the power to take the course contemplated by my orders. The juridical basis of the power is, after all, the inherent power of such courts to ensure that justice is done at trial and that must be regarded as carrying with it the power to ensure that an appropriate balance is struck between the competing public interests in, on the one hand, the work of the courts being conducted in public and, on the other hand, the work of the courts being done with a view to achieving appropriate protection of private rights. The law has long recognised that there will be cases where justice cannot be done at all if absolutely everything must be done in public.[3]
(f)	But the matter may not be beyond argument. One curiosity is that s 48(1) of the Human Rights Act admits of taking international law into account in interpreting statutory provisions and article 14(1) of the International Covenant on Civil and Political Rights suggests the only exception to the obligation to make judgments public is “…where the interest of juvenile persons otherwise requires or the proceedings concern matrimonial disputes or the guardianship of children.”

[3]             See the discussion by Viscount Haldane LC in the House of Lords in Scott v Scott [1913] AC 417 at 437- 438, quoted with approval in David Syme & Co Ltd v General Motors-Holden’s Ltd [1984] 2 NSWLR 294.

1. It is, however, unnecessary to essay a rigorous analysis of these matters in the present case. Section 108(2) of the Human Rights Act provides that the Act does not affect proceedings commenced or concluded before its commencement and the present proceeding commenced in 2019.

The Agreement

1. Before 2011, the Supplier and companies associated with it owned and operated both a cement plant located at Pinkenba (where cement products were manufactured) and various concrete plants (which were supplied with cement produced by the cement plant and which produced concrete therefrom).

2. By an asset sale agreement dated 14 April 2011, the concrete plants were sold to interests associated with the Purchaser. The Pinkenba cement plant was not sold. The only other established suppliers of bulk cement in South East Queensland were Sunstate Cement Ltd (which was a company in which an associate of the Purchaser had a half interest) and Cement Australia Pty Ltd.[4]

   [4] Confidential exhibit 2 (Second affidavit of Denis Patrick Wagner sworn 2 September 2019), redacted version, at [6].

3. The Agreement was expressed in a formal written agreement dated 8 December 2011. As entered into, the Agreement obliged the Supplier to supply and the Purchaser to purchase specified cement products (referred to as “Products”) during a 10 year fixed term commencing on the date of the Agreement: see cll 3.1, 3.2 and 4 and associated definitions in cl 1. Provision was also made for extension of the term by a further period of 10 years at the option of the Supplier: cl 4. It was common ground before me that the term had been extended.

4. “Agreement Year” was a term defined in cl 1 of the Agreement in this way:

   Agreement Year means any period of 1 year ending on 30 June. In the case of the first financial year of this Agreement, it means the period (although less than 1 year) from the Commencement Date to the immediately succeeding 30 June. In the case of the last financial year of this Agreement it means the period, although less than 1 year, extending back from the expiration of this Agreement to the immediately preceding 1 July

5. The result was that in the first 10 year fixed term commencing 8 December 2011, the Agreement Years were:

(a)	8 December 2011 to 30 June 2012;
(b)	1 July 2012 to 30 June 2013;
(c)	1 July 2013 to 30 June 2014;
(d)	1 July 2014 to 30 June 2015;
(e)	1 July 2015 to 30 June 2016;
(f)	1 July 2016 to 30 June 2017;
(g)	1 July 2017 to 30 June 2018;
(h)	1 July 2018 to 30 June 2019;
(i)	1 July 2019 to 30 June 2020;
(j)	1 July 2020 to 30 June 2021; and
(k)	1 July 2021 to 7 December 2021.

1. During the term of the Agreement, the Purchaser was obliged to purchase a certain specified Minimum Quantity of Products in each Agreement Year (cl 3.2) and it was obliged to meet that annual quantity by ensuring that the amount it purchased in each consecutive three- month period fell within plus or minus 20% of a rolling average figure expressed by reference to the annual Minimum Quantity (cl 8.9). The Minimum Quantity was effectively the extent of the Purchaser’s take-or-pay obligation in any one Agreement Year. The term was defined in cl 1 of the Agreement in this way:

   Minimum Quantity means for an Agreement Year the minimum quantity of Products required to be purchased in that Agreement Year in accordance with clause 3.2, as adjusted downwards if applicable in accordance with clauses 3.4, 3.5 and 3.6

2. The Minimum Quantities required to be taken by the Purchaser in each Agreement Year increased from 125,000 tonnes in the first Agreement Year, to 140,000 tonnes in the second Agreement Year and finally to 175,000 tonnes in the third Agreement Year: cl 3.2(1) to (3). In subsequent Agreement Years of the contract term the Minimum Quantity was calculated by reference to a specified “Take-or-Pay Threshold”: cl 3.2(4) and associated definitions in cl 1. That threshold was calculated using a defined formula by reference to variables determined according to published statistics concerning concrete production in South East Queensland. For the Agreement Year ending 30 June 2019, the Take-or-Pay Threshold was 249,891 tonnes of Product, which (allowing for a rollover of 4,244 tonnes) gives rise to an average of approximately 20,470 tonnes per month.[5]

   [5]            Confidential exhibit 3 (First affidavit of Cameron David Coleman sworn 17 July 2019), redacted version, at [19]; Confidential exhibit 4 (Second affidavit of Cameron David Coleman sworn 5 September 2019), redacted version, at Exhibit CDC-21.

3. Notably, cl 3.4 specified a formula by which the Minimum Quantity could be adjusted downwards during any period (defined as the “Affected Period”) in which the Supplier (whether by reason of supply interruption or otherwise) could not supply in full the Purchaser’s requirements. Clause 3.4 was in these terms:

   The parties agree that if for any period during an Agreement Year (whether by reason of Supply Interruption or otherwise) the Supplier cannot supply in full the Purchaser's requirements for Products (each such period being an Affected Period) the Minimum Quantity in respect of the relevant Agreement Year will be adjusted down by an amount determined as follows:

   ���� = �������������

Where:	365 × ����� − ��������
����	is the amount (in tonnes) by which the Minimum Quantity for the Agreement Year is reduced;
������������	is the duration of the Affected Period in days (calculated to include any days during or either side of the Affected Period that the Supplier’s plant is not ordinarily operational, such as weekends and public holidays);
����	is the greater of:
-	the Minimum Quantity applicable to the relevant Agreement Year; or
-	12 times the average monthly quantity (in tonnes) of Products purchased by the Purchaser from the Supplier during the 12 months before the commencement of the Affected Period (ignoring any months themselves affected by Supply Interruption or other failure to supply);
��������	is the quantity of Products (in tonnes), if any, actually purchased by the Purchaser from the Supplier during the Affected Period.

For the avoidance of doubt the above must be applied separately in respect of each Affected Period during an
Agreement Year.

1. Thus if, for example, the Supplier could not supply for six months out of an Agreement Year, and during that six months the Purchaser did not purchase any Products from the Supplier, then the Minimum Quantity would be reduced by at least half of what it would otherwise have been and, if the second limb of variable “����” applied, the Minimum Quantity would be reduced by somewhat more.

2. Obviously enough, if the Supplier could not supply an amount which the Purchaser had contemplated obtaining, the Purchaser might be put in the position of having to make alternative arrangements to meet its needs. Clause 3 contained an acknowledgment that, once an Affected Period was over, the Purchaser might not immediately be able to switch back to the Supplier as a source of supply. Accordingly, cl 3.5 was in these terms:

   The Supplier acknowledges that during any Affected Period the Purchaser will need to make alternative arrangements for cement products and that a lead time will be required for the Purchaser to switch its purchases back to the Supplier. Accordingly, for the purposes of clause 3.4 the Supplier will be taken to be unable to supply Products until the time which is 72 hours after the relevant Supply Interruption (or other supply failure) ceases and normal supply of the Products resumes (or, if later, 72 hours after the Purchaser first receives notice that such cessation and resumption have occurred) and the duration of the relevant Affected Period will be determined accordingly.

1. Clause 8 of the Agreement governed what would happen if the Purchaser did not purchase the requisite Minimum Quantity of Product. The clause required the Purchaser to be notified if, in any particular month, the quantity purchased fell below one twelfth of the contractual Minimum Quantity for the relevant year. But a monthly shortfall did not have any immediate pecuniary consequences in respect of the amount which the Purchaser was required to pay, because the contractual focus was on the whole-of-year position. If there was a shortfall at the end of an Agreement Year, the clause provided for the calculation of the amount which the Purchaser must pay to meet its take-or-pay obligations for the year, for notice to be given of the calculated amount, and for the Purchaser to pay that amount within a specified period.

2. Unsurprisingly, the Agreement specified the price which the Purchaser would have to pay for the quantities of cement products it was obliged to purchase in the normal course of the Agreement. As to this:

(a)	The principal obligation was to pay the applicable “List Price” for the relevant type of Product “at the time of the purchase”: cl 6.1(1).
(b)	The “time of the purchase” was not a defined term. But the Products were to be supplied out of the Supplier’s cement plant at Pinkenba (cl 5.1) and it was agreed that title to Products would pass to the Purchaser at the point at which the Purchaser or its agent collected the Products from the Supplier’s plant: cll 5.5 and 15.3 and associated definitions in cl 1.
(c)	There was no particular contractual mechanism for placing an order before supply would occur. Rather it was common ground that the contractual contemplation was for the usual industry practice to apply, namely that from time to time the Purchaser’s trucks would simply arrive at the Supplier’s facility and collect the Product which the Purchaser required.[6]
(d)	The Supplier was obliged to invoice the Purchaser at the end of each month for the Product which had been dispatched during the month: cl 10.

[6]            Exhibit 14.

