Hurford Hardwood Kempsey Pty Ltd v Kempsey Timbers

Representation

1. Mr McCall appeared for Hurford and Mr Quickenden appeared for Kempsey Timbers. I was greatly assisted by the manner in which both counsel conducted the case. Both made concessions where appropriate, and focussed cross-examination and final submissions on the three issues that divided the parties.
2. In his final submissions, Mr McCall, with great care, summarised the facts established by the evidence. By and large, Mr Quickenden did not cavil with Mr McCall's summary.
3. Much of what follows, so far as concerns the factual background, is taken with gratitude from Mr McCall's submissions.

Unprocessed and Processed Stock

1. Although the Contract did not say so in terms, it is common ground that there was: 1. included in the sale all "unprocessed board stock" ("Unprocessed Stock") on site at completion; and 2. excluded from the sale "engineered and finished" stock ("Processed Stock") on site at completion.
2. Explanation of the difference between Unprocessed Stock and Processed Stock requires consideration of how the mill operated.
3. The mill is shown in this aerial photograph:
4. As indicated on the photograph there is a "Saw Mill" (also referred to as a "Green Mill") and a "Dry Mill" at the site.
5. Logs are delivered to and stored at the mill. In the photograph, logs appear stored on the ground to the right of the Saw Mill. The logs are cut in the Saw Mill into boards of various sizes. The boards are classified by type; for example Blackbutt, Spotted Gum, Red Mahogany and so on. The boards are also classified with a "nominal size" for width and thickness; for example, 75 x 25 mm or 100 x 25 mm.
6. At the end of the production line in the Saw Mill, the boards are extruded onto a "Round Table" for manual removal by workers. The Round Table is in the building marked "Round Table" and is a large rotating table that allows sawn boards to accumulate without becoming congested.
7. The boards are then stacked into packs that are about 6 metres long. Examples of such packs appear to the left of the Round Table building in the photograph.
8. Although the boards are of a particular breadth and width depending on their "nominal size", their length varies.
9. The boards are packed using a method of alternating placement of boards for each row, usually eight rows across. Each row is separated vertically by thin strips of timber known as "stickers" or "strips". There are gaps in the packing.
10. The packs are usually about 20 rows high. The boards are packed this way to allow maximum air circulation to reduce moisture content. The packs can be seen in the photograph to the left of the Dry Mill.
11. The Unprocessed Stock is processed in the Dry Mill. Usually, and depending on the moisture content of each pack, the Unprocessed Stock is dried in the kilns, seen beyond the Dry Mill in the photograph, prior to processing.
12. In the Dry Mill, the Unprocessed Stock is reshaped and finished into Processed Stock: usually floor boards. One piece of machinery in the Dry Mill that achieves this result is a "moulder". Within the moulder is a tally wheel which measures the length of boards passing through the moulder.
13. At completion, there was a large amount of both Unprocessed Stock and Processed Stock on the site.

The issues

1. As I have mentioned, three issues divided the parties: 1. whether the purchase price under the Contract should be adjusted by reason of there being less Unprocessed Stock on site than was warranted; 2. whether Kempsey Timbers made an enforceable promise to "account" to Hurford in relation to an understatement of long service leave entitlements; 3. whether, following Hurford's denial of Kempsey Timbers' access to certain information and services, Kempsey Timbers has suffered damage by reason of thereby having to sell Processed Stock at a greater discount than would otherwise have been the case.

Warranty as to Unprocessed Stock

1. By cl 62 of the Contract, Kempsey Timbers warranted that "at completion, the stock will comprise 4,550 m3 plus or minus 150 m3", that is to say, between 4,400 m3 and 4,700 m3, with provision made for an adjustment to the purchase price on completion "if the stock is outside [that] range". Any adjustment was to be made at the rate of $1,000 per m3. I will return to cl 62, and its proper construction, below.
2. Hurford contends that: 1. by an email exchange between the parties' solicitors on 30 November 2017, shortly prior to completion, cl 62 was varied to permit any necessary adjustment to be made on 30 May 2018, when the next instalment of the purchase price was due, rather than at completion; and 2. there was in fact only 4,165.26 m3 on site at completion and that Hurford was therefore entitled to deduct $234,740 ((4,400 - 4165.26) x $1,000) from the payment of $1.3 million due on 30 May 2018.
3. Kempsey Timbers contends that there was an agreement made on 1 December 2017 that there was present on the site at completion between 4,400 m3 and 4,700 m3 and that no cause for adjustment of the purchase price arose.

Understated long service leave entitlements

1. By cl 60 of the Contract Hurford agreed to be responsible for all long service entitlements of employees, whether those entitlements arose before or after completion.
2. Prior to completion, Kempsey Timbers disclosed that its records may have understated the amount of long service leave then due to the employees and said that "the variance in leave entitlements once reviewed and confirmed will be accounted for by" Kempsey Timbers.
3. Hurford contends this amounted to an enforceable promise by Kempsey Timbers to pay it the $44,300, being the amount understated.

Interruption to the "pick and pack" service

1. In order to facilitate Kempsey Timbers' access to the Processed Stock, by cl 59 of the Contract Hurford agreed to provide a "warehousing and 'pick and pack' service" on behalf of Kempsey Timbers for nine months from the date of Contract; that is, until 8 August 2018.
2. By its cross claim, Kempsey Timbers contends that it was agreed by email between the date of the Contract and completion that the pick and pack service would be provided by allowing remote access to a computer server as well as the services of Mr Michael Borger who was then, and remained after completion, employed at the mill.
3. On 4 June 2018, Hurford denied Kempsey Timbers remote access to the server and thereafter denied it direct access to Mr Borger. The server was turned back on 8 June 2018. Kempsey Timbers was able to access the server again on 12 June 2018.
4. Kempsey Timbers contends that, as a result of Hurford denying it access to the server and the services of Mr Borger, it suffered damage of between some $226,700 and $249,450.

Decision

1. As to Unprocessed Stock: 1. no agreement was reached on 1 December 2017 about the volume of Unprocessed Stock; 2. the Contract was varied on 30 November 2017 so that any adjustment to the purchase price required under cl 62 would be made on 30 May 2018, rather than at completion of 30 November 2017; 3. there was in fact only 4,165.26 m3 of Unprocessed Stock on site at completion; 4. Kempsey Timbers refused to agree a variation of the contact price; and 5. Hurford is entitled to damages at the rate agreed in cl 62(3).
2. Kempsey Timbers made no enforceable promise about accounting for the alleged understated long service leave.
3. Kempsey Timbers has not proved it suffered any damage by reason of Hurford's denial of access to the server or Mr Borger.

Matters not pressed or unavailable

1. Before setting out my reasons for coming to those conclusions, it is necessary to deal with three preliminary matters.
2. In his final written submissions, Mr Quickenden contended that Hurford was estopped from asserting that there was an agreement made on 1 December 2017 as to the amount of Unprocessed Stock on site on 30 November 2017 and from asserting any breach of cl 62 of the Contract. These matters were not pleaded and were abandoned in final oral submissions.
3. Further Mr Quickenden, in final submissions, made a number of references to "the equities" and sought to deploy a number of matters passing between the parties prior to entry into the Contract. In my opinion, those matters have no bearing on the issues with which I am concerned.

Admissibility of Hurford's business records concerning Unprocessed Stock

1. During the hearing, Mr McCall tendered a series of "run sheets" which recorded the length of Unprocessed Stock as recorded while it was being processed in the Dry Mill.
2. The documents were admitted into evidence without objection as business records pursuant to s 69 of the Evidence Act 1995 (NSW).
3. In final submissions, Mr Quickenden sought to revisit that ruling on the basis that the documents had been prepared in anticipation of litigation and were thus not admissible by reason of s 69(3) of the Evidence Act.
4. Mr Quickenden submitted: "I am culpable. I should have taken the objection at the time the Court was considering the tender. I had forgotten the qualification contained in the section. However, at that point I also believed cross examination relating to the documents would assist in determining their ultimate inadmissibility or probative value. This should not influence the justice between the parties when the case is not concluded."
5. The submission reveals why it cannot be accepted. The time to take the objection was when the documents were tendered. If the point had then been taken that the documents were prepared in anticipation of litigation there were a number of witnesses that Mr McCall could have called to deal with that matter. It is too late to object in final submissions.

The warranty as to Unprocessed Stock

1. Clause 62 of the Contract provided: "[Kempsey Timbers] warrant[s] that at completion the stock will comprise:- (1) 4,550 m3 plus or minus 150 m3; (2) after the date hereof [Kempsey Timbers] will not sell unprocessed board stock without the consent of [Hurford]; (3) if the stock is outside the range referred to in sub-paragraph (1) an adjustment in either [Kempsey Timbers'] or [Hurford's] favour of $1,000 a cubic metre will be made at completion."

Construction question - what stock was included in the sale?

