Cool-Off Pty Ltd (ABN 79 068 308 225) v Thomas Foods International Pty... [2023] NSWSC 1183 | Case summary

A Supply Agreement Is Terminated and the Court is Approached

Most of the background facts, both contested and uncontested, have been advanced through the principal witnesses on each side, namely Mr Matthew Fankhauser, the Chief Executive Officer of Cool-Off and Mr Anthony Stewart, the Chief Executive Officer of Thomas Foods.
Ovine Meat Processing Involving Thomas Foods and Cool-Off. Cool-Off operates a pet food processing facility in Howlong in New South Wales, a town almost 30 km west of Albury on the Murray River. Cool-Off manufactures a significant amount of popular wet and dry pet food products. Cool-Off's case is that it relies upon the consistent supply of animal by-product from Thomas Foods to meet its customers demand for pet food.
Thomas Foods is the Australian subsidiary of Thomas Foods International, which as its name implies trades in several overseas jurisdictions. These include countries in Asia, Europe, and North America. Thomas Foods specialises in meat processing and distribution globally across the retail, wholesale and food service sectors and is a substantial operator in the Australian meat processing market. Thomas Foods has five meat processing plants in Australia, in Lobethal and Murray Bridge in South Australia, in Tamworth and Bourke in New South Wales, and in Stawell in Victoria.
Thomas Foods' five Australian plants process the meat of both bovine animals (calves and cattle) and ovine animals (sheep and lambs). Only the Lobethal, Tamworth, and Stawell plants process ovine animals. Thomas Foods comprises just over 20% of the total Australian ovine animal processing market.
From about April 2019, Thomas Foods has supplied Cool-Off with by-products from its processing of ovine animals. Cool-Off uses those by-products, which it collected from Thomas Foods' Lobethal and Tamworth processing plants under the contract discussed later in these reasons. But the contract is best understood with an appreciation of the meat processing conducted by Thomas Foods and the markets in which Cool-Off and Thomas Foods operate.
Primary producers deliver their ovine animals to Thomas Foods by truck to the Lobethal and Tamworth plants. Under veterinary and public health supervision, the animals are tagged and sent initially to the slaughter room where after being stunned, their throats are slit, they are hung up onto a conveyor, and they have their hides and head removed. In the same room they are eviscerated, and offal is removed from each animal into stainless-steel trays. At the same time inspectors check the carcasses and the offal to ensure they are both fit for human consumption, or whether they should be condemned as unfit.
From there the offal is sorted manually to extract the parts of the animal offal which are to be supplied to Cool-Off (called under the parties' contract "the Specified Product"). After separation by Thomas Foods employees, the Specified Product is placed by Thomas Foods employees into a vacuum chute which moves the Specified Product portion of the offal material into hoppers supplied by Cool-Off. These hoppers are large movable stainless-steel containers.
After the separation of the Specified Product from the ovine offal, Thomas Foods employees then sort the remaining offal to extract those parts of it which Thomas Foods can sell. The rest of this offal, which is still under the control of Thomas Foods, is sent down separate chutes to be "rendered", which is a process through which the offal is turned into meat meal or tallow.
What remains of the animal at this stage of the processing is a carcass which is then moved onwards on the conveyor to a chilling room. From there it is subsequently deboned into portions more suitable for human consumption. At that point Thomas Foods employees remove further material from the carcass, which is supplied to Cool-Off under the contract. But first it is necessary to examine more closely the process by which the Specified Product passes from Thomas Foods to Cool-Off.
Each day before the slaughtering process commences Thomas Foods' employees prepare the hoppers supplied by Cool-Off for use at the Thomas Foods plants to accept the Specified Product. That requires the Thomas Foods employees to turn on the chilling system in the hoppers and ensure that they are clean and ready for the collection of offal. A degree of coordination is required between Thomas Foods and Cool-Off in this process and the process that follows to complete the collection of the Specified Product. Cool-Off will usually have informed Thomas Foods as to the approximate time that Cool-Off's truck drivers will attend to pick up the Specified Product.
Cool-Off does not collect the hoppers. Rather Thomas Foods employees take material out of the hoppers and place it into large plastic tubs, which Cool-Off also supplies and collects. The process by which the specified product in the hoppers finds its way into the tubs and is delivered to Cool-Off employees in trucks involves handling by Thomas Foods employees in coordination with Cool-Off employees.
The interaction between Thomas Foods employees and Cool-Off employees in this process may be shortly described. Shortly prior to each Cool-Off pickup by truck, Thomas Foods employees undertake the following actions: removing the Specified Product from the Cool-Off hopper by first draining the hopper of excess fluid; bringing the tub to the base of the hopper with the forklift; opening the hopper latch so the Specified Product can flow from the hopper to fill the tub; removing the full tub with a forklift to a location to await collection; sealing the full tub, and weighing and recording the weight for invoice purposes, creating a shipping label and placing it on the tub; bringing another empty Cool-Off tub to the hopper to repeat the process; loading the full tubs into Cool-Off's trucks when they arrive; using forklifts and without assistance from Cool-Off employees; preparing and giving to the Cool-Off truck driver completed forms relating to the consignment that are required by regulation; and finally, placing the hopper into an electronic self-cleaning cycle at the end of each day. The Cool-Off trucks are required to enter the Thomas Foods premises at the Tamworth and Lobethal plants to drop off hoppers and empty tubs and collect the full tubs.
Under the contract between these parties, Thomas Foods supplies an additional stream of processed animal material to Cool-Off apart from Specified Product. This additional stream of material results from the deboning process in the cool rooms of Thomas Foods after the removal of the offal from the animal including the Specified Product.
The deboning process in the deboning room creates four streams of ovine product: 1. product for human consumption - these are packaged and stored in chilled rooms before being shipped to customers; 2. bones and fatty materials supplied to Cool-Off under the contract - these are also described in these reasons as "Bone Material", which is a shortened form of a description of this material contained in the contract between the parties; 3. some ovine bone is exported to China but only from the Tamworth plant which is the only Thomas Foods facility which is licensed to export to the People's Republic of China ("PRC") - there is a Chinese market for ovine bone and Thomas Foods can sell a small proportion of its Bone Material produced at the Tamworth plant to the PRC; and 4. other residual materials such as connective tissue is sent to be "rendered" - the process of rendering is the cooking and grinding of meat (mainly offal) and bone material to break it down into meat meal or tallow - this leftover material is saleable by Thomas Foods to its customers, mainly pet food manufacturers, and is described in the evidence and in these reasons as "ovine meat and bone meal".
Thomas Foods supplies the "Bone Material" described above to Cool-Off under the fuller description "Lamb Boning Room Meat and Bone Material". But this non-Specified Product material supplied under the contract will for convenience be described in these reasons as "Bone Material".