1. Clause 6.2 provided that in the first Agreement Year the List Price would be the price set out in Schedule 1 to the Agreement. That schedule specified three types of cement product and an initial price per tonne applicable to each product. However, the “List Price” was not fixed for the whole of the contractual term. Rather, cl 1 defined “List Price” as the price determined under cl 6 as applicable to the relevant type of Product from time to time. In this regard, cl 6.1 provided:

   The price payable by the Purchaser for each type of Product will be:

(1)	the applicable List Price for the relevant type of Product under this clause 6 at the time of the purchase; or
(2)	if a lower price is applicable for the relevant type of Product under clause 7 at the time of the purchase, that lower price.

1. It is evident that cl 6 provided for two ways in which price could be adjusted.

2. The first way in which price could be adjusted was the adjustment referred to in cl 6.1(1). That was an annual adjustment. Clause 6 provided for annual adjustment to the prices set out in Schedule 1 to the Agreement over successive three-year cycles during the term of the Agreement, with the first cycle commencing at the beginning of the second Agreement Year on 1 July 2012. For the first two years of the cycle (namely for the second and third Agreement Years) the adjustment was a CPI adjustment pursuant to cl 6.4, and for the third year of the cycle (namely for the fourth Agreement Year) the adjustment was a price review adjustment carried out by an independent expert review pursuant to cll 6.5 to 6.8. The inputs in the formula for the independent expert review appear to take account of market movements by requiring the calculation of a volume weighted price for each type of Product by reference to the sales by the Supplier (or any associates of it) into the market. Both the CPI adjustment and independent expert review mechanisms permitted of price going either up or down.

3. The second way in which price could be adjusted was that referred to in cl 6.1(2). Clause 7 set out an ad hoc mechanism by which price could be reduced below what would otherwise be the prevailing List Price. Because that price adjustment mechanism is the one about which the parties are in dispute, it is necessary to set out the whole of its terms.

4. Clause 7 provided:[7]

   [7]             Bold print emphasis in original.

7.1	For the purposes of this clause 7 Market Pricing Evidence means:
(1) a bona fide offer or quotation by another supplier (excluding any supplier in which any Related Body Corporate of the Purchaser holds a material shareholding), which provides for:

(a)	the supply of the relevant type of Product ex-plant in South East Queensland or the Darling Downs region; and
(b)	supply for a period of at least 6 months; and
(c)	supply of an aggregate volume of at least 10,000 tonnes per month (on average); and
(d)	confirmation that the supplier has been supplying cement in South East Queensland or the Darling Downs for at least 3 months; or

(2) any other evidence reasonably acceptable to the Supplier of the price at which the relevant type of Product can be purchased from another supplier (excluding any supplier in which any Related Body Corporate of the Purchaser holds a material shareholding) on the basis set out in (a), (b) and (c) above and confirmation that the supplier has been operating for at least 3 months,

(and for the purposes of this clause 7.1 it is acknowledged that at the date of this Agreement a Related

Body Corporate of the Purchaser holds a material shareholding in Sunstate Cement Ltd).

7.2	If at any time and from time to time the Purchaser gives notice to the Supplier (a Pricing Notice) setting out Market Pricing Evidence in respect of any type of Product which provides for a price for that type of Product (per tonne and excluding GST) which is lower than the then prevailing price under this Agreement, then subject to clause 7.4 the price for that type of Product under this Agreement will from the date of the Pricing Notice be reduced to the price specified in the relevant Market Pricing Evidence.
7.3	If the price of any type of Product is reduced under clause 7.2, the Purchaser may not give a further Pricing Notice under clause 7.2 seeking a further adjustment to the price of that type of Product for at least 6 months after the date of the relevant Pricing Notice.
7.4	If the Supplier is unwilling to supply any type of Product at the price specified in a Pricing Notice, it may by notice to the Purchaser within 20 Business Days after the date of the Pricing Notice elect to suspend supply of Products (but if the Supplier does not elect to suspend within that 20 Business Days’ period the price reduction will take effect in accordance with clause 7.2).
7.5	If the Supplier elects to suspend supply of Products under clause 7.4, then:
(1) the suspension will last from the date of the election until the earliest of:

(a)	the date 6 months after the date of the election;
(b)	if the parties agree a mutually acceptable price, the date the parties agree to resume supply; and
(c)	if clause 7.6 applies, the Purchaser becomes obliged to resume purchasing Products from the Supplier,

the duration of the suspension being the Suspension Period;

(2)	during the Suspension Period, the Supplier will have no obligation to supply Products, and the Purchaser will have no obligation to purchase Products; and
(3)	any period during an Agreement Year falling within the Suspension Period will be treated as an ‘Affected Period’ for the purposes of clause 3.4 (and clause 3.5 will also apply accordingly), and the Minimum Quantity in respect of the relevant Agreement Year will be adjusted down accordingly; and
(4)	at the end of the Suspension Period, the Supplier will recommence supply of the Products to the Purchaser at the prevailing List Prices applying under clause 6 of this Agreement, subject to the Purchaser’s right to provide further Pricing Notices in accordance with clause 7.2.

7.6 Where the supply of Products has been suspended in accordance with clause 7.4, the Purchaser must resume purchasing Products from the Supplier if it ceases to be able to (or for any reason chooses not to) procure supply from a third party supplier (excluding any supplier in which any Related Body Corporate of the Purchaser holds a material shareholding) at the price specified in the Pricing Notice giving rise to the suspension.

1. It remains briefly to mention some other contractual terms.

2. Clause 9 obliged the Purchaser to provide forecasts of the quantities of Product it would order during the following month at the commencement of the term of the Agreement and monthly thereafter.

3. Clause 20 set out a dispute resolution clause. It created a staged regime which applied where a dispute arose “in connection with this Agreement”. The first step in the regime required a dispute notice to be given to the other parties, specifying the dispute and requiring its resolution under the clause. There followed stages requiring negotiation; mediation; and then litigation. Urgent interlocutory relief could be pursued in Court at any time in relation to any dispute or claim arising under or in connection with the Agreement. The explicit contemplation of the clause was that the parties were obliged to continue to perform their obligations under the Agreement despite any mediation or litigation.

4. Clause 24 set out procedural details governing how a notice connected with the Agreement must be given in order to have legal effect. By cl 24.1, notice had to be in writing and sent by prepaid post, by facsimile, or personally delivered. By cl 24.2, notices sent by post were to be treated as given on the second business day after posting; those by facsimile, on the day they were sent; and those personally delivered, on the day of delivery.

5. Clause 28 expressed an entire agreement clause, providing, amongst other things, “[t]his agreement constitutes the entire contract and supersedes all other agreements and understandings between the parties with regard to the matters dealt with in this agreement …”.

6. Clause 29 revealed that the parties had contemplated the possibility that a party might waive the other’s breach of contract or other contractual non-compliance, and had sought to regulate the circumstances in which the non-waiving party might advance the contention that its breach of contract or its non-compliance with any warranty, term or condition of the Agreement had been waived. The clause was in these terms:

29.1 A party to this Agreement shall not allege or purport to rely upon any waiver of any breach of or non- compliance with any warranty, term or condition of this Agreement unless that waiver is in writing and signed by the party against whom that waiver is claimed. A waiver of any breach or non-compliance shall not be and shall not be deemed to be a waiver of any other or subsequent breach or non- compliance.

The proper construction of the agreement.

[36]     For present purposes, the principles of construction of commercial contracts were sufficiently identified by French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd[8] and subsequently approved in Victoria v Tatts Group Ltd:[9]

[8]             Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 per French CJ, Nettle and Gordon JJ at [46] to [51], internal citations omitted.

[9]             Victoria v Tatts Group Ltd (2016) 90 ALJR 392 per French CJ, Kiefel, Bell, Keane and Gordon JJ at [51].

[46]      The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

[47]       In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

[48]      Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

[49]     However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.

[50]      Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations.

[51]       Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption “that the parties ... intended to produce a commercial result”. Put another way, a commercial contract should be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.

1. I should record that the Supplier sought to rely on extrinsic evidence in aid of construction of the Agreement, the Purchaser objected, and both parties were content that I rule on the objection in the course of these reasons.

2. In my judgment, the issues which have arisen between the parties and which I examine under separate headings below all address matters on which the terms of the Agreement itself are relevantly ambiguous. The result of the application of the above principles is that, in order to determine the proper construction of the Agreement, recourse may be had to:

(a)	the text of the terms, the meaning of which is disputed;
(b)	the internal context within which that text occurred, namely the entire text of the Agreement as well as the particular documents referred to in the text of the Agreement; and
(c)	evidence of events, circumstances and things external to the Agreement which were known to the parties or which assist in identifying the purpose or object of the transaction.

1. The facts which I have identified at [13] to [14] above fall within the last category. However, as identified in Annexure A to these reasons, the Supplier sought to rely on a great deal of further material which was said to fall within that category. The evidence tendered amounted to evidence of subjective intention or opinion, or of things said in pre-contractual negotiations, which was not capable of being used in the manner contemplated by the last category. Indeed, for the most part, the evidence in question merely identified statements made during negotiations which shed light on the speaker’s subjective intention or opinion (and in some cases that the speaker had communicated that subjective intention or opinion to the other party).