1. The Contract did not provide, in terms, that Unprocessed Stock was included in the sale. However, that was the parties' intention and they conducted themselves consistently with that intention.
2. Clause 56 provided that: "For the avoidance of doubt, stock-in-trade for the purposes of Clauses 1 and 4 hereof does not include finished stock and engineered stock, logs on ground." (Emphasis in original.)
3. There is no other relevant reference in the Contract to "stock-in-trade". Clause 62 refers to "stock" and "unprocessed board stock". And cll 1 and 4 of the Contract make no reference to "stock-in-trade". However, cl 59, to which I will return below when considering Kempsey Timbers' cross claim, does refer to "engineered and finished stock" and makes clear that such stock was not included in the sale. Evidently, the references in cl 56 to "stock-in trade" and "[c]lauses 1 and 4" should have been references to "stock" and "cl 62".
4. Clause 62 refers to "stock" in its chapeau and sub-cl (3), but to "unprocessed board stock" in sub-cl (2). Nonetheless I think it clear that the parties intended the terms to be synonymous. The warranty given by Kempsey Timbers in cl 62 is given in respect of "stock". That warranty is coupled with an agreement by Kempsey Timbers not to sell "unprocessed board stock" without Hurford's consent.
5. The distinction drawn by the parties in the Contract is between such stock, referred to in cl 62, and "engineered and finished" stock, that is Processed Stock, as referred to in cll 56 and 59; and not between the "stock" and "unprocessed board stock" as referred to in cl 62.
6. Accordingly, my conclusion is that the warranty given in cl 62 is as to the volume of Unprocessed Stock on site at completion.
7. There is another variety of timber product, known as scantlings. Scantlings comprise unseasoned timber cut to order for such things as fence posts and timber housing frames. They are finished products. Unseasoned timber is also used to make pallets, which are also finished products.
8. There is no reference in the Contract such products. Nor is there any evidence that such products were on site at completion, although small amounts of scantling were apparently on site between December 2016 and June 2017.
9. If such product was on site, I would regard it as "finished stock" and thus Processed Stock subject to cl 59 rather than cl 62.
10. Clause 62 called for an adjustment of the purchase price if the volume of Unprocessed Stock was less than 4,400 m3 or more than 4,700 m3. But neither cl 62, nor any other provision in the Contract, stated how the volume of Unprocessed Stock should be determined in order that such adjustment be made.
11. As I set out below, in November 2017, the parties attempted to conduct a stocktake to determine the volume of Unprocessed Stock and what if any adjustment was called for. That was an understandable approach. But it was not required by nor governed by any term in the Contract. The Contract does not mention a stocktake. It refers only to an adjustment.

The state of Kempsey Timbers' records

1. As Mr McCall submitted, the evidence suggests that, over time, Kempsey Timbers' records of the amount of Unprocessed Stock at the mill became unreliable.
2. Prior to 2004, a Mr Rabbit managed the mill. Up to that time it appears Mr Rabbit conducted regular audits of Unprocessed Stock. However, from around 2006 there appear to have been no audits to ensure that the amount of Unprocessed Stock as recorded in Kempsey Timbers' stock sheets was accurate.
3. In 2015 Mr Ben Geatches, who was then the General Manager of the mill, decided to reduce the volumes that were allotted to new packs of Unprocessed Stock because he thought the previous estimates applied to them were too large.
4. In one of his affidavits, Mr Geatches said: "The system of pack volume calculation used by [Kempsey Timbers] was an arbitrary system that would be calculated as follows: If there were 21 rows of logs in a pack, then it would be given a volume of 2 cubic metres. If [it] was 24 rows it would be given a volume of 2.1 cubic metres. There was no checking of these volumes until the timber was processed on site. We did compare the lineal metres of sawn boards processed through the moulder to the recovered volume of finished products into packs to compare with a recovery number but we never actually compared that back to the stock pack volumes."

Events following exchange of Contract

1. On 13 November 2017 Hurford's Chief Executive Office, Mr Robert Engwirda, and its Chief Operating Officer, Mr Jacob Eldridge, attended the site to prepare for handover on completion.
2. There were many tasks to perform, including making the site safe and attempting the stocktake of the volume of Unprocessed Stock for the purposes of cl 62.
3. At that time, Mr Head gave Mr Engwirda a stock sheet which purported to record the volume of Unprocessed Stock on site. The parties referred to this as the "13 November Stock Sheet".

The 13 November 2017 Stock Sheet

1. Mr Engwirda quickly became concerned about the accuracy of the 13 November Stock Sheet. He gave this evidence: "Upon inspection, I realised that the defendants' Stock Sheets and the labels on the packs were often very inaccurate and could not be accepted on face value. It became obvious to me that there was no way that packs could contain the amount of timber stated on the 13 November Stock Sheet. For example, packs that were about the same physical size in terms of number of rows and height, had markedly different volumes recorded on the Stock Sheet and the labels on the pack. For example, pack number 69364 was 24 rows high with 100 x 15 timber size had a stated quantity of 2.1m3 on the stock sheet and pack number 69393 had the same timber size but 26 rows high had a much lower stated quantity of 1.75m3. Upon inspection of the physical packs, we found many similar examples throughout the 13 November Stock Sheet. I could find no real logic to the data on the 13 November Stock Sheet. There was no standardisation in calculating the volume of a pack. If the packs on site had been correctly labelled with an accurate stock sheet system and logical calculations of volumes in packs, in my experience, we could have performed a stocktake and assessed the volume of stock as we have done so on many occasions on Hurfords' [sic] other sites."
2. Mr Eldridge gave similar evidence. He said: "Based on my observations of packs in the yard at Kempsey Timbers and my review of the 13 November Stock Sheet provided to me, I formed the view that it was not going to be possible for us to conduct a stock take to assess the cubic metre volume of timber. I formed that view based on my experience, knowledge and observations at the time. I have been employed in the timber industry for about 25 years. During that time I have performed many stock takes of packs of timber at numerous different sites. In my experience, if the stock sheets are accurate, packs are labelled well and the packs of timber are standardised and consistent, a stock take of packs of timber is usually a relatively straightforward process. For example, Hurfords [sic] have standardised packs sizes which are well labelled. We regularly perform stock takes at other Hurfords' [sic] sites. In my experience, we would be able to conduct a stock at other Hurfords' [sic] sites of similar sized area comfortably within two days. However, this was not the case at Kempsey Timbers."
3. Mr Eldridge performed calculations that showed that it was physically impossible that the volume of Unprocessed Stock could be as set out in the 13 November 2017 Stock Sheet. He said: "I also found that there appeared to be no real logic as to why the stock sheet had different volumes recorded for packs of the same number of rows. For example, I counted that pack 69364 was 24 rows high with 100 x 15 timber size and had a stated quantity of 2.1m3 on the stock sheet. Whereas, pack number 69393 had the same dimension timber size of 100 x 15 and I counted 26 rows high but that pack had a much lower stated quantity of 1.75m3 in the 13 November Stock Sheet. There appeared to have been no standardisation by Kempsey Timbers in calculating the volume of a pack that was stated in the stock sheet."
4. Between 13 and 30 November 2017 Mr Engwirda, in consultation with other employees of Hurford and current employees of Kempsey Timbers, including Mr Geatches, continued to endeavour to ascertain what volume of Unprocessed Stock was present at the mill.
5. In his affidavit, Mr Geatches said that as settlement was approaching he had this conversation with Dr Head: "[Dr Head]: Ben [Geatches], the unprocessed board stock we are selling Hurfords [sic] has a target of 4,550 cubic metres but there's a plus or minus 150 cubic metre range from this. I want you to aim for the lower end of that. [Mr Geatches]: 4,450 cubic metres? [Dr Head]: Yes."
6. Dr Head denied this conversation and said that he told Mr Geatches: "We need to make sure there is a big buffer. If the sawmill goes down that would mean less unprocessed stock and we may be caught in paying a big penalty."
7. Dr Head has an interest in the outcome of these proceedings, whereas Mr Geatches, who was General Manager both before and after completion, but who is no longer employed at the mill, had nothing to gain by giving partial evidence in the proceedings. Mr Quickenden pointed out that comments Mr Geatches made in an email exchange with Mr Head on 18 December 2017, to which I will return, suggests that there had been some bad blood between Mr Geatches and the Head family for reasons evidently not associated with the issues in these proceedings. However, my impression of Mr Geatches in the witness box was that he was a disinterested witness giving confident evidence of what he recalled had occurred. I accept his evidence.
8. Whatever may have been said, this evidence draws attention to the relationship between the processing of logs into Unprocessed Stock in the Saw Mill and the processing of that Unprocessed Stock into Processed Stock in the Dry Mill. Unprocessed Stock was included in the sale. Processed Stock was not. It was therefore in Kempsey Timbers' interest to process as much stock as possible between exchange of contracts on 6 November 2017 and completion on 30 November 2017, subject to preservation at the mill of at least 4,400 m3 of Unprocessed Stock consistent with the warranty in cl 62 of the Contract. In those circumstances, Dr Head's instruction to Mr Geatches to "aim for the lower end of that" was a perfectly proper, albeit risky, instruction in that it left open the possibility that the "lower end" might not be achieved.
9. Mr Geatches said: "By about 27 November 2017, I had become concerned that I was not going to be able to even reach the lower end of 4,400 cubic metres of board stock based on the volumes that were showing on the [Kempsey Timbers] stock sheet in the computer [data]base. This was because the dry mill had been running flat out and processing more volume than the saw mill was producing in board stock. I made a decision to then increase production in the saw mill to try to increase the volume of packs of board stock. We also ran the dry mill at a minimum. However, there were numerous breakdowns of machinery in the saw mill during the week and we did not produce as much volume as I would have hoped. I estimate that we were only able to produce about 70 extra cubic metres of board stock during that week leading up to settlement on 30 November 2017. I was very concerned during that week that we were not going to meet the minimum board stock level of 4,400 cubic metres on my stock sheet system and also that the stock sheet database was inaccurate in volumes recorded for packs."