The Bone Material, item (2) above, is collected and delivered by Thomas Foods employees to Cool-Off in a manner that is wholly different from the collection of the Specified Product. The Thomas Foods employees collect the Bone Material from conveyor belts on which it has been placed in the deboning process. They then place the Bone Material into large cardboard "octobins", which Thomas Foods supplies. Then Thomas Foods employees seal the octobins and use forklifts to load them onto pallets. The Thomas Foods employees then weigh the Bone Material and store the packaged octobins ready for collection from Thomas Foods premises by trucks arranged by Cool-Off. When the trucks arrive Thomas Foods employees load the pallets of octobins onto the Cool-Off trucks, again by forklift.
Upon completion of all these processes there is usually nothing left of the animal, so that no part of it needs to be disposed of it in a waste facility. Thomas Foods global customers require that suppliers to them, such as Thomas Foods, meet sustainability requirements, including the prohibition upon the wastage of the by-products of slaughtering.
Thomas Foods' evidence is that meeting the objective of no waste, means that there is an important relationship between the sale of the Bone Material to Cool-Off, item (2) above, and the characteristics of the ovine meat and bone meal that constitutes the residue of the whole slaughtering and deboning process, item (4) above.
Ovine meat and bone meal are principally used as ingredients in the manufacture of dry pet food, or kibble as it is known. The quality of the ovine meat and bone meal are important pricing factors in sales to pet food manufacturers. One important characteristic of the quality of the meat and bone meal is the percentage of bone it contains, or as it is known in the industry, its "ash content".
Thomas Foods' evidence is that its ovine processing facilities are not set up to make ovine meat and bone meal with specific characteristics such as meeting a particular ash content. Rather the facilities are set up to render all the otherwise unwanted/unsold residue products from the slaughtering and deboning process. Thus, whether Cool-Off takes the Bone Material, makes a difference to the consistency - and specifically the ash content - of the ovine meat and bone meal rendered by the Thomas Foods ovine processing facilities, which it then tries to sell in available markets.
Thomas Foods says that it does not have the capacity to store large quantities of meat by-product during the slaughtering and deboning process to prevent it going off and becoming unsaleable. Therefore, the by-product of the slaughtering process needs to be progressively rendered at the Thomas Foods processing facilities throughout the day. Thomas Foods' case is that this also means that it has no on-site capacity to adjust the proportions of different types of ovine materials (meat or bone) to make ovine meat and bone meal with specified characteristics.
Thomas Foods' evidence explains that this is one of the reasons why it sought to enter the contract with Cool-Off, so that Cool-Off would take over much of the responsibility for converting more of the by-products from the Thomas Foods slaughtering and deboning process into pet food. Cool-Off disputes that this purpose was communicated to it or that such a purpose emerges from the proper construction of the contract. This is a matter which will be contested at final hearing.
Ovine meat and bone meal is commonly classified for sale according to its ash content. Thomas Foods's evidence is that ovine meat and bone meal is classified either as "low ash meal" (having an ash content of about 20% or less) or "high ash meal" (having an ash content of between 20% and 26%). Thomas Foods contends that pet food companies pay a premium for low ash ovine meat and bone meal and in some cases will specify that they require only low ash meal to be supplied.
Thomas Foods' case is that it sells meat and bone meal both in the international and domestic markets in an annual tender process that ordinarily takes place in October and November. The pet food manufacturing companies call for tenders for the supply of ovine meat and bone meal by express reference to its ash content and in response suppliers, such as Thomas foods, tender to provide that material in specified volumes for the next 12 months.
Thomas Foods case is that to participate in this petfood supply market it needs to be able to project accurate estimates of the amount of low and high ash content ovine meat and bone meal that it will produce over the next 12 months, and only commit to supply pet food manufacturers under agreements that it can fulfill with material with the ash content that it can be confident that it can deliver. Some excess ovine meat and bone meal which is not the subject of its annual sales agreements can be sold on the spot market. But that is a less price-predictable and efficient sales process for Thomas Foods and is more labour-intensive than participating in the annual tender process.
Thomas Foods' case also is that a variety of markets exist for the sale of different types of offal. Thomas Foods explains that apart from the process that is described above, offal can be disposed of by sale in "bulk packed" cartons, sometimes shortened in industry usage to "BP". Thomas Foods say that these are usually one type of offal (livers and kidneys), which has been separated from the other types of offal, or the Specified Product, that would go into the general hoppers supplied by Cool-Off. This separated offal is packed into these cartons and frozen. The bulk packed cartons can be sold for human consumption or for use in the pet food industry.
This account of the relevant background is substantially drawn from the evidence of Mr Stewart with some indication of the areas of contest between the parties. Other areas of contest become clearer when the legal issues in the proceedings are discussed below and the contrasting position put by Mr Fankhauser on several important issues is examined.
The parties are in substantial contest about the nature of the markets in which they are each operating. These contests feature in relation to the nondisclosure and misrepresentation issues and on the balance of convenience and are discussed in more detail below. These reasons now turn to the terms of the contract.
The Making of the Contract and its Terms. Between March 2019 and August 2021, the parties maintained commercial supply arrangements between themselves which were not subject to an overarching contract. Rather they were fulfilled on a more ad hoc basis. During this period Cool-Off would commonly seek from Thomas Foods the supply of specified ovine offal such as lung's hearts and livers or ovine bone and trim material. If Thomas Foods had the material for sale, it would negotiate a price for the quantity of the product which would be recorded in a Cool-Off purchase order and then supplied, usually in bulk packed cartons.
But in August 2021, the parties sought to make a more formal commercial relationship reflected in a written contract in relation to the supply of animal by-products from Thomas Foods' abattoirs in Lobethal and Tamworth. It should be mentioned at this point that parallel negotiations were taking place between Cool-Off and a company, which operates the Stawell abattoir, Frew Foods International Pty Ltd, which is now known as Thomas Foods International Stawell Pty Ltd. An agreement was ultimately made between that entity and Cool-Off on terms that are very similar to those negotiated between Thomas Foods and Cool-Off for the Lobethal and Tamworth facilities. But Cool-Off's claims in these proceedings only concern supply of products from the Lobethal and Tamworth facilities of Thomas Foods and the contract for the Stawell abattoir can be ignored.
But despite their lengthy negotiations, due to what appears to be a communication error, in the final exchange of contract counterparts the parties exchanged counterparts that did not fully correspond with one another, although they were a close match in most respects. On 16 August 2021 Cool-Off emailed a signed copy of the contract to Thomas Foods ("the 16 August 2021 version"). It is convenient to use the date of signing and sending of this version of the agreement, 16 August, even though it was confusingly dated at the beginning as 7 July 2021, confusion which has persisted in reference to it in correspondence. A few days later on 20 August 2021 Thomas Foods emailed the different version of the contract to Cool-Off, which was dated 19 August 2021 ("the 19 August 2021 version"). The fact that Thomas Foods had made changes and signed a different version appears not to have been noticed by Cool-Off, which did not respond to the differences or sign the changed version from Thomas Foods.