2. The Supplier submitted that such evidence was admissible in aid of construction. The Supplier’s proposition was that the law had moved on and now permitted an examination of the communicated negotiating position of parties from time to time in relation to a particular contractual term, because the communicated negotiating position should itself be regarded as a “fact” known to both parties, which might then tend to show the purpose or object of the clause (in the sense of the “mischief” to which it was directed) and therefore be admissible in aid of construction. It is true that there are statements in the New South Wales Court of Appeal in Cherry v Steele-Park (2017) 96 NSWLR 548 at [91] to [92] and in Commonwealth Steel Company Ltd v BHP Billiton Marine and General Insurance Ltd [2018] NSWCA 242 at [34] to [35] which lend support to the Supplier’s proposition. However, to my mind the Supplier’s proposition is inconsistent with High Court authority and plainly wrong: see Heydon on Contract at [9.50], [9.660], [9.1360] and [9.1410] and the cases there cited. The orthodox view of the law, consistent with High Court authority, is that which was expressed by the Queensland Court of Appeal in Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd [2011] QCA 312 per Philippides J (with whom Fraser and White JJA agreed) at [93] to [103] and in Watson v Scott [2016] 2 Qd R 484 per McMurdo P (with whom Morrison and Philippides JJA agreed) at [30]. The law as stated in those cases would exclude the contested evidence, “drenched in subjectivity”[10] as it was, on the grounds that it was irrelevant. The law as stated in Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd and in Watson v Scott is the law which I have applied.

   [10]           The phrase used by Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101 at [38] is as apposite here as it was when adopted by Spigelman CJ in Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64 at [30].

3. Accordingly, the evidence on which the Supplier sought to rely was not admissible in aid of construction. Further, it was irrelevant because the Supplier was never able sufficiently to articulate how it had any bearing on the process of ascertaining the legal meaning of any of the parts of the Agreement which were in contest. The evidence in question; the Purchaser’s objections; the Supplier’s responses; and my rulings are all set out in Annexure A to these reasons.

4. Against that background discussion of the terms of the Agreement, I turn to identify and to seek to resolve the issues which have arisen between the parties. It is convenient to adopt the manner by which the Supplier framed the issues in its written submissions.[11]

   [11]            I have used the same issue numbering as used by the Supplier up to Issue 6. The Supplier’s Issues 7, 8, 9 and 10 have been re-ordered to give rise to a more logical progression.

Issue 1: Was the Purchaser’s March Pricing Notice a valid and effective notice under cl 7.2, when given?

1. The first issue arose because the Purchaser sought to implement the cl 7 mechanism, but the Supplier contended that the evidence provided with the notice did not comply with the requirements of the clause.

The facts

1. By letter of 1 March 2019 the Purchaser wrote to the Supplier stating that the letter and attached Market Pricing Evidence (the March Market Pricing Evidence) constituted a notice pursuant to cl 7.2 of the Agreement (the March Pricing Notice).[12]

   [12]           Confidential exhibit 3 (First affidavit of Cameron David Coleman sworn 17 July 2019), redacted version, at Exhibit CDC-10. No pleaded issue was taken as to the legal efficacy of the notice pursuant to cl 24 or as to when pursuant to that clause the notice was to be taken as having been given. As it purports to have been sent

1. The following observations may be made about the March Market Pricing Evidence:

(a)  The attachment was an unsigned[13] three-page quotation from Cement Australia comprising:

[13]           It was not contended at trial that the lack of a signature from Cement Australia was significant.

(i)       the quotation page, which referred to itself as “Supply Contract – Key Terms”; and

(ii)      a two-page attached document referred to as “Annexure A – General Conditions of Contract”.

(b)	It comprised an offer on its face capable of acceptance.[14]
(c)	It provided for the supply of identified cement products by Cement Australia to the Purchaser during the eight-month period from 1 May 2019 until 31 December 2019 in quantities which met the requirements of cl 7.1(1)(c) of the Agreement.
(d)	It specified a price per tonne which was lower than the then prevailing List Price under the Agreement.

[14]           Clause 1.1 of the General Conditions set out three mechanisms by which the Purchaser would be deemed to have accepted the offer: the Purchaser communicating acceptance; Cement Australia delivering goods; or the Purchaser signing a copy of the contract.

The competing contentions

1. The Supplier contended that the March Pricing Notice was not a valid and effective notice under cl 7.2 of the Agreement because the only “Market Pricing Evidence” provided was a quote of the price for the supply of cement commencing on 1 May 2019, which was two months after the date of the Pricing Notice itself, and there was no other information which suggested that that price was a price which was applicable as at the date of the notice.

2. The Supplier submitted that such a quote did not satisfy the contractual requirements of cll 7.1 and 7.2 because the language of those clauses (particularly their tense) suggested that “Market Pricing Evidence” must express a price related to a current supply of cement, and not price related to a supply of cement in potentially different market conditions two months in the future.

3. The Purchaser argued that this approach to construction should be regarded as tantamount to the implication of terms into the Agreement and there was no warrant for such implication. It then raised a number of arguments aimed at demonstrating that the legal requirements for implication of a term into a contract had not been met.

4. The Purchaser argued that construing cl 7.1 as requiring evidence of the price at which Product “can be purchased” as at the date of the Pricing Notice was itself uncommercial. It submitted that:

(a)  the very nature of a quote or offer contemplated:

(i)       the quote or offer remaining open for a period of time;

(ii)      some necessary lag time between acceptance of the quote or offer and commencement of actual supply to allow logistical arrangements to be put in place; and

(iii)     some degree of currency to the pricing information, on the assumption that suppliers would unlikely issue a quote for supply at some date so far into the future as to render the quote unusable as market pricing evidence on the date the quote is given;

(b)	there was nothing in the agreement to suggest volatility in the cement market such that the currency of pricing information was critical;
(c)	the Purchaser’s obligation under cl 7.6 to resume purchasing from the Supplier if it “ceases to be able to procure supply” was not triggered merely because actual supply did not immediately commence pursuant to the quote or offer; and
(d)	the ability for the Supplier to issue a notice of suspension at any time within 20 business days after the Pricing Notice, or to elect not to suspend, meant the Purchaser would be significantly inconvenienced if it was required to put in place all necessary logistical arrangements to be in a position to immediately commence supply even before it was certain when the Supplier would issue a notice of suspension or whether it would elect to suspend at all.

Discussion

1. It is necessary to make some introductory observations about the position of the cl 7 mechanism in the contractual scheme taken as a whole.

2. First, in any particular Agreement Year during the Agreement term, the Purchaser was obliged to take from the Supplier the prevailing Minimum Quantity of Products for that Agreement Year and to pay for those Products at the prevailing List Price.

3. Second, if the Purchaser did not meet its Minimum Quantity obligations with the Supplier, it would be in the position of having to pay for Product which it had not taken. So long as the Purchaser met its obligation to take the Minimum Quantity for the Agreement Year at the prevailing List Price, it was otherwise unconstrained in its right to acquire cement products from any third party supplier in whatever quantities and for whatever price suited its purposes.[15]

   [15]           This proposition was subject to an exception which might have applied during the first and second Agreement Years because cl 12 set out an obligation by which the Purchaser might have been required to meet all of its requirement for Products in those years in certain specified markets. It is unnecessary to consider that requirement further.

4. Third, if the Purchaser felt it could prove market prices had lowered by setting out specified evidence thereof, cl 7.2 conferred on the Purchaser a right by giving a Pricing Notice to put the Supplier to an election between either –

(a)	accepting a reduction in the prevailing price under the Agreement down to the price specified in the Pricing Notice (but with the Minimum Quantity obligation unchanged); or
(b)	subject to cl 7.6, suspending supply for a six-month Suspension Period (thereby providing the Purchaser with relief from its take-or-pay obligations and freeing it up to obtain Products from a third party supplier at the reduced price).

1. The former advantage would accrue to the Purchaser if, having received a Pricing Notice, the Supplier was willing to supply at the reduced price and did not by notice elect to suspend pursuant to cl 7.4. The latter advantage would accrue to the Purchaser if, having received a Pricing Notice, the Supplier was not willing to supply at the reduced price. In that circumstance:

(a)	the Supplier would elect to suspend pursuant to cl 7.4;
(b)	during the Suspension Period there would be no obligation on the Supplier to supply Products or on the Purchaser to purchase Products: cl 7.5(2);
(c)	the period of the suspension would be treated as an “Affected Period” for the purposes of cll 3.4 and 3.5: cl 7.5(3);
(d)	the operation of the formula in cl 3.4 (and quoted at [20] above) would lead to a downwards adjustment to the Minimum Quantity; and
(e)	the relief from the take-or-pay obligation would last for the length of the Suspension Period (plus the 72-hour lead time provided for by cl 3.5).

1. Fourth, the Purchaser’s right to obtain either of the two advantages identified at [53] above was conditioned on the Purchaser providing to the Supplier a Pricing Notice setting out Market Pricing Evidence which provided for a price lower than the then prevailing price under the Agreement for the Products concerned. The evident logic was that the Purchaser would have the right only if its Pricing Notice set out evidence which met the criteria specified in the defined term “Market Pricing Evidence” in cl 7.2. A notice which did not do that would not have complied with the condition. It would not be a Pricing Notice contemplated by cl 7.

2. Against that background, what, on its proper construction, did the Agreement require?

3. In my view the Supplier was correct to submit that the language and tense used in each of cll 7.1 and 7.2 suggested that what must be evidenced was a price which was current as at the date of the Pricing Notice.

4. It is particularly notable that cl 7.1(2) referred to “any other evidence … of the price at which the relevant type of Product can be purchased from another supplier …”. This suggested that both types of evidence referred to in cl 7.1 were intended to identify the price at which Product “can be purchased”.

5. Indeed, the use of the term “Market Pricing Evidence” itself suggested that both types of evidence were intended to be evidence of “market price”. That choice of language was significant. The Macquarie Dictionary defines “market price” as “the price at which a commodity, security, or service is selling in the open market.”

6. Further support for the conclusion that the contractual intention was that the requisite evidence must be something which would be evidence of a current or market price can be found in the relevant Macquarie Dictionary definition of “quotation”, namely:

   3.           Commerce

a.	the statement of the current or market price of a commodity or security.
b.	the price so stated.