The events of 30 November 2017

1. By the time of completion on 30 November 2017, it became clear that it was not going to be possible to calculate the volume of Unprocessed Stock on site.
2. Mr Engwirda told Mr Head, on a number of occasions, that in his opinion the volume of Unprocessed Stock at the mill could not be ascertained until the stock was processed and the length of the boards ascertained by reference to the tally wheel in the moulder.
3. Mr Engwirda said that, prior to completion, he said to Mr Head: "Roy, it's impossible for us to measure how much timber is in these packs. About a fifth of the packs don't have any legible labels. Some of the packs are well overstated in your stock sheets, it's physically impossible to have that much timber in the packs. The volumes on your stock sheets are overstated. Is there any formula that is used? The proof will be when we run the wood and dress it how much wood is in the packs."
4. Mr Head said that, at around 1 pm on 30 November 2017, Mr Engwirda said to him: "We may not be able to reach agreement of the feedstocks levels with the currently accounted for packs before the scheduled settlement at 2.30pm. I suggest we move forward with settlement with the flexibility to continue the stocktake in the afternoon/the next morning as needed."
5. Mr Engwirda's recollection was that he was a little more precise than this and that he said: "Roy [Head], this is only going to be something that can be done over time as the boards are processed and measured through the machines over time."
6. Mr Engwirda recalled that around this time he said to Mr Head: "It's impossible to do an accurate stocktake. All we can try to agree on is the total number of packs. That's the best possible outcome to be able to settle today and we'll have to agree on stock levels at a later date".
7. Mr Engwirda and Mr Head agreed that they then agreed to refer the matter to "the solicitors".

The 30 November 2017 email exchange

1. At 1.42 pm on 30 November 2017 Hurford's solicitor, Mr David Wolff, wrote to Kempsey Timbers' solicitor, Mr Brook Worthington: "My client is still going through the stock and will not have a final figure in terms of Clause 62 [i]n time for settlement at 2.30. My client would like to proceed today but it can only do so on the basis that if any adjustment needs to be made in accordance with Clause 62.3 it be made after Completion and adjusted at the payment due on 30 May 2018. Please take your client's instructions." (Emphasis added.)
2. Mr Worthington contacted Dr Head, who was then in Adelaide. Dr Head gave this evidence about his conversation with Mr Worthington: "He described to me that there may be some problems with the stocktake, that it was all going satisfactorily except it may not be completed that evening and it could run over into the early morning and did I have any objection to agreeing to the fact of it going over the next morning and my response was, 'Will this hold things up?' And he said, 'No, it wouldn't' and I said, well, as an act of - you know, courtesy, I didn't want to push them that evening and I was happy for it to run over to the next morning. I was of the - and I said, 'As long as it's done in the next 24 hours' and he said, 'Will I email them back to that?' or words to that effect and I - I agreed to that."
3. At 2.17 pm Mr Worthington replied: "I have referred your email to my client. It agrees to your proposal on the basis every effort is made to complete the stock take today."
4. Mr Worthington's email did not include any qualification to the effect "as long as it's done in the next 24 hours".
5. There is no suggestion that Hurford did not make "every effort…to complete the stocktake" on 30 November 2017.
6. Hurford contends the exchange amounted to a variation of the Contract. Kempsey Timbers contends it amounted to no more than a "forbearance". I will return to this below.

Completion

1. Following this email exchange, completion took place. Hurford paid Kempsey Timbers the $4.5 million called for by the Contract as payable on completion.
2. The parties then focussed their attention on endeavouring to agree on the number of packs present on the site. By the end of 30 November 2017, 2,336 packs were located. Mr Geatches said there were another 20 or so packs missing. The missing 20 packs were located overnight. Mr Geatches updated the information in the 13 November Stock Sheet to reflect this number of packs. The computer system then showed the volume of Unprocessed Stock to be 4,454.82 m3.
3. Later on 30 November 2017, there were further discussions summarised by Mr Geatches in his affidavit: "In relation to the discussions on the day of settlement (30 November 2017) Warren Gibson, Matt Hughes, Bob Engwirda and Roy Head were working on trying to calculate the stock and I joined them towards the end of the day at approximately 3:30 pm. All the mills had been shut down by then. I said words to the effect: 'It is not going to be possible to calculate volume due to the discrepancies in pack sizes and packs shifting around the site throughout the day.' Due to variable pack sizes we were unable to determine cubic metreage and could only attempt to count the number of packs. The agreement reached was roughly that the figures were down on pack numbers on the computer. It appeared to me it was down by about 20 packs. I recall Bob Engwirda saying to Matt Hughes and Roy Head words to the effect: 'The pack numbers are down and we cannot agree a volume. We will not be able to agree a volume until we run it through the processing line so that we can get some accurate numbers.' I did not have any understanding that the stock figure would be agreed by, for example, the next day as that would be impossible."
4. Mr Head said that, at about 4 pm, Mr Geatches said to him: "We have found about another 60 packs. We will continue to look for the other 20 odd packs. We have got to a total of 4390m3 against a stock sheet of 4450m3. We will continue to locate the missing packs. We will meet the target bracket between 4400 m3 to 4700 m3. The round table (sawn board from the green mill that had yet to be racked into slings and place in the drying yard) has not been counted. Nor has the additional 3 inch Rose Gum kiln dried feedstock located in the processing shed. If both those were counted we would easily be within the range. I will also look for the missing packs. The round table and Rose Gum 3 inches are only backup if needed."
5. Mr Geatches denied saying anything to Mr Head concerning timber on the Round Table. He said: "I saw the out feed round table after the end of production on the day and it was all but empty except for just a few boards. I am not sure the volume of that timber".
6. Mr Head said that, at around 6 pm, Mr Geatches said to him: "We are still missing around 20 packs from the stock list. The total count so far is 4390m3 (short of the target bracket). The packs will be somewhere on site and I suggest we have a look in the morning given it is getting late."
7. Mr Geatches agreed that he said something to this general effect except that he said the words "according to the database" after the reference "4390m3".
8. A short time later Mr Head sent an email to Dr Head which included: "Final count for board stock was 4390m3 but don't believe it included either round table or the Indonesian 3" Rose Gum de sticked boards. We should be okay but a fair bit of stress at the end".

The 30 November Stock Sheet

1. I have mentioned that, by the end of November 2017, the mill's computer system shows that the volume of Unprocessed Stock was 4,454.82 m3. It is common ground that Mr Geatches told Mr Engwirda and Mr Head of that figure. However, the mill stock list, so revised, was not circulated at that time.
2. The stock list, as updated to 30 November 2017, was referred to by the parties as the "30 November Stock List" to distinguish it from the 13 November stock list.
3. That stock list was only made available to Hurford by Mr Geatches in August 2018. Mr Geatches had by then retired from employment at Hurford, but had retained a copy of the 30 November Stock List on his computer. No party offers any criticism of Mr Geatches in this regard.

The effect of the 30 November 2017 email exchange between the solicitors

1. Mr Quickenden submitted that it was implicit in the 30 November 2017 email exchange that Hurford would "complete its estimate of stock by 1 December [2017]".
2. I do not agree.
3. That may be what Dr Head understood, based on his conversation with Mr Worthington immediately before Mr Worthington replied to Mr Wolff's email. But Mr Worthington did not specify in his email that the stocktake be concluded on 1 December 2017. With a qualification that Mr Quickenden accepts was irrelevant, Mr Worthington simply accepted Mr Wolff's proposal.
4. In my view, the exchange of emails between the solicitors for the parties on 30 November 2017 effected a variation of the Contract.
5. The exchange of emails between the solicitors constituted an agreement by Kempsey Timbers that notwithstanding the fact that the volume of Unprocessed Stock could not be ascertained on the date of completion, and therefore that any adjustment to the purchase price could not then be agreed, and in consideration of Hurford nonetheless agreeing to proceed to completion and to pay the $4,500,000 due on completion, any adjustment to the purchase price could be made on 30 May 2018 rather than on completion.
6. Thus the effect of the adjustment was that cl 62 relevantly read: "[Kempsey Timbers] warrant[s] that at completion the stock will comprise:- (1) 4,550 m3 plus or minus 150 m3; … (3) if the stock is outside the range referred to in sub-paragraph (1) an adjustment in either [Kempsey Timbers'] or [Hurford's] favour of $1,000 a cubic metre will be made at completion on 30 May 2018." (Emphasis added.)
7. In my opinion, this conclusion follows from the words used by the parties' solicitors in the 30 November 2017 email exchange. Those words are clear. There is no need to resort to surrounding circumstances to understand what they mean.
8. It is true, as Mr Quickenden pointed out, the email exchange did not state: 1. when any stocktake would take place; 2. that Hurford proposed to determine the amount of Unprocessed Stock by processing the stock to ascertain board length; 3. that Hurford proposed unilaterally to undertake this process from 11 December 2017 to 30 May 2018; or 4. that Kempsey Timbers would not be present during the exercise.
9. But the absence of reference to those matters does not affect what was agreed; namely that any necessary adjustment to the purchase price be made on the next date payment was due: 30 May 2018. Prior to its amendment by the 30 November 2017 email exchange, the Contract was silent as to how Unprocessed Stock volume was to be calculated in order that any necessary adjustment be effected. The Contract, as amended, remained silent as to these issues.
10. Mr Quickenden submitted that the effect of the email exchange was that Hurford waived the right to an adjustment to the purchase price. I do not accept that submission. Nothing that happened on 30 November 2017 affected Hurford's entitlement to an adjustment to the purchase price, nor that of Kempsey Timbers, if such an entitlement turned out to be justified by the volume of Unprocessed Stock in fact present at the mill on 30 November 2017.
11. Mr Quickenden also submitted that the 30 November 2017 email exchange amounted to no more than a "forbearance" and "that the stocktake would conclude on 1 December 2017 and, if any adjustment was made, it would occur at the time of the next instalment payment" on 30 May 2018. I do not accept that submission. There is nothing in the 30 November 2017 email exchange that provides any foundation for it.