Thomas Foods contends on the issue of whether there is a serious question to be tried, that this mismatch of counterparts meant that it should be inferred that no agreement was reached between the parties. In reply, Cool-Off contends that from August 2021 through until Thomas Foods sought to terminate in July 2023 the parties operated according to at least one version of the exchanged contracts, probably the 19 August 2021 version, which it should be inferred in the circumstances is binding upon them. The differences are discussed in more detail below. But on the issue of balance of convenience the differences between the two versions are not material as the dispute relates to clauses that are common to both the 16 August 2021 version of the contract and the 19 August 2021 version.
Neither side appears to be relying on doctrines of unilateral mistake. Neither side suggests that one party was aware of the mistake of the other and took unconscientious advantage of the other side's lack of recognition that an error had taken place. Rather the situation appears to be that each side remained unaware that the other was relying upon a different set of terms until the present dispute broke out much later.
Which set of terms is binding is a matter for final hearing. But looking objectively at the exchanges between the parties Cool-Off has a case that can be very respectably argued that the 19 August 2021 version is likely to bind the parties. That was the last set of signed terms to pass between the parties. Cool-Off did not notify Thomas Foods that it had any issue with the 19 August 2021 version. Instead, Cool-Off commenced to conduct itself in relation to Thomas Foods on the basis that some contract bound it and Thomas Foods appeared objectively to proceed on that basis. On these facts it is well arguable that either Cool-Off accepted an offer in the form of the 19 August 2021 version or both parties are estopped from denying that they are bound by that version, although Thomas Foods maintains that because the two documents contain materially different terms, Thomas Foods' 20 August 2021 email of the 19 August 2021 version should be characterised as a counteroffer which Cool-Off never accepted. But Cool-Off ostensibly acted based on what Thomas Foods had sent to it on 20 August 2021 and acceptance by conduct may be inferred.
Two other matters should be mentioned in this context. First when Cool-Off sought ex parte relief before Lindsay J it propounded the 19 August 2021 version, which is the version which Thomas Foods had approved. Secondly, Thomas Foods notice of termination of 15 March 2023 is predicated upon the assumption that there is a binding "Supply Agreement" between the parties which is capable of termination by notice in accordance with clause 15 of the Standard Terms and Conditions, although the version which is attached to the notice of termination is the 16 August 2021 version. Cool-Off can hardly be blamed for later approaching the Court ex parte believing that Thomas Foods thought there was a binding contract in the form of the "Supply Agreement - offal collection".
For these reasons the "no contract" issue will not feature greatly in the Court's present consideration of whether there is a serious question to be tried.
The Court will use the 19 August 2021 version for convenient analysis and points out how it differs from the 16 August 2021 version. In one respect that was the subject of contention between the parties.
The contract was made between Thomas Foods as supplier and Cool-Off as buyer. The contract related to the supply by Thomas Foods to Cool-Off of the two different kinds of animal product, which were defined in the contract as, "Specified Product" and "Lamb Boning Room Meat & Bone Material" but referred to here as Bone Material. As the background above explains, each of these animal products comes from a different part of the slaughtering process. Thomas Foods says that its parallel supply of both products to Cool-Off under the one agreement was designed to serve its own commercial objectives of having Cool-Off take Bone Material off its hands as well as selling Specified Product to Cool-Off. Whether those commercial objectives were in fact achieved by the wording of the contract is a matter for final hearing. The supply obligations and rights of the parties with respect to each type of animal product, Specified Product and Bone Material were different and are found in different parts of the contract, as can be seen in the following identification and analysis of the essential terms of the contract.
The contract is entitled "Supply Agreement - offal collection" and consisted of two parts, one more specific, which is described as the "Particulars" and the other more general, containing standard terms (described as the "Standard Terms and Conditions"). Both parts of the contract contain provisions that regulate the supply of the two products, Specified Product and Bone Material, or as it is described in full under the contract, Lamb Boning Room Meat & Bone Material.
The contract entitled "Supply Agreement - offal collection" was made between Thomas Foods as "Supplier" and Cool-Off as "Buyer". The first part of the contract, called Particulars, was crafted to address the parties' detailed terms and conditions of supply under which 11 "Items" appear, each Item being a clause in the contract.
Of principal relevance to the present contest are Items, 3.1 - 3.5, 4.1, 5.1, 6.1 and 11.1 - 11.11.
Item 3.1 - 3.5 is headed "Term" and provides for the term of the contract with the buyer having an option to extend and preventing the supplier from supplying petfood offal to any other party or using Cool-Off's equipment on-site for any other party: "3.1 Three (3) year term commencing from the date of this Agreement unless terminated as per the terms of this Agreement. The Buyer has first option to extend the term by three (3) years at least 1 months' prior notice to the date of the initial term (as the case may be) expiring. Upon agreement by the Supplier, the Agreement shall be extended for the further term. 3.2 If after the expiry of the Term & without the parties formally renewing this Agreement and the Supplier continues to supply the Specified Product to the Buyer, the parties will do so in accordance with the terms of the Agreement. Pricing will continue to reset on the anniversary of this Agreement. But in that case this Agreement will not be taken to have been renewed and either party may terminate the ongoing supply arrangement by giving 3 months written notice to the other party, past the agreed term of this agreement. 3.3 On termination or expiry without renewal of this Agreement the Supplier will grant site access to the Buyer to enable removal of the Offal collection/chilling equipment (Secured Property) provided and installed by the Buyer, provided the Buyer gives 3 months written notice of intention to remove the Secured Property. 3.4 In any circumstances the Supplier will not supply pet food offal to any other party unless authorised in writing by the Buyer, (Non-Compete) or use the Secured Property provided by the Buyer for other purposes or other parties. 3.5 Should the supplier demand the agreement be terminated prior to the agreed term, the supplier accepts that they will be required to pay costs or compensation for removal of the buyer's equipment. At the pro rata rate on cost on installation of the equipment ($ / 3-year amortisation rate) costs supported by invoices associated with the particular site/ sites."
Although "Secured Property" is not defined in the contract, the standard terms and conditions contain a definition of "Secured Equipment", which is defined as the buyer's equipment installed on the supplier's land for the collection and cooling of offal, and "Secured Property" should be taken in context to denote the same equipment.