1. The structure of cl 7 supported this construction in other ways. A Suspension Period could commence at any time within 20 business days of the date of the Pricing Notice: cll 7.4, 7.5. But the suspension would cease if at any time during the Suspension Period the Purchaser ceased to be able to procure supply from a third party supplier at the price specified in the Pricing Notice: cl 7.6. The parties must have contemplated that the Purchaser would be able to procure supply at the price specified in the Pricing Notice from the commencement of the Suspension Period. This is a strong indication that the nature of the evidence contemplated by the Agreement must have been evidence of a price at which the Purchaser would be able to procure supply from the commencement of the Suspension Period because it was the then current or market price of the Products concerned.

2. It may further be noted that cl 7.2 contemplated that the Market Pricing Evidence which was set out in the Pricing Notice would “provid[e] for a price … which is lower than the then prevailing price under this Agreement”. The purpose of that comparison was either to facilitate (1) a new prevailing price being set “from the date of the Pricing Notice”, or (2) a suspension of purchasing under the Agreement within 20 business days. These time stipulations are not consistent with the use of Market Pricing Evidence concerning future supplies of cement which only commence one-third of the way into the new six-month pricing period.

3. Because the Cement Australia quotation was not a quotation of a price which met the requirements I have discussed, I agree with the Supplier that the quotation did not meet the contractual requirements for Market Pricing Evidence.

4. It is not necessary to deal with the Purchaser’s arguments that no term should be implied. What is at issue here is what the parties meant by the terms they used. The issue is construction, not implication. It does not require reading words into the Agreement. It is true that the construction proceeds from a basis of presuming that in a commercial long-term contract the parties intended to behave in a commercially rational way, but it is orthodox to take that approach. Thus, in HSH Hotels (Aust) Ltd v State of Queensland [2012] 2 Qd R 252 at [16], Fraser JA noted that “in the absence of clear words to the contrary, a long term commercial lease should be construed in a commercially rational manner and … if the text is reasonably capable of bearing more than one meaning, the court is entitled to have regard to the context and commercial purpose of the clause when choosing one meaning in preference to another.”

Conclusion

1. The March Pricing Notice was not a valid and effective notice under cl 7.2 when given.

Issue 2: Was the Supplier’s March Suspension Notice a valid and effective notice under cl 7.4?

1. The second issue arose because shortly after receiving the March Pricing Notice the Supplier expressed the view that the March Pricing Notice was not valid and effective, but nevertheless purported to give notice of suspension of supply under cl 7.4 of the Agreement. Questions of waiver and election between inconsistent remedies arose.

The facts

1. By letter dated 5 March 2019, the Supplier notified the Purchaser that “at this stage” it was not treating the March Pricing Notice as valid under cl 7.1.[16] By the letter the Supplier communicated that it was “currently considering its position in respect of its supply obligations under [the Agreement]” and that it otherwise reserved “all its rights under [the Agreement] and generally”.

   [16]           Confidential exhibit 4 (Second affidavit of Cameron David Coleman sworn 5 September 2019), redacted version, at Exhibit CDC-19.

2. By letter dated 7 March 2019, the Purchaser responded. It advised the Supplier that the fact that the Supplier was not treating the Pricing Notice as valid did not affect the operation of time under the Agreement. The Purchaser advised that the Supplier had 20 business days from 1 March to decide whether to issue a notice electing to suspend supply of products; otherwise, the price would reduce as specified in cl 7.2.[17]

   [17]           Confidential exhibit 4 (Second affidavit of Cameron David Coleman sworn 5 September 2019), redacted version, at Exhibit CDC-20.

3. By letter dated 15 March 2019, the Supplier wrote to the Purchaser communicating the following three propositions in relation to the March Pricing Notice:[18]

   [18]           Confidential exhibit 3 (First affidavit of Cameron David Coleman sworn 17 July 2019), redacted version, at Exhibit CDC-11.

(a)	First, the letter advised the Purchaser that the Supplier was of the view that the Pricing Notice was not a valid Pricing Notice because the document attached to the Pricing Notice purporting to be Market Pricing Evidence for the purposes of cl 7.1 did not comply with cl 7.1(1). Various reasons (including the reason now relied on by the Supplier) were set out.
(b)	Second, the letter advised that –

[The Supplier] otherwise reserves all their rights under [the Agreement], and generally, in respect to

the delivery by [the Purchaser] of the Pricing Notice.

(c) Third, the letter invoked the dispute resolution procedures in cl 20 of the Agreement and stated that the letter was to be regarded as a notice of dispute under that clause.

1. By letter dated 18 March 2019,[19] the Supplier gave a further notice to the Purchaser. Despite the Supplier having re-expressed to the Purchaser its opinion that the Pricing Notice was not valid, the Supplier explicitly treated the Pricing Notice as valid and gave notice of suspension of supply pursuant to cl 7.4. It is appropriate to set out the terms of that notice (the March Suspension Notice) in full:

   [19]           Confidential exhibit 3 (First affidavit of Cameron David Coleman sworn 17 July 2019), redacted version, at Exhibit CDC-12.

   NOTICE OF SUSPENSION OF SUPPLY UNDER CLAUSE 7.4 OF [THE AGREEMENT]

   In this letter, capitalised terms have the same meaning as used in [the Agreement].
   We refer to [the Purchaser’s] correspondence dated 1 March 2019 purporting to be a Pricing Notice issued
   in accordance with clause 7.2 of [the Agreement].
   [The Supplier] does not accept that the Pricing Notice is a valid notice and reserves its rights in that regard.
   However, [the Supplier] is unwilling to supply the Product at the price specified in the purported Pricing
   Notice. The Notice given in this letter is given on the basis contended for by [the Purchaser], that the Pricing

   Notice is valid.

   Notice of suspension of supply under [the Agreement].

   Pursuant to clause 7.4 of [the Agreement], [the Supplier] gives [the Purchaser] notice that it has elected to able, or for any reason chooses not to, procure supply of the quantities required under [the Agreement] from an unrelated third party supplier at the price specified on the Pricing Notice, [the Purchaser] must resume purchasing Product from [the Supplier] under [the Agreement].

   suspend supply of Products under [the Agreement]. This suspension will take effect immediately.

   Without Prejudice to the Notice of Dispute

   We also refer to our letter of 15 March 2019 giving a Notice of Dispute in respect to the validity of the Pricing
   Notice. This letter is without prejudice to that Notice of Dispute.

2. The evidence reveals that the Supplier in fact implemented the suspension of which it notified by the March Suspension Notice.[20] Prior to the notice, the pace of supply had been about 26 truckloads of Product per day. Only four truckloads were collected on 18 March 2019 and that occurred between 5:55pm and 10:18pm. Only six truckloads were collected on 19 March 2019 between 12:14am and 8:04am. No supply occurred thereafter until 15 May 2019. The very limited supply on 18 and 19 March occurred because of the logistics involved in the immediate stopping of collection of cement.[21]

   [20]           Confidential exhibit 3 (First affidavit of Cameron David Coleman sworn 17 July 2019), redacted version, at [33]-[36].

   [21] Confidential exhibit 9 (First affidavit of Jason Adrian Maki-Neste sworn 31 July 2019), redacted version, at [26].

The competing contentions

1. For its part, the Purchaser contended that even if, contrary to its contention, the March Pricing Notice was not valid, the March Suspension Notice must nevertheless be regarded as a valid and effective notice under cl 7.4. The Supplier was able to waive the alleged irregularity in the March Pricing Notice. It must be treated as having done so and as having made an unequivocal election between inconsistent rights. It could not now be permitted to contend that its own notice was not valid and effective.

2. The parties were in agreement that the purpose of the doctrine of election was to prevent a person from taking up inconsistent positions: Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 326. There was also no dispute about the matters which needed to be established for the doctrine to apply. As the Purchaser submitted – relying on Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570, Commonwealth v Verwayen (1990) 170 CLR 394 and Sargent v ASL Developments Ltd (1974) 131 CLR 634 – these three elements must be present:

(a)	a party must have made an unequivocal election between inconsistent rights;
(b)	that election must have been communicated to the person against whom the rights are exercisable; and
(c)	the election must have been made with knowledge of the relevant facts, although not necessarily with knowledge of the legal effect of those facts.

1. The Supplier did not suggest that the second and third elements were not satisfied. Rather the Supplier focused on the proposition that, for the doctrine of election to apply, a choice between inconsistent rights must exist and that choice must be unequivocally made. The Supplier advanced these four arguments to suggest that that element could not be regarded as having been satisfied:

(a)	First, if the March Pricing Notice was invalid, the Supplier did not have a right to give the March Suspension Notice. Thus there could be no relevant inconsistency of rights.
(b)	Second, if the Purchaser’s argument was correct, then that would mean that the Supplier’s ability to contest invalid pricing notices was circumscribed. Unless it could vindicate its position about invalidity within the 20 business days referred to in cl 7.4, an election would be forced on it upon expiry of that period by the operation of cl 7.2 and it would be forced into accepting the reduced price.
(c)	Third, upon a proper examination of the circumstances, the Supplier’s conduct must be regarded as equivocal.
(d)	Fourth, the existence of the dispute resolution clause meant that there was no relevant inconsistency of rights.

Discussion

1. The first point to be made is that in the resolution of contractual disputes concerning waiver or election, the question must be answered by reference to the contractual intention of the parties because, in the end, it is the intention of the parties which is sovereign: cf Donaldson v Bexton [2007] 1 Qd R 525 per Keane JA (at [21]).[22]

   [22] Jerrard JA apparently agreed with this proposition, because his Honour founded his preference for the analysis of Keane JA over the analysis of McMurdo J as he thought the former’s analysis achieved the result closest to the position for which the parties had bargained or agreed: see [2007] 1 Qd R 525 at [1].

1. What, then, are the relevant aspects of the evident contractual intention of the parties to the Agreement? To the four points I have made at [51] to [55] above, I would add three further points.

