FEDERAL COURT OF AUSTRALIA Wet Fix Holdings Pty Ltd v Gillion Pty Ltd [2021] FCA 67 File number: NSD 721 of 2017 Judgment of: MARKOVIC J Date of judgment: 5 February 2021 Catchwords: CONTRACTS – construction of agreements relating to the sale of a business – where one company was the operating entity and another company owned the assets of the business including the shares in the operating entity – claim for recovery of an alleged overpayment of the purchase price under a share sale agreement – where adjustments were made to the purchase price by reference to a balance sheet made available after settlement – whether applicant is precluded from raising objections to the purchase price and balance sheet – whether objections have been made out – claim dismissed – cross-claim for recovery of amount advanced under a vendor finance agreement – cross-claim allowed Cases cited: Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345 Jones v Dunkel (1959) 101 CLR 298 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 Toohey v Gunther (1928) 41 CLR 181 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 327 Date of hearing: 7, 8, 9, 10 and 14 September 2020 Counsel for the Applicant: Mr E Hyde and Mr T Rogan Solicitor for the Applicant: BT Lawyers Counsel for the Respondent: Mr M Henry SC and Ms M Cowden Solicitor for the Respondent: Brown Wright Stein Lawyers ORDERS NSD 721 of 2017 BETWEEN: WET FIX HOLDINGS PTY LTD ACN 606 009 116 Applicant AND: GILLION PTY LTD ACN 102 972 001 Respondent order made by: MARKOVIC J DATE OF ORDER: 5 FEBRUARY 2021 THE COURT ORDERS THAT: 1. By 12 February 2021 the respondent is to file and serve an affidavit setting out the amount due to it on its cross-claim. 2. Subject to Order 3 below, on or before 19 February 2021 the parties are to provide to the Associate to Markovic J draft orders to be made giving effect to these reasons. 3. If no agreement is reached on the form of draft orders to be made giving effect to these reasons, on or before 19 February 2021 the parties are each to notify the Associate to Markovic J of the orders for which they contend and to provide submissions, not exceeding two pages in length, explaining why those orders should be made. 4. If agreement cannot be reached pursuant to Order 2 above, the proceeding will be listed for case management hearing before Markovic J on 26 February 2021 at 9.30 am. 5. In the absence of agreement between the parties, on or before 26 February 2021 each party is to file and serve submissions, not exceeding three pages in length, on the question of costs of the proceeding. Unless either party requests an oral hearing, the question of costs will be determined on the papers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. 1 The evidence [6] 1.1 The witnesses [7] 1.2 The Wet Fix Business and its growth [18] 1.3 Sale of the Wet Fix Business [28] 1.4 Discussions with Mr Starling [31] 1.5 Negotiations for the sale of the Wet Fix Business [40] 1.6 May to June 2015 [53] 1.7 Exchange of agreements for the sale of the Wet Fix Business [57] 1.8 Share Sale Agreement and Business Sale Agreement [68] 1.8.1 Share Sale Agreement [69] 1.8.2 Business Sale Agreement [75] 1.9 Blow moulder and bottle filling plant [80] 1.10 Stocktakes [94] 1.10.1 29 June 2015 [94] 1.10.2 30 September 2015 [96] 1.11 Settlement [117] 1.12 Events following settlement [122] 1.12.1 January 2016 [122] 1.12.2 February 2016 [146] 1.12.3 October 2016 [149] 2 The pleaded case [158] 3 The issues [163] 4 Holdings' claim [164] 4.1 The limitation issue [164] 4.2 Purchase price – items in dispute [186] 4.2.1 Inventory [187] 4.2.1.1 Parties' submissions [190] 4.2.1.2 Consideration [198] 4.2.2 Capital expenditure [218] 4.2.2.1 Parties' submissions [219] 4.2.2.2 Consideration [225] 4.2.3 Creditors [232] 4.2.3.1 Parties' submissions [233] 4.2.3.2 Consideration [238] 4.2.4 Other creditors [243] 4.2.4.1 Parties' submissions [244] 4.2.4.2 Consideration [246] 4.2.5 Blow moulder and bottle filling plant – ANZ leases [251] 4.2.5.1 Parties' submissions [253] 4.2.5.2 Consideration [274] 4.2.6 Plant and equipment – post 31 March 2015 assets [295] 4.2.6.1 Parties' submissions [297] 4.2.6.2 Consideration [306] 5 Gillion's cross-claim [313] 5.1 Vendor Finance Agreement [314] 5.1.1 Consideration [315] 6 Conclusion [325] REASONS FOR JUDGMENT MARKOVIC J: 1 This proceeding concerns the calculation of the purchase price of a business. 2 The business in question is a water supply business (which I will refer to in these reasons as the Wet Fix Business) established and operated by the respondent, Gillion Pty Ltd (Gillion), until its sale in 2015 to the applicant, Wet Fix Holdings Pty Ltd (Holdings). The background to the development of the Wet Fix Business and the events surrounding its sale are described below. 3 Upon its commencement there were two applicants to the proceeding: Holdings and Wet Fix Pty Ltd (Wet Fix). Since that time Wet Fix has been removed as an applicant and the claim previously made by it abandoned. Holdings, the remaining applicant, has, over time, amended its statement of claim, thus narrowing the dispute between the parties. Holdings no longer presses its claim for damages pursuant to the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth), or for breach of the business sale agreement dated 11 June 2015 between it as purchaser and Gillion as vendor (Business Sale Agreement) or its claim in debt. 4 The remaining issues between Holdings and Gillion, as pleaded in the second further amended statement of claim filed by Holdings on 14 September 2020 (SFASOC), concern recovery of an alleged overpayment by Holdings under a share sale agreement dated 11 June 2015 between Gillion as vendor, Holdings as purchaser and Wet Fix for the acquisition of shares in Wet Fix (Share Sale Agreement) as part of the transaction to acquire the Wet Fix Business and, subject to the resolution of that issue, a claim for restitution for interest paid by Holdings for vendor finance advanced by Gillion to assist in the purchase of the Wet Fix Business. 5 On 10 October 2018 Gillion filed a cross-claim in which it seeks judgment against Holdings for the amount it contends it advanced to Holdings by way of vendor finance plus interest or, in the alternative, declarations as to the amount it alleges it advanced to Holdings by way of vendor finance and that the amount advanced remains unpaid. 1. The evidence 6 The parties relied on a significant amount of evidence, some of which, given the narrowing of Holdings' claim and the issues in dispute assumed little, if any, significance in the determination of the remaining issues. That observation should not be taken as a criticism. The steps taken by the parties to narrow the areas of dispute between them were appropriate and of assistance to the Court. It is apparent that much of the evidence was prepared at a time when the dispute was broader in scope, hence covering matters no longer in contention. I point this out to explain why, in these reasons and, in particular, in setting out the facts, I have focused only on the evidence that assists in explaining the background and is relevant to the resolution of the remaining issues in dispute between the parties. 1.1 The witnesses 7 The following witnesses gave evidence for Holdings: (1) Darren Starling who was involved in the negotiations for the purchase of the Wet Fix Business and ultimately acquired the Wet Fix Business through interests associated with him. Mr Starling has been a director of Elem Investments Pty Ltd (Elem Investments) since 21 October 2013, is a director of Wet Fix and, in the period between 1 October 2015 (when the sale of the Wet Fix Business settled) and 28 November 2017, was its sole director. He has been the sole director of Holdings and Wet Fix Equipment Pty Ltd (Wet Fix Equipment) since their respective registrations on 23 and 24 May 2015. Mr Starling was cross-examined; (2) Valerie Richardson who from 29 June 2015 was the stock control and production manager for Wet Fix and was involved in stocktakes undertaken for the purposes of the sale of the Wet Fix Business. Ms Richardson was cross-examined; and (3) Dylan Byrne, a certified practising accountant with BDO Australia (BDO), who was instructed to undertake certain analyses and calculations in relation to the purchase price of the Wet Fix Business for the purposes of the proceeding. Mr Byrne was cross-examined. 8 The following witnesses gave evidence for Gillion: (1) Pamela Gill who has been a director of Gillion, the previous owner of the Wet Fix Business, since its registration in 2002. Mrs Gill was a director of Wet Fix from its registration on 23 June 2004 until 21 December 2015. She managed production and the overall operation of the Wet Fix Business, including the day to day operation of its factory situated at 25-29 Christensen Road, Stapylton (Christensen Road Factory). Mrs Gill was cross-examined; (2) Maurice Gill, Mrs Gill's husband, who has also been a director of Gillion since its registration and was a director of Wet Fix from its registration until 1 October 2015. Mr Gill was the general manager of the Christensen Road Factory and oversaw the day to day operation of equipment and machinery. Mr Gill was not cross-examined; (3) Candice Power who is Mr and Mrs Gill's daughter and who, without intending any disrespect, I will refer to as Candy in these reasons. Candy worked in the Wet Fix Business until early January 2016 managing accounts receivable and clients as well as assisting on the factory floor as required. She was not cross-examined; and (4) Christopher Chapman, a chartered accountant, who has practised on his own account since about 2014. Prior to that time Mr Chapman was employed in various accounting practices. He first undertook accounting work for Gillion and Mr and Mrs Gill while he was employed by Liu Madden Partners from 1997 to 2005. In June 2013 Mr Chapman again became the accountant for Gillion and Mr and Mrs Gill and, save for the period from December 2015 to May 2016, has continued to act in that capacity. At the time of the acquisition of the Wet Fix Business, Mr Chapman was also the accountant for Wet Fix and Mr Starling. Mr Chapman was cross-examined. 9 Both Holdings and Gillion made submissions as to whether I would accept the evidence of some of the witnesses. 10 Holdings submits that I ought to find that Messrs Starling and Byrne, Ms Richardson and Mrs Gill were honest witnesses who did their best to recall the relevant events, which took place five years ago. That said, Holdings also submits that I ought to find that Mrs Gill's evidence is of no assistance on the matters in issue and that I would put no weight on Mr Chapman's evidence except where it is against interest or corroborated by objective evidence. 11 Insofar as Mrs Gill's evidence is concerned, Holdings says there are two reasons why I should find her evidence to be of no assistance to the matters in issue: first, because Mrs Gill accepted that her understanding of the matters in issue was wholly based on what she was told by Mr Chapman; and secondly, because she gave evidence that she was unable to differentiate between Gillion and Wet Fix. Holdings submits that this means that Mrs Gill cannot assist the Court in its determination of the issues in this proceeding. 12 I do not accept that Mrs Gill's evidence is of no assistance to a resolution of the matters in issue. Mrs Gill was key to the operation of the Wet Fix Business and involved in its sale. It does not follow that because, in some respects, Mrs Gill deferred to Mr Chapman's more detailed knowledge of events, given his role as the accountant for Gillion at the time, her evidence is of no assistance to the Court. Similarly, I would not find that Mrs Gill's evidence is of no assistance because she considered Wet Fix and Gillion to be "one and the same thing". Mrs Gill may not have appreciated the legal distinction between Wet Fix and Gillion. That is hardly surprising given that, as described below, the Wet Fix Business was a tightly held family business. That that was so may mean that her evidence on some issues does not assist me but it does not mean that I would put aside her evidence and find it to be of no assistance on all issues. 13 Insofar as Mr Chapman's evidence is concerned, Holdings relies on the following matters in support of its submission that no weight should be given to Mr Chapman's evidence except where it is against interest or corroborated by objective evidence: first, Mr Chapman admitted under cross-examination that he prepared invoices to mislead the National Australia Bank (NAB); secondly, he denied that he had ever prepared financial records to mislead an insurance company, maintained that denial when shown contradictory evidence and proffered an implausible explanation; thirdly, he admitted that he had backdated his declaration in Wet Fix's signed financial accounts; and lastly, he admitted that his calculations of purchase price adjustments, which underpin the amount said to be due by Holdings to Gillion under the Share Sale Agreement, were inaccurate. 14 I do not accept that I would put no weight on Mr Chapman's evidence. Mr Chapman was a careful witness who did his best to assist the Court. He was conscious that he had, as will become apparent from the recitation of the facts below, placed himself in a difficult position given the many roles he assumed in the transaction for sale of the Wet Fix Business. Notwithstanding that, he answered the questions put to him fully and frankly, even when those answers were against his interests. For example, Mr Chapman did not cavil with the proposition that his calculation of the amount due under the Share Sale Agreement undertaken in January 2016 was wrong. He candidly accepted that he never informed the NAB that Gillion did not have clear title to equipment that it was purporting to sell and that he had "deliberately made the numbers look bad" to increase an insurance payout on equipment for use in the Wet Fix Business which had been damaged on delivery. Each of these were matters which portrayed Mr Chapman in a bad light either because he had potentially not properly carried out his professional role or, more critically, had misled a bank and an insurer. Notwithstanding the way in which these matters might reflect on Mr Chapman's character, he answered the questions without argument, accepting propositions that were clearly against his interest and which reflected on his professional judgment. That did not make Mr Chapman an unreliable witness. On the contrary, in answering in that way Mr Chapman came across as a candid and helpful witness. 15 Gillion submits that of those witnesses called by each of the parties and who were cross-examined, all but Mr Starling should be taken by the Court as credible witnesses doing their best faithfully to give evidence. Gillion submits that Mr Starling created unbelievable counterfactuals to resist adverse conclusions about his evidence and motivations for causing Holdings to bring this proceeding. 16 It is the case that Mr Starling was defensive in response to questioning in cross-examination and refused to accept versions of events different to those recounted in his evidence-in-chief, even when those versions were clearly supported by compelling objective evidence. That said, I would not reject all of his evidence out of hand but do so in respect of certain events, as set out below. In particular, in a number of instances, Mr Starling's evidence could not be accepted for reasons explained below, including because of other objective facts and contemporaneous documentary evidence. 17 I turn then to set out the relevant evidence. 1.2 The Wet Fix Business and its growth 18 Gillion is the trustee of the Summerfield Trust. It operates a business supplying bulk water to the bottled water industry in south east Queensland. 19 Wet Fix was incorporated on 23 June 2004 to operate the Wet Fix Business which was purchased by Gillion in July 2004. Upon Wet Fix's incorporation, Mr and Mrs Gill were appointed as its directors and remained in those roles until 1 October 2015 and 21 December 2015 respectively. 20 At the time of its acquisition by Gillion, the Wet Fix Business was a water supply business which primarily supplied water coolers and water to customers for use in homes and offices. The ownership and operation of the Wet Fix Business was structured such that Gillion owned the assets of the business, including the shares in Wet Fix, while Wet Fix was the operating or trading entity. 21 When Gillion purchased the Wet Fix Business, it also purchased a factory at 28 Leda Drive, Burleigh Heads which it leased to Wet Fix and from where Wet Fix operated the Wet Fix Business. In about April 2005 Gillion purchased the Christensen Road Factory and subsequently Wet Fix leased those premises from Gillion and moved its operations there. 22 The Wet Fix Business was family run: as I have already observed, Mrs Gill managed production and the overall operation of the business, including the day to day running of the Christensen Road Factory; Kayne Gill, Mr and Mrs Gill's son, who without intending any disrespect I will refer to as Kayne in these reasons, was involved in the technical side of production including sourcing plant and equipment, looking after major customers, negotiating contracts with multinational clients and suppliers, project managing the installation of new equipment, dealing with quality and production issues and providing emergency after hours support; Candy managed the accounts and clients including Woolworths Limited (Woolworths); and Mr Gill assisted Mrs Gill with the day to day running of the Christensen Road Factory. 23 Between 2004 and 2015 the Wet Fix Business grew. It began supplying bottled water to various supermarkets including Woolworths, which became its biggest client, manufacturing its own water bottles at the Christensen Road Factory, and increasing its production. 24 As far as Mrs Gill was concerned, Gillion and Wet Fix were one and the same for the purposes of the sale to Holdings, which is the subject of this proceeding, and, it seems, more generally. Equipment purchases and most other agreements were in the name of Wet Fix, which would make payments. Mrs Gill understood that all of the assets, apart from stock, were owned by the Summerfield Trust and Mr Chapman, as the accountant for Gillion and Wet Fix, would make "paper entries" at the end of the financial year, or whenever appropriate, to ensure that the assets and equipment were in the name of Gillion. So far as Mrs Gill was aware, none of the suppliers to Wet Fix knew of Gillion and they would invoice Wet Fix. 25 In 2014 Woolworths offered Wet Fix a contract to supply water to New South Wales on condition that Wet Fix agreed to expand its business and install a new blow-fill line, a line of machinery used to manufacture and fill plastic water bottles. Mr and Mrs Gill decided to take up this opportunity. 26 In late 2014 Kayne travelled to Germany to commence negotiations and preparations for the purchase of the new blow-fill line. Kayne project managed the purchase of the equipment until about 18 December 2015 when he ceased employment with Wet Fix. 27 In light of the new contract offered by Woolworths to Wet Fix, Gillion anticipated that Wet Fix would need more factory space. Accordingly, Wet Fix leased a factory at Business Street, Yatala (Business Street Factory) to accommodate the new equipment and the attendant increase in production. 