Item 4 is labelled "Goods or Services to Be Provided" and deals with the supply of the Specified Product, which is defined more fully in Schedule 2B: "4.1 Ovine offal in accordance with specification itemised in Schedules 2B (the Specified Product). The Supplier must ensure the requirements relating to the fresh offal collection described in Schedules 2B are met. 4.2 the buyer may change the agreed mix and quantity of a specified product to be collected to match customer demand and aid in maintaining quality subject to the campaign call are outlined in schedules 2B as applicable. (Optional product) the buyer will provide the supply with (two) weeks written notice prior to any changes."
Items 4.3 and 4.4 then provide for the Buyer to weigh the Specified Product and the Supplier reserves the right to weigh the Specified Product and audit the weights declared by the Buyer.
Item 5 relates to the subject of "Quality-Control Provisions" and deals with what the contract describes, but otherwise does not define, as Corrective Action Response Programs, which appear to be operating procedures designed to control the quality of material supplied by Thomas Foods where there is zero tolerance for impurities or defects in the product. Clause 5.1 provides as follows: "5.1 Corrective Action Response programs to be used to monitor and control quality for all zero tolerance items."
Item 6 is labelled "Frequency of Collection" and sets out in clause 6.1 a standard of daily collection of Specified Product: 6.1 The Buyer is to arrange for the removal of the Specified Product usually on each day that production is performed at the Supplier's site, and or at a time that is mutually agreed by both parties.
Item 6 also provides for a licence by the Supplier to allow the Buyer and its freight provider access to the Supplier's sites.
Item 7 provides for the pricing of the Specified Product as described in schedule 2B which will be reviewed every 31 October after 31 October 2021. This clause contains several provisions that allow the supplier and the buyer to review market pricing for ovine meat and bone meal. This item also provides for a floor price for Specified Product.
Item 8 provides for the Buyer to supply at its cost "the Secured Equipment" to enable the automatic collection and chilling of the Specified Product at no cost to the Supplier. Item 8 then provides for the specifications of the Secured Equipment, the supply of utility services such as electricity to it, an installation plan, the supply of forklifts, access to the Buyer to inspect and maintain operational efficiency of the Secured Equipment, the provision of detailed operational guides for the Secured Equipment to the supplier, and the servicing and maintenance of the Secured Equipment by the buyer.
Item 11, entitled "Additional Items/Product" and headed "Lamb Boning Room Meat and Bone Material" departs from regulating the supply of Specified Product and turns to the separate subject of Bone Material. It provides the following in full: "11.1 The buyer agrees to buy from the seller with in (sic) the time period of this agreement, (3.1) Lamb (Ovine) bone, carcass fat, trim, bruised meat and or carcass pieces etc derived from its Human Consumption / edible boning room operations and where possible Buyer shall add value where it can to other area of the abattoirs operations in regards to usable and collectable materials for use in Pet food. 11.2 Current price to October 31st 2021 (Anniversary Date) is at 1.00 aud/kg ex works, packed in poly lined cardboard jumbo Cartons in export pallets. 11.3 Price for this material to be reviewed annually and the agreed price shall be effective from the Anniversary Date. 11.4 As part of the general 6 month contract review detailed in Item 7.6 above the market price for Lamb Boning Room Meat and Bone Material will also be reviewed. Out of this review if pricing has moved materially either party may request an out of cycle price review with a price to be jointly agreed by the parties. Such a request must be issued in writing. 11.5 Price shall be based on the market agreed price of such material. 11.6 Should the Supplier and Buyer fail to agree on a market price at either an annual price review or out of cycle price review the Supplier shall have the right to terminate the agreement in relation to the supply of Lamb Boning Room Meat and Bone Material by providing 30 day written notice to the Buyer. 11.7 Should the Supplier terminate supply of material in accordance with Item 11.6 this has no impact on the agreement to supply Ovine Offal in accordance with Item 4 of this agreement. 11.8 Packing may be subject to change provided such change is advantageous to both parties. 11.9 Price shall be applied at parity across all agreed sites on this document. 11.10 Product must meet a standards as to temperature maintained in a chilled state not greater than 10C until collection by the buyer. 11.11 Collection shall be on a daily basis, unless otherwise agreed."
The principal way in which the 16 August 2021 version of the contract differs from the 19 August 2021 version is the inclusion of Item 11.7 in the 19 August 2021 version, but its exclusion from the 16 August 2021 version. There are other differences of less significance to the parties present contest, and these can be ignored for now.
The second part of the contract contains general terms and is headed "Provision of Services - Standard Terms and Conditions". This part of the contract defines the term "Agreement" to mean not only the Standard Terms and Conditions themselves but "the Particulars" (a reference back to the first part of the contract) and "the attached Schedules", thereby incorporating Schedule 2B (see below). Clauses 3, 4 and 15 came under consideration in the interlocutory hearing. They provided as follows: "3. TERMS OF AGREEMENT: Subject to Clause 15 the Buyer shall purchase the Specified Product for the period set out in Item 3 of the Particulars and the Supplier will make the Specified Product available throughout the Term. 4. SCOPE OF AGREEMENT: The Buyer shall purchase the Specified Product from the Supplier as described in Item 4 of the Particulars and the Supplier will supply the Specified Product and store it, until collected by the Buyer, in the Secured Equipment 15. TERMINATION 15.1 A party (the Terminating Party) may terminate this Agreement at any time during the Term, by giving written notice of termination to the other party, upon the happening of any one or more of the following events: a) where the other party is a company, a resolution is passed, or Court order made for the winding up of that pafty or an administrator is appointed to that party pursuant to any relevant law; b) a receiver or manager or receiver and manager is appointed to the or undertaking of the other part/ or any part thereof; c) the date of expiry without rectification of a notice referred to in this paragraph, that is to say: (i) if the other party fails duly and punctually to carry out any obligation on its part to be performed or observed pursuant to this agreement; and (ii) the failure is not rectified within 60 days after service of a written notice on the other party specifying the nature of the failure and directing the other party to whom the notice is addressed to rectify the failure or cause the failure to be rectified. d) the share capital of the other party has been acquired to an extent exceeding 49% by a competitor of the Terminating Party; e) a substantial adverse deterioration in the financial circumstances of the other party; and upon service of such notice of termination this Agreement will be deemed terminated. 15.2 If at any time the Suppler or Buyer ceases to carry on business, this Agreement will terminate immediately."
Attached to the contract are two Schedules, Schedule 1, and Schedule 2B. There is no Schedule 2A. Only the latter, which deals with the "Specification Type - Ovine Natural Fall Offal", came under consideration in the interlocutory hearing. It divides ovine offal into two groups, Group 1 being "standard products for the current specification. These products shall be included according to Cool-Off's requirements as advised". Group 2 is defined as products that "may be included if Cool-Off are able to find a use for these products".