2. First, as I have written at [35] above, cl 29 of the Agreement sought to regulate the circumstances in which a party might advance the contention that its breach of contract or its non-compliance with any warranty, term or condition of the Agreement had been waived by the other party. What is presently significant is that the clause reveals that the parties by their contract must be taken to have contemplated the possibility that a party might waive the other party’s non-compliance with a term or condition of the Agreement, and that the non-waiving party could rely on the waiver if it was in writing and signed by the waiving party.

3. Second, the contractual term which required the Purchaser to present Market Pricing Evidence in order to obtain either a reduction in the prevailing price under the Agreement or a six-month suspension of its take-or-pay obligation was evidently a condition for the benefit of the Supplier and not the Purchaser because it had a character which was protective of the Supplier’s take-or-pay rights under the Agreement. The protective character of the condition was apparent from the two permitted categories of evidence, each of which contemplated evidence of price coming from an arm’s-length established supplier who was prepared to supply a substantial amount of Product over a medium term. Thus the first category of evidence was a “bona fide offer or quotation”, from an unrelated and established supplier, which “provides for … the supply” of a relevant Product in “an aggregate volume of at least 10,000 tonnes per month (on average)” and “for a period of at least 6 months”. The second category was “any other evidence reasonably acceptable to the Supplier” of the price at which the relevant type of Product could be purchased from such a supplier in that volume and for that term. Each of those terms protected the Supplier from the Purchaser seeking to obtain either of the cl 7 advantages on spurious bases.

4. Third, whilst cl 29 would undoubtedly be read down as not contemplating or authorising waiver of non-compliance of conditions which were for the benefit of the non-waiving party, that would not be relevant in the present circumstances, given my conclusion that the contractual requirement that a Pricing Notice contain evidence of price which complied with the criteria set out in cl 7.1 was inserted for the protection of the Supplier.

5. The result is that I would construe the Agreement as contemplating that it was open to the Supplier to waive the alleged non-compliance with the cl 7.1 criteria and to treat a non- compliant Pricing Notice as valid.

6. It follows that, in principle, one choice which faced the Supplier when in receipt of a Pricing Notice which it contended was invalid would be to waive the extent to which the Pricing Notice had not complied with cll 7.1 and 7.2. Clause 29 of the Agreement contemplated that it would have the right to do so. If the non-compliance was waived, then the Supplier would have the right to suspend pursuant to cl 7.4.

7. However, a second choice facing the Supplier in such a position would be to dispute the validity of the Pricing Notice and to assert the rights which would follow consequent upon that contention. Contrary to the Supplier’s contentions which I have identified at [74](b) and [74](d), its ability to contest invalid pricing notices was not circumscribed, and the dispute resolution clause did not interfere with its choice. True it is that on the expiry of the 20 business day period referred to in cl 7.4, the Purchaser would inevitably contend that price had been reduced by operation of cll 7.2 and 7.4. But the outcome stated in parentheses at the end of cl 7.4 is premised on a valid Pricing Notice having been given (or a Pricing Notice having been treated as valid by waiver of the non-compliance which would otherwise give rise to invalidity). If the Supplier disputed the validity of the Pricing Notice and explicitly insisted on performance of the Agreement according to its terms without reduction in price, waiver would not be arguable. An invalid notice not the subject of any waiver by the Supplier could not possibly bring about a reduction in the prevailing list price.

8. In order to vindicate its position about invalidity, the Supplier would simply need to supply Product as requested by the Purchaser and then to issue invoices consistent with its contention that the Pricing Notice was invalid and the prevailing price had not been reduced. If those invoices were incompletely paid, the Supplier would be in a position to enforce its rights, contending that the total unpaid price of any invoice was a liquidated debt due and owing to the Supplier. If the Supplier was correct on invalidity, it would eventually succeed. If it was incorrect, and the Pricing Notice was valid, it would follow that the price had been reduced by operation of cll 7.2 and 7.4, the Purchaser would have a defence and the Supplier would fail. That there are contractual consequences to the choices which the Supplier makes does not, in my view, mean that the Supplier is being forced into anything.

9. The Supplier’s contention which I have identified at [74](a) was that invalid notices could not give rise to an election. They were to be regarded as invalid and ineffective when given and incapable of being made valid by the Supplier. I would reject that contention because I have concluded that the proper construction of the Agreement permitted waiver of the irregularity in the notice. I have regarded waiver as an exercise of a contractually contemplated power capable of founding an inconsistency of rights in the way I have described above.

10. I agree with the Purchaser that the course I have taken is supported by the decision of Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] 2 All ER (Comm) 896. That case concerned a charterparty under which the service of a valid notice of readiness on the charterers was a condition of the rights of the ship owners to claim demurrage. A notice served on the charterers was invalid because it was served before the ship had reached berth. The Court held that the charterers made a binding election to waive this invalidity, and could not subsequently assert that the notice was invalid. Potter LJ (Arden LJ and Sir Denis Henry agreeing) stated as follows (at [65] to [66]):

    In Bremer Handelsgesellschaft mbH v Vanden Avenne-Izegem PVBA [1978] 2 Lloyd’s Rep 109 the House of Lords was concerned with and applied the doctrine of waiver by election to a force majeure notice given by sellers to the buyers which was defective both in form and on the ground that it was given too late. Their Lordships treated the issue of waiver as an objective exercise based on the communications between the parties, Lord Salmon (at 126) observing:

    ‘I think that any reasonable sellers would rightly have inferred the buyers were accepting the notice as a valid and effective notice under cl. 22 save that the reference to 500 tonnes should be altered to 280 tonnes. To put it another way, the buyers made an unequivocal representation that they were treating the notice as a valid and effective notice under cl. 22. To make an unequivocal representation or waiver it is not necessary for the buyers to say “We hereby waive it”. It is quite enough if they behave in such a way that reasonable sellers would be led to believe that the buyers were waiving any defect there might be in the notice and were accepting it as effectively extending the date for delivery in accordance with the provisions of cl. 22.’

    … subsequently seeks to rely will depend upon the effect of the communications or conduct of the parties, the intention of the party alleged to have waived his rights being judged by objective standards. This being so, it seems to me clear that, in an appropriate commercial context, silence in response to the receipt of an invalid notice in the sense of a failure to intimate rejection of it may, at least in combination with some other step taken or assented to under the contract, amount to a waiver of the invalidity or, put another way, may amount to acceptance of the notice as complying with the contract pursuant to which it is given.

11. The Supplier, on the other hand, sought comfort in Nabalco Pty Ltd v BP Australia Ltd (unreported, NSWSC, 27 August 1975). In that case, Sheppard J had to consider the effect of notices given under a fuel supply contract between Nabalco (the Buyer) and BP (the Seller). Under that contract the Seller delivered oil products to the Buyer. The contract permitted the Seller to give notice to the Buyer fixing a new revised base price which the Buyer could either accept or, if the prices were unacceptable, give notice to terminate the contract. The relevant clause (cl 9(C)(iii)) was in these terms:

    If at any time due to circumstances beyond the Seller’s control, the Seller is unable or able only on onerous terms to obtain supplies of crude petroleum and/or petroleum products from its present or then usual sources and by the present or then usual routes for such supplies, and if in consequence thereof the Seller incurs substantial additional costs in respect of the supply of [relevant products] deliverable hereunder then the Seller may give notice thereof to the Buyer and fix a revised base price per metric ton for supplies of such [relevant products] hereunder as is so affected and save as herein provided such revised base price or prices per metric ton shall become operative on the day stated in the notice being a date not less than three (3) months after the date of the notice. If any such revised base price per metric ton shall be unacceptable to the Buyer then within one month after the receipt of the said notice the Buyer shall give three months’ notice in writing to the Seller to terminate upon the expiration of such notice its obligation to purchase under this agreement the product or products the revised base price or prices of which is or are unacceptable …

12. The Seller gave notice on 25 March 1974 pursuant to cl 9(C)(iii) that it was only able to obtain supplies on onerous terms. On 24 April 1974, the Buyer gave notice which denied the validity of the Seller’s notice, but which also, if that notice should be valid, would have had the effect of terminating the contract on 24 July 1974. Sheppard J concluded that the Seller’s notice was invalid or ineffective as a notice pursuant to the clause because the circumstances relied on by the Seller were not within the clause. Having reached that conclusion, Sheppard J made the following observations on which the Supplier in the present case relied (emphasis added):

    As already indicated this argument was put on the basis that [the Seller’s] notice was valid. Since I have decided that it was invalid this matter does not really arise for consideration. It was however argued at some length and I should express some views about it. [The Seller’s] submission is that [the Buyer’s notice] is ineffective because it approbates and reprobates. It purports to operate in two different ways. On the one hand, it claims that [the Seller’s] notice is invalid with the result that the pre-existing price continues to apply. On the other hand, in case the notice should be found to be valid, it purports itself to be a notice terminating the contract pursuant to the clause. [The Seller] submits that its notice, valid or invalid, put [the Buyer] in a position where it had to elect what its course would be. The submission seeks to liken [the Buyer’s] situation to that of one party to a contract where the other has committed an act which may amount to conduct entitling the first party to rescind for anticipatory breach. In such circumstances the party having such right must by unequivocal words or conduct indicate that he accepts the conduct of the other party as a repudiation of the contract and treats it as being at an end. I do not think that the analogy is apt. In the present case [the Buyer] was placed in a dilemma. Either [the Seller’s] notice was effective or it was not. If it were ineffective [the Buyer] wished the contract to continue as before. If it were effective, [the Buyer], pursuant to a right conferred by the contract upon it so to do, wished to terminate it. If the notice were invalid nothing that [the Buyer] did could make it valid. It was ineffective for any purpose and the contract continued as before. It did not need words from [the Buyer] to make it valid or invalid. But if it were valid a notice was required if [the Buyer] were desirous of terminating the contract. It made its position clear by saying that, whilst not accepting the validity of the notice, if it were, contrary to its views valid, it terminated the contract pursuant to a right in that behalf so to do. It was not a case in which there was any question of [the Buyer] rescinding the contract pursuant to a supposed right so to do arising because of some conduct on the part of [the Seller] manifesting an intention not further to be bound thereby. [The Buyer] made it plain that the contract was to remain on foot either to continue for its full term or so that it might be terminated pursuant to a specific provision contained therein. Accordingly, if I had found that [the Seller’s] notice were good, I would have concluded also that [the Buyer’s] notice was good.