1.3 Sale of the Wet Fix Business 28 In 2012 and 2013 Mr and Mrs Gill discussed the possibility of selling the Wet Fix Business. At the time, Mrs Gill considered that they could either continue to run the Wet Fix Business and invest in its growth or sell it given it was doing well. Mrs Gill engaged a business broker to value the Wet Fix Business and an information memorandum was prepared. Two attempts to sell in 2013 did not result in a sale. 29 In about late 2014, when Mr Chapman was at the Christensen Road Factory, he informed Mrs Gill that he had a client who might be interested in purchasing the Wet Fix Business. But, because of the new contract with Woolworths and the investment in new machinery, Mrs Gill declined to sell at that time. 30 Mrs Gill's attitude to a sale of the Wet Fix Business changed in February 2015 when she was diagnosed with cancer. She told Mr Chapman that it was a good time to sell and that she would like to speak with the person who Mr Chapman had earlier indicated may be interested. Mr Chapman informed Mrs Gill that he would ask his client, who he identified as Mr Starling. 1.4 Discussions with Mr Starling 31 Mr Starling first learned of the Wet Fix Business in late 2014 from Mr Chapman. He recalls that at that time Mr Chapman told him he had a client that ran a water bottling business which might be for sale. Mr Starling expressed interest and requested details. 32 Mr Starling met with Mr Chapman in March 2015. Mr Starling recalls that at that time he and Mr Chapman had a conversation to the following effect: Mr Chapman: I have a client and its business is for sale or the shares in it. You and Lisa might be interested. The business bottles spring water under license from various retailers. It also sells its own brands of bottled spring water, "Mountain Dew" and "Wet Fix Natural Spring Water". It operates this business from premises in Stapylton in South East Queensland. It distributes this bottled water throughout the east coast of Queensland and northern NSW. It provides spring water bottling for customers, the largest of which is Woolworths. The managing director has cancer and she needs to get out. Mr Starling: I might be interested. I don't know much about water bottling. Get me some accounts to look at. 33 In March 2015 Mr Chapman organised for Mr Starling to visit the Christensen Road Factory and to meet with Mr and Mrs Gill. 34 On 16 March 2015 Messrs Starling and Chapman met with Mr and Mrs Gill and Candy at their home in Miami Beach, Gold Coast. According to Mr Starling, at that time Mr Chapman showed him some draft handwritten documents which set out calculations for the price of the Wet Fix Business following which there was the a discussion to the following effect: Mr Starling: I wouldn't normally buy the shares in the operating entity. I would buy the business in the name of a shelf company. Mr Chapman: Yes, but Pam says Woolworths would require the new company to retender, whereas if you buy Wet Fix's shares that is not necessary. The price for the shares can be set by a formula that takes into account the actual value of what Wet Fix owns less what its liabilities are as at the end of the financial year. The starting figure is $2M for the shares in Wet Fix. Mr Starling recalls that there was a further discussion about the items that would be included as assets and liabilities in the formula proposed to be used to calculate the price of the shares in Wet Fix and the conversation then continued to the following effect: Mr Chapman: The price of the shares in Wet Fix will not be known until the accounts are done. Those figures will need to be input into the agreed formula to arrive at the sale price. At this stage all I can say is that there will be a range. That range can be the subject of vendor finance. In other words if the figures make the sale price the upper end of the range the vendor finance will be owing, but if the sale price is at the lowest end then the vendor finance can be set off against the amount of the vendor finance so no loan would be owing. The basic structure is that Wet Fix buys its water from Gillion. It bottles it using equipment owned by Gillion from premises leased by Wet Fix. So that means in order to own it all you not only need to buy the shares in Wet Fix but also and buy the equipment from Gillion. You could have a first right of refusal over the land at Power Parade, Mount Tamborine. Pam wants the deal to include me. I would buy in for 10% and stay in as the accountant. Mr Starling: Power Parade would only interest me if it had approval. I would consider taking an option over it in case the approval comes. Ultimately, no option was taken up on Power Parade. 35 Mr Starling recalls that on the following day he was shown around the Christensen Road Factory by Mrs Gill and Mr Chapman. 36 Although nothing turns on it, Mrs Gill's recollection of the venue for her meetings with Messrs Starling and Chapman on 16 and 17 March 2015 differ. Mrs Gill recalls that on 16 March 2015 she and Mr Gill met with them at the Christensen Road Factory at which time Mr Starling signed a confidentiality agreement with Wet Fix. Mrs Gill then spoke to Mr Starling about the Wet Fix Business. 37 Mrs Gill recalls that during this visit she showed Mr Starling around the Christensen Road Factory and spoke with him about the expansion plans and the machinery to be installed as part of the new contract with Woolworths. Mrs Gill and Messrs Starling and Chapman had a conversation to the following effect: Mr Starling: What are your expectations of the price for the business? Mrs Gill: We want $8 million for the plant and equipment. We will also need an adjustment for the stock at cost. We aren't selling the business based on a price that takes into account the future growth given the new blow line that we are installing, and so this is a great deal. You will need to also agree to pay for any equipment that is delivered from now on, which will include the equipment for the new blow line, as well as the costs for setting up the new factory at Burnside Road. We will organise the finance for the new plant and equipment, but on settlement you need to pay it out in full. This includes everything necessary to run a complete line. We want settlement to occur as soon as possible, Chris has recommended that it happen in the new financial year and so we want it to settle on 1 July. Mr Starling: Okay. Mr Chapman: I am going to drive Darren up to Power Parade to see the springs. We will stay at the house the night and we will see you again tomorrow. 38 Mrs Gill also recalls that on 16 March 2015 she had a conversation with Mr Chapman to the following effect: Mr Chapman: Because it is such a positive cash flow business, I want to buy in 5%. Darren has suggested that you buy in 5% in your personal name as well because of your relationship with Woolworths and to remain as a director of Wet Fix, and I will be the secretary. Darren wants to keep it as a family business, he wants to keep Kayne and Candy on. They have the relationship with Woolworths and also the knowledge. Mrs Gill: I think that sounds great. But I would probably prefer Kayne or Candy to have the shareholding. 39 On 17 March 2015 Mrs Gill was too unwell to go to the Christensen Road Factory so she met with Messrs Starling and Chapman at her home on their way to the airport. Mr Gill and Candy were also present. During that meeting there was a conversation to the following effect: Mr Starling: I am interested in going ahead with buying the business. Mr Chapman: We will set up a new holding company for Darren's company Elem Investments Pty Ltd to purchase the assets from Gillion and the shares from Wet Fix. Mrs Gill: I will get my lawyer Paul Hopkins to prepare the sales contract. I will give Paul permission to talk with Chris about this. Mr Chapman: Darren, I can recommend a lawyer for you to talk to that I know. Mr Starling: Okay. 1.5 Negotiations for the sale of the Wet Fix Business 40 According to Mr Starling, on their return from Queensland Mr Chapman provided him with a three page list of equipment headed "Summerfield Trust Schedule of Assets" in relation to which Mr Chapman said: This list is Gillion's asset register. However it is incomplete because it was put together a while ago and there are millions of dollars' worth of equipment that is not in there which needs to be added in. The values are original cost. There was then a discussion about the motor vehicles in the list which Mr Starling thought were overvalued. Mr Chapman agreed the list needed updating including to add more recently acquired equipment. 41 On 18 March 2015 Mr Chapman sent an email to Paul Hopkins of RMB Lawyers, Gillion's solicitors, which was copied to Mrs Gill. That email included (as written): As we discussed last week, I am currently heading overseas for a 6 week holiday and over the last two days have been up in Queensland discussing sale opportunities with one of my clients and Pam. Pam would like to move this forward immediately on my return at the beginning of May. Therefore over the next few weeks would you please arrange for the preparation of a share sale agreement on the following terms: Share purchase agreement Shares in wet fix to be sold by Summerfield trust to a new entity "Wet Fix Holdings Pty Limited- yet to be incorporated" Plant and equipment owned by Summerfield Trust to be sold to a separate company "Wet Fix assets Pty Limited - yet to be incorporated" I will have to apportion the sale proceeds to achieve the best tax result. - are Two agreements required?? Pam/ Kayne/ entity to own 10% of wet fix holdings Chris Chapman entity to own 10% of wet fix holdings 80% owned by Elem Investments Pty Limited (Darren Starling's entity) Wet Fix holdings will own 100% of wet fix Pty Limited and wet fix assets Pty Limited. targeted completion date is 1 July 2015 Usual guarantees from vendor as to past activities Consideration is to be determined based on below formula: Base sale price 8 Million Plus the following items at completion: Trade Debtors Sundry Debtors Inventories Cash at bank Retained profits in company Less the following items at completion: Creditors sundry creditors Tax provision Annual leave and Long Service provisions ANZ stock purchase facility Bank overdraft Based on the 31 December 2014 numbers this equates to a total purchase consideration of $11.264 Million. My guess is that this will increase by the profit for the next 6 months trading (less any dividends paid prior to 30 June) I would suggest that at settlement a payment of say 11.5M be made with 11M released to Pam and Maurie immeadatly and the balance be held in your trust account until the parties sign off on the 30 June 2015 financial statements and purchase calculations. There also needs to be a special clause that states that the value of any plant or equipment purchased since 31 March 2015 (Is This date Ok Pam?) is added to the purchase consideration. A similar clause is also needed that states that any costs associated with the new property at Jutland street are to be added to the purchase consideration. At settlement Maurie will resign as director (Pam to initially continue as she will be retaining 10% interest) Clause required to say that purchaser (Darren Starling) will replace Maurie as guarantor for all obligations (Jutland lease, Woolworths contract, Hire purchase agreements etc). If not possible to replace, Wet Fix will indemnify Maurie for any and all actions. 42 Mr Starling recalls that in March, April and May 2015 Mr Chapman provided him with partially completed accounts, forecasts and budgets, explaining on one occasion that they were not up to date because Mrs Gill was battling cancer, he had only been recently retained and he had been instructed to get the accounts up to date. 43 On or about 23 May 2015, after an initial introduction by Mr Chapman on 20 May 2015, Mr Starling retained Mark Smith of ANZ Lawyers to act for Holdings on the purchase of the Wet Fix Business from Gillion. 44 On 23 and 24 May 2015 respectively Holdings and Wet Fix Equipment were registered. 45 On 23 May 2015 Mr Chapman sent an email to Messrs Hopkins and Smith noting that the "purchasers and vendors" met on Friday and setting out matters that had been agreed between them at that meeting. It is not necessary to set out the substance of that email save to note that it attached a "revised annexure A" to the draft Share Sale Agreement and an "updated annexure B" to the draft Business Sale Agreement. As to the latter, Mr Chapman explained that it was "based on what Kayne [had] supplied to [him] to date" and that he had sent it to Kayne for confirmation of its accuracy. 46 Mr Starling recalls that in instructing Mr Smith in relation to the draft Business Sale Agreement he noticed that: (1) it provided for the inclusion of an "inventory of fixtures, fittings and chattels plant & equipment" as schedule A which was referred to in item N(a) in the items schedule; and (2) in the drafts that were the subject of discussion between Messrs Hopkins and Smith, there was no such schedule present. According to Mr Starling, he asked Mr Chapman about the missing schedule and Mr Chapman informed him that he was still preparing it. 47 However, given the following matters, I do not accept that the "inventory of fixtures, fittings and chattels plant & equipment" referred to in item N(a) in the "Items Schedule" to the Business Sale Agreement was not available in the course of discussions of drafts of the Business Sale Agreement. It is clear on the evidence that the schedule was available not only in drafts provided to Mr Starling's lawyer, Mr Smith, but to Mr Starling. 48 By email dated 18 May 2015 from Mr Chapman to Messrs Smith and Starling, Mr Chapman circulated, among other things, a copy of the draft Business Sale Agreement which included, as an "inventory of fixtures, fittings and chattels plant & equipment", a document titled "Summerfield Trust Schedule of Assets" (BSA Asset Schedule). While Mr Starling could not recall if he opened this email on receipt, his evidence was that he did not read the attachments because, either on the same or following day, he met with Mr Chapman who had hard copies of the documents with him and he "went through it first hand". 49 On 24 May 2015 Mr Smith sent an email to Messrs Starling and Chapman attaching his letter of the same date in which he set out his comments in relation to the draft agreements for purchase of the Wet Fix Business. In relation to the BSA Asset Schedule, Mr Smith included the comment: I assume that you have completed a review of the asset list as part of your due diligence. 50 By email also dated 24 May 2015 addressed to Messrs Smith and Starling, Mr Chapman responded to Mr Smith's letter. In relation to Mr Smith's query about the BSA Asset Schedule, Mr Chapman's response was: Yes, we are happy with the list. More generally Mr Chapman asked in his email: Darren, is there anything I have said that you do not agree with?? 51 By email dated 25 May 2015 to Mr Chapman, copied to Mr Smith, Mr Starling responded in the following terms (as written): Thank you Chris and Mark, I am comfortable with the changes and points raised with one note as per below: Regarding clause 7 .8 in relationship to the use of the name Mountain Dew, would it be prudent to include a clause that limits the purchasers liability in this matter if it were to become an issue? 52 Despite Mr Starling expressing agreement with the comments made by Mr Chapman in his email dated 24 May 2015 (see [50] above), he maintained in cross-examination that he was not happy with the BSA Asset Schedule and that his email ought to be considered in conjunction with his conversations with Mr Chapman in which he was informed by Mr Chapman that the sale needed to be progressed due to Mrs Gill's ill health, he was working on the BSA Asset Schedule with Mrs Gill and he would have it completed. Save for the evidence recorded at [42] above, Mr Starling did not give evidence of conversations to that effect. 1.6 May to June 2015 53 Over the course of May and June 2015 Mr Starling visited the Christensen Road Factory on a number of occasions. Mrs Gill recalls that on one occasion Mr Starling visited with his wife, Lisa Miller, and they discussed Mrs Gill's future involvement in the Wet Fix Business. They had a conversation to the following effect: Mr Starling: We are concerned about the Woolworths contract, you have the relationship with Woolworths and we don't want to lose that, so it is important that you stay on as a shareholder and director, and Candy and Kayne stay involved in the business. Mrs Gill: Okay. The business will be growing imminently because of the new blow fill line. There is an urgent need to employ an engineer with suitable experience to assist Kayne, as well as someone to take over my position as production manager and more qualified staff on a needs basis. Candy is just about full time managing the Woolworths account. Mr Starling: I agree. It will be an advantage having me and Chris to assist Candy with the administrative duties, as I have an accountancy background. Lisa will also be able to use her advertising experience to improve the website and assist with promotions. Following this conversation Mrs Gill agreed to be a shareholder in the Wet Fix Business rather than Kayne or Candy. 54 Mr Chapman was at the Christensen Road Factory during May 2015 and, on a number of occasions, brought Mr Starling with him. During one of these visits Mrs Gill had a conversation with Mr Chapman to the following effect: Mr Chapman: Darren and I have discussed it. Darren thinks we should increase the 5% shareholding to 10%, and we think that each of us will then make a $400,000 shareholders loan to the business for this 10%. This $400,000 will be a deduction from the purchase price that Holdings will pay Gillion at settlement. Mrs Gill: That sounds okay. 55 Mrs Gill was conscious that in light of the new Woolworths contract and the equipment that Gillion had ordered to meet the requirements of that contract, Wet Fix would need more space. Accordingly, she and Mr Starling commenced a search for additional factory premises and in May 2015 negotiated a lease for a property comprising three units at Burnside Road, Stapylton (Burnside Road Factory) which was close to the Christensen Road Factory. 56 In late May or early June 2015 Mrs Gill became aware that Mr Starling was having an issue with finance. As a result, the settlement date was pushed back from 30 June 2015 to 1 October 2015. This caused budgeting and cash flow issues, the latter of which was resolved by the provision of loans to Wet Fix prior to settlement from Elem Investments for $2.25 million and from Mr Chapman for $920,000. Mrs Gill explained that Wet Fix applied the money borrowed from Elem Investments and Mr Chapman as well as its own cash reserves to pay for the new plant and equipment and the inventory that was required for production. 1.7 Exchange of agreements for the sale of the Wet Fix Business 57 On the morning of 10 June 2015 Mr Chapman sent an email to Mr Smith, copied to Mr Starling, attaching, among other things, the Business Sale Agreement including its two schedules: the BSA Asset Schedule and schedule B (BSA Equipment Schedule). Mr Starling did not read the attachments to the email. Rather, later that day he reviewed hard copies of them with Mr Chapman. Mr Starling says that, at the time of doing so, neither the BSA Asset Schedule nor the BSA Equipment Schedule was annexed to the Business Sale Agreement because they were "works in progress". 58 On 11 June 2015 the following agreements were entered into: (1) Share Sale Agreement; (2) Business Sale Agreement; (3) loan agreement between Gillion as lender, Holdings as borrower, and Wet Fix and Mr Starling as guarantors (Vendor Finance Agreement); (4) consultancy agreement between Wet Fix and Mr and Mrs Gill as consultants; (5) three year lease of the Christensen Road Factory between Gillion as lessor and Wet Fix as lessee commencing 1 October 2015 and ending 30 September 2018; and (6) shareholders' agreement for Holdings between Elem Investments (as to 80%) and Mrs Gill and Mr Chapman (as to 10% each). 