Schedule 2B also contains standards as to the delivery of material by Thomas Foods to Cool-Off. This schedule requires Thomas Foods to keep all offal product collected in clean Cool-Off hoppers before delivery, contaminant free, chilled in the equipment provided by Cool-Off according to Cool-Off's requirements and lidded and sealed for transport. Maintenance of these standards clearly need scrutiny and co-operation at the point of delivery.
Events leading up to termination. Between August 2021 and early 2023 market conditions changed, and the parties developed diverging expectations as to how the contract should be performed.
The contract operated until late 2022 with Cool-Off negotiating prices with Thomas Foods. Based on the negotiated price per kilogram Cool-Off issued purchase orders to acquire quantities of Bone Material. The quantities of Bone Material in these purchase orders were, according to Thomas Foods, aligned with estimates of all the material that Thomas Foods expected to supply within the period covered by the purchase order. Negotiations between the parties for the supply of Specified Product and Bone Material took place in October and November 2022, as was envisaged by Item 7 of the contract.
On 2 December 2022 Cool-Off signalled in an email that due to the high volume of finished lamb product "sitting in the US" that commencing on 5 December 2022 Cool-Off needed "to cap the volume of [Bone Material] it was receiving from Lobethal, Tamworth, and Stawell" to volumes significantly below what Cool-Off was then taking from these Thomas Foods plants "until the issue is resolved". Thomas Foods interpreted this as a request for a temporary reduction in volume. Similar emails were sent on 6 December and 15 December 2022 telegraphing various reasons for Cool-Off being unable to take any Bone Material from Lobethal and only limited volumes from Tamworth. By the end of December 2022 Cool-Off had ceased collecting any Bone Material from either Lobethal or Tamworth. Thomas Foods claims that this had a significant impact, pushing the ash content of the ovine meat and bone meal it was producing for sale through its rendering operations into the "high ash" category.
Thomas Foods continued to supply Specified Product to Cool-Off. But in late December 2022 the parties became embroiled in a temporary dispute about Cool-Off's failure to pay Thomas Foods' invoices for Specified Product. Thomas Foods suspended supply of specified product between Christmas 2022 and late January 2023. Cool-Off recommenced payment of the invoices and supply of specified product resumed.
On 2 and 3 February 2023 Cool-Off collected a minor quantity of Bone Material from the Lobethal plant because Thomas Foods was undergoing temporary maintenance issues in a related facility at Murray Bridge. But after that Cool-Off continued not to collect Bone Material from either Lobethal or Tamworth.
On 14 March 2023 Cool-Off emailed Thomas Foods indicating that it was not going to assist Thomas Foods in "reducing the ash content" in its ovine meat and bone meal. Cool-Off declared that its objective was to reduce its intake of Bone Material for render because of declining market conditions. It offered to take a limited amount of Bone Material from the Lobethal plant at $0.85 per kilogram which was below the price identified in Item 11.2 at the commencement of the contract. Thomas Foods rejected the proposal the same day and called on Cool-Off to recommence collecting Bone Material.
Nothing was heard back from Cool-Off. Both sides then turned to lawyers to resolve their dispute: Thomas Foods went to CCK Lawyers and Cool-Off to Litton Legal. On 15 March 2023 CCK Lawyers wrote to Cool-Off referring to the Supply Agreement - offal collection between the parties dated 7 July 2021. The letter contended that Cool-Off was required under the Particulars, Item 11 to buy from Thomas Foods all the Bone Material it produced for the entirety of the term of the contract, contending that the current price was $1.37 per kilogram. The CCK Lawyers letter contended that Cool-Off's deferral of purchasing Bone Material was inconsistent with Item 11.8 and that the statements in Cool-Off's 14 March letter repudiated the Supply Agreement - offal collection. The letter sought confirmation "as a matter of urgency" that Cool-Off will adhere to the terms of the contract. The CCK Lawyers letter attached the 16 August 2021 version of the contract.
Litton Legal replied on 17 March 2023 referring to negotiations which had occurred in December 2022 to accommodate Cool-Off by allowing it to purchase reduce quantities for a period. But Litton Legal's reply did not give confirmation of adherence to the contract that Thomas Foods had requested. After this initial legal skirmish Thomas Foods continued to supply Specified Product to Cool-Off.
A formal meeting of the parties was organised for 1 June 2023 to try and resolve the dispute. The meeting was unsuccessful. After that meeting, on 2 June 2023 (at 5:41 PM AEST), Litton Legal wrote to CCK Lawyers requiring an urgent undertaking by no later than 7 PM AEST to continue to supply Specified Product from all sites. Litton Legal foreshadowed that if the undertaking was not provided, they held instructions "to immediately commence proceedings" and put CCK Lawyers on notice of their intention to approach the Supreme Court "immediately failing receipt of an undertaking".
Despite the peremptory nature and urgent tone of Litton Legal's 2 June email, Cool-Off did nothing to follow-up on its request for an undertaking for just under two calendar months. In the meantime, Thomas Foods in fact continued to supply it with Specified Product. Although, for three weeks between 8 and 30 July 2023, the Lobethal plant was completely shut down for maintenance, cutting off the supply of specified product from that source without other compensating supply from the Tamworth facility.
Issues came to a head on Monday, 31 July 2023. On that day, Thomas Foods served on Cool-Off a notice terminating with immediate effect the 16 August version of the contract, for Cool-Off's alleged failure to rectify the breaches notified in Thomas Foods' letter of 15 March 2023. An interesting issue is that Thomas Foods did not purport to terminate the 19 August version of the contract, but that can await final hearing. The notice requested that Cool-Off contact the plant managers at the Tamworth and Lobethal sites to plan for the cessation of Specified Product collection and the removal of Cool-Off's on-site equipment.
That letter launched events leading to Cool-Off's application to Lindsay J late in the afternoon of Friday, 4 August 2023. Litton Legal wrote to CCK Lawyers on 2 August 2023, once again requiring an urgent undertaking from Thomas Foods by 3 PM that same day "confirming that it will continue to supply offal material from the Lobethal and Tamworth plants".
Thomas Foods did not provide an undertaking. Instead, on 3 August 2023, CCK Lawyers wrote to Litton Legal declining to give the undertaking and pointing out that should Cool-Off approach the Court to seek injunctive relief it was likely to fail for at least five reasons: (1) the injunction was in the nature of an interlocutory mandatory injunction; (2) there was no prejudice to Cool-Off that could not be compensated by an award of damages; (3) an injunction would force Thomas Foods to perform a contract which had already been terminated; (4) it was illusory to try and preserve the status quo, as the commercial relationship between the parties was at an end; and (5) the foreshadowed injunction application would involve requesting the Court to compel Thomas Foods to perform the contract, whilst allowing Cool-Off to remain in continued breach of the contract. When counsel approached Lindsay J, this letter was put before the Court.