[88]    In my view Nabalco Pty Ltd v BP Australia Ltd is of no assistance in the present circumstances. In the first place, waiver by the Buyer did not seem to have been argued. Second, it is doubtful that the condition on the power of the Seller to give the notice should be regarded as a condition inserted for the benefit of the Buyer and something which could be waived by it even if waiver had been argued. Third, the observations were obiter.

1. The only remaining issue is whether I should accept the Supplier’s argument that upon a proper examination of the circumstances, its conduct must be regarded as equivocal.

2. I make the following observations about the March Suspension Notice:

(a)	The heading in upper case at the start of the letter made the unambiguous assertion that the document was a notice of suspension of supply under cl 7.4.
(b)	The letter then communicated that the Supplier still did not accept that the Pricing Notice was valid and reserved its rights.
(c)	But despite that statement, the letter unambiguously went on to say that it was given “on the basis contended for by [the Purchaser], that the Pricing Notice is valid.” The Supplier was clearly flagging its decision to treat the Pricing Notice as valid, notwithstanding its continued view that it was not valid.
(d)	The letter then unambiguously notified of the election to suspend and that the suspension would have immediate effect. And that in fact happened.
(e)	Finally, the letter added the proposition that it was without prejudice to the earlier notice of dispute.

1. I agree with the Purchaser that the reservation of rights which preceded the decision to treat the Pricing Notice as valid and to elect to suspend under cl 7.4 could not be regarded as rendering the Supplier’s conduct equivocal. The right which the Supplier purportedly reserved was the right to insist that the Pricing Notice was invalid and that the Purchaser was obliged to continue to take-or-pay for the Minimum Quantity of Product at the prevailing price. The right being exercised was the right to waive any invalidity, treat the Pricing Notice as valid and elect to suspend under cl 7.4. That was inconsistent with the right purportedly reserved. As Macfarlan JA observed in Summer Hill Business Estate Pty Ltd v Equititrust Ltd [2011] NSWCA 149:[23]

   [23]           At [26] (Campbell and Young JJA agreeing).

   … a reservation of [inconsistent] rights would likely have been ineffective because the outright exercise of one such right usually constitutes an election not to exercise the other, whatever reservation might have been made (see Haynes v Hirst (1927) 27 SR (NSW) 480 where a party unsuccessfully sought to “protect himself against the legal consequences of his acts by stating that he [did] them without prejudice” (at 489)).

2. The same reasoning applies to render irrelevant the statement that the letter was without prejudice to the earlier notice of dispute.

3. The result is that I reject the Supplier’s argument.

Conclusion

1. The Supplier’s March Suspension Notice was a valid and effective notice under cl 7.4 electing to suspend as at 18 March 2019. Accordingly, pursuant to cl 7.5, it created a Suspension Period lasting from 18 March 2019 for the period specified in cl 7.5, unless it was brought to an end at some earlier time. Further, pursuant to cl 7.5(3) any period during an Agreement Year which fell within that Suspension Period was to be treated as an Affected Period under the Agreement, with the consequences provided for in cl 7.5(3) and the clauses to which it referred.

Issue 3: Was any Suspension Period created by the March Suspension Notice brought to an end pursuant to cl 7.6?

1. The duration of the Suspension Period which commenced consequent upon a valid and effective Suspension Notice would be six months from the date of the election (cl 7.5(1)(a)) unless it was ended earlier by agreement (cl 7.5(1)(b)) or because cl 7.6 applied to oblige the Purchaser to resume purchasing Products from the Supplier (cl 7.5(1)(c)).

2. Clause 7.6, it will be recalled, was in these terms:

   Where the supply of Products has been suspended in accordance with clause 7.4, the Purchaser must resume purchasing Products from the Supplier if it ceases to be able to (or for any reason chooses not to) procure supply from a third party supplier (excluding any supplier in which any Related Body Corporate of the Purchaser holds a material shareholding) at the price specified in the Pricing Notice giving rise to the suspension.

3. Notably the type of third party supplier the subject of the clause was the same type of third party supplier (i.e. a supplier subject to the same exclusion) as had been referred to in cl 7.1. Once a Suspension Period had commenced, the obligation to resume purchasing arose when either of these two criteria had been met:

(a)	first, the Purchaser ceased to be able to procure supply from such a third party supplier at the price specified in the Pricing Notice giving rise to the suspension; or
(b)	second, the Purchaser for any reason chose not to procure supply from such a third party supplier at the price specified in the Pricing Notice giving rise to the suspension.

1. The third issue arose because the Supplier contended that in the events which followed the giving of the March Suspension Notice, cl 7.6 operated to oblige the Purchaser to resume purchasing Products from the Supplier.

The facts

1. It will be recalled that the evidence which the Purchaser provided with the March Pricing Notice was a Cement Australia quotation which provided for the supply of identified cement products by Cement Australia to the Purchaser during the eight-month period from 1 May 2019 until 31 December 2019 in quantities which met the requirements of cl 7.1(1)(c) of the Agreement and at a price per tonne which was lower than the then prevailing List Price under the Agreement.

[100]   As I have said, the Supplier elected to suspend supply under the Agreement on 18 March 2019. Pursuant to cl 7, the Suspension Period commenced from that date. What happened thereafter was as follows.

1. As regards Cement Australia:

(a)	Between 19 March 2019 and 26 March 2019, the Purchaser did not purchase Products from Cement Australia for the price per tonne specified in the March Market Pricing Evidence.[24] Nor did it purchase Products for that price in that time period from any other person or entity that was not a Related Body Corporate.[25]
(b)	Between 19 March 2019 and 26 March 2019, the Purchaser and Cement Australia conducted what may be characterised as negotiations for the purpose of entering into a contract along the lines of that which had been the subject of the Cement Australia quotation forming part of the Market Pricing Evidence.[26]
(c)	On 26 March 2019, the Purchaser and Cement Australia entered into a contract (the Cement Australia Agreement) pursuant to which Cement Australia agreed to supply Products to the Purchaser for the price per tonne specified in the March Market Pricing Evidence for a nine-month period beginning 1 April 2019 and ending on 31 December 2019.[27]
(d)	Between 26 March 2019 and 31 March 2019, the Purchaser did not purchase Products from Cement Australia for the price per tonne specified in the March Market Pricing Evidence.[28] Nor did it purchase Products for that price in that time period from any other person or entity that was not a Related Body Corporate.[29]
(e)	On 1 April 2019, the Purchaser began purchasing Products from Cement Australia pursuant to the Cement Australia Agreement for the price per tonne specified in the March Market Pricing Evidence, had been purchasing them on a consistent basis since that time, and intended to continue to do so.[30]
(f)	Between 1 April 2019 and 21 October 2019, the Purchaser purchased a total of 81,239.49 tonnes of Products from Cement Australia.[31] If one averages the rate of purchase over 7 months, that gives rise to a monthly average of about 11,600 tonnes. If one averages the rate of purchase over 6.7 months, that gives rise to a monthly average of about 12,125 tonnes. Thus the rate of purchase seemed to approximate the 12,000- tonne maximum monthly amount for which the Cement Australia Agreement provided.
(g)	However, the amounts purchased from Cement Australia were significantly less than the Purchaser’s take-or-pay obligations under the Agreement with the Supplier, had those obligations continued to apply. The Minimum Quantity for the Agreement Year commencing 1 July 2018 was 249,891 tonnes.[32] Adjusting for a 4,244-tonne rollover from the previous year, the Purchaser’s monthly Minimum Quantity under the Agreement was therefore approximately 20,470 tonnes. The amounts purchased also fell far below the minimum quantities which would have been required to meet the three-month rolling average provisions of cl 8.9 of the Agreement.[33]

[24] Fact admitted by amended defence at [11].

[25] Fact admitted by amended defence at [11].

[26]           Confidential exhibit 8 (Affidavit of Bill Sioulas sworn 31 July 2019), redacted version, at [34] and Exhibit BS- 8.

[27]           Confidential exhibit 8 (Affidavit of Bill Sioulas sworn 31 July 2019), redacted version, at [34] and Exhibit BS- 8.

[28] Fact admitted by amended defence at [11].

[29] Fact admitted by amended defence at [11].

[30]           Confidential exhibit 9 (First affidavit of Jason Adrian Maki-Neste sworn 31 July 2019), redacted version, at [29]–[32].

[31] Confidential exhibit 11 (Third affidavit of Jason Adrian Maki-Neste sworn 20 January 2020), redacted version, at [7].

[32]           Confidential exhibit 4 (Second affidavit of Cameron David Coleman sworn 5 September 2019), redacted version, at Exhibit CDC-21.

[33]           Exhibit 6 (Fourth affidavit of Cameron David Coleman sworn 4 February 2020), at Exhibit CDC-30.

16       These Key CSA Terms were essential from

the Wagners Sale Entities point of view for [the Purchaser] were essential is Wagner’s subsequent evidence about the matters is irrelevant, and other evidence of But further, the evidence was irrelevant

the reasons noted in paragraph 11 of this my irrelevant. negotiations. Mr Wagner about the negotiations is itself

affidavit. because its reception did not have any

inadmissible as set out below. It is also	bearing on the process of ascertaining the
irrelevant and unorthodox to seek to	legal meaning of any of the contested parts
corroborate a witness’ testimony by	of the Agreement.
reference to a subjective belief allegedly held by that witness.