59 Mr Starling says that on 11 June 2015 when he and Mr Chapman met with Mr and Mrs Gill at their home to sign the various agreements, he observed upon inspecting the Business Sale Agreement that it still did not have the BSA Asset Schedule annexed to it. According to Mr Starling, before signing that agreement, he had a conversation to the following effect: Mr Starling: There is still no asset schedule here. Mr Chapman: I am still working on it. We can just put it in later. Mrs Gill and Mr Starling: Ok. 60 Similarly, Mr Starling says that, at the time of its execution, the Business Sale Agreement did not have the BSA Equipment Schedule annexed to it. Despite this evidence, Holdings' position is that nothing turns on whether the BSA Equipment Schedule was annexed to the executed version of the Business Sale Agreement and that the Court ought to proceed on the basis that it was part of the executed Business Sale Agreement. In light of that concession, I will not consider the evidence on this issue further. 61 As for the BSA Asset Schedule, notwithstanding Mr Starling's emphatic evidence that it was not annexed to the Business Sale Agreement at the time of its execution and exchange, that schedule is annexed to the copy of the Business Sale Agreement included by him in his evidence for the purpose of this proceeding. In cross-examination Mr Starling said that the version of the Business Sale Agreement included in his affidavit was provided by DibbsBarker, Holdings' lawyers at the time, and is likely to have been sourced from Gillion's records. He said that although he reviewed his affidavit before he swore it, he did not look clearly at the exhibits and maintained that the version of the Business Sale Agreement that he signed did not have the BSA Asset Schedule attached to it. 62 Mr Starling accepted that it was important to have the BSA Asset Schedule annexed to the Business Sale Agreement but maintained that it was not complete. He said that he signed the Business Sale Agreement without the BSA Asset Schedule annexed to it because he knew Mr Chapman, with whom he had a professional relationship spanning some nine years, was working on completing it and he relied on him to provide a proper asset register. In cross-examination the following exchange took place between senior counsel for Gillion and Mr Starling: Mr Henry: Mr Starling, you appreciate, don't you, that the business sale agreement had a purchase price of $6 million? Mr Starling: I do. Mr Henry: That's a very substantial amount of money; isn't it? Mr Starling: It is. Mr Henry: And it would be important to know if you are agreeing to commit a company for $6 million purchase, that you identify what assets are the subject of the purchase; do you agree? Mr Starling: I do agree. Mr Henry: You don't seriously suggest that you had no idea what assets were the subject of this $6 million purchase; do you? Mr Starling: I had a guide from Mr Chapman and an appreciation of Mr Chapman's efforts to and rectify this. Mr Chapman was very convincing in the fact that the assets were worth more than the $6 million and they were discounted, and that was all – as – as the documentation and the accounting system wasn't up to date, that was all I was able to go on. Mr Henry: Mr Starling, the accounting was up to date; wasn't it? Mr Starling: Not in the Wet – not in the Wet Fix's MYOB System. Whether it was or not in Mr – Mr Chapman's HandiLedger, I don't know, but he did say that they were a work in progress. Mr Henry: And you had to get finance from the National Australia Bank, didn't you, to complete this transaction; correct? Mr Starling: The business – yes, that's correct. Mr Henry: Did you not provide the National Australia Bank with the [BSA Asset Schedule] attached? Mr Starling: Mr Chapman provided all the information to National Australia Bank for the loans. Mr Chapman organised the loans. Mr Chapman approached, I think, three, possibly four banks; I met with the Bank of Queensland, National Australia Bank and I spoke with ANZ, but I think Mr Chapman had approached somebody else, as well. Mr Henry: Weren't you the sole director of Wet Fix Holdings in 2015? Mr Starling: I was. Mr Henry: And signing off on any loan facility would have been your responsibility at that time; correct? Mr Starling: Yes. Mr Henry: Well, did you satisfy yourself that information provided to the NAB was accurate for the purposes of securing the finance? Mr Starling: The National Australia Bank did their own valuations and determined that they had sufficient coverage for their loans. Mr Henry: Yes, but were you aware whether they were provided with the [BSA Asset Schedule] at pages 936 through to 938? Mr Starling: No I wasn't; and no, I'm not aware of whether Mr Chapman forwarded those or not. Most – most of the information forwarded that I saw was cashflows, profit and loss, and cashflow projections. Mr Henry: Did you weren't concerned to know whether the information that was provided to the bank for the purpose of securing the finance was accurate? Mr Starling: I was concerned. I – I can do nothing but trust my accountant, who I had been dealing with for nearly a decade. Mr Henry: Mr Starling, as the sole director of the company entering into $6 million contract, I suggest to you that you can do a lot more than rely on somebody else to work out whether the assets you're acquiring are worth $6 million; do you agree with that? Mr Starling: The information supplied, as I stated was as it was, also, the National Australia Bank financing was predominantly for machines with actual invoices for valuation. 63 Although ultimately it does not go to a matter in issue, I do not accept Mr Starling's evidence that the BSA Asset Schedule was not attached to the Business Sale Agreement at the time of its execution. This is so for the following reasons. 64 First, Mr Starling was aware of the BSA Asset Schedule since at least 18 May 2015, when he received a draft copy of the Business Sale Agreement by email and then reviewed a hard copy soon thereafter. 65 Secondly, on 10 June 2015, the day before exchange, Mr Starling received a further copy of the Business Sale Agreement by email which again attached the BSA Asset Schedule. While he did not bother to review the attachments to that email, he met with Mr Chapman later that day and reviewed hard copies of the various agreements that had earlier been provided by email. I do not accept that the hard copy of the Business Sale Agreement that was provided by Mr Chapman at the time was incomplete in that it did not include the BSA Asset Schedule. 66 Thirdly, the copy of Business Sale Agreement exhibited to Mr Starling's affidavit which bears Mr Starling's signature includes the BSA Asset Schedule. Even if that copy was sourced from Gillion's records, it demonstrates that Mr Starling signed the Business Sale Agreement with the BSA Asset Schedule attached. 67 Fourthly, it is implausible that Mr Starling, at the time the sole director of Holdings, would enter into the Business Sale Agreement without knowing the identity of the assets being acquired as part of that business, that Holdings' financier would provide finance without understanding the value of the underlying business and that Mr Starling would rely entirely on Mr Chapman to satisfy his financier's requirements. 1.8 Share Sale Agreement and Business Sale Agreement 68 The Share Sale Agreement and the Business Sale Agreement are central to the resolution of a number of the issues raised by the parties. It is convenient to set out their terms insofar as they are relevant. 1.8.1 Share Sale Agreement 69 The Share Sale Agreement includes the following terms: (1) clause 1 sets out definitions and at (h) defines "Purchase Price" to mean "the sum calculated in accordance with annexure 'A' to" the Share Sale Agreement; (2) clause 3, titled "Agreement to Sell", provides: Purchase Price 3.1 [Gillion] agrees to sell and [Holdings] agrees to purchase [Gillion's] twenty ordinary shares in [Wet Fix] for the Purchase Price. Manner of Payment 3.2 The Purchase Price shall be paid as is specified in clauses 4, 5 and annexure "A". (3) clause 4.1 provides that a deposit of $100,000 is to be paid on or before the date of entry into of the Share Sale Agreement. It is common ground between the parties that a deposit was not paid; (4) clause 5 which concerns payment of the balance of the "Purchase Price" provides: 5.1 On completion [Holdings] will pay to [Gillion] the balance of the Purchase Price by bank cheque to [Gillion's] solicitor or as [Gillion's] solicitor directs in writing. 5.2 If [Holdings] does not pay any part of the Purchase Price by the due date for payment under this Agreement, [Holdings] will pay interest on the amount outstanding at the rate of twelve percent (12%) per annum. (5) clause 6, titled "Entire Agreement", provides: The Agreement 6.1 This Agreement constitutes the entire agreement between [Gillion] and [Holdings] relating to the sale of shares. Collateral Agreement 6.2 This Agreement is subject to and conditional upon the contemporaneous completion of the contract dated the same day as this Agreement for the sale of business entered into by [Gillion] as Trustee for Summerfield Trust as seller and [Holdings] as buyer (the "[Business Sale Agreement]"). Default under the [Business Sale Agreement] by the seller or buyer named in it will be deemed to be default under this Agreement by that party. (6) clause 7 concerns vendor warranties and provides at cl 7.8 that Gillion warrants, among other things, that: C. Business (a) [Wet Fix's] assets used in the business, which are disclosed in its financial and taxation records and in Schedule l, including plant, equipment, equipment, motor vehicles, furniture, fittings, stock-in-trade (called "[Wet Fix's] assets"): (i) are owned absolutely by [Wet Fix] as legal and beneficial owner; (ii) are not subject to my mortgage, charge or encumbrance; (iii) are all in [Wet Fix's] possession and situated on [Wet Fix's] premises; (iv) are not subject to any currently pending lease, credit sale, hire purchase, or other agreement under which any other person has title, or an interest or outstanding financial interest in any item; except as specified in Schedule 1. (b) [Wet Fix] has not entered into any commitment for capital expenditure to acquire, modernise, or repair any assets, except as specified in Schedule 1. (7) clause 14.1 provides that completion was to occur no later than 3 pm on 1 October 2015, the date fixed for completion, but, in that respect, time was not of the essence; (8) clause 14.3 provides that on completion Gillion would vest title to its shares in Wet Fix and control of Wet Fix's business and affairs in Holdings and that the parties will comply with all matters required to occur on completion in accordance with the Share Sale Agreement; (9) clause 14.9 concerns the Vendor Finance Agreement and provides that: [Wet Fix], [Holdings] and the Guarantors named in the [Vendor Finance Agreement] attached to this Agreement have requested [Gillion] make available the loan facility of $1,750,000.00 referred to in that agreement on completion. [Gillion] has agreed subject to [Wet Fix], [Holdings] and the Guarantors executing the [Vendor Finance Agreement] and delivering it to [Gillion] on completion. (10) clause 19 concerns service of notices including: Modes of Service 19.1 Any notice or demand under this Agreement may be made or given by a party or by that party's solicitor to the other party or to that party's solicitor, delivered personally, or posted by prepaid post addressed to the party's or to the solicitor's address shown in this Agreement. Particulars for Service … Purchaser: Wet Fix Holdings Pty Limited Address: Unit 3, 1A Lillis Street, Cammeray NSW 2062 Purchaser's solicitor: ANZ Lawyers Address: 164B Bourke Street, Darlinghurst NSW 2010 70 Schedule 1 to the Share Sale Agreement sets out the matters referred to and arising from the warranties in cl 7. Relevantly it includes: … 71 In turn, the "Depreciation Schedule" referred to in item 3 of Schedule 1 in the preceding paragraph is titled "Wet Fix Pty Limited Schedule of Assets" and is in the following form: 72 As noted at [69(1)] above, the "Purchase Price" was to be calculated in accordance with Annexure A to the Share Sale Agreement which relevantly provides: A. The Purchase Price is calculated as follows: 1. Two Million Dollars ($2,000,000.00); plus 2. trade debtors of [Wet Fix] as at 30 June 2015; plus 3. sundry debtors of [Wet Fix] as at 30 June 2015; plus 4. inventories of [Wet Fix] as at 30 June 2015; plus 5. cash at bank of [Wet Fix] as at 30 June 2015; plus 6. any plant and equipment purchased by [Wet Fix] after 31 March 2015; less 7. creditors of [Wet Fix] as at 30 June 2015; less 8. to sundry creditors of [Wet Fix] as at 30 June 2015; less 9. tax provision of [Wet Fix] as at 30 June 2015; less 10. annual leave and long service leave entitlements of the employees of [Wet Fix] as at 30 June 2015 less 11. ANZ Stock Purchase Facility bank overdraft; less 12. ANZ Bank Overdraft. For example, should [Wet Fix's] balance sheet as at 30 June 2015 be the same as the attached balance sheet as at 31 March 2015, the Purchase Price would be Four Million Two Hundred and Sixty Seven Thousand Five Hundred and Twenty Three Dollars ($4,267,523.00). 73 Annexure A to the Share Sale Agreement also includes: B. Payment by [Holdings] of the Share Purchase Price if the net assets of [Wet Fix] were the same as the attached balance sheet as at 31 March 2015 would be as follows: 1. One Hundred Thousand Dollars ($100,000.00) as deposit; and 2. Four Million One Hundred and Sixty Seven Thousand Five Hundred and Twenty Three Dollars ($4,167,523.00) on 1 October 2015; C. A balance sheet as at 30 June 2015 is to be prepared by the company accountant Chris Chapman. D. For 15 days after the balance sheet prepared as at 30 June 2015 is made available to [Holdings], [Holdings] can conduct due diligence on the balance sheet. After 15 days from the date of the balance sheet is made available, no adjustments can be made to the balance sheet or the Purchase Price. 74 It is common ground for the purposes of cll A, C and D of Annexure A that the balance sheet was to be prepared as at 30 September 2015, and not 30 June 2015 as set out therein. 1.8.2 Business Sale Agreement 75 The Business Sale Agreement is a standard form Real Estate Institute of Queensland contract. It relevantly provides: ON THE DATE SET OUT IN 'A' OF THE ITEMS SCHEDULE THE SELLER NAMED IN 'C' OF THE ITEMS SCHEDULE AGREES TO SELL AND THE BUYER NAMED IN 'E' OF THE ITEMS SCHEDULE AGREES TO BUY THE BUSINESS AS DESCRIBED IN 'J' OF THE ITEMS SCHEDULE AND IN ACCORDANCE WITH THE ITEMS SCHEDULE AND THE STANDARD CONDITIONS OF SALE. … 1. This Contract incorporates the Standard Conditions of Sale – Business Sale (Second Edition) adopted by the Real Estate Institute of Queensland Limited (REIQ). 2. Where there is any conflict between the Standard Conditions and this Contract, this Contract prevails. 76 The items schedule includes: (1) items C and E which respectively name Gillion as the seller and Holdings as the buyer; (2) item J which describes the business as "bottle manufacturer, bottled water and distribution"; (3) item L which sets out the "Purchase Price" as follows: (4) item N which is titled "Plant & Equipment" and provides: (5) item P which provides for completion to take place on 1 October 2015 at the Gold Coast. 77 The special conditions to the Business Sale Agreement, which were expressed to "take precedence over any attached Standard Conditions", include: 2. This Contract is subject to and conditional upon the contemporaneous completion of the following: Contract dated the same date as this Contract for the sale of Shares in [Wet Fix] entered into by [Gillion] as Trustee for the Summerfield Trust as Seller and [Holdings] as Buyer ([Share Sale Agreement]). Default under the [Share Sale Agreement] by [Gillion] or [Holdings] named in it will be deemed to be default under this Contract by [Gillion] or [Holdings] as the case may be. … 4. In addition to the Purchase Price, at completion [Holdings] will pay by cash or bank cheque to [Gillion] the sum of the deposits paid by [Gillion] on plant and equipment listed in Schedule "B" and any other plant and equipment ordered but not delivered to [Gillion] prior to 31 March 2015 and any other plant and equipment ordered after 31 March 2015. … 8. [Holdings] confirms: (a) [Holdings] has inspected the financial accounts, books and records of the Business; and (b) [Holdings] has carried out its own investigations and enquiries with respect to the Business; and its inspection, investigations and enquiries have been satisfactory. 78 The Standard Conditions incorporated into the Business Sale Agreement include: (1) at cl 1.1 the following definitions: "Business" means the Business listed in Item J and includes the Business Assets; "Business Assets" mean the assets described in clause 3.1 or in 3.2 (as the case requires); … "Excluded Assets" means: (a) any notified debt in accordance with clause 16.3; (b) any other receivable; (c) any cash of the business; (d) any employment contract of any person (including an employee); (e) any insurance policy or insurance claim: (f) any document or record which the Seller is obliged by law to retain. … "Plant and Equipment" means the plant and equipment referred to in Item N; (2) clause 3.1 which relevantly describes "Business Assets" and provides: The Business includes the goodwill, fixtures, fittings, furniture, chattels and the plant and equipment, industrial and intellectual property, work-in progress (if any), and stock-in-trade, permits, licenses, and other assets set out in any schedules attached to this Contract (but excluding any Excluded Assets) and which assets are in this Contract referred to as the "Business Assets". (3) clause 8.3 titled "Buyer's Statements" which, among other things, provides: The Buyer states and assures the Seller that: (a) the Buyer has entered this Contract after satisfactory personal inspection and investigation of the premises, Business, stock-in-trade, licences and other Business Assets and the Buyer has perused such records of financial transactions relating to the Business as the Buyer has desired to inspect; 79 The Business Sale Agreement had annexed to it the BSA Asset Schedule and the BSA Equipment Schedule, the latter of which was in the following terms: 1.9 Blow moulder and bottle filling plant 80 In order to fund the purchase of the blow moulder and the bottle filling plant, both of which were part of the new blow-fill line, on 15 August 2014 Gillion took out an import finance facility with a limit of $2.5 million (Import Finance Facility) from the Australia and New Zealand Banking Group (ANZ). 81 Also on 15 August 2014 Gillion as holding company and Wet Fix as hirer entered into an intragroup hire agreement (Hire Agreement) by which Gillion agreed to hire to Wet Fix the "Goods described in Item 1 of Schedule 1" to that agreement and Wet Fix agreed to hire those goods and to pay rent as agreed from time to time. The "Goods" described in Schedule 1 to the Hire Agreement were "all current and future plant and equipment used in the manufacture and production and distribution of water bottles" and included but was not limited to "assets which store water (tanks) and wheeled assets (trucks and forklifts etc)". Although Schedule 1 to the Hire Agreement referred to an attached annexure which was intended to be a "detailed schedule of plant and equipment", no such annexure was attached. The Hire Agreement also provided: (1) for an acknowledgement by Gillion for the ANZ's benefit that title to Goods will at all times remain with it and that the Hire Agreement does not extinguish the ANZ's security interest in the Goods or the "Proceeds of the Goods"; and (2) that the hire period was until further notice. 82 On 18 September 2014 Nissei ASB Pte Ltd (ASB) issued an invoice to Wet Fix for JPY 24,017,520 as 20% down payment for sales contract no SCAU140630NOR3. 