Did the parties agree on the volume of Unprocessed Stock?

The events of 1 December 2017

1. Hurford assumed conduct of the mill on 1 December 2017.
2. Kempsey Timbers contends that Mr Engwirda, on behalf of Hurford, and Mr Head, on behalf of Kempsey Timbers, reached an agreement on 1 December 2017 that the amount of stock present on site at 30 November 2017 was between 4,400 m3 and 4,700 m3 and thus within the range contemplated by the warranty in cl 62 of the Contract.
3. By the morning of 1 December 2017 agreement was reached that there were 2,356 packs of Unprocessed Stock on site.
4. Mr Head said that, at around 10.30 am, he had this conversation with Mr Engwirda and Mr Geatches: "[Mr Head]: Did we find the missing packs? [Mr Geatches]: We have reached the bracket with a volume of around 4450m3 this morning. [Mr Engwirda]: It appears you were aiming for the low bar Roy [Head] (in reference to the target bracket volume). [Mr Head]: It was always a moving target given we were in operation up to the final day of completion of the contract. Has everything been counted? [Mr Engwirda]: We stopped counting given we would be squabbling over firewood at this stage. [Mr Head]: Are we all good then? We have reached the final volume within the bracket? [Mr Engwirda]: Yes we are. Thanks. [Mr Head]: I need to leave for Sydney and we will be in touch. [Mr Engwirda]: Okay." (Emphasis added.)
5. Mr Head's reference to "the bracket" was to the range of 4,400 m3 to 4,700 m3 within which no price adjustment was called for by cl 62.
6. The figure of 4,450 m3 that Mr Head said Mr Geatches mentioned was very close to the volume recorded in the mill's database, for Unprocessed Stock as at 30 November 2017: 4,454.82 m3.
7. Mr Engwirda agreed that Mr Geatches told him at about 3 pm on 30 November 2017 that the "system was showing 4,450 metres cubed" for Unprocessed Stock.
8. Mr Geatches said, in relation to Mr Head's evidence: "I do not agree that I said that [i.e. that the "bracket" had been reached] to Roy [Head]. I was not confident of the accuracy of the figures in [Kempsey Timbers'] stock database".
9. As I have mentioned, it is common ground that on 30 November 2017 or 1 December 2017 Mr Geatches told both Mr Head and Mr Engwirda what the mill's database said about the volume of Unprocessed Stock.
10. In those circumstances, I think it more likely that what Mr Geatches said was no more than that the database showed there to be 4,450 m3 stock present.
11. Mr Geatches went on to say: "I did not hear any such conversation between Bob Engwirda and Roy Head. … Bob [Engwirda] had been saying words to the effect 'the volumes in the packs aren't right' and 'we are not going to be able to determine the volume'."
12. Mr Engwirda denied the conversation deposed to by Mr Head. He said: "At no stage did I agree any cubic metre volume with Roy Head or anyone else. I had formed the view that I could not."

The 14 and 18 December 2017 emails

1. On 14 December 2017 Mr Head wrote to Mr Engwirda: "If you could come back to me when you can on…final m3 board stock volume at handover, it would be appreciated".
2. On 18 December 2017 Mr Head re-sent that email to Mr Engwirda.
3. The fact that Mr Head felt it necessary to enquire of Mr Engwirda about final cubic metre stock volume suggests that he did not then believe there was an agreement about the volume of Unprocessed Stock. If, as he deposed, Mr Engwirda had on 1 December 2017 agreed that "we have reached the final volume within the bracket", there would be no need to make this enquiry.
4. Later, the following email exchange occurred between Mr Head and Mr Geatches.
5. At 7.15 pm Mr Geatches emailed Mr Head: "Are you sure your dad didn't take that chainsaw? Because I've done everything I can to find it."
6. Mr Head replied at 7.26 pm by suggesting Mr Geatches deal directly with Dr Head about the missing chainsaw and continuing: "While I've got you, did you have the final m3 feedstock volume at change over? Graeme [Dowsett, Kempsey Timbers' external accountant] is chasing me on it and I've said I recall it being about 4450 m3 from the Friday morning [1 December 2017] but needed to confirm."
7. Again, this enquiry is hard to reconcile with Mr Head having a belief that an agreement had been made about volume.
8. Mr Geatches replied: "Still waiting for the email history, if you don't want it to happen I'd prefer you to say rather than us relying on it. It was over 4000."
9. The first sentence of Mr Geatches's email appears to relate to an issue not relevant to these proceedings.
10. In relation to Mr Geatches's response "it was over 4000", Mr Head gave this evidence in response to questions from me: "Q. Well, how did you respond? Did you call him or email him, whatever -- A. I emailed him. I didn't directly address the 4,000 but as you can imagine, this has caught me by significant surprise. I said, 'There appears to be a major issue going on here, Ben, but it's becoming more difficult because you're not talking with me. I suggest we have a chat to understand what - what these underlying problems are'. From a 4,450 agreement or above that, on 1 December, to then move to saying it was 4,000 and this is 18 days after that agreement is a huge swing."
11. Mr Head's email response was not then in evidence. Mr McCall called for it, and it was produced. It read: "Give me a call tomorrow and let's run through where your concerns are. (I'm flying from 11 - 2pm, but available in the AM). There seems to be an underlying issue that needs addressing but lack of talking seems to be making it bigger. Texting etc doesn't work. Im trying to work with you on this stuff but you're making assuming the worst and it's creating difficulties on both sides for the transition (including your ongoing relations with contractors). I'll forward you my correspondence to Brodie giving authorisation from 2 weeks ago. I don't know what's going on, but let's resolve it for everyone's sake."
12. As Mr Head said in response to my question, his email did not directly address Mr Geatches's statement that "it was over 4000". In fact, he did not address the question at all. He did not say anything in his email to Mr Geatches about any "huge swing" from a "4,450 agreement" to Mr Geatches saying "it was over 4,000".
13. Minutes later Mr Geatches replied: "Essentially, you didn't allow the time for a seamless transition, I've managed it well from my end. Forgive me for sounding harsh but I'd rather not speak to you or your dad. Nothing personal, I just have to get on with it".
14. Minutes later Mr Head replied: "Let's leave it for now then. I've got to encourage you to consider whether that approach is best (to stop communication) for your own interests. We're both getting on with it, I didn't want to be in this position either, and the short turnaround relates to the negotiations of two parties (both Hurfords [sic] and [Kempsey Timbers]). Effectively to make it work for both sides we need to be talking. Difficult as it may be. Personal or not, I assure you we both will need information or assistance from the other party multiple times before we wrap this up."
15. The email exchange concluded a short time later with this email from Mr Geatches: "I wanted to do everything I could for [Kempsey Timbers], but at the end of the day I was thrown away like everyone else. Do not talk to me like I'm a child either as per below. I'm appreciative of the opportunity your dad gave me, forever, but I also worked for 18 years to get there."
16. These last two exchanges suggest, as I mentioned earlier, that something had occurred between Mr Geatches and Mr Head and Dr Head that caused ill feeling on Mr Geatches's part. That may be why Mr Head did not respond to Mr Geatches's statement that "it was over 4,000". However, that statement is not consistent with Mr Geatches believing there had been an agreement about volume at completion being 4,450 m3.

The December 2017 correspondence

1. Between 1 and 21 December 2017, Mr Engwirda endeavoured to ascertain the volume of Unprocessed Stock on site on 30 November 2017 by causing the Unprocessed Stock to be processed through the moulder in the Dry Mill. He concluded that the volumes stated in the records maintained by Kempsey Timbers were inaccurate and overstated the volume of Unprocessed Stock.
2. I will return to the process adopted by Mr Engwirda when considering the expert evidence about volume.
3. On 21 December 2017, Mr Engwirda wrote to Mr Head: "We have an issue with the stock amount that we purchased. As you are aware I raised the issues of the following problems. 1. A lot of stock on [Kempsey Timbers] pack system had a higher stated volume that was physically impossible to have in that size packs. 2. 20% of the stock had no labels, so all we could do is an overall pack count and not an individual pack count. 3. The claimed amount of 2 or 2.1 m/3 per pack in the stock system we have found is overstated. The 4 production runs to date Species RM SG IBK MW Total [Kempsey Timbers] stock sheet 45.2 60.9 45.4 46.3 197.8 m/3 actual 40.34 60.23 41.715 42.27 - m/3 184.555 diff 4.86 0.67 3.685 4.03 13.245 % diff 10.47% 1.10% 7.91% 8.48% 6.70% m/3

The above shows that the quantity per pack is overstated at an average of 6.7%".