Paragraph 18:	Mr Wagner’s evidence that he informed	Objection disputed. That Mr Wagner told	The objection is maintained. Mr	I uphold the objection because I agree with
[the Purchaser] of these matters is	[the Purchaser] about the matters	Wagner’s evidence in this respect is	the Purchaser that, at its highest, the

18       During February 2011, I do recall informing

Mr Read, and other representatives of Boral irrelevant. identified is relevant to identify the object, inadmissible for the reasons set out in evidence merely identifies statements

involved including Mr Cohen, in those	genesis, or purpose of the [Agreement].	section III of the [Purchaser’s]	made during negotiations which –
negotiations	These are objective matters, facts, and	submissions. At its highest these are	(a) shed light on the speaker’s subjective opinion or intentions and were

(a) of the Key CSA Terms; circumstances, relevant to the alleged statements made during

interpretation of that agreement. negotiations which are inadmissible.

(b)	of the commercial importance to the	accordingly inadmissible; and
Wagners Group (which I have explained

Evidence to which objection taken Purchaser’s objection Supplier’s response Purchaser’s response Ruling

in paragraph 11 of this my affidavit) of	(b) were irrelevant because their
the Key CSA Terms.	reception did not have any bearing on the process of ascertaining the legal meaning of any of the contested parts of the Agreement.

Paragraph 23:	Mr Wagner’s subjective view that what he	Objection disputed. The paragraph merely	Objection maintained. Mr Wagner’s	I uphold the objection for the reasons
identifies as the “Key CSA Terms” were	introduces the next passage of Mr	subjective characterisation of “key” terms	advanced by the Purchaser.

23       The Key CSA Terms were incorporated into

the CSA in the form finally agreed. The incorporated into the [Agreement] is Wagner’s affidavit. It is not relied on for being included is irrelevant. But further, the evidence was irrelevant

following clauses of the CSA are relevant to irrelevant. any other purpose.

these Key CSA Terms. Where necessary, I because its reception did not have any

The other matters referred to in this bearing on the process of ascertaining the

also explain the background to and

commercial purpose behind each of those	paragraph, i.e., the clauses Mr Wagner	The second part of the objection is dealt	legal meaning of any of the contested parts
clauses from the perspective of the Wagners	believes are relevant to those “Key CSA	of the Agreement.
Group.	with by reference to specific paragraphs
Terms”, and the Wagners Group’s	below.
subjective views regarding the background and commercial purpose of those clauses, are also irrelevant.

Paragraphs 35 to 36:	The subjective intention of Mr Read of	Objection disputed. The communicated	The objection is maintained. Mr	I uphold the objection. At its highest, the
[the Purchaser] as to the commercial	concern is an objective matter, fact, and	Wagner’s evidence in this respect is	evidence merely identifies statements

35       During the negotiations I discussed the

content of clause 7 with Mr Read. purpose of clause 7 of the [Agreement], circumstance, which identifies the object, inadmissible for the reasons set out in made during negotiations which –

and the communication of this subjective genesis, or purpose of cl 7 of the section III of the [Purchaser’s]

36 In those discussions, Mr Read explained to (a) shed light on the speaker’s subjective

intention to Mr Wagner, is irrelevant to [Agreement], and is therefore relevant to submissions. A subjective statement made

me that the commercial purpose behind opinion or intentions and were

clause 7 was for it to act as a safeguard against	the proper construction of the	the interpretation of that clause.	during the course of negotiations is not	accordingly inadmissible; and
any significant price reduction in the Cement	[Agreement].	relevant to interpreting the contract.

Products market as a whole in South East	(b) were irrelevant because their
Queensland during the term of the CSA.	reception did not have any bearing on the process of ascertaining the legal meaning of any of the contested parts of the Agreement.

Paragraph 37:	Mr Wagner’s opinion as to the contents of	Objection disputed. This paragraph	Objection to the inclusion of the first	I uphold the objection for the reasons
clause 7.1 of the [Agreement], and his	introduces the paragraphs following it.	sentence of this paragraph as an	advanced by the Purchaser.

37       Clause 7.1 sets out what is required in order

to qualify as "Market Pricing Evidence" for evidence that it was, generally, the subject The fact that cl 7.1 was the subject of introduction to the following paragraphs is But further, the evidence was irrelevant

the purposes of clause 7 of the CSA. The of extensive negotiations prior to the extensive negotiations explains and withdrawn, provided it is not relied upon

definition of "Market Pricing Evidence" was because its reception did not have any

execution of the [Agreement] are corroborates the evidence which follows. for any substantive purpose (although

the subject of extensive negotiations prior to bearing on the process of ascertaining the

irrelevant. those subsequent paragraphs are

the execution of the CSA. legal meaning of any of the contested parts

themselves objected to, as set out below).	of the Agreement.
The evidence that the clause was the subject of extensive negotiations is irrelevant – even if it did corroborate the evidence which follows as to the content of those negotiations (which it does not), the evidence of those negotiations is itself irrelevant as explained below.

Evidence to which objection taken	Purchaser’s objection	Supplier’s response	Purchaser’s response	Ruling
Paragraphs 38 to 39:	Mr Wagner’s subjective concerns and	Objection disputed. The communicated	The objection is maintained. Mr	I uphold the objection because, at its
expectations regarding clause 7 of the	concern is an objective matter, fact, and	Wagner’s evidence in this respect is	highest, the evidence merely identifies

38       During those negotiations, I was concerned

to ensure that clause 7 could not be used by	[Agreement], and his evidence that he	circumstance, which identifies the object,	inadmissible for the reasons set out in	statements made during negotiations
Boral to reduce the price it paid for Cement	communicated those concerns to Mr	genesis, or purpose of cl 7 of the	section III of the [Purchaser’s]	which –

Products under the CSA if:  Read, are irrelevant. [Agreement], and is therefore relevant to submissions. These are no more than (a) shed light on the speaker’s subjective

(a)  some inexperienced new supplier the interpretation of that clause. subjective views and isolated statements opinion or intentions and were

entered the South-East Queensland	allegedly made during a course of	accordingly inadmissible; and
Cement Products market and attempted	negotiations.

to gain market share by offering prices	(b) were irrelevant because their
significantly below the prevailing
market prices for limited quantities of	reception did not have any bearing on
product; or	the process of ascertaining the legal meaning of any of the contested parts
(b)	an offer being provided by a supplier
which was not consistent with the true of the Agreement.
market price of Cement Products in the South East Queensland market.

39       I explained these concerns to Mr Read (although I cannot precisely recall when I did so).

Paragraph 40:	Mr Wagner’s subjective view as to why	Objection disputed. The communicated	The objection is maintained. Mr	I uphold the objection because, at its
the figure of 10,000 tonnes was arrived at	concern is an objective matter, fact, and	Wagner’s evidence in this respect is	highest, the evidence merely identifies

40       During the negotiations, the figure of 10,000

tonnes (mentioned in clause 7.1) was arrived	in clause 7.1 is irrelevant to the proper	circumstance, which identifies the object,	inadmissible for the reasons set out in	statements made during negotiations
at because I considered, and Mr Read said to	construction of the [Agreement].	genesis, or purpose of cl 7 of the	section III of the [Purchaser’s]	which –

me that he considered likewise, that an ability [Agreement], and is therefore relevant to submissions. These are statements about

Mr Wagner’s evidence as to his own (a) shed light on the speaker’s subjective

to supply 10,000 tonnes per month into the	the interpretation of that clause.	subjective views and allegedly isolated
market for at least a three-month period	subjective considerations and subjective	opinion or intentions and were

statements made during a course of

would demonstrate that the supplier was a considerations communicated to him by accordingly inadmissible; and

credible supplier. negotiations.

Mr Read of [the Purchaser] are irrelevant	(b) were irrelevant because their
to the proper construction of the	reception did not have any bearing on
[Agreement].	the process of ascertaining the legal meaning of any of the contested parts of the Agreement.

Paragraphs 41 to 42	Mr Wagner’s evidence that there were no	Objection disputed. The absence of any	The objection is maintained. Mr	I uphold the objection because I agree with
discussions during the negotiations in	communicated concern is an objective	Wagner’s evidence in this respect is	the Purchaser that evidence that there

41       There was no discussion during the

negotiations that the figure of 10,000 tonnes	respect of the [Agreement] about certain	matter, fact, and circumstance, which	inadmissible for the reasons set out in	were no discussions during the
per month set out in clause 7.1 had any	issues is irrelevant to the proper	identifies the object, genesis, or purpose of	section III of the [Purchaser’s]	negotiations in respect of the Agreement
further significance or relevance. In	construction of that agreement.	cl 7 of the [Agreement], and is therefore	submissions.	about certain issues is irrelevant to the

particular, there was no discussion about this relevant to the interpretation of that proper construction of that agreement.

figure of 10,000 tonnes affecting or altering

clause.

Boral's obligation to purchase the Minimum	But further, the evidence was irrelevant
Quantity.	because its reception did not have any

42	It was never discussed that, for the purposes	bearing on the process of ascertaining the
of clause 7.6, Boral Resources could, without	legal meaning of any of the contested parts
ending a period of suspension, purchase:	of the Agreement.

Evidence to which objection taken Purchaser’s objection Supplier’s response Purchaser’s response Ruling

(a)	from the third party supplier, less than the Minimum Quantity applicable under the CSA; and
(b)	Cement Products from its related

therefore purchase a quantity of otherwise have been obliged to purchase from Wagners Cement under the CSA.