83 On 27 November 2014 ASB issued sales contract no SCAU140630NOR3 to Wet Fix for, among other things, a "Nissei ASB Blaxial Orientation Stretch Blow Molding Machine" being for the purchase of the blow moulder and associated parts. The sales contract nominated Wet Fix as buyer and ASB as seller and was signed on behalf of Wet Fix on 2 December 2014 by Kayne. It also recorded that payment of JPY 24,017,520 had been received. 84 On 21 October 2014 Krones AG issued a down payment invoice to Wet Fix for AUD 252,065.48 for the bottle filling plant. Mrs Gill accepted that Wet Fix would have made payment pursuant to this invoice but with funds transferred to it by Gillion. 85 In June 2015 the blow moulder was delivered to the Burnside Road Factory along with the new bottle filler and labeller. However, the blow moulder was dropped and damaged on delivery. Notwithstanding that, it was commissioned at the Burnside Road Factory and was in use from about September 2015. 86 In light of the incident that occurred on delivery of the blow moulder, the vendor would not provide a warranty for it. Accordingly, an insurance claim was made for its replacement. By the time of settlement of the sale of the Wet Fix Business, that claim had not been paid. 87 On 1 July 2015 ASB issued sales contract no SCAU150701NO to Wet Fix for a "Nissei ASB Blaxial Orientation Stretch Blow Molding Machine" and associated equipment, being a replacement for the damaged blow moulder. That contract again named Wet Fix as buyer and ASB as seller and, among other things, required 30% payment on confirmation of order and the balance of 70% payable prior to shipment. Mrs Gill understands that, ultimately, the 30% deposit was paid by the insurer, although it may have initially been paid by Gillion. 88 On 24 September 2015 Wayne Gardner, relationship manager, ANZ provided Mr Chapman, among others, with the payout figures for "various tradeloan facilities" as follows: 89 On 30 September 2015 Gillion issued a tax invoice to Holdings for certain equipment including the blow moulder and the bottle filling plant described therein as follows: 1 x ASB PF24-BB Injection Blow Moulding Machine 1,500,000.00 N/T Serial number: 369CC0024 (subject to finance with ANZ Bank 1 x Barfill RFC Washing, Filing and Capping Machine 880,000.00 N/T Serial number: F01939 (subject to finance with ANZ Bank) 1 x Krones Controll Bottle Labeller 210,000.00 N/T Serial Number: K745VC9 (subject to finance with ANZ Bank) 90 Mr Chapman confirms that at settlement of the sale of the Wet Fix Business on or about 1 October 2015, which is described more fully below, monies provided by the NAB were applied at Holdings' direction to pay out the Import Finance Facility and Wet Fix took over the insurance claim (see [86] above). In particular, $2,249,381.50 owed by Gillion pursuant to the Import Finance Facility was paid out by the NAB at the direction of Holdings. 91 Holdings on sold the blow moulder and bottle filling plant to Wet Fix Equipment and noted in its FY2016 financial accounts that the items on the invoice (including the blow moulder and bottle filling plant) were from Gillion. 92 By email dated 23 May 2017 Mr Gardner provided the following statement for the "importation facility" in the name of Gillion noting that the amounts included in it "were the various progress payments made for the various assets that were imported from Europe & Japan for the 2nd bottling line" and that the "differential in amounts" from invoices previously sent "is due to us having to convert them into AUD for funding": 93 Mr Chapman's view is that, despite the tax invoices from ASB and Krones AG referred to at [82]-[84] and [87] above being in the name of Wet Fix, because the purchase of the items was funded by the Import Finance Facility in the name of Gillion they could be claimed by Gillion under special condition 4 of the Business Sale Agreement. According to Mr Chapman, once the blow moulder and bottle filling plant had been delivered, the following transactions or events would have taken place: (1) he would have prepared an invoice from Wet Fix to Gillion for the sale of the blow moulder and bottle filling plant to Gillion; (2) Gillion would have organised a sale and leaseback arrangement with the ANZ for the blow moulder and bottle filling plant and the funds from this arrangement would have been used to pay out the Import Finance Facility; and (3) Gillion would have rented the blow moulder and bottle filling plant to Wet Fix and it would have formed part of the plant and equipment that was rented by Wet Fix from Gillion. However, these transactions did not take place because of the issues which occurred on delivery of the blow moulder and the subsequent insurance claim. 1.10 Stocktakes 1.10.1 29 June 2015 94 On 29 June 2015 Mrs Gill scheduled maintenance on the equipment at the Christensen Road Factory and production was shut down. Mrs Gill together with Messrs Chapman and Starling, Ms Richardson, who had commenced employment with Wet Fix on that day, and a forklift driver carried out the stocktake for the period ended 30 June 2015. In order to do so, they visited the Christensen Road Factory, the Burnside Road Factory and the Business Street Factory. Mrs Gill recalls that Messrs Chapman and Starling were not present for the whole of the period during which she carried out the stocktake and that she principally undertook that task with Ms Richardson and the forklift driver. The process involved the forklift driver moving pallets to enable them to count the pallets. Ms Richardson's role was limited to writing down the stock numbers as they counted. 95 After completing the stocktake, Mrs Gill recalls that she said to Ms Richardson words to the following effect: Give the numbers to Heather Hull in the office to enter into the excel sheet. Candy will research the invoice prices and help with the costings. 1.10.2 30 September 2015 96 As at 30 September 2015 Wet Fix was operating out of: the Christensen Road Factory; the Burnside Road Factory comprising three separate units, two of which had stock stored in them and the third of which was being set up for production; and the Business Street Fact 97 It was necessary to value the stock for the purpose of settlement of the sale of the Wet Fix Business. There is conflicting evidence about the way in which it was agreed that should occur. 98 On 30 September 2015 at around lunchtime Mrs Gill attended the Christensen Road Factory where she, Mr Starling and Ms Richardson attempted to carry out a stocktake, with Ms Richardson doing most of the work. 99 Mrs Gill explains that, at the time, the Christensen Road Factory was in full production in that: (1) the main line was producing approximately 170 bottles per minute; (2) the blow moulders were producing four pallets of empty bottles per hour; and (3) the 15 litre line (which produced 15 litre bottles) was producing about four pallets per hour. 100 Mrs Gill's usual practice was to visit the Christensen Road Factory, Burnside Road Factory and Business Street Factory whenever she went to work. She observed that, while attempting to undertake the stocktake at the Christensen Road Factory, the warehouse had semi-trailers picking up full loads which, in her experience, take approximately 22 pallets per truck, and semi-trailers delivering raw materials. She was also aware, because she had seen the sheets detailing the pick-ups, that full loads were scheduled to leave the Burnside Road Factory and the Business Street Factory for Woolworths, Aldi and other customers. 101 Mrs Gill considered that undertaking a physical stocktake without shutting down production and halting all deliveries would be a logistical nightmare and inaccurate. She recalls that on 30 September 2015 at approximately 3 to 4 pm she met with Messrs Starling and Chapman in the office at the Christensen Road Factory and had a conversation to the following effect: Mr Chapman: People are running around in circles and not getting anywhere. It is not accurate and time consuming. Mrs Gill: I agree. Unless you shut down, and shutting down is not an option, you cannot do the stocktake. You would need to shut down for 24 hours to do the stocktake properly. There are 3 different sites, and all of them are operating 24 hours. Val keeps finding things she hasn't counted, and on every recount she finds the number has either gone up or down depending on the truck movements. Mr Chapman: I think that we should do it a different way. I will look at the previous stocktake and the gross profit for the previous periods, and do an estimate. Mrs Gill: That seems like the most sensible way forward. Mr Starling: I agree with Chris' suggestion. Mr Starling denies this conversation took place and says that there was no agreement for Mr Chapman to provide an estimate as a substitute for carrying out a full stocktake. According to Mr Starling, the stocktake continued for a further two days, which would have been of no utility if there had been an agreement to rely on an estimate of the stock. 102 As noted at [98] above, Ms Richardson participated in the stocktake on 30 September 2015 at the Christensen Road Factory. She gave the following evidence about the operations there at the time: (1) a fully automated production line was in operation on a 24 hour per day, seven days per week basis. She explained that in a 24 hour period approximately 180,000 to 200,000 bottles were produced; and (2) finished product and raw materials were stored there. 103 Ms Richardson did not participate in any stocktake on 30 September 2015 at the Burnside Road Factory or the Business Street Factory. She believes a stocktake at those premises was undertaken by the warehouse manager, Scott Taylor. However, Ms Richardson gave the following evidence about the facilities at and deliveries from the Burnside Road Factory and the Business Street Factory at the time: (1) at the Burnside Road Factory one unit had capacity for storage of about 600 pallets and a second unit had capacity for storage of about 300 pallets. Each pallet comprised 1440 bottles; (2) finished product was also stored at the Business Street Factory; and (3) finished product was collected by trucks from about 6 am to 10 pm daily from each of the three sites with the oldest stock being sold and collected first. Woolworths collected about eight truckloads per day with each truck taking 24 pallets and there were approximately three truckloads per day for delivery to other customers who at the time included Aldi, Norco, K2 and Pacific Springs. 104 Ms Richardson's evidence is that the stocktake of the Christensen Road Factory as at 30 September 2015 was prepared over a two to three day period. 105 On 6 October 2015 Ms Richardson sent an email to Messrs Chapman and Starling and Mrs Gill attaching a document she described as the "stock take counts" which was in the form of a spreadsheet (Richardson 2015 Spreadsheet). Ms Richardson also puts into evidence a spreadsheet which she believes is a correct record of the stocktake undertaken at this time (September 2015 Spreadsheet). The Richardson 2015 Spreadsheet and the September 2015 Spreadsheet differ. In its written submissions Holdings notes that September 2015 Spreadsheet was prepared by BDO. 106 In cross-examination Ms Richardson gave the following evidence about the September 2015 Spreadsheet: (1) she did not create the spreadsheet; (2) she had no input into the value of the stock recorded therein and was unable to say whether it accurately records the value of the stock; and (3) she was unable to say whether it accurately records all of the stock on hand as at 30 September 2015. Ms Richardson did not count all of the stock but worked with at least two other people, Zoe Joyce and Adam Rinehart. I have assumed that this evidence applies equally to the Richardson 2015 Spreadsheet. 107 Ms Richardson ultimately agreed that it was unlikely that a physical stocktake of all of the stock at the Christensen Road Factory, Burnside Road Factory and Business Street Factory could be undertaken accurately without shutting down all three sites. 108 Mr Chapman also gives evidence about the stocktake. 109 On 30 September 2015 Mr Chapman went to Brisbane to get the bank cheques for settlement. Before departing, he had a discussion with Mrs Gill and Mr Starling in which he reminded them that they needed to do the stocktake for settlement. 110 On his return at about 4 pm, Mr Chapman went to the Christensen Road Factory where he met Ms Richardson. He observed that the factory was still operating and that a stocktake had been partially completed. At the time Mr Chapman saw handwritten count sheets that had been prepared by Ms Richardson which included the brand of stock and number of pallets on hand. Mr Chapman was informed by Ms Richardson that she had not completed the stocktake. 111 Mr Chapman recalls that he then had a conversation with Mrs Gill and Mr Starling in which he said words to the following effect: As we have not done a complete stocktake, the only thing we can do is to estimate the stocktake based on the revenue and gross profit achieved in the previous quarters. According to Mr Chapman, in response Mrs Gill and Mr Starling nodded and Mr Starling said words to the following effect: That's acceptable because we cannot do anything else. Mr Starling says that he was not a party to this conversation. 112 Mrs Gill said that, because of the agreement to disregard the 30 September 2015 stocktake, she did not consider the September 2015 Spreadsheet (or Ms Richardson's evidence about it) to be important. Mrs Gill maintained that the stocktake was only undertaken on 30 September 2015, not over two to three days as Ms Richardson recalls, and insofar as it was undertaken, it was inaccurate because of the ongoing deliveries and production. Mrs Gill did not tell Ms Richardson on 30 September 2015 about the agreement not to proceed with the stocktake. She assumed that Ms Richardson would have realised that the exercise was useless. 113 For the reasons set out at [204]-[207] below, I accept Mrs Gill's and Mr Chapman's evidence that there was an agreement that the value of stock as at 30 September 2015 would be estimated by Mr Chapman adopting the method he identified (see [111] above). I do not accept Mr Starling's evidence that the conversations deposed to by Mrs Gill and Mr Chapman did not occur or that he was not party to them. 114 On 6 October 2016 Janet Bray, an office manager at Wet Fix, provided Mr Byrne with "stock counts and cost of goods sold" for the 30 June 2015 and 30 September 2015 periods. As to the latter, Mr Byrne received the September 2015 Spreadsheet from Ms Bray. 115 Mr Byrne describes the content of, relevantly, the September 2015 Spreadsheet to include updated stock figures calculated by Wet Fix staff showing inventory at its cost value. In Mr Byrne's opinion, this is the most common method for valuing stock and gross retail value is not an appropriate method for valuing stock. 116 Mr Byrne's role is relation to the September 2015 Spreadsheet was limited. He did not check the cost of goods sold figures but ensured that the calculations of the total values were correct. That is, Mr Byrne simply undertook an arithmetic exercise relying on the information included in the September 2015 Spreadsheet. 1.11 Settlement 117 On 1 October 2015 settlement of the sale of the Wet Fix Business took place. 118 According to Mr Starling, between 1 and 16 October 2015 Holdings: (1) paid to, or was credited by, Gillion the sum of $7,020,157.30 on account of the Share Sale Agreement; and (2) paid Gillion $6 million on account of the Business Sale Agreement. 119 At and shortly after that time, Holdings made cash payments of $7,698,879.67 as follows: (1) on or about 1 or 2 October 2015, a total amount of $4,498,879.67 was paid by the NAB on behalf of Holdings to Gillion and applied by Gillion in discharge of some of its facilities with the ANZ including the Import Finance Facility (see [80] above); (2) on or about 6 October 2015, $400,000 was paid by Holdings via Wet Fix to Gillion; and (3) on 13 and 14 October 2015, a total of $2.8 million was paid by Elem Investments to Gillion. 120 Holdings borrowed $5,687,179.59 of which the sum of $4,498,879.67 was paid in reduction of Gillion's indebtedness to the ANZ (see [119(1)] above) and the balance, being $1,188,299.92, was applied by Holdings to pay out various liabilities of Wet Fix. 121 Non-cash adjustments totalling $1,532,985.25 were made, reducing the amount owing by Holdings under the Share Sale Agreement and the Business Sale Agreement as follows: (1) the purchase price was reduced by $1,277.63 as an allowance made for personal petrol expenses charged to Wet Fix after 1 October 2015; (2) the purchase price was reduced by $400,000, being a credit by Gillion on behalf of Mrs Gill to Holdings for Mrs Gill to acquire shares in Holdings; (3) the purchase price was reduced by $400,000, being a credit by Gillion on behalf of Mrs Gill to Holdings in respect of a loan of that amount by Mrs Gill to Holdings; and (4) the purchase price was reduced by $731,707.62, being repayment by Gillion to Wet Fix of the Gillion loan account. 1.12 Events following settlement 1.12.1 January 2016 122 Between December 2015 and 3 January 2016 Mr Chapman undertook a calculation pursuant to Annexure A to the Share Sale Agreement (January 2016 Settlement Statement) which was as follows: 123 Mr Chapman initially explained that the January 2016 Settlement Statement was structured to set out the amounts owing under both the Share Sale Agreement and the Business Sale Agreement, showing the adjustments required under both agreements and the payments made. He said that he did not pay much attention to whether some adjustments (such as the addition of items purchased after 31 March 2015) were to be made under the Share Sale Agreement or the Business Sale Agreement because Holdings had to pay for the items under one or other of those agreements. 124 However, when cross-examined about the January 2016 Settlement Statement, Mr Chapman agreed that his evidence that he was attempting to work out the amount due under both the Share Sale Agreement and the Business Sale Agreement in the January 2016 Settlement Statement was not accurate, that his calculation of the amount due and payable under the Share Sale Agreement as set out in the January 2016 Settlement Statement is fundamentally wrong and materially overstated by some millions of dollars, and that the amount payable under the Business Sale Agreement was, as set out in the January 2016 Settlement Statement, $6 million, which was the amount in fact paid on settlement in October 2015. 125 The January 2016 Settlement Statement and supporting documents were enclosed in a letter dated 3 January 2016 from Mr Chapman addressed to Gillion and Wet Fix (January 2016 Letter) which provided: WET FIX PTY LIMITED SHARE SALE AGREEMENT In accordance with annexure "A" to the share purchase agreement, I have calculated that balance of the purchase price is $89,726.49. Please find attached the detailed calculation and working papers, to enable you to obtain an Independent assessment of the purchase price calculation. I note that in accordance with clause 5.2 of the share sale agreement that this outstanding amount is now due for payment and bears interest at the rate of 12% per annum. Please advise me as soon as possible, if you require any further information or documentation to assist in your review of the calculations. 126 What happened next and whether the January 2016 Letter (and its enclosures) was provided to Mr Starling on or about 5 January 2016 is a matter of some controversy between the parties. 127 Mr Starling was in Queensland from 4 to 6 January 2016 and was at the Christensen Road Factory on 5 January 2016 to attend a meeting with LMI Group Pty Ltd, Wet Fix's loss adjusters in relation to the insurance claim for the blow moulder, Scott Bushnell of Crawfords and Co, the insurer's loss adjuster, and Mr Chapman and Mrs Gill, who both arrived late to the meeting. 