1. Mr Worthington responded to this email by writing to Mr Wolff as follows: "I refer to previous correspondence and have been asked to write to you in respect of one particular matter which seems to be gathering momentum behind the scenes and it concerns the quantity of stock pursuant to Special Condition 62 of the Contract of Sale and the stocktake conducted on the evening of completion of that Contract, that is, the 30th November 2017. At the time the stocktake was conducted I understand Matt Hughes, another representative of the purchaser whose name is unknown, Bob Engwirda, Roy Head and Ben Geatches were involved at various times and it was agreed between all the parties that the limits imposed by Special Condition 62(i) [sic] were reached (approximately 4450m3). Accordingly the Contract was completed. My client now understands there are suggestions that a discrepancy may exist and, even more concerning, that a sum of money may be withheld from the repayment of the secured loan as noted in the Contract and the purpose of this letter is to put to rest those suggestions before an issue arises. The Contract dated 8th November 2017 has been completed and is at an end. The terms of that Contract have been agreed and there is no right of set off in the security documentation." (Emphasis added.)
2. Thus, Mr Worthington asserted that an agreement had been reached about stock volume. The agreement asserted was not quite the same as that now asserted by Mr Head. According to Mr Head, the agreement was that "we have reached the final volume within the bracket"; whereas Mr Worthington asserted the agreement was that the "limits" in cl 62 had been reached and that the agreed volume was "approximately" 4,450 m3.
3. Mr Wolff replied on 22 December 2017: "Our client has confirmed it has concerns with the stock provided as part of the Contract. Our client does not dispute that the stock-take took place but any agreement as to the final stock figure was based on data supplied by your client which has proved to be inaccurate. In other words, any purported agreement as to the volume of stock was formed on partly erroneous assumptions. Bob Engwirda, by email yesterday to Roy Head, indicated to him the issues with the stock that had been found to date. We are instructed that having reviewed approximately 5% of the stock the quantity is on average down about 6.7%. Clearly our client is not yet in a position to form a concluded position in relation to the stock but having regard to the size of the stock and the limited timeframe our client reserves its rights in relation to this issue notwithstanding any completion of the Contract. It will be in a better position next year to make the appropriate request for an adjustment." (Emphasis added.)
4. The passage I have emphasised in Mr Wolff's letter appears to acknowledge that some kind of agreement may have been made, but that it was based on "inaccurate" data provided by Kempsey Timbers.
5. Mr Wolff said something similar on 26 February 2018 when he wrote to Mr Worthington stating: "The position has not improved. There remains a material shortfall in the volume of timber provided in the packs and therefore a breach of [Kempsey Timbers'] warranty in Clause 62 where no adjustment was made."

Was there an agreement?

1. Mr Wolff's letters of 22 December 2017 and 26 February 2018 suggest that there was an agreement of some kind made between Hurford and Kempsey Timbers.
2. Neither counsel addressed that possibility in closing submissions.
3. Mr Head deposed to the agreement that the parties had "reached the final volume within the bracket" in the context of his recollection that, immediately before, Mr Geatches had said that "we have reached the bracket with a volume of around 4,450m3 this morning".
4. Mr Geatches denied that he had said this, although he did not depose to what he recalled he said, if anything, on this subject.
5. What is known is that, on 1 December 2017, the mill's database showed that the volume of Unprocessed Stock was then 4,454.82 m3. Mr Geatches did not believe that that figure was accurate but had told Mr Engwirda and Mr Head that this is what the database showed.
6. In those circumstances, as I have said at [119] above, I think it more likely that all that Mr Geatches said, and all that Mr Engwirda acknowledged, was that this was the volume of Unprocessed Stock as recorded in the database.
7. I think it highly improbable that Mr Engwirda would have agreed that, as a matter of fact, the volume of Unprocessed Stock on site was "within the bracket". The persistent theme of his evidence was that he found the mill's stock records to be unreliable and that, because of the manner in which the Unprocessed Stock was stored in the packs, it was not possible to make an assessment of what the volume of Unprocessed Stock was. All that could be done, Mr Engwirda emphasised, was to ascertain the number of packs on site.
8. I see this conclusion as being consistent with Mr Wolff's letters of 22 December 2017 and 26 February 2018 where he said that "any agreement as to the final stock figure was based on data supplied by your client which has proved to be inaccurate".
9. I think it likely that Mr Worthington's assertion of 21 December 2017 that there was an agreement that "the limits" in cl 62 have been reached reflected what I have concluded to be Mr Head's misunderstanding of the import of what had been said on 1 December 2017.
10. Overall, I am not satisfied that there was an enforceable agreement about the volume of Unprocessed Stock actually present on site.

Subsequent correspondence

1. Having received no reply to his 26 February 2018 letter, Mr Wolff again wrote on 11 April 2018 enclosing a further spreadsheet which recorded the results of further production runs.
2. Mr Wolff continued: "As you can see, based on the Stock Sheet, 1,498.9 cubic metres has been utilised by our client during this period showing a deficiency of 111.664 cubic metres from the volume shown on [Kempsey Timbers'] Stock Sheet. The overall difference is a deficiency of 7.45% with approximately 32.9% of the projected stock being used in production to date. As we indicated in our earlier correspondence, our client will require an adjustment to the amounts owing by your client at the appropriate time. Our client, however, has suggested that if a representative of your client would like to arrange a visit for the site to review the material our client has prepared they are happy to do [sic] facilitate it. This may also give the parties an opportunity to resolve when this discrepancy will be adjusted."
3. Mr Worthington responded by saying he was getting instructions but made no substantive response to Mr Wolff's letter.
4. On 28 May 2018 Mr Wolff wrote a further letter to Mr Worthington: "I wrote to you on 11 April 2018…identifying that stock discrepancy (being a 7.45% shortage in pack volume) and attaching the summary prepared by my client. I have not received a constructive reply to my email. My client has now calculated an adjustment to the stock valuation as follows: Required stock at Completion - 4,550 m3 +/- 150 m3 Actual Count based on number of packs only - 4,400 m3 Adjustment for stock shortage - 7.45% Stock adjustment quantity - 328 m3 (4,400 m3 x 7.45%) Revised stock quantity - 4,072 m3 - well under the minimum stock of 4,400 m3 Stock adjustment value per m3 if short $1,000 / m3 Stock adjustment value $1,000 x (328 m3) = $328,000. Accordingly, an adjustment of $328,000 will now be made."
5. Mr Worthington responded on 29 May 2018: "I refer to your letter of the 28th May last, the contents of which I have referred to my client and note that despite all necessary information has [sic] been with you for many months your client has waited until two (2) days prior to the due date for payment of the first instalment to notify my client of the proposed adjustment. In view of this discourtesy I have been asked to make my client's position quite clear and in the strongest terms. Firstly, I note there is no right of set-off in the mortgage documentation and any shortfall in the terms of payment is a clear breach of an essential term. Secondly, my client, as mortgagee, has allocated the funds of the first instalment and any delay or shortfall in payment will cause it to breach its obligations to third parties resulting in substantial loss. Your late notification of an intended deduction from the first instalment payment has made it impossible for my client to make alternative arrangements with its bankers and I suggest to you that your client is well aware of same. Thirdly, and most importantly, any issues as outlined in your letter are a matter of Contract and should be dealt with in the appropriate forum. Needless to say my client denies all allegations raised in your recent correspondence and will defend any proceedings commenced in respect thereof. I hold instructions on behalf of my client to accept any process issued."
6. Mr Worthington demanded that Hurford pay to Kempsey Timbers the next instalment of $1,300,000 and said that Kempsey Timbers would exercise its rights under its security by taking possession of the site and appointing a receiver if the payment was not made. Mr Worthington concluded: "My client does not intend to enter any further correspondence in this matter."
7. Dr Head said in cross-examination that he was of the view that the claims by Hurford were simply a negotiating stance to reduce the remaining payments. Mr Head considered that the alleged agreement of 1 December 2017 was the end of the matter and that he was not going to agree to any adjustment to the 30 May 2018 payment.
8. Mr Worthington's 29 May 2018 letter caused considerable concern to Hurford. Hurford had already paid some $5 million for the mill which was still in its first year of operation. Mr Andrew Hurford, the Chairman of the Hurford group of companies, concluded that it would be disastrous for the Hurford group if Kempsey Timbers carried out its threats in the 29 May 2018 letter.
9. Accordingly, on 30 May 2018, and as a result of these concerns, Hurford made the 30 May 2018 payment in full.

The effect of Mr Worthington's 29 May 2018 letter

1. If the true position was that there was less than 4,400 m3 of Unprocessed Stock on site at completion, the effect of the 30 November 2017 email exchange was that Kempsey Timbers was obliged to agree an adjustment of the instalment of the purchase price payable on 30 May 2018 if there was not between 4,400 and 4,700 m3 of Unprocessed Stock.
2. By Mr Worthington's letter of 29 May 2018, Kempsey Timbers manifested a refusal to countenance that any adjustment be made to the 30 May 2018 instalment; or at all.
3. It is true that, by Mr Wolff's letter of 28 May 2018, Hurford only revealed what adjustment it proposed be made to the 30 May 2018 instalment two days before the due date before that instalment.
4. However that fact should be seen in the context of Hurford's endeavour, through Mr Wolff's letters in the early part of 2018, to engage Kempsey Timbers in a dialogue on the subject.
5. Kempsey Timbers' response to Mr Wolff's letters of 21 December 2017 and 29 May 2018 was, in effect, that there was nothing to discuss, and that Hurford's contention that an adjustment was called for on 30 May 2018 was groundless, hence Mr Worthington's concluding sentence: see [161] above.
6. Kempsey Timbers did not, for example, quibble as to the particular adjustment sought by Hurford and seek to engage in discussion about what the correct adjustment might be.
7. Although Mr McCall did not put the matter this way, Mr Worthington's letter of 29 May 2018 amounted to an anticipatory breach of Kempsey Timbers' obligation to make any necessary adjustment to the 30 May 2018 payment. Kempsey Timbers, through Mr Worthington, evinced an intention not to comply with its obligations under the Contract as amended.
8. Hurford paid the full instalment of $1.3 million on 30 May 2017. Although there is no direct evidence that repayment was made under protest, the surrounding circumstances show that it was.
9. Kempsey Timbers did not plead that Hurford had in any way waived its right to assert a breach by Kempsey Timbers of its obligations under cl 62. Indeed, as I have said, Mr Quickenden abandoned the suggestion made in his written closing submissions that Hurford was estopped from relying on a breach of cl 62.
10. It follows that, if the true position is that there was less than 4,400 m3 of Unprocessed Stock on site on 30 November 2017, Kempsey Timbers is liable to pay damages to Hurford for breach of its obligation in cl 62(3) to adjust the purchase price; such damages to be assessed, as the parties agreed, on the basis of $1,000 per m3.