Second Affidavit of Denis Patrick Wagner sworn 16 July 2019

Evidence to which objection taken	Purchaser’s objection	Supplier’s response	Purchaser’s response	Ruling
Paragraph 7:	Mr Wagner’s subjective views as to why	Objection disputed. The evidence is	Objection maintained. Even if the	I uphold the objection for the reasons
the Wagners Cement Plant was built are	relevant to explain and corroborate Mr	evidence corroborates Mr Wagner’s	advanced by the Purchaser. Moreover

1. At paragraphs 10 and 11 of my earlier affidavit

I refer to the Wagners Cement Plant. To irrelevant. Wagner’s evidence about the negotiations. evidence as to the negotiations (which it even if the evidence should be regarded as

elaborate, the reason the Wagners Cement	does not), the evidence of those	identifying a fact, there is no evidence that
Plant was built was to ensure that the	negotiations is itself irrelevant as	the fact was known to both parties.

Wagners Concrete Plants would not be explained below. It is also inadmissible to

subject to cement rationing. For my part, that But further, the evidence was irrelevant

adduce evidence of Mr Wagner’s state of

concern was a serious one because before the because its reception did not have any

plant was built the only cement suppliers	mind to corroborate other parts of his	bearing on the process of ascertaining the
with the capacity to supply the Wagners	evidence which is itself inadmissible.
Concrete Plants were owned by competitors	legal meaning of any of the contested parts
of the Wagners Sale Entities. Those suppliers	of the Agreement.
were rationing their cement at times, making it difficult to guarantee that the Wagners Concrete Plants would have enough material.

Paragraphs 8 and 9:	Mr Wagner’s subjective observations	Objection disputed. The evidence is	Objection maintained. Even if the	I uphold the objection for the reasons
regarding the Wagners Cement Plant and	relevant to explain and corroborate Mr	evidence corroborates Mr Wagner’s	advanced by the Purchaser. Moreover

1. The construction of the Wagners Cement

Plant required a very large capital the Wagners Concrete Plants are Wagner’s evidence about the negotiations. evidence as to the negotiations (which it even if the evidence should be regarded as

investment. The return on that investment irrelevant. does not), the evidence of those identifying a fact, there is no evidence that

was from revenue generated by through put, negotiations is itself irrelevant as the fact was known to both parties.

or in other words, by making cement to explained below. It is also inadmissible to

supply to customers. But further, the evidence was irrelevant

adduce evidence of Mr Wagner’s state of because its reception did not have any

9 The Wagners Concrete Plants were by far the mind to corroborate other parts of his

largest customer of the Wagners Cement bearing on the process of ascertaining the

evidence which is itself inadmissible.

Plant. Whilst the Wagners Cement Plant	legal meaning of any of the contested parts
supplied some other customers those	of the Agreement.
customers' demands for cement were much smaller. With only those smaller customers to supply, the Wagners Cement Plant would be a marginal proposition at best. That was
Cement Plant was built. Today, the Wagners
the position in 2009 when the Wagners volume.

Evidence to which objection taken	Purchaser’s objection	Supplier’s response	Purchaser’s response	Ruling
Paragraphs 10 and 11:	These matters are irrelevant for the	Objection disputed. The communicated	The objection is maintained. Mr	I uphold the objection because, at its
reasons set out in respect of paragraphs 15	concern is an objective matter, fact, and	Wagner’s evidence in this respect is	highest, the evidence merely identifies

1. At paragraph 18 of my earlier affidavit I refer

to my recollection of informing Mr Read (and and 18 of Mr Wagner’s first affidavit. circumstance, which identifies the object, inadmissible for the reasons set out in statements made during negotiations

others) about certain things. I cannot now genesis, or purpose of the [Agreement], section III of the [Purchaser’s] which –

recall the precise words I used to inform and is therefore relevant to the submissions. The evidence is no more (a) shed light on the speaker’s subjective

them of the Key CSA Terms or the interpretation of that agreement. than alleged recollections of isolated

commercial importance of those terms. opinion or intentions and were

statements made during a course of

However, I do recall that in broaching the	accordingly inadmissible; and
topic I said words to the effect that "We [i.e.	negotiations.
Wagners Cement] will need to ensure that	(b) were irrelevant because their
after the sale of the assets the cement plant	reception did not have any bearing on
remains commercially viable. We will require	the process of ascertaining the legal
a long-term take off agreement with
minimum quantities".	meaning of any of the contested parts of the Agreement.

1. To my best recollection the words I have used at paragraphs 15(b)(i) to (vi) of my earlier affidavit explain the effect of the words I used in my negotiations and

   discussions with Mr Read.

Paragraph 12:	These matters are irrelevant for the	Objection disputed. The communicated	The objection is maintained. Mr	I uphold the objection because, at its
reasons set out in respect of paragraph 36	concern is an objective matter, fact, and	Wagner’s evidence in this respect is	highest, the evidence merely identifies a

1. At paragraph 36 of my earlier affidavit I refer

to my recollection of Mr Read explaining the of Mr Wagner’s first affidavit. circumstance, which identifies the object, inadmissible for the reasons set out in statement made during negotiations

commercial purpose of clause 7 to me. I genesis, or purpose of cl 7 of the section III of the [Purchaser’s] which –

cannot now recall the precise words he used. [Agreement], and is therefore relevant to submissions. The evidence is no more (a) sheds light on the speaker’s

I do recall that he said words to the effect that the interpretation of that clause. than alleged recollections of isolated

"if the whole cement market comes down in subjective opinion or intentions and

statements made during a course of

price Boral doesn't want to be stuck paying a	was accordingly inadmissible; and
higher price to Wagners."	negotiations.

(b) was irrelevant because its reception did not have any bearing on the process of ascertaining the legal meaning of any of the contested parts of the Agreement.

Paragraph 13:	These matters are irrelevant for the	Objection disputed. The communicated	The objection is maintained. Mr	I uphold the objection because, at its
reasons set out in respect of paragraphs 38	concern is an objective matter, fact, and	Wagner’s evidence in this respect is	highest, the evidence merely identifies a

1. At paragraphs 38 and 39 of my earlier

affidavit I refer to my recollection of and 39 of Mr Wagner’s first affidavit. circumstance, which identifies the object, inadmissible for the reasons set out in statement made during negotiations

informing Mr Read about my concerns with genesis, or purpose of cl 7 of the section III of the [Purchaser’s] which –

clause 7 during the negotiations. Again, I [Agreement], and is therefore relevant to submissions. The evidence is no more (a) sheds light on the speaker’s

cannot now recall the precise words I used to the interpretation of that clause. than alleged recollections of isolated

inform him of those concerns. However, I do subjective opinion or intentions and

statements made during a course of

recall that I said words to the effect that "an	was accordingly inadmissible; and
untested supplier offering a cheap price is not	negotiations.
acceptable as market evidence. The market	(b) was irrelevant because its reception
evidence has to be from a credible supplier	did not have any bearing on the
and the requirements for market evidence	process of ascertaining the legal
should reflect that".	meaning of any of the contested parts of the Agreement.

Evidence to which objection taken	Purchaser’s objection	Supplier’s response	Purchaser’s response	Ruling
Paragraphs 14 to 15:	The email of 27 February 2011 referred to	Objection disputed. The communicated	The objection is maintained. Mr	I uphold the objection because, at its
in these paragraphs is irrelevant to the	concern is an objective matter, fact, and	Wagner’s evidence in this respect is	highest, the evidence merely identifies

1. On 27 February 2011 I was copied to an email

(at 1.17pm) from Mr Read to my brother, proper construction of the [Agreement]. circumstance, which identifies the object, inadmissible for the reasons set out in communications made during negotiations

John Wagner, in relation to some key terms genesis, or purpose of cl 7 of the section III of the [Purchaser’s] which –

of the CSA. Exhibit DPW-2 is a true and [Agreement], and is therefore relevant to submissions. (a) shed light on the writer’s subjective

correct copy of the email chain. the interpretation of that clause. opinion or intentions and were

1. In respect of clause 7 there is a reference to a

'Gerry Wong type offer'. Gerry Wong was accordingly inadmissible; and

someone who offered to sell, ad hoe, very low (b) were irrelevant because their

quality cement imported from China at low

prices. reception did not have any bearing on
the process of ascertaining the legal
meaning of any of the contested parts
of the Agreement.

Paragraph 16:	These matters are irrelevant for the	Objection disputed. The communicated	The objection is maintained. Mr	I uphold the objection because, at its
reasons set out in respect of paragraph 40	concern is an objective matter, fact, and	Wagner’s evidence in this respect is	highest, the evidence merely identifies

1. At paragraph 40 of my earlier affidavit I refer

to the negotiations about the figure of 10,000 of Mr Wagner’s first affidavit. circumstance, which identifies the object, inadmissible for the reasons set out in statements made during negotiations

tonnes in clause 7.1. I cannot now recall the genesis, or purpose of cl 7 of the section III of the [Purchaser’s] which –

precise words used in those negotiations. I [Agreement], and is therefore relevant to submissions. The evidence is no more (a) shed light on the speaker’s subjective

can only recall the effect of what was said. Mr the interpretation of that clause. than alleged recollections of isolated

Read said words such as "a supply of 10,000 opinion or intentions and were

statements made during a course of

tonnes per month would be substantial and	accordingly inadmissible; and
indicate that the alternative supplier was	negotiations.
credible". I said words like "I agree".	(b) were irrelevant because their

reception did not have any bearing on
the process of ascertaining the legal
meaning of any of the contested parts
of the Agreement.

by facsimile, I will treat it as having been effectively given on the date it bears. Unless noted otherwise, I will
take the same approach in relation to the other notices referred to in these reasons.

procured at a price below the price specified in the Pricing Notice.