128 According to Mr Chapman, he attended the Christensen Road Factory on 5 January 2016 and at that time had two copies of the January 2016 Letter (and its enclosures) with him: one in a red folder; and the other in a pink folder (Pink Folder). Mr Chapman recalls that, as Mr Starling was not at the Christensen Road Factory at that time, he handed Mrs Gill the red folder and handed Candy the Pink Folder. He recalls that upon doing so he said to Candy words to the following effect: Please give this to Darren tomorrow, don't leave it lying around the office. 129 In cross-examination Mr Chapman accepted that on 5 January 2016 he did in fact attend a meeting at the Christensen Road Factory with Mr Starling and the loss assessors, to which he arrived late. To the extent he gave evidence that Mr Starling was not at the Christensen Road Factory on 5 January 2016, he was mistaken. Mr Chapman said that, while he had the Pink Folder with him, because of his late arrival he did not have an opportunity to give it to Mr Starling prior to the meeting. He was also unable to give it to Mr Starling after the meeting as Mr Starling left to attend another meeting at the Burnside Road Factory. It seems that Mr Chapman also attended this later meeting. Mr Chapman wanted to sit down with Mr Starling and go through the folder with him but could not do so because other people were present. 130 That those meetings occurred is confirmed in a series of emails. In particular, by email sent on 16 December 2015 Mr Chapman arranged a meeting to take place at 10 am on 5 January 2016 at the Christensen Road Factory to be followed by a visit "later in the day" to the Burnside Road Factory to look at the blow moulder. 131 I accept Mr Chapman's evidence that he was unable to give the Pink Folder to Mr Starling during the course of the day on 5 January 2016 as there were other people present and he wanted to sit down and go through its contents with Mr Starling. I also accept that Mr Chapman did not withhold the Pink Folder from Mr Starling. 132 It was in those circumstances that Mr Chapman gave the Pink Folder to Candy to give to Mr Starling. 133 Mr Chapman says that he telephoned Mr Starling on the evening of 5 January 2016 and had a discussion with him to the following effect: Mr Chapman: I have left the folder with Candy with the sale adjustments for you to collect tomorrow. Mr Starling: Yes OK. I will look at them. Mr Starling denies that this conversation took place. 134 Mrs Gill's evidence is that on or about 5 January 2016 Mr Chapman met her and Candy at her home and that at the time Mr Chapman handed her a folder containing the January 2016 Letter with its enclosures. Mrs Gill reviewed the January 2016 Letter on receipt. She observed that it contained Mr Chapman's calculation of the amounts owing by Holdings to Gillion pursuant to the Share Sale Agreement and the Business Sale Agreement after adjustments had been made following the finalisation of the Wet Fix accounts as at 30 September 2015. At that time Mrs Gill also observed Mr Chapman handing Candy another folder, i.e. the Pink Folder, and saying to her words to the following effect: Can you please take this into the Factory and give it to Darren. 135 In 2015 Candy was living at her parents' home in order to care for her mother while she was unwell. She recalls that during 2015, as there was work to be done on the sale of the Wet Fix Business, Mr Chapman spent time in Queensland and stayed at her parents' home. She saw him there and at the Christensen Road Factory. 136 Candy also recalls that in late 2015 and early 2016 Mr Chapman would sometimes give her documents when she was at her parents' home and request her to deliver them to Mr Starling at the Christensen Road Factory. While Candy would not look at the documents, she knew from being around her parents and Mr Chapman that they concerned the sale of the Wet Fix Business and thus were important. 137 Candy's usual practice was to take the documents given to her by Mr Chapman to the Christensen Road Factory. If Mr Starling was not present, which she says was the norm, she would put the documents on Mr Starling's desk in his office. Candy's practice was to do this as soon as she arrived at work. She did not hand these documents to anyone else as they concerned the sale of the Wet Fix Business and not its day to day running. Candy observed Mr Starling picking up documents from his office on a few occasions when he attended his office and she was in the main open plan office. As far as Candy is aware, Mr Starling was the only person who would collect documents from his office. She did not observe anyone else doing so. 138 Candy recalls that Mr Chapman requested that she deliver documents to Mr Starling on about 6 to 12 occasions and that she was never told by Mr Starling, Mrs Gill or anyone else that Mr Starling had not received the documents she delivered. 139 While Candy has no specific recollection of Mr Chapman providing her with the Pink Folder, her evidence is that, in accordance with her usual practice, she would have left the Pink Folder on Mr Starling's desk. 140 Although Candy resigned from Wet Fix at the end of 2015, she stayed on until early 2016 over the busy Christmas and New Year period. Candy cannot now recall the exact date she ceased employment with Wet Fix but it is clear that she remained until about 7 January 2016. 141 Mr Starling was in Japan from 14 to 24 January 2016 inspecting and signing off on equipment for the Wet Fix Business. He says that he was not provided with the Pink Folder at any time by Candy or any other person and, in particular, he was not provided with the Pink Folder between 5 January 2016 and the date he travelled to Japan. According to Mr Starling, by 5 January 2016 Candy had resigned from her employment with Wet Fix and her last day in the office at Wet Fix was 7 January 2016. 142 In cross-examination Mr Starling did not agree that the Pink Folder was left in his office at the Christensen Road Factory before he left for Japan or that it was sitting in his office on his return. According to Mr Starling, he did not receive the Pink Folder and did not access it prior to October 2016. 143 Mr Chapman visited the Christensen Road Factory on about 15 January 2016. Mr Starling was not there at the time. While he was looking for some other documents, Mr Chapman saw the Pink Folder on Mr Starling's desk in the boardroom. He was surprised by this because the Pink Folder was lying out in the open and he expected that Mr Starling would have put it away given that it was confidential. Mr Chapman opened the Pink Folder to see if it had been used for something else and saw that the January 2016 Settlement Statement was in it. 144 Holdings did not pay Gillion the amount requested in the January 2016 Letter. 145 Having considered the evidence, for the reasons set out at [167]-[183] below, on balance I am satisfied that the Pink Folder was delivered to Mr Starling on or about 6 January 2016. 1.12.2 February 2016 146 On 23 February 2016 there was an exchange of emails between Messrs Starling and Chapman in relation to the insurance claim for the blow moulder. Mr Chapman's email to Mr Starling referred to the total claim and component parts of it. In response Mr Starling wrote: Given the fact that the 30th Sept figures are not yet finalized between all parties this should be easy to make adjustments for. We need to ensure that all future progress payments are exclusively for the period from the 1st Oct 2015 and leave the August/September component to Pam and Paul. Mr Chapman was cross-examined about this email. At the time of its receipt, it did not occur to Mr Chapman that Mr Starling may not have received the Pink Folder and that the reference in Mr Starling's email demonstrated that he was unaware of the figures included in it. Mr Chapman candidly conceded that in hindsight he should have realised that was the case. Mr Chapman recalls that he discussed the adjustment to the insurance claim referred to in the second part of the email with Mr Starling but he did not tell Mr Starling at the time that he had finalised the figures for 30 September 2015. He assumed, having previously seen the Pink Folder on Mr Starling's desk, that he had the figures but had not gone through them. 147 On 25 February 2016 Mr Chapman forwarded to Mr Starling by email a letter received that day by express post. The letter referred to as the "Gillion Letter" was not in evidence. Shortly after, Mr Starling sent an email to Mr Chapman in which he wrote: This is an interest payment on a loan with a yet to be determined amount! Janet was under the impression that you were setting the payments up for this as we do not have a base figure to operate from. From memory you have nominated an interim figure of $1,790,000, is this correct? Are we tracking these payments so that we can adjust as required? 148 On 28 February 2016 Mr Chapman responded to Mr Starling's email set out in the preceding paragraph in the following terms: The loan agreement is for $1,750,000 at RBA rate plus 4%. As mentioned in my email to you of 28 January the funds were needed in Holdings to pay the interest which I usually do (as it should come from Holdings) I have had no reply to that email asking whether I should pay it and no reply when I followed up. Do you want me to pay it now? Also February is due on Tuesday. Please let me know and I will transfer the funds to Holdings and pay the interest of $8,750 per month. Mr Starling responded by email also sent on 28 February 2016 noting that he would "do both on Tuesday". 1.12.3 October 2016 149 On 22 March 2016 Gillion issued two creditor's statutory demands pursuant to s 459E of the Corporations Act 2001 (Cth) to Holdings: one for payment of outstanding rent; and the other for payment of the amount owing under the Vendor Finance Agreement. By October 2016 Gillion had commenced a proceeding seeking to wind up Holdings. 150 By letter dated 6 October 2016 RMB Lawyers informed Mr Chapman that: We understand that Wet Fix Holdings claims that it has not received the Share Sale Agreement purchase price calculation documents. We kindly ask that you please prepare schedules setting out the calculation of the purchase price figures for the Business Sale Agreement and Share Sale Agreement and ask that you please serve those documents along with this letter on Wet Fix Holdings Pty Ltd and Gillion Pty Ltd as soon as possible. 151 On 6 October 2016 Mr Chapman sent a letter to Gillion and Holdings (October 2016 Letter) which provided: As requested by RMB Lawyers (a copy of their letter is attached for your records) please find enclosed a copy of my letter dated 3 January 2016 enclosing the calculations made under the share sale agreement and supporting documents. I note that the original documentation was hand delivered to Pam Gill on the evening of 5 January 2016 (by myself) and after a telephone discussion with Darren Starling on 5 January 2016, Wet Fix Holdings Pty Limited's copy was hand delivered to him on the morning of 6 January 2016, by Candice Gill. As l have been requested to prepare settlement sheets under each separate agreement, l have also attached a separate settlement sheet for each transaction, which was not supplied under cover of my original letter of 3 January 2016. Please advise me as soon as possible, if you require any further information or documentation to assist in your review of the calculations. The October 2016 Letter enclosed the January 2016 Letter and its enclosures, the January 2016 Settlement Statement and supporting documents, and a further settlement statement prepared for each of the Share Sale Agreement and the Business Sale Agreement (October 2016 Settlement Statements). 152 According to Mr Starling, he had not seen Wet Fix's balance sheet as at 30 September 2015 prior to receipt of the October 2016 Letter. 153 Mr Chapman was cross-examined about the October 2016 Settlement Statements. He said that he was asked by Gillion's then lawyers to re-do his calculations by accommodating some items under the Share Sale Agreement and others under the Business Sale Agreement, the effect of which was to add approximately $3 million to the purchase price under the Business Sale Agreement for the blow moulder and bottle filling plant and other equipment which was previously included in the calculation of the purchase price under the Share Sale Agreement. Mr Chapman relied on special condition 4 of the Business Sale Agreement in adding those amounts. Mr Chapman accepted that the BSA Equipment Schedule intended to set out the equipment that was leased by Gillion and that it recorded that, as at 22 May 2015, no deposit had been paid for the blow moulder or bottle filling plant. The following exchange then took place between counsel for Holdings and Mr Chapman: Mr Hyde: It's true, isn't it, that those two items, referred to as the blow moulder and the bottle filling plant, comprised the $2.2 million that you seek to add, under clause special condition 4, to the purchase price? Mr Chapman: I'm not 100 per cent sure that there is not other items in there. But they are certainly – if there are any items, they're 90, 99 per cent of it. So for the sake of the argument, yes. I will accept that. Mr Hyde: All right. So can I then take you back to special condition 4. And if you look at the second line of special condition 4, you understood, didn't you, that you were entitled to add to the purchase price the deposits paid by the seller on the plant and equipment listed in [the BSA Equipment Schedule]? Mr Chapman: That's correct. Mr Hyde: And you say that formed no part of your calculation? Mr Chapman: That's correct. Mr Hyde: But what you say, as I understand it, that there are items [in the BSA Equipment Schedule] that were ordered but not delivered to the seller prior to 31 March 2015? Mr Chapman: Yes. Mr Hyde: And to understand the reference to seller there is Gillion? Mr Chapman: That's correct. Mr Hyde: You know full well, don't you, that the blow moulder and the bottle filling plant weren't ordered from Gillion, were they? Mr Chapman: They were ordered by a purchase order in the name of Wet Fix. Mr Hyde: You know full well, don't you, Mr Chapman, that the blow moulder and the bottle filling plant were both ordered by Gillion. That's right isn't it? Mr Chapman: That's correct – that's correct. Mr Hyde: And you know full well, don't you, Mr Chapman, that the blow moulder and the bottle filling plant was not delivered to Gillion? Mr Chapman: That's correct. Mr Hyde: And so how is it that you have used the blow moulder and the bottle filling plant as being an adjustment under clause 4? Mr Chapman: They were paid for by a bank facility in the name of Gillion and therefore they – I thought they would fall within that definition. Mr Hyde: But if you're wrong about that assumption your calculation is flawed; isn't it? Mr Chapman: That's correct. Mr Hyde: And your evidence to her Honour is that the blow moulder and the bottle filling plant were ordered by Wet Fix? Mr Chapman: That's correct. Mr Hyde: And delivered to Wet Fix? Mr Chapman: That's correct. Mr Hyde: And certainly according to [the BSA Equipment Schedule], that at no time prior to 22 May 2015 did Gillion pay a deposit with respect to that equipment? Mr Chapman: That's correct. Mr Hyde: And your evidence to her Honour is the only reason you've sought to add $2.2 million to the total amount you say is due and owing under the business sale agreement was because there was a facility with the ANZ Bank; is that right? Mr Chapman: That's correct. Mr Hyde: And your evidence, I take it, to her Honour is that that facility was in the name of Gillion? Mr Chapman: That's correct. Mr Hyde: And Gillion lent money to Wet Fix; didn't it? Mr Chapman: It did. Mr Hyde: And Wet Fix paid for the equipment; didn't it? Mr Chapman: Nobody physically paid for the equipment other than Gillion had borrowed the money from ANZ. Mr Hyde: Well, Gillion lent the money to Wet Fix to enable Wet Fix to pay for it; didn't it? Mr Chapman: Gillion have paid the money to the supplier. I do not know whether that the supplier is in the name of Wet Fix or Gillion. Mr Hyde: Mr Chapman, you're just making this up as you go along now; aren't you? Mr Chapman: No. I can't tell you – all I can tell you is the facts and the facts as I understand them is that Gillion paid the money direct to the supplier. Mr Hyde: And how did you get that understanding, Mr Chapman? Mr Chapman: I've spoken to officers at ANZ Bank who informed me that that is what happened. Mr Hyde: Are you sure about that? Mr Chapman: Yes, I am sure about that. … Mr Chapman: … And if we go to 9.3, which I believe is on page 1667 of the court book. … That is where – and that's an email from Peter Hemming at NAB. That is – that is where I got that number from for the blow moulder and filler capper machine, that is the … That is where I got the amount that NAB, as the incoming banker, paid to ANZ to acquire title to those two pieces of our equipment. Mr Hyde: Yes. You will accept, won't you, Mr Chapman, that it's impossible to determine from the document at page 1667 as to what the amounts referred as the ANZ figure were used for? Mr Chapman: It is impossible from the document on 1667, yes, I agree with that. … Mr Hyde: And so you sit here today, giving evidence to her Honour, to try and convince her Honour to find that a further $2.2-odd million is due and payable under the business sale agreement by reference to the document titled 9.3? Mr Chapman: That is correct. Mr Hyde: And you rely upon no other documents in support of that calculation, do you? Mr Chapman: There is the earlier document that you took me to that showed the ANZ facility but that was obtained after my affidavits were written and my calculations were done. The "earlier document" referred to by Mr Chapman is the statement for the "importation facility" in the name of Gillion, i.e. the Import Finance Facility, attached to Mr Gardner's email dated 23 May 2017 in which Mr Gardner notes that the amounts included in the statement "were the various progress payments made for the various assets that were imported from Europe & Japan for the 2nd bottling line" (see [92] above). 154 On 21 October 2016 and 25 November 2016 DibbsBarker, Holdings' solicitors at the time, wrote to RMB Lawyers disputing the amounts included in Wet Fix's balance sheet as at 30 September 2015 and the calculations carried out by Mr Chapman. Holdings had retained BDO to undertake an analysis of those calculations. 155 In their letter dated 21 October 2016 DibbsBarker noted, among other things, that: You will see that BDO's conclusion is that, rather than there being any indebtedness by Holdings to pay Gillion $89,726.49 (pursuant to clauses 1(h) and 5.1 of the Share Sale Agreement), Mr Chapman's calculations were overstated to the extent of $4,493,595.05 The balance sheet, and other accounting documents purportedly prepared by Mr Chapman pursuant to clause C of Annexure A to the Share Sale Agreement are fundamentally incorrect. The position as at the date of this letter is that Gillion owes Holdings $4,493.595.05 in relation to the Share Sale Agreement. We are instructed to demand payment on behalf of Holdings from Gillion in the sum of $4,493,595.05 within 7 days. (Original emphasis.) 156 In their letter dated 25 November 2016 DibbsBarker reported on the further analysis undertaken by Holdings in relation to the BSA Asset Schedule and contended, among other things, that the majority of the assets listed in the BSA Asset Schedule were owned by Wet Fix as opposed to Gillion. 157 In cross-examination Mr Starling rejected the contention that the reason he challenged Mr Chapman's calculations in October 2016 was because of Gillion's attempt to wind up Holdings at that time. He said he made the challenge at that time because he had finally received the settlement documents. 