What volume of Unprocessed Stock was in fact on site on 30 November 2017?

1. Both parties adduced expert evidence as to the volume of Unprocessed Stock on site on 30 November 2017. Hurford relied upon the evidence of Mr David Hayward. Kempsey Timbers relied on the evidence of Mr Peter Zed.
2. Mr Hayward concluded that there was 4,165.26 m3 of Unprocessed Stock on site on 30 November 2017. That is 234.74 m3 less than the minimum amount warranted in cl 62(1).
3. In his report, Mr Zed opined that the correct figure was 4,454.82 m3; a little above the 4,400 m3 minimum specified in cl 62(1).
4. However, in final submissions Mr Quickenden eschewed reliance on Mr Zed's opinions. To understand why that was so, it is necessary to understand how Mr Hayward arrived at his opinion.
5. Mr Hayward based his opinion in part on the process Mr Engwirda undertook following completion to feed the Unprocessed Stock through the Dry Mill with a view to ascertaining the length of the boards in the piles. This was because inspection of the piles in November 2017 revealed that the boards were uneven in length.
6. Between December 2017 and May 2018, Mr Engwirda caused much of the Unprocessed Stock to be processed through the moulder in the Dry Mill. The moulder incorporated a tally wheel which was able accurately to measure and record the length of the Unprocessed Stock fed through the moulder. As the Unprocessed Stock was of a particular nominal size, and thus had a known width and breadth, calculation of the length of the stock as recorded in the tally wheel in the moulder enabled Mr Engwirda to calculate volume.
7. The result of that process is summarised in a table, a copy of which is attached to these reasons (the "Table") (The Table (579 KB, pdf)).
8. The Table was prepared by Mr Engwirda, Mr Geatches and Mr Hughes from business records of Hurford, including run sheets maintained contemporaneously during the process of feeding Unprocessed Stock through the moulder in the Dry Mill.
9. The Table shows, in relation to each pile of Unprocessed Stock, what actual volume was processed, and compares this to the volume shown in Kempsey Timbers' records for the corresponding pile. For the most part, the exercise shows that the Unprocessed Stock volumes were overstated in Kempsey Timbers' records.
10. On 21 December 2017, Mr Engwirda sent this information, current as at 21 December 2017, to Kempsey Timbers in the email set out at [140] evoking the response from Mr Worthington that I have set out at [141].
11. Mr Hayward adopted the information in the Table for the purposes of his opinion. I will return to this.
12. Mr Hayward also observed the processing of three packs of stock in November 2018.
13. Mr Hayward's methodology was to: 1. use the 30 November 2017 Stock Sheet to determine the number of packs, the nominal sizes of the boards and the claimed volume in cubic metres for each pack; 2. adopt the lineal measurement for each pack recorded on the tally wheel in the moulder during each production run of Unprocessed Stock in the Dry Mill as set out in the Table; 3. multiply the lineal metres by the end sizes for the boards in each pack to get the actual volume of the pack in cubic metres; 4. compare the actual volume with the asserted volume in the Kempsey Timbers' stock sheets; 5. for each specific end size find the overall difference in claimed volume and actual size, and express that as a percentage; and 6. extrapolate that percentage difference for each end size across the entire stock as set out in the stock sheets.
14. Mr Hayward relied upon the following records to revise the lineal measurement for each pack: 1. the Table; 2. a summary of run sheets of processing 15 packs on 100 x 15 mm at another mill operated by Hurford at Tuncester in October and November 2018 as provided to him by Mr Eldridge; and 3. the results of his observation of processing 3 packs of 100 x 15 mm at Kempsey in November 2018.
15. Mr Hayward concluded that the 30 November 2017 Stock Sheet was overstated by 289.54 m3. On that Stock Sheet there were 2,356 packs with a stated volume of 4,454.8 m3. His calculation of volume is then as follows: 30 November 2017 Stock Sheet volume: 4,454.8 m3 Overstatement of volume in the 30 November 2017 Stock Sheet: - 289.54 m3 Actual volume as at 30 November 2017: 4,165.26 m3

1. Mr Zed agreed that a process similar to that adopted by Mr Hayward was appropriate as long as three additional factors were considered.
2. Those factors were that: 1. some stock may have been rejected in the Dry Mill immediately prior to the timber passing through the moulder; 2. Mr Zed's uncertainty as to the sizing process used by Kempsey Timbers in assigning stock volume; and 3. an adjustment for board stock on the Round Table on the day of assignment and for what the parties referred to as "Rose Gum board stock".
3. As to factor (a), Mr Zed assumed that 4% and 6% of Unprocessed Stock would be rejected by the moulder during processing in the Dry Mill. But that assumption was not established in the evidence. On the contrary, Mr Hughes gave evidence that the amount of stock rejected was less than 1%. Further, Mr Hughes gave evidence that when processing the Unprocessed Stock after completion and for the purpose of measuring it, all stock was put through the moulder without rejection.
4. As to factor (b), Mr Zed accepted during concurrent evidence that Kempsey Timbers had used nominal sizes and that this was therefore no longer a qualifying factor.
5. As to factor (c), Mr Geatches's evidence was that there was almost no Unprocessed Stock on the Round Table at the relevant time.
6. In my opinion, "Rose Gum board stock" was not Unprocessed Stock. The Rose Gum had been kiln dried, unpacked, de-sticked, shrink wrapped in plastic and stored in the "Finished Product" shed shown in the photograph at [14] for sale by Kempsey Timbers to an Indonesian organisation. It was also not included in the 13 November 2017 Stock Sheet.
7. In final submissions, Mr Quickenden did not seek to support Mr Zed's opinion. Mr Quickenden said: "And indeed, the effect of his evidence, I agree with my learned friend, has been neutralised a great deal. He made three complaints about Mr Hayward's measurements. Subsequently acknowledged that two of them had been satisfied. And the third one, about not measuring the rejected board stock, there's evidence that it was not rejected, and that was what - the measurements were correct, because there were no rejections of stock."
8. During concurrent evidence, Mr Zed had sought to articulate a different basis for his opinion as to the volume of Unprocessed Stock on site on 30 November 2017.
9. In final submissions, Mr Quickenden did not attempt to justify that opinion. Mr Quickenden said: "I'm not even going to attempt to explain what Mr Zed said about the counting of the rows, because frankly all that's a bit uncertain too, but it was just too late in the day for your Honour to have regard to that."
10. That led me to have this exchange with Mr Quickenden: "HIS HONOUR: That means you accept that there was less than 4,400 cubic metres on the day, doesn't it? QUICKENDEN: If your Honour finds that Mr Hayward's evidence can be accepted on all that, that's the conclusion your Honour is likely to come to, subject to a couple of things I want to say, your Honour."
11. Ultimately, the only criticism Mr Quickenden offered of Mr Hayward was his statement in his first report that: "At the time of inspection [in November 2017] approximately 44% of the unprocessed stock had been processed".
12. Mr Quickenden submitted, in effect, that this sample was not sufficiently representative to draw a conclusion as to the whole of the Unprocessed Stock present on site on 30 November 2017.
13. However, as Mr McCall submitted, the evidence shows that Mr Hayward's figure is correct.
14. Accordingly, I accept Mr Hayward's evidence and conclude that the amount of Unprocessed Stock on site on 30 November 2017 was 4,165.26 m3, and therefore 234.74 m3 less than the minimum of 4,400 m3 specified in cl 62.

Conclusion on the Unprocessed Stock issue

1. There was 234.74 m3 less than the minimum amount of Unprocessed Stock required by cl 62(1) on 30 November 2017. Hurford is thus entitled to $234,740.00 in damages, assessed in accordance with cl 62(3) at the rate of $1,000 per m3.
2. Hurford is also entitled to interest on this sum from 30 May 2018, being the date that Kempsey Timbers refused to make an adjustment.