The application before Lindsay J is outlined with the analysis of nondisclosure issues below.

Should the Injunction Be Dissolved for Nondisclosure?

An applicant for ex parte injunctive relief is obliged fully and frankly to disclose all relevant matters to the Court, including those which would have been raised by the respondent in its defence if it had been afforded the opportunity to be heard: Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955 ("Walter Rau") at [48]. The obligation is an obligation to be direct, frank and to the point. It means clearly putting the case of the absent party so the Court can understand it, despite the urgency, so the Court can appreciate what might be said against the making of the orders. The Court should be relieved of any obligation to "search out, organise and bring together" what can be said on the respondent's behalf: Walter Rau at [38].
Thomas Foods submits in this case that Cool-Off has fallen well short of this standard. It submits that the deficiencies in Cool-Off's disclosure to Lindsay J on 4 August 2023 fall into four categories: 1. A misdescription of the supply process; 2. A failure to explain that there were two versions of the supply agreement; 3. The availability of other sources of supply to Cool-Off; and 4. The prejudice likely to be suffered by Thomas Foods by reason of the non-collection of Bone Material.
Thomas Foods accepts that not every case of material nondisclosure will automatically lead to dissolution of an injunction obtained ex parte. But Thomas Foods submits it is nevertheless a factor to which the Court must give serious weight in exercising its discretion as to whether the injunction should continue. Authority is clear that it is relevant to the exercise of the discretion as to whether the injunction should continue to identify whether the material nondisclosure was serious or otherwise and the importance or weight that should be attached to the omitted fact in the decision-making process, together with any hardship if the order were to be set aside, is such that the injunction should not be continued: see Savcore Pty Ltd v Cathodic Protection International APS [2005] VSCA 213 at [31] ("Savcore"). And the approach is different if the plaintiff has acted culpably and the nondisclosure was part of a deliberate attempt to mislead the Court, in which case the most likely result would be that the order would be vacated: Savcore at [31].
Thomas Foods submits that the nondisclosures here were both serious and important enough, in the sense that had full disclosure been made to Lindsay J, the injunctive relief would not have been granted on 4 August 2023, or if granted would have been granted on different terms, and for that reason should now be discharged.
Here, the Court concludes that some misleading of the Court occurred but that it was occasioned by Cool-Off's perceived urgency of the situation and was not deliberate. Nevertheless, the Court can confidently conclude that had several of the matters that have now been brought to the Court's attention been disclosed at the time the ex parte injunctive relief was sought, any grant of injunctive relief, had it been made, would almost certainly have been made on different terms than it was, and more like the terms which are outlined in these reasons as the alternative approach that would be taken had Thomas Foods' nondisclosure case not succeeded.
These reasons now analyse the four categories of nondisclosure upon which Thomas Foods relies.
(a) Misdescription of the supply process. Thomas Foods' first contention is that the ex parte application severely underrepresented the degree of Thomas Foods employees' involvement in the production and delivery of Specified Product to Cool-Off, making it more likely that Lindsay J would grant the ex parte relief.
Some context is required to assess the first of the nondisclosure arguments which Thomas Foods brings. The hearing before Lindsay J on Friday, 4 August 2023 was brief. Mr Sykes of counsel came prepared with a written submission of six pages and 45 paragraphs, outlining and supporting Cool-Off's claim to ex parte interlocutory relief. Mr Sykes was granted liberty to file a Summons that sought interim relief restraining Thomas Foods from ceasing supply of the Specified Product in breach of Item 3 of the Particulars. The Summons sought as final relief a declaration that Thomas Foods' notice of termination dated 31 July 2023 was invalid and of no effect. Cool-Off filed and read in support of its application an affidavit of Mr Fankhauser of 4 August 2023 and the exhibit to that affidavit.
The transcript of the ex parte hearing occupies some 10 pages. Understandably, much of the introductory part of the hearing was spent with counsel attempting to explain the complexities of the Supply Agreement - offal collection - to the learned judge, with special reference to the alleged breach of Item 3. Counsel then took Lindsay J to the notice of breach of 15 March 2023 and summarised the case in the following way: "At its core this is an application to have the parties maintain what was the status quo and perform their contractual obligations up until four days ago."
Counsel stressed the urgency of the matter, and Lindsay J gave it a return date on Tuesday of the following week, 8 August 2023, noting that it was "late on Friday afternoon". The transcript shows that one point Mr Sykes referred to the time being 4.20 PM. Counsel gave the usual undertaking as to damages. When the form of interlocutory relief was being discussed, framed as it was as restraining Thomas Foods from acting on the notice of termination, the following exchange occurred between counsel and his Honour, who expressed caution about granting an ex parte injunction expressed in positive rather than negative terms. "HIS HONOUR: … I think that's probably all I can really do, when you think about it, because I can't order specific performance. I wouldn't be wise to do that. SYKES: In effect it's to compel supply in accordance with clause-- HIS HONOUR: I know. That's the specific performance. SYKES: Yes, your Honour. HIS HONOUR: The way this works is that they put the product in a tub and you come along and collect the tub. SYKES: Essentially. The equipment does it for them. We say that the equipment is there. HIS HONOUR: Well, why don't I say that they be restrained from obstructing or interfering with the supply of product."
The written submission handed up to Lindsay J was based on Mr Fankhauser's affidavit filed with the Summons, both of which say little about the degree of interaction between Cool-Off and Thomas Foods employees in the collection of Specified Product. Counsel's submission describes the process in the following terms, based on similar descriptions in Mr Fankhauser's affidavit, which gives the simple impression that the handover of Specified Product could be an automated employee-free zone: "The material moves from the slaughter floor at the abattoir, down the shoot and into the hopper, where it stores the offal material until collection."
And, on the balance of convenience, the written submission reinforced the idea that the process was essentially automated and that cooperation between Cool-Off and Thomas Foods employees was hardly required in the process of delivering Specified Product so that Cool-Off truck drivers could pick it up: "Thirdly, there is no evidence of any hardship to be caused to the defendant as it is maintaining the status quo. The hopper, in effect does the work to collect cool and store the by products."
The written submission was supplemented by what counsel said on this subject to Lindsay J. Counsel dismissed the idea that the claimed injunction would be like granting a decree of specific performance. Mr Sykes responded to Lindsay J's question as to whether "[t]he way this works is that they put the product in a tub and you come and collect the tub" stating: 'Essentially. The equipment does it for them. We say that the equipment is there.'