2. The pleaded case 158 Holdings relies on the SFASOC. As noted at [4] above, Holdings makes two claims: a purchase price claim and a restitution claim for interest paid pursuant to the Vendor Finance Agreement. 159 In making the purchase price claim, Holdings refers to and relies on the Share Sale Agreement and the Business Sale Agreement and contends that: (1) on about 27 June 2015 the terms of the Share Sale Agreement were varied so that: (a) completion of the Share Sale Agreement would proceed notwithstanding the lack of availability of a balance sheet for Wet Fix; (b) the purchase price would be calculated by reference to a balance sheet dated 30 September 2015 instead of 30 June 2015; (c) Holdings would pay Gillion an interim settlement amount (inclusive of the deposit) to complete the Share Sale Agreement; (d) the payment of the interim settlement amount by Holdings to Gillion was subject to a later adjustment after Wet Fix's balance sheet as at 30 September 2015 was made available; and (e) the adjustment referred to in the preceding subparagraph was to be made by a payment from Gillion or Holdings to the other for the difference between the interim settlement amount and the total derived by inputting the relevant amounts stated in Wet Fix's balance sheet as at 30 September 2015 (as adjusted for valid objections) into cl A of Annexure A to the Share Sale Agreement; (2) as at 1 October 2015 no balance sheet for Wet Fix as at 30 September 2015 had been made available to Holdings; (3) between 1 and 16 October 2015 Holdings made payments to Gillion as the interim settlement amount for the Share Sale Agreement and the Business Sale Agreement by which Holdings: (a) paid to, or was credited by, Gillion the sum of $7,020,157.30 on account of the Share Sale Agreement; and (b) paid Gillion $6 million on account of the Business Sale Agreement. In return, Gillion transferred its shares in Wet Fix to Holdings and purported to loan $1.75 million to Holdings; (4) on or about 10 October 2016 a balance sheet for Wet Fix as at 30 September 2015 was provided to Holdings together with material in support which concluded that $89,726.49 was the balance of the purchase price owing under the Share Sale Agreement by Holdings to Gillion; (5) on 20 and 21 October 2016 Holdings, through its then lawyers, served an objection on Gillion disputing that calculation and contending that $4,493,595.05 was the adjusted balance of the purchase price owing by Gillion to Holdings under the Share Sale Agreement and demanding payment of that amount by Gillion to Holdings; (6) the errors made in the calculations provided by Gillion were that: (a) sundry debtors of $200 (being a loan owing by an employee) should not have been included as an asset as the loan had been forgiven; (b) $913,427.50 of fixed assets were included as assets when those assets were not acquired after 31 March 2015, the relevant date for the purposes of cl A, item 6 of Annexure A to the Share Sale Agreement; (c) expense on maintenance of equipment of $82,408.76 was included as an asset when it should have been regarded as an expense; (d) $2,249,381.50 of equipment was wrongly included because that equipment was owned by the ANZ as lessor and the corresponding lease liability was not included in the calculation; (e) stock inventory was reflective of an estimate whereas the actual stocktake revealed that the estimate was overstated by $1,205,792.84; (f) creditors were understated by $93,068.40; (g) two other liabilities were not recorded in the calculations: other creditors to the value of $30,067.75 and a contractual liability of $201,058 to Woolworths; (h) the annual leave provision was overstated by $23,068.88 and the long service leave provision was overstated by $8,516.09; (i) an amount of $10,762.79 due by Gillion to Holdings for overpayment on a credit card was not included; and (j) two errors were made which result in adjustments in Gillion's favour, being a double counting in the debtor's figure of $207,423.81 and an understatement of a GST refund by $7,481.42; (7) the purchase price under the Share Sale Agreement is not to be determined in accordance with the calculations referred to at subpara (4) above but, rather, in accordance with Holdings' own calculations; (8) by relying on the calculations referred to at subpara (4) above to calculate the purchase price, Gillion breached cl 1(h) of the Share Sale Agreement; and (9) Holdings has overpaid the amount of $4,950,187.35 for the purchase price under the Share Sale Agreement. In refusing to repay Holdings that amount, Gillion has breached the Share Sale Agreement and Holdings claims damages of $4,950,187.35 from Gillion. 160 Given my findings in relation to Holdings' purchase price claim (addressed below), the restitution claim does not arise for consideration. It is therefore not necessary to set it out in any detail. 161 In Gillion's amended defence filed on 15 October 2018 in summary: (1) in relation to the purchase price claim, it contends that: (a) Wet Fix's balance sheet as at 30 September 2015 was made available to Holdings by 5 January 2016; (b) pursuant to cl 1(h) and Annexure A to the Share Sale Agreement, the purchase price was to be calculated by reference to Wet Fix's 30 September 2015 balance sheet; (c) by reference to Wet Fix's balance sheet as at 30 September 2015, the Share Sale Agreement as varied and the Collateral Agreements (as defined), the purchase price under the Share Sale Agreement was $1,052,190.11 and the purchase price under the Business Sale Agreement was $9,127,865.15, such that the combined purchase price under both agreements was $10,180,865.15; (d) in the alternative, if the Court was to find that Wet Fix's balance sheet as at 30 September 2015 was not made available to Holdings by 5 January 2016, the purchase price under the Share Sale Agreement was $1,047,793.63 and the purchase price under the Business Sale Agreement was $9,127,865.15, such that the alternative combined purchase price under both agreements was $10,175,658.78; (e) as to payment of the interim settlement amount: (i) by reason of the loans by Elem Investments and Mr Chapman, on 1 October 2015 the purchase price was reduced by a total of $3,170,000; (ii) between 1 and 16 October 2015 Holdings (or an entity on its behalf) paid or was credited with an amount of $9,231,864.92 (excluding the amount advanced pursuant to the Vendor Finance Agreement) in respect of both the Share Sale Agreement and the Business Sale Agreement; (iii) on 1 October 2015 Gillion advanced $948,190.34 to Holdings under the Vendor Finance Agreement in part payment of the combined purchase price under the Share Sale Agreement and Business Sale Agreement, which amount remains owing by Holdings; (iv) in the alternative, in addition to applying payment of $9,231,864.92 to the alternative combined purchase price of $10,175,658.78, on 1 October 2015 $943,793.86 (plus the amount of the blow moulder claim) was advanced by Gillion to Holdings pursuant to the Vendor Finance Agreement, and the alternative amount of $943,793.86 (plus the amount of the blow moulder claim) owing under the Vendor Finance Agreement has not been repaid to Gillion; and (f) it is not indebted to Holdings in the amount demanded by it and Holdings is not entitled to that amount as damages; and (2) in relation to the restitution claim, Gillion denies that Holdings is entitled to restitution of all amounts it has paid to it on account of interest under the Vendor Finance Agreement. 162 Gillion has filed a cross-claim seeking from Holdings repayment of the amount it says is due under the Vendor Finance Agreement. In its defence to cross-claim, Holdings, in effect, denies that it is indebted to Gillion under the Vendor Finance Agreement and that Gillion is entitled to any relief under its cross-claim. 3. The issues 163 Although there was some difference between them, the parties each identified the issues for resolution by the Court. Taking them together, they are: (1) what is described as a limitation issue. That is, whether Holdings is entitled to raise any objections to the adjustments made to the calculation of the purchase price for the Wet Fix Business or whether it is precluded from doing so by the effluxion of time. This in turn depends on when Holdings became aware of certain matters; (2) if the limitation issue is resolved in favour of Holdings and Holdings is not prevented from raising objections to the adjustments made to the purchase price for the Wet Fix Business, then the following issues (which do not encompass all of the pleaded allegations about the calculation of the purchase price) arise in relation to items included in that calculation: (a) the value of Gillion's inventory as at 30 September 2015; (b) whether an amount of capital expenditure for maintenance of equipment was included in the calculations as an asset rather than as an expense; (c) the value of Wet Fix's creditors. This concerns whether the amount included for creditors was understated and whether an additional amount should be included for "other creditors" identified by Holdings; (d) whether the adjustment to the purchase price made under special condition 4 of the Business Sale Agreement is available to Gillion and, if it is, whether any such adjustment should be made; and (e) whether an adjustment to the purchase price can be made for assets acquired after 31 March 2015 and, if so, pursuant to which agreement. This raises the issues of who owned those assets and when they were acquired; and (3) whether Gillion is entitled to payment of the monies it says it loaned to Holdings by way of vendor finance pursuant to the Vendor Finance Agreement and which remain owing to it as claimed by it in its cross-claim. 4. Holdings' claim 4.1 The limitation issue 164 The first issue to resolve is whether Holdings was provided with a copy of the Pink Folder on or about 6 January 2016. Gillion contends that it was because Mr Starling, Holdings' sole director at the time, was provided with the Pink Folder on or about that date while Mr Starling contends that he only became aware of the January 2016 Letter and the January 2016 Settlement Statement (both of which were included in the Pink Folder) on or about 6 October 2016. 165 This issue arises as a threshold issue for the following reasons: (1) Annexure A to the Share Sale Agreement sets out the formula pursuant to which the purchase price is to be calculated and relevantly includes (at cl D) that, for 15 days after the balance sheet prepared as at 30 September 2015 is made available to Holdings, it can conduct due diligence on the balance sheet and, after 15 days from the date that the balance sheet is made available, no adjustments can be made to it or the purchase price; (2) Holdings contends that a balance sheet for Wet Fix as at 30 September 2015 was provided to it on or about 10 October 2016 but, in its defence, Gillion contends that a balance sheet for Wet Fix as at 30 September 2015 was made available to Holdings by 5 January 2016; (3) Holdings had 15 days after the date on which the balance sheet as at 30 September 2015 was made available to it to conduct due diligence and any adjustments to be made to the balance sheet or the purchase price under the Share Sale Agreement could only be made in that 15 day period; (4) Holdings, through its then solicitors, first disputed the amounts included in Wet Fix's balance sheet as at 30 September 2015 on 21 October 2016; (5) if there is a finding that Wet Fix's balance sheet as at 30 September 2015 was made available to Holdings on or about 5 or 6 January 2016, rather than 10 October 2016, then the issues raised by Holdings in October 2016 in relation to that balance sheet were not raised within the 15 days allowed for in Annexure A to the Share Sale Agreement; and (6) the practical effect of this is that Holdings can no longer dispute Wet Fix's balance sheet as at 30 September 2015 and no adjustments can be made to the balance sheet or the purchase price under the Share Sale Agreement. 166 The evidence relating to the Pink Folder given by each of Messrs Starling and Chapman, Mrs Gill and Candy is at [127]-[143] above. 167 As set out at [145] above, having weighed up the competing evidence, I have concluded on balance that the Pink Folder was provided to Mr Starling on or about 6 January 2016. It follows that it was made available to Holdings on or about that same date. My reasons for reaching this conclusion follow. 168 First, Mr Chapman's evidence, which I accept, is that he provided a copy of the January 2016 Letter to Mrs Gill on 5 January 2016 and, at the time, he also handed the Pink Folder to Candy with instructions to provide it to Mr Starling the following day. His evidence is corroborated by Mrs Gill who recalls that she and Candy met with Mr Chapman on 5 January 2016 and at that time Mr Chapman handed her a folder containing the January 2016 Letter and that she observed Mr Chapman handing Candy another folder and asking her to take it to the Christensen Road Factory and give it to Mr Starling. 169 The difference in the accounts given by Mr Chapman and Mrs Gill only concern the venue at which this meeting took place. Mr Chapman recalls that the meeting took place at the Christensen Road Factory while Mrs Gill recalls that the meeting took place at her home. That difference in recollection is not sufficient for me to reject either Mr Chapman's or Mrs Gill's evidence. 170 Secondly, Mr Chapman's evidence was that Mr Starling was not at the Christensen Road Factory on 5 January 2016. However, in cross-examination, upon considering Mr Starling's evidence and reflecting on the matter, he frankly conceded that his evidence in that regard was not correct and that he had in fact attended a meeting at the Christensen Road Factory with Mr Starling on that date. The objective evidence supported that a meeting had taken place between, among others, Messrs Starling and Chapman in relation to the insurance claim for the damaged blow moulder. 171 Mr Chapman provided an explanation for not providing the Pink Folder to Mr Starling at the time of that meeting or while at the Christensen Road Factory on 5 January 2016 (see [128]-[129] above). That explanation is entirely plausible and one that I accept. 172 Mr Chapman explained that he wished to go through the Pink Folder with Mr Starling but, given the presence of others, could not. Holdings submits that, if that were so, one would expect to receive evidence from Mr Chapman that at some time after 5 January 2016 he sought to "sit down with Mr Starling and go through the folder" or otherwise to discuss the calculations. That does not necessarily follow, particularly given the steps that Mr Chapman then took to have the Pink Folder delivered to Mr Starling and to put Mr Starling on notice that it was to be provided. 173 Thirdly, contrary to Holdings' contention, Mr Chapman's evidence that he gave the Pink Folder to Candy to give to Mr Starling does not lack credibility. Mr Chapman's evidence that he did so is corroborated in two ways: first, as I have already observed, by Mrs Gill; and secondly, by the October 2016 Letter in which Mr Chapman records that the original documentation was hand delivered to Mrs Gill on the evening of 5 January 2016 and that Holdings' copy was hand delivered to Mr Starling by Candy on the morning of 6 January 2016 (see [151] above). 174 While Candy cannot recall receiving the Pink Folder, she gives evidence of a practice that had developed by which Mr Chapman would from time to time ask her to deliver documents to Mr Starling and she would take those documents and place them on Mr Starling's desk in his office. Candy says that in accordance with her usual practice she would have left the Pink Folder on Mr Starling's desk. Candy was not cross-examined. Her practice in this regard is not disputed. 175 Fourthly, Mr Chapman deposes to a conversation he had with Mr Starling on 5 January 2016 informing him that the he had left the Pink Folder with Candy. Mr Starling denies that this conversation took place. However, once again that conversation is corroborated in the October 2016 Letter. I accept the conversation took place and reject Mr Starling's evidence that it did not. 176 Fifthly, the January 2016 Settlement Statement refers to documents which support the figures included in it and which were enclosed with the January 2016 Letter. In some instances those documents include creation dates. For example Document 2, a "receivables reconciliation [summary]" as of 1 October 2015, and Document 5, a general ledger for the period 1 July 2014 to 1 October 2015, each bear a creation date of 27 December 2015, which is proximate to the date of the January 2016 Letter. That supports a conclusion that the January 2016 Settlement Statement and the January 2016 Letter were prepared and available as at 3 January 2016. It would follow that Mr Chapman would take steps to provide the material to Gillion and Holdings thereafter. Put another way, it is inconceivable that, having prepared the January 2016 Letter and the January 2016 Settlement Statement, Mr Chapman would then not seek to have that material provided to Mr Starling. 177 Sixthly, the circumstances in which the October 2016 Letter was dispatched and its terms shed further light on the issue and support the conclusion I have reached. On 6 October 2016 RMB Lawyers requested Mr Chapman to prepare schedules setting out the calculation of the purchase price figures for the Business Sale Agreement and the Share Sale Agreement and to provide those documents to Holdings and Gillion as soon as possible. On the same day, in response to that request, Mr Chapman sent the October 2016 Letter which, in turn, enclosed the January 2016 Letter and its attachments. As I have already observed, the October 2016 Letter referred to the mode of delivery of the Pink Folder to Holdings in January 2016 and to Mr Chapman's conversation with Mr Starling on 5 January 2016. Subject to one matter, those statements were unprompted and made at a time when this proceeding was not contemplated. As at the date of the October 2016 Letter, Gillion had commenced a proceeding to wind up Holdings. However, there is no evidence about the status of that proceeding as at the date of the October 2016 Letter or Mr Chapman's knowledge of the proceeding such that it would undermine the conclusion I have reached about the terms of the October 2016 Letter. 178 Lastly, Holdings relies on email correspondence between Messrs Chapman and Starling over a four day period in February 2016 (see [146]-[148] above) to support its submission that Mr Chapman's evidence that he gave the Pink Folder to Candy, in turn, to give to Mr Starling is not credible. But that correspondence does not cause me to reach that view. 179 True it is that Mr Starling suggested in his email dated 23 February 2016 that the "30th Sept figures" were not yet finalised between all parties and that Mr Chapman did not respond to or discuss that aspect of the email. However, I accept Mr Chapman's explanation that, at the time, he did not realise that Mr Starling had not received the Pink Folder or that he was unaware of the figures contained in it. 180 Putting that to one side, there is a level of ambiguity in the email. On the one hand, it might convey to a reader that Mr Starling was unaware of the Pink Folder and the January 2016 Letter contained in it but, on the other, it might equally convey that Mr Starling was aware of the Pink Folder but either had not yet considered it or, having looked at it, had issues he wished to raise such that he considered that the outstanding amount to be paid to Gillion had not yet been finalised between the parties. In my opinion, Mr Starling's email dated 23 February 2016 does not provide conclusive evidence that Mr Starling had not received the Pink Folder or undermine Mr Chapman's credibility. 