The understated long service leave entitlements

1. Clause 60 of the Contract relevantly provided: "…the Purchaser will pay for all workplace entitlements including long service leave to all employees (including non-transferring and transferring employees) whether or not the Purchaser recognises service with the Vendor. The Purchaser acknowledges it has satisfied itself as to employee entitlements and indemnifies the Vendors against any claims against them whatsoever in respect thereof." (Emphasis in original.)
2. During November 2017, Kempsey Timbers' then Finance Officer, Ms Carolyn Hawken: "…was concerned that I would need to review and adjust payroll records in [Kempsey Timbers'] system to ensure that all employee leave entitlements would be correctly recorded with Hurfords [sic]".
3. On 30 November 2017, Ms Hawken told Mr Engwirda that in her opinion Kempsey Timbers' "payroll systems has had errors in it", that the "employees' entitlements are understated for about 10 employees" and that "there is approximately $40,000 or so difference".
4. That led to this conversation between Mr Engwirda and Mr Head: "[Mr Engwirda]: Roy [Head], this list [Ms Hawken] has given me is different to the list you gave us before. Look at these long service leave balances. They are all higher here for these employees. There's about $40,000 difference. What is going on? [Mr Head]: This is our fault. We'll take care of it. It looks like it's a clerical error by us. It's our responsibility and we will take care of it. I'll put it in writing to you."
5. A short time later Mr Head sent Mr Engwirda an email with the heading "[v]ariance of leave entitlements" in these terms: "It appears there has been a clerical issue in relation to the employee entitlements information provided during negotiations / contract and what is true and correct. As I understand some of the leave entitlements were not registered on the system and therefore the figures provided are off. This is a mistake on [Kempsey Timbers]'s side and with a short period to transfer of first payment in settlement, I won't have time to review in detail but acknowledge the variance. I confirm that the variance in leave entitlements once reviewed and confirmed will be accounted for by [Kempsey Timbers]."
6. Mr Head gave this evidence about that matter first in response to questions from Mr McCall and then in response to questions from me: "Q. Well, the only other problem could have been, was that the records weren't right and Ms Hawken said that she'd fixed that? A. The documents had been provided showed a variance between one and the second. At that point in time, I hadn't had a chance to review it myself and confirm that for sure. If there are anomalies there, that's something that you need to get right. I've said that we would go away and ensure that that was true and correct. … HIS HONOUR Q. Did you review and confirm the variance? A. Personally, I did not. … Q. You arranged for someone to look at it, did you? A. Yes. So after [Kempsey Timbers] was transferred across to Hurford, we outsourced our finance department to our accounting agency, Vidal O'Brien and Graham Dowsett, who were mentioned earlier. These documents and the system were passed on to them, along with Dr Head, and from that, it was being reviewed to ensure that it was true and correct at that time. Q. And what was the result of that? A. I believe that there were further amendments that were required to leave entitlements. Q. So the review was by Mr Dowsett or his team, was it? A. That is correct. Q. And was there any communication back to Hurford about what the result of that review was? A. I believe so, it did not come from me though."
7. There is no evidence before me of any communication of the kind to which Mr Head referred to in his last answer.
8. Mr McCall submitted that the 30 November 2017 email from Mr Head to Mr Engwirda constituted either a variation of cl 60 of the Contract or a separate Contract to "account" to Hurford for the "variance" identified by Ms Hawken.
9. I see two difficulties with that submission.
10. The first is that any promise contained in Mr Head's email was qualified. What Mr Head said was that Kempsey Timbers would account for the variance once it had been "reviewed and confirmed". Hurford has not shown that the "variance" was so "reviewed and confirmed".
11. Such evidence as there is on the topic is to the contrary. Mr Head said that the matter was reviewed by Kempsey Timbers' external accountants who reported that "further amendments" to those identified by Ms Hawken were identified. It is not clear on the evidence whether the result of that review was communicated to Hurford. Mr Head's evidence suggests, albeit not conclusively, that it was.
12. The second difficulty is, in any event, any promise contained in the 30 November 2017 email was not supported by consideration. Mr McCall submitted that Hurford "could have stopped or delayed the settlement pending the resolution of the issue". I do not see how Hurford could have done this. By cl 60 of the Contract, Hurford had given its unqualified promise to pay "all" leave entitlements. Hurford did not give any consideration by proceeding to completion; it was already bound to do that.
13. Mr McCall submitted, alternatively, that Hurford "also had claims for misleading or deceptive conduct in regard to the deficiencies in the May 2017 leave balances report".
14. Mr McCall was referring to a document evidently provided by Kempsey Timbers to Hurford during discussions, earlier in 2017, and many months before entry into the Contract.
15. My attention has not been drawn to any evidence dealing with the circumstances in which that report was made available or what was said, if anything, by Kempsey Timbers as to its accuracy or completeness.
16. Thus, the evidence does not enable me to come to any conclusion that Hurford had a right to make a claim for misleading or deceptive conduct; let alone that it forewent pursuing any such claim.
17. For these reasons, my conclusion is that Hurford's claim in respect of the long service entitlements fails.

The cross claim - the interruption to the pick and pack service

1. Processed Stock was excluded from the sale.
2. To facilitate access by Kempsey Timbers to that Processed Stock, the parties agreed in cl 59 of the Contract that: "…[Hurford] will provide a warehousing and 'pick and pack' service of engineered and finished stock orders on behalf of [Kempsey Timbers] for a rent free period of nine (9) months from the date hereof such flooring to be insured at the cost of [Hurford]. This clause shall not merge on completion. [Hurford] will make available to [Kempsey Timbers] at all reasonable times all books and records relating to engineered and finished stock for a period of twenty-four (24) months after completion. This clause will not merge on completion."
3. The parties contemplated that Kempsey Timbers would have remote access to a server at the mill and the assistance of Mr Michael Borger. Mr Borger had been employed by Kempsey Timbers at the mill in the data entry and payroll area and continued to be so employed by Hurford following completion.
4. On 16 November 2017, Mr Head sent to Mr Engwirda an email setting out the detail of his proposal as to how the arrangements would work: "- We would contribute $500.00/week ex. GST (circa 50% of Michael [Borger]'s wages and super), paid monthly, for him to handle local sales, sales support and logistics on behalf of [Kempsey Timbers] during the cross over. The aim is to move the stock as quickly as possible to free up warehouse space for you, but would expect this option available to us if needed by month up until final settlement (August 31st). - For Michael [Borger] to service local sales, we are thinking of converting to a mobile EFTPOS machine to free up a phone line, and would prefer to have a single [Kempsey Timbers] phone line still available (local sales and [Kempsey Timbers] engagement with Michael [Borger]). - Regarding the server, ideally we would look to maintain it onsite until changeover is complete and we've moved the finished goods. It's connected to the NBN via fixed wireless and has another port for your server to be set up. - As I understand Hurford's run a remote desktop setup similar to ours so this should be relatively simple for Michael [Borger] to change between companies as required."
5. Hurford agreed to these proposals.

Was this a variation?

1. I accept Mr Quickenden's submission that this amounted to a variation of the Contract whereby, in consideration of Kempsey Timbers' agreement to contribute $500 per week to Mr Borger's salary, Hurford agreed to provide the pick and pack service as set out in that email. Kempsey Timbers did pay that salary, although only in May 2018.
2. The pick and pack process operated on this basis, uneventfully, between 1 December 2017 and 5 June 2018.

Hurford denies access to the server

1. On that date Mr Engwirda, angered by Kempsey Timbers' 29 May 2018 response to Hurford's 28 May 2018 request for an adjustment to the 30 May 2018 payment, instructed Mr Borger to deny Kempsey Timbers remote access to the server.
2. In his affidavit, Mr Borger said that Mr Engwirda gave him this instruction: "Michael [Borger], can you please turn off the server. I haven't had contact from [Mr Head] or [Dr Head] to discuss matters. This will get their attention to contact me."
3. Mr Borger also said: "I was directed by Bob Engwirda to turn off the computer server used in this arrangement on 5 June 2018. The server remained off for approximately 24 hours."
4. Mr Engwirda also directed that he, rather than Mr Borger, be the contact point for the pick and pack service.
5. Ultimately it was agreed that Kempsey Timbers should acquire the server.
6. Mr Head said: "The shutdown had occurred on Tuesday morning 5 June 2018. While the server was restored to operation on Friday 8 June 2018 [Kempsey Timbers] was unable to return to standard business function until the following Tuesday, 12 June 2018."
7. As at 12 June 2018, Kempsey Timbers had less than two months to clear the remaining Processed Stock from the mill. That is because Hurford's obligation under cl 59 of the Contract to provide rent free warehousing of the Processed Stock and to provide the pick and pack service expired nine months after the date of the Contract: on 9 August 2018.
8. Thus, unless Kempsey Timbers could sell the remaining Processed Stock by 9 August 2018, it would have to arrange for that stock to be removed from the mill.
9. As it turns out, Hurford agreed to extend the 9 August 2018 deadline to 30 August 2018, although that occurred only on 4 July 2018.
10. As Kempsey Timbers' sale of the mill to Hurford marked its departure from the timber industry it was, so far as concerns sale of the Processed Stock, engaged in what Mr Head described as a "controlled exit strategy" from the processed timber industry.

Did the denial of access cause damage?