These reasons have earlier given an account of the evidence of Mr Stewart of the involvement of Thomas Foods employees in the production, dispensing, unloading from the tub, packing, weighing in preparing for loading trucks and preparing the necessary shipping and regulatory paperwork. Cool-Off does not contest the essentials of Mr Stewart's description of the involvement of Thomas Foods employees in this process. But Cool-Off says their participation is not major involvement and contests Mr Stewart's account of disputes arising.
It is not possible to decide these issues either way, but the process as described clearly risks disputation about weights and the calibration of weighing equipment and other issues associated, for example with loading of Cool-Off's trucks, and the Court accepts that there have been some problems and disputes in 2023. Moreover, Mr Stuart's evidence cannot be discounted that these interactions are leading to stress among employees. As the Court observed during argument, abattoirs are likely to be more dangerous than many workplaces and the Court would be very cautious about adding to shopfloor stress in granting an injunction.
Thomas Foods' contentions about Cool-Off's nondisclosure to Lindsay J of the close involvement of Thomas Foods employees in undertaking work are persuasive. The disclosure and clear flagging of this element of what was involved in granting the injunction would be likely to have weighed firmly in favour of the Court not granting an ex parte injunction but examining the alternatives, and there was a very clear alternative that would have been attractive to the judge had any of this been pointed out.
First, Lindsay J had already understandably expressed caution about making a positive order akin to specific performance and was likely to be concerned about this information. Secondly, even if the kind of evidence that Mr Stewart was going to give was not specifically known to Cool-Off, it nevertheless knew enough to give a far more balanced account of what was involved to the judge, which would have raised risk factors for the judge. Thirdly, if this matter had been raised, there was a relatively easy solution for the judge. In truth, on a Friday afternoon the position was finely balanced for a duty judge in Lindsay J's position. There was almost no real cost to the plaintiff in seeking leave for short service and bringing the matter back for contested argument on Monday, 7 August 2023. None of the evidence suggests that a two-day delay would have caused much if any damage to Cool-Off, which had been prepared to risk just such an event by failing to act on its 2 June 2023 letter demanding an undertaking.
Cool-Off's arguments against this are not persuasive. Cool-Off argues that nondisclosure of such an issue is immaterial where all that is being asked in the injunction is for compliance with an existing agreement. The argument cites the decision of Rees J in MP Water Pty Ltd v Veolia Water Australia Pty Ltd [2021] NSWSC 582 at [58], which in turn cites several authorities for the well-known principle that interlocutory mandatory injunctions would be more likely to issue where the defendant was compelled, not to embark upon fresh course of conduct, but to revert to a course of conduct pursued before the occurrence of the acts or omissions that provoked the litigation: see Business World Computers Pty Ltd v Australian Telecommunications Commission [1988] FCA 127, per Gummow J (as his Honour then was).
There can be no issue with this principle. But it does not make consideration of the impact of the grant of an ex parte injunction on the employees of the defendant wholly irrelevant, as Cool-Off now contends. The Court can always consider hardship to the defendant or third parties, such as employees, in the grant of an injunction.
Next, Mr Sykes argues on behalf of Cool-Off that Thomas Foods' evidence does not support the conclusion that to continue fulfilling its side of the contract that Thomas Foods must put on extra employees or that its employees are now doing Cool-Off's work. But this argument somewhat misses the point. The real issue is the nondisclosure of the involvement of the functions and the extent of Thomas Foods' employees, and the risk of tensions involved in them continuing to perform the contract.
On this ground alone the Court will discharge the injunction granted on 4 August 2023 for nondisclosure by the plaintiff to Lindsay J when the injunction was being sought. But this is not the only basis for discharging the injunction.
(b) Not explaining there were two versions of the supply agreement. Thomas Foods contends that Cool-Off did not put before Lindsay J the issue that there were two versions of the terms contract which did not correspond with one another leading to the inference that there was no binding agreement made between the parties for the supply of Specified Product. This submission is correct in pointing out that Lindsay J was not informed about the lack of correspondence between the two versions and the possibility that a contract may not have resulted from their exchanges.
But this was not a significant omission at the ex parte hearing. As has been explained above under the heading "Serious Question to Be Tried" Thomas Foods unsuccessfully contended at the interlocutory hearing that because of the lack of correspondence between the 16 August 2021 version and the 19 August 2021 version, Cool-Off had at best a very weak prima facie case that a contract had been made between the parties. But the Court has not found Thomas Foods "no contract" argument persuasive at the interlocutory hearing. Had the same issue been raised at the ex parte hearing before Lindsay J, the disclosure probably would have made little difference to Lindsay J's balancing of the relevant considerations in granting ex parte relief. Moreover, Cool-Off put before Lindsay J the version which it might have expected that Thomas Foods would regard as representing the contract, namely the 19 August 2021 version. And CCK Lawyers did not include this issue in the list of issues in their 3 August 2023 letter that they drew to the attention of Litton Legal before Cool-Off approached Lindsay J.
(c) The availability of other sources of supply to Cool-Off. Thomas Foods contends that the affidavit material of Mr Fankhauser read in support of the ex parte application before Lindsay J was misleading in suggesting that there was likely to be an immediate supply crisis for Cool-Off if the injunction were not granted. Although the Court heard extensive contested evidence about the extent to which Cool-Off might be disadvantaged if an injunction were not granted, the Court can infer that Cool-Off was unlikely to suffer from a few days' delay in the grant of an injunction. Cool-Off should have been frank with Lindsay J about the unlikelihood of short-term prejudice, said more about its short-term options and asked Lindsay J for leave for short service to bring the matter back in a few days. Instead, Cool-Off asked for an injunction on the spot. Quite apart from issues of disclosure, conducting an ex parte application in this way allows the Court to manage the duty list in an orderly way.
Mr Fankhauser's affidavit presented to Lindsay J says at [31] on this subject: "[Thomas Foods] has ceased supply of offal material with immediate effect and given the lack of notice, Cool-Off cannot arrange for an alternative supply of product in the volumes required to meet any shortfall."
The affidavit further states at [32]-[34] that unless Thomas Foods "restarts supplying offal material to Cool-Off immediately", Cool-Off would be at risk of "los[ing] some, or in the worst case all, of the contracts it has with its customers".
In the Court's view, despite the range of contested evidence on this matter, this was an overstatement that was apt to prompt Lindsay J to act immediately rather than to wait and see what the fuller picture presented upon return of the summons.
Mr Stewart gave a range of evidence in reply on this issue. This evidence included material based on Cool-Off's own website to the effect that Cool-Off itself claims that it is supplied by "40 abattoirs across Australia" and that Cool-Off has hoppers installed at "over 30 Australian abattoirs". Mr Stewart also advances broader industry figures that support the conclusion that the number of ovine animals being slaughtered across Australia is currently at an industry highpoint and is therefore likely to sustain alternative sources of supply for Cool-Off. Finally, Mr Stewart's evidence explains that JBS, the largest operator in the meat industry in Australia and a producer of ovine meat, also is a current supplier of Cool-Off.