181 In his email dated 25 February 2016 Mr Starling refers to the vendor finance to be provided by Gillion and to an interest payment on a loan which he says is a "yet to be determined amount". In response, Mr Chapman notes that the Vendor Finance Agreement is for $1.75 million and indicates that interest is due on that amount. The email exchange is completed with Mr Starling saying that he will pay the amounts due. Mr Chapman's response did not suggest that there had been any calculation of the figures as at 30 September 2015 but it did quantify the amount of the loan pursuant to the Vendor Finance Agreement at $1.75 million. In doing so, there was an implicit suggestion that the purchase price for the Wet Fix Business had been finalised. Mr Starling did not raise any query about the amount said to be owing under the Vendor Finance Agreement by suggesting, for example, that it could not be quantified because the balance sheet as at 30 September 2015 and/or the adjusted figure for the purchase price had not been provided, but simply noted that he would pay the interest due. 182 These matters taken together lead me to conclude that the Pink Folder was delivered to Mr Starling by placing it on his desk at the Christensen Road Factory on or about 6 January 2016. That having occurred, it is unlikely that Mr Starling would not have seen the Pink Folder at any time between 6 January 2016 and 6 October 2016, the date of the October 2016 Letter. 183 In those circumstances, I am satisfied that the Wet Fix balance sheet as at 30 September 2015 was "made available" to Holdings on or about 6 January 2016. The period in which adjustments could be made to the balance sheet or the purchase price under the Share Sale Agreement ended 15 days after that date, that is on 21 January 2016. Thereafter, no adjustments could be made to the balance sheet or the purchase price. 184 The consequence of this finding is that the issues raised by Holdings in relation to the Wet Fix balance sheet as at 30 September 2015 and the calculation of the purchase price under the Share Sale Agreement in October 2016 were raised outside the 15 day period permitted by Annexure A to that agreement. It follows that the challenges made by Holdings in this proceeding to the January 2016 Settlement Statement and the calculation of the purchase price are out of time. The January 2016 Settlement Statement, which was provided to Holdings on or about 6 January 2016 and in relation to which it made no complaint in the permitted 15 day period, must stand. 185 Based on the January 2016 Settlement Statement, a balance of $89,726.49 was owing by Holdings to Gillion. However, in its cross-claim, Gillion makes no claim for payment of that amount and limits its claim to recovery of the amount it contends remains owing under the Vendor Finance Agreement. Why that is so is not explained. I consider Gillion's cross-claim commencing at [313] below. 4.2 Purchase price – items in dispute 186 Despite my finding that the Pink Folder was made available to Holdings on or about 6 January 2016, given the detailed submissions made by the parties and in case I am found to be wrong, I consider below each of the items which Holdings now contends were either wrongly included or overstated in the January 2016 Settlement Statement. As can be seen from the issues identified by the parties, either Holdings does not press some of the items claimed in the SFASOC or they have been resolved between the parties. 4.2.1 Inventory 187 The first issue that arises is whether the amount included in the January 2016 Settlement Statement for inventory is overstated. 188 Holdings alleges that one of the errors in the January 2016 Settlement Statement is that "the stock inventory was reflective of an estimate, whereas the actual stocktake revealed that estimate was overstated by $1,205,792.84": para 26(e) of the SFASOC. The inventory is valued in the January 2016 Settlement Statement at $2,385,000. 189 A significant amount of evidence was led about the stocktakes and, in particular, the stocktake as at 30 September 2015. That evidence is set out at [96]-[116] above. 4.2.1.1 Parties' submissions 190 Holdings relies on the September 2015 Spreadsheet and contends that it records the correct value of inventory to be taken into account for the purposes of the calculation of the purchase price under the Share Sale Agreement. As I have found to be the case, the September 2015 Spreadsheet was based on the Richardson 2015 Spreadsheet. 191 Holdings submits that the September 2015 Spreadsheet was prepared by BDO and explains the differences between it and the Richardson 2015 Spreadsheet as follows: (1) in the September 2015 Spreadsheet, unit prices for inventory have been changed by BDO, on instructions from Wet Fix staff, to at cost prices rather than sale prices. According to Holdings, the approach taken by Wet Fix of valuing the stock at retail prices and applying a discount and the approach taken by Holdings of valuing the stock at cost prices yield substantially similar figures as is evident from the 30 June 2015 stocktake. It notes that Wet Fix's practice was to apply sale prices and then to apply a discount of 30% whereas BDO applied at cost prices. However, the total in regards to finished product is substantially equivalent; and (2) the September 2015 Spreadsheet excludes discontinued lines, based on a list of redundant items prepared by Mr Starling, which Holdings says are of no commercial value to Wet Fix. 192 Holdings contends that the first adjustment made by BDO, on instructions from Wet Fix, does not materially alter the overall value of finished product and the second adjustment simply ensures that the stocktake figure reflects commercial reality. It submits that neither adjustment ought to cause the Court any difficulty in accepting the September 2015 Spreadsheet advanced by it. 193 Holdings submits that there was no agreement that the inventory as at 30 September 2015 was to be estimated by Mr Chapman and that the Court would conclude that the conversation in which it is alleged that agreement was reached did not take place. 194 Gillion submits that the allegation made by Holdings at para 26(e) of the SFASOC (see [188] above) assumes that it was a breach of the Share Sale Agreement for inventory to be estimated by Mr Chapman and asserts that the actual stocktake revealed that Mr Chapman's estimate was overstated by $1,205,792.84. Gillion contends that Holdings must prove both the assumption and the assertion to succeed on its claim but that Holdings has not proved its claim as to the alleged undervalue of the inventory for three reasons. 195 First, Gillion observes that the Share Sale Agreement does not refer to any method by which inventory should be calculated. Clause A, item 4 of Annexure A to that agreement only states that "inventories of [Wet Fix] as at [30 September 2015]" are to be added to the purchase price and cl C of Annexure A provides that "a balance sheet as at [30 September 2015] is to be prepared by the company accountant Chris Chapman". Gillion submits that Holdings has not established that Mr Chapman's estimate of the value for inventories was in breach of the Share Sale Agreement, much less in circumstances in which the inventory count was incomplete as at 30 September 2015. It says that neither Mr Chapman's method of estimation nor the application of that method to produce his estimate were challenged by Mr Byrne or in cross-examination of Mr Chapman. 196 Secondly, Gillion submits that the parties agreed that Mr Chapman would value Wet Fix's inventory as at 30 September 2015 for the purposes of the Share Sale Agreement by reference to the gross profit percentage of the previous quarter and by multiplying it by the sales revenue for the September quarter, which is precisely what Mr Chapman did. 197 Thirdly, Gillion submits that Holdings has not proved the alleged overstatement of the amount for inventories included in the January 2016 Settlement Statement. 4.2.1.2 Consideration 198 The first matter to consider is whether Holdings has proved its claim as pleaded in the SFASOC, namely that it was a breach of the Share Sale Agreement for inventory to be estimated by Mr Chapman and that the actual stocktake demonstrated that Mr Chapman's estimate of inventory was overstated by $1,205,792.84. 199 The Share Sale Agreement does not provide for any method by which the value of inventory should be calculated. Clause 1(h) defines the term "Purchase Price" to mean the sum calculated in accordance with Annexure A to that agreement and, in turn, cl A of Annexure A simply prescribes a formula to be applied to calculate the purchase price. Clause A, item 4 provides for "inventories of [Wet Fix] as at [30 September 2015]" to be added to the purchase price. Clause C of Annexure A provides that "[a] balance sheet at [30 September 2015] is to be prepared by the company accountant Chris Chapman". 200 Mr Chapman adopted a method of estimation to calculate the value of the inventories as at 30 September 2015. His workings in arriving at the figure for inventories included in the January 2016 Settlement Statement are set out in Document 10 enclosed in the January 2016 Letter. Mr Chapman explains his methodology in his affidavit sworn on 20 April 2018 as follows: 166. I prepared the calculation of the Document 10 amount using a technique called a "constant profit percentage" calculation. 167. The calculation proceeds as follows: for the year ended 30 June 2015 there were sales of $13,555,706 and after deducting the cost of sales (that is, the cost of manufacturing the goods sold), yielded a gross profit figure of $6,020,800. I then divided the gross profit by the sales revenue which gave me a percentage of 44.42%. That indicated that the cost of sales was 63.56% of sales in that period. 168. That calculation tells me the expected cost of the stock and manufacturing needed to produce a given level of sales and, therefore, allows me to calculate implied stock values. That COGS percentage number can be checked for its likely integrity by comparing it to previous periods, other seasonal periods, meaningful groups, such as quarters, and so forth, to see if any significant variation is evident which might put in doubt the calculated relationship of COGS to sales, either generally or for use in a particular period. With most manufacturing processes, unless, for example, some material variation in production mix, or change in sales values occurs, the costs incurred in preparing goods for sale ought be fairly constant as a percentage of sales value. 169. Given the opening stock value for an earlier period was known and the cost incurred in the purchase and manufacture of additional stock was known for a period after that stock count date, the aggregate value of 'available' stock to support sales was known. With the sales known, the cost of the stock sold could be computed, using the percentages above, and, by deducting that number from the "available" stock value, the implied closing stock value is known. Its composition, i.e. the particular physical counts of items, is not known. The implied value is. 170. Because of the nature of the equation, alternatively, a closing stock value can be calculated which will give the calculated cost of goods sold number (calculated from the percentage of sales) or percentage of sales. That is what I did. I estimated the closing stock as at 30 September 2015 to achieve the same gross profit percentage as had been historically achieved. For the months of July, August, September, October and November 2015 I took the sales figure for the month and applied a percentage of 44.42% to get an estimated value of the stock on hand at the end of each period. The actual percentages are slightly different because I rounded the stock figure. 201 Neither Mr Chapman's evidence explaining his methodology or Document 10, which includes Mr Chapman's workings based on that methodology, were the subject of any cross-examination or of any evidence given by Mr Byrne. That is, neither the adoption of the methodology of estimation, the way in which Mr Chapman applied the methodology nor the resulting valuation of the inventories is challenged by Holdings. 202 Holdings has not established that Mr Chapman's estimation of the value for inventories was in breach of the Share Sale Agreement or that the amount arrived at by Mr Chapman adopting his methodology was overstated. It follows that Holdings has failed to make out its claim that the amount included for inventories in the January 2016 Settlement Statement was overstated. 203 Notwithstanding that finding, I turn to consider Gillion's positive defence that the Share Sale Agreement was varied. It contends that, as a complete stocktake had not been completed, the parties agreed that Mr Chapman would value the inventories for the purposes of the Share Sale Agreement by reference to the gross profit percentage of the previous quarter and by multiplying it by the sales revenue for the September quarter (Stocktake Agreement). Mrs Gill and Mr Chapman give evidence of the conversations upon which Gillion relies to contend that the Stocktake Agreement was struck. Mr Starling denies that those conversations took place and thus that the Stocktake Agreement was made. 204 As set out at [113] above, on balance, I am satisfied that the Stocktake Agreement was struck. In coming to that view, I have preferred the evidence of Mrs Gill and Mr Chapman to that of Mr Starling. I have already set out my concerns about Mr Starling's evidence generally. Putting that to one side, the following additional facts support the conclusion I have reached: (1) Mr Chapman calculated the amount for inventories as at 30 September 2015 in accordance with the Stocktake Agreement both in the January 2016 Settlement Statement and the October 2016 Settlement Statements and, in each case, Mr Chapman included his detailed workings showing how he arrived at the figure included for inventories. The January 2016 Settlement Statement was prepared within a few months of the Stocktake Agreement having been made; (2) there is no evidence of Mr Starling or anyone on his behalf providing Mr Chapman or any other party with a completed stocktake based on a manual count in the period leading up to the date of the January 2016 Letter or the subsequent period leading up to the October 2016 Letter. As Gillion submits, that would be expected if he was to adopt a figure for inventories based on a manual stocktake. That this was so also gives force to the existence of the Stocktake Agreement and the parties' understanding that Mr Chapman would adopt the method the subject of that agreement in valuing inventories; (3) true it is that on 6 October 2015 Ms Richardson circulated by email the Richardson 2015 Spreadsheet. However, given the evidence set out at [106]-[107] above, I am not satisfied that it represents a complete stocktake of the inventory as at 30 September 2015 and there is no evidence to suggest that either Gillion or Holdings treated it that way; and (4) Holdings first raised objections to the January 2016 Settlement Statement in October 2016 at a time when it was defending an application by Gillion to wind it up. Prior to that time, it had not raised any issue about the calculations that had been undertaken including the valuation of the inventories in accordance with the Stocktake Agreement. Similarly, as I have already observed, the methodology adopted by Mr Chapman has not been challenged by Mr Byrne. 205 Holdings submits that the continuation of the stocktake after 30 September 2015 and the timing of the Stocktake Agreement favours Mr Starling's version of events and tells against a finding that the parties made any such agreement. I do not accept that is so. 206 While Mr Chapman accepted in cross-examination that the consequence of the Stocktake Agreement would be for Ms Richardson to stop the stocktake, he was unaware that Ms Richardson had not been given such a direction. That is hardly surprising given Mr Chapman's role as the accountant for Gillion and Mr Starling's interests. It is not suggested that he should have given such a direction to Ms Richardson. 207 Mrs Gill provided a credible explanation for why she did not tell Ms Richardson on 30 September 2015 to stop doing the stocktake. She explained, first, that, in effect, it did not occur to her to do so on 30 September 2015 and, secondly, as at 1 October 2015 she was no longer running the Wet Fix Business and so it did not fall to her to tell Ms Richardson what to do. 208 Insofar as Holdings contends that the amount for inventories included in the January 2016 Settlement Statement is overstated, it relies on the September 2015 Spreadsheet. However, the evidence before me establishes that the September 2015 Spreadsheet is inherently unreliable. My reasons for reaching that conclusion follow. 209 First, on Mr Starling's own evidence, while the physical exercise of counting the stock commenced on 30 September 2015 it was not completed until some four or five days later on 4 or 5 October 2015. Given the evidence that neither production nor deliveries and collections were halted during that period, any stocktake undertaken over a period of four or five days could not be a stocktake of the position as at 30 September 2015. 210 Further, given the ongoing production, collection of finished goods and delivery of raw materials, it was not possible to undertake an accurate stocktake. Mr Starling suggested that it is possible to count stock without shutting down production and deliveries using production records because production runs and production sheets are recorded. However, he conceded that as at 30 September 2015 there was no electronic system in place to enable this to be done. 211 Secondly, Mr Starling was not present when the stocktake was undertaken, did not produce the September 2015 Spreadsheet but relied on others to do so, did not know if the Richardson 2015 Spreadsheet (on which the September 2015 Spreadsheet was based) recorded the stock on the floor of the Wet Fix premises as at 30 September 2015 and was unaware who of Ms Richardson or Ms Bray inputted the pricing information into the September 2015 Spreadsheet, although he suggested it would more likely be Ms Bray. 212 Mr Starling also suggested that BDO prepared the stocktake figures in the September 2015 Spreadsheet based on the cost of goods sold. However, Mr Byrne's evidence, which I accept, is that he was provided with the stock counts and the cost of goods sold by Ms Bray on 6 October 2016 and that his role was limited to ensuring that the calculation of total values was accurate. In other words, he carried out an arithmetic exercise. Mr Byrne did not check the figures provided for the cost of goods sold. 213 It is apparent, based on the evidence before me, that Ms Bray was responsible for preparing and inputting the pricing in the September 2015 Spreadsheet. Ms Bray, who from 15 October 2015 was employed as an office manager by Mr Starling, did not give evidence. The approach taken by Ms Bray to the preparation of and the pricing included in the September 2015 Spreadsheet is thus unknown. If called, Ms Bray presumably could have given evidence about the preparation of the September 2015 Spreadsheet, the approach taken to the unit pricing included in it and why some of the items had no cost attributed to them. As a former employee of Wet Fix, Ms Bray is in Holdings' "camp": see Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345 at [260]-[265]. Notwithstanding that, she was not called. No explanation was given for why that was so. In the circumstances of this case and given her role in preparing the September 2015 Spreadsheet, I infer that Ms Bray's evidence would not have assisted Holdings to establish that the September 2015 Spreadsheet accurately recorded the value of the Wet Fix's inventory as at 30 September 2015: see Jones v Dunkel (1959) 101 CLR 298 at 320-322. 