1. Kempsey Timbers contends that the denial by Hurford of access to the server between 5 and 12 June 2018, and the ongoing interposition of Mr Engwirda between Kempsey Timbers and Mr Borger had the effect that Kempsey Timbers was obliged to offer greater discounts to customers from then on than would otherwise have been the case.
2. By comparing the discounts Kempsey Timbers gave to its customers between December 2017 and May 2018 with those it gave to customers between June and August 2018, Mr Head calculated that the loss that Kempsey Timbers has suffered is between $226,705.80 and $249,450.46.
3. Mr Head's calculations in relation to the higher of those two figures are set out in a document he prepared entitled "AST Maximum Financial Losses Summary", which is attached to these reasons (Maximum Financial Losses Summary (585 KB, pdf)).
4. Kempsey Timbers adduced evidence from Mr Chris Katehos, a forensic accountant, who gave evidence that Mr Head's analysis of Kempsey Timbers' loss: "…is plausible in terms of accounting principles as he has compared the financial position of [Kempsey Timbers] but for the actions of [Hurford] and as a result of [Hurford's] actions."
5. Mr Katehos also confirmed that "the mathematical calculations performed by Mr Head in his analysis are correct".
6. I do not think that Mr Katehos's opinion casts much light on the problem at hand. He has done no more than state the obvious, namely that Mr Head has compared the "before and after" June 2018 discounts given by Kempsey Timbers to its customers.
7. It does not follow from that analysis that the mathematical difference between those figures necessarily reveals Kempsey Timbers' position "but for" Hurford's conduct in temporarily denying Kempsey Timbers access to the server and interposing Mr Engwirda in the pick and pack process.
8. In his affidavit, Mr Head deposed, in general terms, to the impact on Kempsey Timbers' business of Hurford's decisions. Thus he said: "The server was affectively [sic] the heart of Kempsey Timbers' business. a. It hosted our email accounts. b. It hosted our financial and sale software. c. It hosted our product data for post-sale support. d. It hosted marketing information. All this information was needed to carry on the pick and pack process. When the server was switched off all those functions were disabled indefinitely and without notice in mid operation. Our business was immediately prevented from operating in any capacity."
9. Mr Head gave this general evidence about the impact of Mr Engwirda's involvement: "[Mr Engwirda's] involvement meant a significantly less effective process. Emails sent by Michael Borger to [Mr Engwirda] in relation to pick and pack information were at times not being forwarded through to me making it impossible to create the necessary loading paperwork for trucks which were to pick up and dispatch our orders. In some cases Michael [Borger] was forced to hand write on old [Kempsey Timbers] stationary [sic] packing slips to ensure trucks were not turned away and requested that I retroactively amend for our records later."
10. Mr Head also said: "What had once been a centralised model in which Michael [Borger] would consolidate Hurfords' [sic] orders and [Kempsey Timbers'] orders and manage freight and dispatch accordingly, a job he did well based on urgency and the requirements of both companies, had now instead become a situation where the respective companies were competing for space on the same trucks, on the same days, and with the same types of product. Our freight providers were becoming frustrated by the unnecessary complication, and it was putting unnecessary strain on Michael [Borger's] and my working relationship to try and find a way to work around the difficulties."
11. However, there is evidence to suggest that the impact of Hurford's conduct on Kempsey Timbers was not as dramatic as Mr Head suggested.
12. As Mr McCall submitted, at its highest, the interruption to Kempsey Timbers' business was over by 12 June 2018, one week after the server was turned off on 5 June 2018.
13. Kempsey Timbers still had its stock sheets, still had access to its customers via telephone, and was still able to place orders with Mr Borger or Mr Engwirda during that period.
14. Mr Borger, who on Kempsey Timbers' case was vital to the efficient running of the pick and pack process, said: "I do not agree that the disconnection of the server caused 'the immediate shutdown of [Kempsey Timbers]'s ability to sell its timber'. Roy [Head] was still able to contact [Kempsey Timbers]'s customers and us by telephone as he had done previously. Roy [Head] also was aware of the [Kempsey Timbers] current stock levels, as was I from working in the business. Prior to the server being switched off Roy [Head] had told me that he had also 'been printing stock lists on a weekly basis for distribution to clients'. The disconnection of the server did cause the loss of [Kempsey Timbers'] email facility but Roy Head would still have been able to negotiate and strike a deal for the sale of [Kempsey Timbers]'s products during the time that it did not have access to the server."
15. Mr Borger continued: "…I do not agree that [Kempsey Timbers] and its customer base felt the impact immediately'. The shutdown was only really affecting [Kempsey Timbers]'s emails. Roy [Head] had [Kempsey Timbers'] stock sheet. Roy [Head] was able to continue as a field salesman, he had his phone and could contact customers and us. [Kempsey Timbers] only had about 7 main customers at this stage anyway. In my observation, I saw no difficulties and received no complaints from customers in relation to the shutdown of the server. The only difficulties that I experienced were with Eva group who contact me by telephone wanting to know where one deliver was, which I was able to advise them and the matter was resolved."
16. Finally, Mr Borger said: "I remained working on [Kempsey Timbers'] business after the server interruption albeit with Bob Engwirda as the intermediary between me and Roy [Head]. It was a little less efficient having Bob [Engwirda] as the intermediary but [Kempsey Timbers'] business was still operating as well as it had previously. We were still taking orders and the goods were being selected and dispatched to customers, just the same as it had before."
17. In cross-examination, Mr Borger gave this evidence: "Q. Perhaps I can put it to you this way to try and sum it up…Mr Borger; things weren't the same for this arrangement after 5 June, were they? A. No, there was other steps involved in the process. Q. And as far as you could see, that was a disadvantage for [Kempsey Timbers], wasn't it? A. We had - we had the communication still open. Q. But it still disadvantaged [Kempsey Timbers] from your perspective, did it not? A. Yeah, you could say that but not to a very large extent."
18. But that evidence was followed up in re-examination: "Q. What was the disadvantage? A. Disadvantage was that I was actually still doing what her - I wasn't doing the job. That would be the only disadvantage; that I wasn't doing it. Q. And what wasn't it that you weren't doing? A. Entering the invoices. The - the computer system, XO. HIS HONOUR Q. So then [Mr Head] would have to do that himself? A. Yes, yeah."
19. Further, in final submissions, Mr McCall drew attention to a large number of email chains between Mr Head, Mr Engwirda and Mr Borger which showed that when Mr Head made a request of Mr Borger for access to Processed Stock, Mr Engwirda forwarded that request to Mr Borger within minutes (often within the minute) and that Mr Borger's response was, in turn, relayed to Mr Head with similar alacrity.
20. To take an example which occurred on 13 and 14 June 2018, immediately after Kempsey Timbers' full access to the server was restored on 12 June 2018: 1. Mr Head sent an email to Mr Engwirda at 6.45 pm seeking access to specified Processed Stock; 2. Mr Engwirda passed that request on to Mr Borger at 6.50 pm (five minutes later); 3. Mr Borger replied to Mr Engwirda at 7.28 am the following day; 4. Mr Engwirda forwarded to Mr Head Mr Borger's reply at 8.35 am; 5. Mr Head responded "not a problem Bob" at 8.39 am.
21. Mr McCall took me to a number of other examples in evidence and submitted that there were many more. In his reply submissions, Mr Quickenden did not dispute that proposition.
22. Kempsey Timbers did not call any of its customers to show that, following 12 June 2018, they had experienced less satisfactory service from Kempsey Timbers than prior to that date.
23. The only evidence of Kempsey Timbers' customer dissatisfaction was an email dated 8 June 2018 from Ms Olesya Lynnson, the Managing Director of Excellent Timbers in Melbourne, who expressed disappointment that Kempsey Timbers could not provide a delivery date for an order and stated: "If you cannot deliver it before the 19th of June, I will cancel my order and it will be very difficult for me to do any business with you in a [sic] future".
24. However, that sale eventually proceeded without any discount being offered.
25. Mr Head's analysis does suggest, on the face of it, that Kempsey Timbers offered greater discounts to its customers in June and July 2018 than in the preceding months.
26. The starting point of Mr Head's analysis is the "Standard Value" of the Processed Stock. However, cross-examination of Mr Head revealed that there were different "Standard Values" for particular customers and no fixed point from which it could be possible to determine any "discount". Indeed Mr Head stated in his affidavit that "[n]ormal sell prices are not standardised".
27. In his calculation, Mr Head did not seek to take into account the fact that Kempsey Timbers was selling into a market that would necessarily cease to exist in August 2018 when its enjoyment of rent free storage of the Processed Stock at the Kempsey mill would come to an end.
28. Mr Head explained his decision to increase discounts as follows: "I had multiple discussions with [Dr Head] by phone during the period of 13th of June through to late June regarding the issues I was facing in relation [to] Hurford's actions and requested that he allow me to discount the stock to higher than previously forecasted levels to end this given the difficulties [Dr Head] agreed on a case by case basis throughout June. On Tuesday, 3 July 2018 I was advised by [Mr Worthington; Kempsey Timbers' solicitor] that the pick and pack service by Hurford's [sic] would cease on 8 August after communication was received from their lawyers. On Wednesday, 4 July 2018 I wrote to [Dr Head] requesting a complete abandonment of [Kempsey Timbers'] controlled exit strategy of which he agreed, acknowledging the potential financial cost and personal toll it was taking."
29. Thus, from 4 July 2018 Kempsey Timbers abandoned its "controlled exit strategy".
30. As Mr Head's analysis shows, the amount of Processed Stock sold in July 2018 was more than double than in any previous month. Not only that, but the bulk of the Processed Stock sold in July 2018 was sold to Kepar Pty Ltd trading as "JVS Timber".
31. Hurford called Mr Aaron Susteren-Parkes from JVS Timber. Mr Susteren-Parkes had negotiated with Mr Head in June and July 2018 for the purchase by JVS Timber of Processed Stock from Kempsey Timbers. The JVS sale involved five semi-trailer loads of goods. Mr Susteren-Parkes said that the price he offered to Kempsey Timbers was based on the fact that, as he saw it, the timber being offered by Kempsey Timbers included "desirable" as well as "undesirable" varieties of timber.
32. Mr Susteren-Parkes said: "I was not aware of the computer shut down or any delays referred to by Mr Head in [the relevant paragraphs of his affidavit] nor did the matters referred to by Mr Head have any effect on the price we agreed to pay [Kempsey Timbers] for the stock."
33. As Mr McCall submitted, the emails passing between JVS and Kempsey Timbers leading up to the sale suggest that it had all the features of a "clearance sale" of desirable and undesirable product rather than a sale somehow affected by Kempsey Timbers' lack of access to the server between 5 and 12 June 2018.
34. In those circumstances, I am not satisfied that Hurford's conduct in temporarily denying Kempsey Timbers access to the server and in interposing Mr Engwirda between Mr Borger and Mr Head was the cause of the June and July 2018 discounting revealed in Mr Head's calculations. Rather, I think it more likely that the discounting was the product of Kempsey Timbers' need to sell the remaining Processed Stock prior to the end of the rent free period contemplated by cl 59 of the Contract.
35. For those reasons, my conclusion is that Kempsey Timbers' claim for damages for a breach of cl 59 of the Contract fails.
36. Conclusion
37. The parties should bring in short minutes to give effect to these reasons.
38. I will hear the parties as to costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 August 2019