The subject of alternative sources of supply was not addressed at the ex parte hearing before Lindsay J. Counsel's written submission put before Lindsay J reflected the urgency of Mr Fankhauser's affidavit and both did not address Cool-Off's position with its other suppliers.
This part of the dispute became more refined at the interlocutory hearing, in part based upon further evidence from Mr Fankhauser. He explained and Mr Sykes emphasised that the statement about 40 abattoirs related to the collection of 13 different kinds of protein, not just ovine offal. Mr Sykes explained, based on Mr Fankhauser's evidence, that in any event what Cool-Off required by way of Specified Product was significantly greater after August 2021, because Cool-Off has signed some 16 contracts for the supply of petfood to third parties that were dependent upon the supplies that would be sourced under this contract with Thomas Foods.
Mr Fankhauser also explained that there is a delay in being able to renegotiate fresh contracts, and Mr Sykes submits that Thomas Foods' position is "divorced from the commercial realities" of having to negotiate fresh supply contracts which could take up to 12 months, if the current contract negotiation is taken as not untypical.
But Thomas Foods replies to this by pointing to the spot market for the purchase of ovine offal that is the equivalent of the Specified Product. Cool-Off says this is too expensive a market but does not really contest that such a market exists. Thomas Foods says that it is ultimately just a matter of money and damages is therefore an adequate remedy.
And as to the impact of this on Cool-Off, initially Mr Fankhauser's evidence was that the contract for Specified Product represented about 15% of Cool-Off's overall inputs. This was clarified to say that it was 50% of its ovine offal input for its operations. But this was not to say that in the short-term, while it was renegotiating its contracts, it could not meet its obligations on the spot market to its customers on the 16 contracts which required ovine offal input.
Cool-Off dismisses Thomas Foods' case of alternative sources of supply as "mere speculation". Its essential answer to this part of the nondisclosure case is to say that there was no nondisclosure because there are no alternative sources of ready supply. But in reply, Thomas Foods points to the lack of any significant detail in Mr Fankhauser's reply affidavit about the lack of alternative sources of supply.
Cool-Off's case was misleading at two levels on this subject, the long-term and short-term. As to the long-term, Cool-Off failed to make clear that there was a spot market for acquiring the Specified Product, although it was expensive, which it could have used until it could renegotiate longer term alternative sources of supply.
As to the short-term, Cool-Off took the tactical decision to seek an ex parte injunction on a Friday. For several reasons, it was unlikely to suffer any loss had it sought leave for short service and brought the matter back the following week for a contested hearing. This would merely have involved Cool-Off missing a few collections on the Monday or Tuesday. Cool-Off had already weathered, without disruption, a shutdown of supply from Thomas Foods for its failure to pay invoices and a maintenance shutdown of some weeks in July. Whilst it is true it could make some plans for those shutdowns, they emphasise that a few days is hardly going to make much difference to Cool-Off's supply obligations.
(d) Prejudice to Thomas Foods from the non-collection of Bone Material. Finally, Cool-Off framed its draft injunction without any mention of its potential obligations to take Bone Material. This was a major omission in the application with two aspects to it. First, a party seeking equitable intervention should at least offer to do equity and that applies to an ex parte application as much as a contested application. Secondly, the omission meant that Lindsay J was not informed that the consequence of Cool-Off not taking the Bone Material meant that Thomas Foods would be forced to supply ovine meat and bone meal with an unacceptably high ash content to its customers.
That second aspect of this issue was much debated between the parties. Mr Sykes argued on behalf of Cool-Off that Mr Stewart's evidence did not rise so high as to assert that Cool-Off's failure to take bone meal meant that Thomas Foods would be put in the position of having to supply high ash content and potentially unacceptable ovine meat and bone meal to US customers through related entities. He criticised the evidence of Mr Stewart as "very vague" and "inadmissible". But much of the evidence at interlocutory hearings would be inadmissible at final hearing. In the Court's view, Mr Stewart's evidence at least establishes hardship from the grant of the injunction by the presentation of a risk of its related entities breaching their supply agreements. And this risk to Thomas Foods had been recognised by Cool-Off in correspondence in March 2023.
But as to the first aspect, the failure of Cool-Off's evidence and submissions at the ex parte hearing to say anything about its obligation to take Bone Material under the contract wholly distorted the presentation of the ex parte application. There was a strong dispute about this issue. At the time of the interlocutory application, Cool-Off was clearly on notice that Thomas Foods was arguing that Cool-Off was obliged to take all the Bone Material from its processing facilities as a parallel part of the contract to supply Specified Product.
Cool-Off seeks to justify its failure to raise this issue with Lindsay J on the basis that its construction of Item 11.1 of the contract is correct. But this argument misses the point. The purpose of the obligation of disclosure is to allow the judge to balance the issues, not for the applicant to foreclose their consideration by omission. Cool-Off's argument as to the construction of Item 11.1 could be wrong. Thomas Foods has a reasonable argument that Cool-Off is obliged to take all the Bone Material and that Cool-Off's failure to do so was a breach of the contract. Cool-Off had a clear obligation to bring the issue to the attention of the Court on the application and to explain that Thomas Foods' position was that Cool-Off was in breach of Item 11.1. But it failed to do so.
Had this matter been drawn to Lindsay J's attention, it would probably have been a significant balancing factor in his Honour's exercise of discretion, leading to the grant of a very different kind of injunction against Thomas Foods, one conditional upon Cool-Off having to continue to take Thomas Foods' Bone Material. The nondisclosure of this matter alone should lead to the discharge of the injunction.
On these grounds, the injunction granted on 4 August 2023 will be discharged. Any hardship from this course to Cool-Off will be alleviated by its access to alternative sources of supply, the notice that it has had of this possibility since the interlocutory hearing and the Balance of Convenience issues discussed below.
As the Court indicated at the hearing, Cool-Off will be given a further short period to prepare itself for the discharge of the injunction or to seek leave to appeal. A period of 14 days should be sufficient for this. This pause can be achieved by imposing a 14 day stay on the order discharging the injunction. The parties were clearly warned at the interlocutory hearing to prepare themselves for this possibility whilst judgment was reserved. No one should be surprised that this has now come to pass. Cool-Off will have had six weeks to prepare itself for this eventuality.

Cool-Off Pty Ltd (ABN 79 068 308 225) v Thomas Foods International Pty Limited ABN 52 008 178 121

At a glance

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Judgment (8 paragraphs)

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Cases Cited (16)

Cited By (1)