214 Thirdly, it appears that the September 2015 Spreadsheet was created about a year after the actual stocktake was said to have taken place. On 29 September 2016 at 7.37 pm Ms Bray emailed a copy of it to Mr Starling. A screenshot of the document properties of the September 2015 Spreadsheet shows that its author was Ms Richardson and it was last modified by Ms Bray on 29 September 2016 at 7.36 pm, one minute prior to it being sent to Mr Starling. Although it is not clear and his evidence was somewhat confused on the issue, it seems that Mr Starling first received the September 2015 Spreadsheet on 29 September 2016. 215 Fourthly, Ms Richardson was unable to verify the accuracy of the September 2015 Spreadsheet. For example, she acknowledged that in the September 2015 Spreadsheet stock was listed at cost prices but that was not her area and she was not involved in applying values to the stock recorded. Further, she could only verify that the counting of finished product at the Christensen Road Factory was complete as at 30 September 2015, she could not recall the position with raw materials at that site and was not involved in any stocktake which took place at the Business Street Factory or the Burnside Road Factory. 216 Finally, the September 2015 Spreadsheet is different to the Richardson 2015 Spreadsheet in a number of respects beyond those identified by Holdings including: (1) the effect of Holdings' submission about the differences between the two spreadsheets is that the principal change is that sale prices were replaced with cost prices of stock. That submission must necessarily be understood as applying to finished product for which a cost price may be ascertainable. However, the changes to pricing of product to reflect its cost was not limited to finished product. A comparison of the September 2015 Spreadsheet with the Richardson 2015 Spreadsheet shows that there are also changes in the former to the unit prices of raw materials; (2) there are also changes to the quantity of materials. This may be the result of Holdings removing what it considered to be redundant stock items; and (3) there are additional items recorded under the heading "Wrap" in the September 2015 Spreadsheet which are not recorded in the Richardson 2015 Spreadsheet. Mr Starling accepted in cross-examination that the Richardson 2015 Spreadsheet must be inaccurate in this respect. 217 In my opinion, the September 2015 Spreadsheet is unreliable and cannot assist Holdings to prove that Gillion breached the Share Sale Agreement by valuing the inventories at the level that it did or, put another way, because the inventories were overvalued. 4.2.2 Capital expenditure 218 The second issue raised by Holdings concerns an amount of $82,408.76 for expenditure on maintenance which is included in the January 2016 Settlement Statement as an asset under the heading "Plant and equipment since 31/3/15" (see [122] above). Holdings contends that this amount should rather have been included as an expense: para 26(c) of the SFASOC. 4.2.2.1 Parties' submissions 219 Holdings submits that the amount of $82,408.76 included in the January 2016 Settlement Statement as an asset is based on Mr Chapman's identification of payments recorded in Wet Fix's repairs and maintenance ledger which he says relate to the installation of new equipment at the Burnside Road Factory. The basis of Mr Chapman's characterisation of those items as purchases relating to the new factory is that the notation "Burnside" appears next to those entries in Wet Fix's ledger. 220 Holdings notes that Mr Chapman cites Accounting Standard AASB 116 Property, Plant and Equipment (AASB 116) as authorising treatment of these costs as falling within the definition of "assets" and that, in its opening submissions, Gillion pointed to ATO Taxation Ruling IT 2197 as authorising treatment of expenditure on setting up new plant and equipment as capital expenditure. Holdings submits that whether or not that type of expenditure is appropriately treated as capital expenditure is beside the point because Gillion has not established what the relevant entries in Wet Fix's ledgers recorded or that those entries pertain to the installation of new plant and equipment at the Burnside Road Factory. Holdings says that Mr Chapman's evidence and the ledgers upon which he relied have been shown to be unreliable. 221 Holdings submits that, absent evidence particularising the underlying transactions, as to what the relevant payments were made for, to whom, and in relation to what services, the claim for the propounded adjustment should fail. It contends that no explanation has been offered as to why Gillion did not seek discovery of the invoices underpinning the journal entities that it seeks to rely upon. 222 Gillion relies upon entries contained in the Wet Fix general ledger created on 14 December 2015 (General Ledger) which identifies expenditure incurred by Wet Fix for the purposes of setting up plant and equipment at the Burnside Road Factory and submits that Mr Chapman's evidence on this issue was unchallenged in cross-examination. 223 Gillion submits that it is uncontroversial that between June and October 2015 the blow moulder and related bottling equipment was being set up in the Burnside Road Factory, that these costs fall within the definition of "assets" in AASB 116 and were incurred solely or mainly for preparation of the site, plant and equipment installation and assembly costs. Gillion notes that cll 7, 11, 15, 16 and 17 of AASB 116 are particularly relevant. 224 Gillion submits that the only evidence relied upon by Holdings to claim that these items are an expense is a speculative statement by Mr Starling that, as far as he is aware, those items were claimed as tax deductible expenses by Wet Fix and not treated as capital expenditure. However, in cross-examination Mr Starling did not know whether Wet Fix lodged an income tax return. 4.2.2.2 Consideration 225 Mr Chapman's evidence is that the amount of $82,408.76 included in the January 2016 Settlement Statement is the accumulation of the amounts spent on set up of the Burnside Road Factory, which was calculated by adding the items listed in the General Ledger in the section headed "Repairs & Maintenance" beside which appears the notation "Burnside". It is not necessary to set out those amounts. 226 Mr Chapman says that these items are capital expenses because they were incurred for the purpose of setting up the plant and operations in the new factory; they do not relate to repairs and maintenance because they do not represent costs for work done on existing plant to make it good after its use in the business. Mr Chapman also says that these costs fall within the definition of "assets" in AASB 116 and were incurred or mainly incurred for preparation of the site, plant and equipment installation and assembly costs. In summary, Mr Chapman says that they were included in the January 2016 Settlement Statement because they were capital expenses paid by Wet Fix. 227 Mr Starling's evidence is that the Burnside Road Factory was not leased until June 2015 and that, as far as he is aware, the repairs and maintenance in the General Ledger for these items were claimed as tax deductible expenses by Wet Fix and not treated as capital expenditure. However, in cross-examination, Mr Starling did not know whether Wet Fix lodged an income tax return for the period ended 30 June 2015. 228 Mr Chapman was not cross-examined in relation to his evidence as to how the amount of $82,408.76 was calculated and why it was included as an asset. I am not satisfied that Mr Chapman's evidence on this point and the General Ledger entries upon which he relies are unreliable and I accept his evidence on the issue. 229 Further, as Gillion submits, Mr Chapman relied upon MYOB entries inserted contemporaneously by Wet Fix accounting staff, which are business records. In the circumstances, I can infer that the amounts bearing the annotation "Burnside" in the General Ledger represent those amounts associated with the cost of setting up plant and equipment in the Burnside Road Factory. The blow moulder and bottle filling plant were being set up in the Burnside Road Factory from early June 2015 until October 2015. 230 Gillion relies on cll 7, 11, 15, 16 and 17 of AASB 116. In particular, cll 16 and 17 provide: 16 The cost of an item of property, plant and equipment comprises: (a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates. (b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. (c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period. 17 Examples of directly attributable costs are: (a) costs of employee benefits (as defined in AASB119 Employee Benefits) arising directly from the construction or acquisition of the item of property, plant and equipment; (b) costs of site preparation; (c) initial delivery and handling costs; (d) installation and assembly costs; (e) costs of testing whether the asset is functioning properly, after deducting the net proceeds from selling any items produced while bringing the asset to that location and condition (such as samples produced when testing equipment); and (f) professional fees. (Emphasis added.) 231 Given those clauses and Mr Chapman's unchallenged evidence, in my opinion, Holdings has not established that the amount of $82,408.76 included in the January 2016 Settlement Statement should not have been characterised as an asset and should have been regarded as an expense. Accordingly, Holdings has not established that any adjustment should be made for this item. 4.2.3 Creditors 232 The next issue concerns the amounts recorded for creditors. Holdings contends that the amount included in the January 2016 Settlement Statement for creditors was understated by $93,068.40: para 26(f) of the SFASOC. 4.2.3.1 Parties' submissions 233 Holdings submits that Mr Chapman gives a figure for creditors as at 30 September 2015 of $1,743,726.88 but that BDO's calculation of the same figure, based on a "direct extraction" from Wet Fix's current MYOB accounts, is $1,836,795.28. 234 Holdings observes that Mr Chapman has calculated his figure by the same method, namely by "direct extrapolation" from Wet Fix's MYOB accounts. 235 Holdings contends that the BDO calculation is based on a later version of Wet Fix's MYOB accounts and that Mr Chapman accepts that the later version is correct, including ledger entries which had not been made in MYOB at the time when he made his calculations. Mr Chapman asserts that $79,547.36 of the now accepted additional creditors figure comprises "additional mainly plant and equipment invoices for Burnside Road" but there is no evidence beyond that assertion to establish that these creditors corresponded with the purchase of plant and equipment for the purposes of cl A, item 6 of Annexure A to the Share Sale Agreement. Holdings submits that the Court would accept the creditors figure put forward by it. 236 Gillion submits that Holdings has never provided it with the invoices to support its claim that Mr Chapman's calculation was understated. However, Gillion located those invoices within material produced by BDO pursuant to a subpoena dated 3 October 2018. 237 In response to this claim, Gillion relies on Mr Chapman's unchallenged evidence that, of the invoices totalling $93,068.40, $81,151.21 relates to plant and equipment in relation to the setting up of the Burnside Road Factory such that $13,521.04 should be added to cl A, item 7 (creditors) in Annexure A and $81,151.21 should be added to cl A, item 6 (plant and equipment purchased after 31 March 2015) in Annexure A, again by reason of the clauses of AASB 116 set out at [230] above. 4.2.3.2 Consideration 238 In order to resolve this issue it is necessary first to set out the relevant evidence. Holdings relies on calculations undertaken by BDO which are based on an extract from Wet Fix's MYOB accounts as at 30 September 2015. The total figure based on that extract is $1,836,885.57. 239 The amount included by Mr Chapman in the January 2016 Settlement Statement for creditors was based on an earlier version of Wet Fix's MYOB accounts. Mr Chapman has reviewed the later extract from Wet Fix's MYOB accounts relied on by BDO to prepare its calculation as well as the invoices which supported what I understand to be the additional creditors included in BDO's calculation, and agrees that that additional amount represents creditors. 240 Mr Chapman explains that the additional creditors were not included in his original calculation because they were not recorded, or properly recorded, in MYOB at the time he undertook his calculations and thus not included in the payables reconciliation summary which he relied on when preparing the January 2016 Settlement Statement. 241 Based on Mr Chapman's review of a spreadsheet titled "Payable Reconciliation [Detail]" as at 30 September 2015 which was produced by BDO, the additional creditors total $94,672.25, rather than $93,068.40 as calculated by BDO. Mr Chapman says that of this amount, that is, $94,672.25: (1) $81,151.21 relates to plant and equipment. Mr Chapman says that this is mainly for the Burnside Road Factory and that this amount should be added to the purchase price under the Share Sale Agreement for additional purchases made after 31 March 2015 pursuant to cl 1(i) and Annexure A to that agreement. He says the net effect of this on the final purchase price payable by Holdings to Gillion will be neutral; and (2) only those creditors whose invoices are not relevant to post 31 March 2015 purchases for plant and equipment should be included as a deduction to the purchase price payable under the Share Sale Agreement. That amount is either $13,521.04, if the total amount of creditors is $94,672.25 as calculated by him, or $11,917.19 if the total amount of creditors is $93,068.40 as calculated by BDO. 242 Mr Chapman's evidence was not challenged and should be accepted. That is, of the amount of $94,672.25 for creditors: $13,521.04 should be added to cl A, item 7 (creditors) in Annexure A to the Share Sale Agreement, which would reduce the purchase price under that agreement by that amount; and $81,151.21 should be added to cl A, item 6 (plant and equipment purchased after 31 March 2015) in Annexure A to the Share Sale Agreement for the same reasons set out at [226] and [230] above. It follows that the purchase price under the Share Sale Agreement would be reduced by $13,521.04. 4.2.4 Other creditors 243 Holdings also raises an issue in relation to other creditors. It contends that a further liability in the amount of $30,067.75 was not recorded in the January 2016 Settlement Statement: para 26(g) of the SFASOC. 4.2.4.1 Parties' submissions 244 Holdings submits that BDO made adjustments to the accounts of Wet Fix to capture creditors of Wet Fix as at 30 September 2015 which are not reflected in the ledger from which Mr Chapman derived his "other creditors" figure. It contends that Mr Chapman now accepts the BDO calculations with one caveat. That is, Mr Chapman says that there is a duplication in the electricity ledger account. Holdings submits that unless the Court is satisfied on the face of the evidence that the duplication occurred, it should accept the BDO calculations as correctly stating the "other creditors" figure and adopt its position in relation to this item. 245 Gillion submits that this amount is a double counting error and should not be included. It contends that, contrary to Holdings' submissions, the onus is on Holdings to demonstrate that the adjustment it seeks is accurate, not on Gillion. 4.2.4.2 Consideration 246 In order to resolve this issue, it is again necessary to examine the relevant evidence. In support of its claim, Holdings relies on the following adjustments made by BDO to the ledger from which Mr Chapman derived his "other creditors" figure (BDO Other Creditors Ledger): 247 Mr Chapman gives the following evidence about the BDO Other Creditors Ledger: (1) he has now had the benefit of reviewing some of the source documents relating to the entries in the BDO Other Creditors Ledger; (2) on the basis of those documents, Mr Chapman accepts all of the creditors in the BDO Other Creditors Ledger other than: (a) the three invoices from ASB totalling $1,910.11 which relate to the commissioning of the blow moulder at the Burnside Road Factory. Mr Chapman says these were either included in the insurance claim for the dropped blow moulder and reimbursed to Wet Fix, in which case they should not be included as creditors for the purposes of the calculation of the purchase price under the Share Sale Agreement or, alternatively, if they are creditors (because the invoices were paid by Wet Fix without reimbursement from the insurer) then they should also be included in the purchase price as plant and equipment purchased after 31 March 2015 pursuant to cl 1(i) and Annexure A to the Share Sale Agreement. However, Mr Chapman says that as no such commensurate increase in the purchase price under the Share Sale Agreement has been made, the ASB invoices should be deducted. Mr Chapman opines that on either alternative there should be a nil effect on the purchase price under the Share Sale Agreement; and (b) in relation to the amount of $31,007.34 which relates to electricity. Mr Chapman says that, based on his review of the MYOB electricity account ledger, there were four invoices recorded in September 2015, two for the month of August 2015 and two for the month of September 2015. The entries of $16,895.74 and $14,178.49 on 30 September 2015 total $31,074.23 (excl GST), being the amount incurred for electricity for September 2015 but paid after 30 September 2015. A further entry of $28,188.49 has then been included on 30 September 2015, which was reversed on 1 October 2015. The electricity expense of $31,007.34 (incl GST) included in the BDO Other Creditors Ledger appears to be a duplication of the electricity invoices for August 2015 of $15,716.65 and $12,471.85 totalling $28,188.50 (excl GST) or $31,007.34 (incl GST). This additional creditor should therefore not have been included in the purchase price as it relates to the electricity bill for August 2015 which had already been taken into account. This amount should have been reversed on 30 September 2015 rather than 1 October 2015 because Holdings obtained the benefit of the additional $31,007.34 in creditors in the Share Sale Agreement calculations, which were calculated as at 30 September 2015; and (3) Mr Chapman concludes that "other creditors" included by BDO of $30,067.75 less the ASB invoices and the electricity expense totalling $32,917.45 means that there should be an increase in the purchase price under the Share Sale Agreement of $2,849.70 in Gillion's favour. 248 True it is that Mr Chapman accepts the entries in the BDO Other Creditors Ledger. However, he does so with a caveat to, significantly, the electricity expense of $31,007.34 (incl GST). 249 Mr Chapman's evidence setting out his analysis of the amounts included in the BDO Other Creditors Ledger was not challenged in cross-examination. Nor has Holdings led any evidence explaining why Mr Chapman's analysis is not correct. Accordingly, I would not, as Holdings urges me to do, accept BDO's calculations on their face as correctly stating the "other creditors" figure and adopt its position. Rather, I accept Mr Chapman's unchallenged evidence and his analysis of the amount claimed in the BDO Other Creditors Ledger. 250 That being so, Holdings' contention that an additional amount of $30,067.75 for "other creditors" should be included in the calculation of the purchase price under the Share Sale Agreement is not made out. 4.2.5 Blow moulder and bottle filling plant – ANZ leases 251 Holdings contends that the amount of $2,249,381.50 included in the January 2016 Settlement Statement against the entry "ANZ Leases" under the heading "Plant and equipment since 31/3/15" was plant and equipment owned by the ANZ as lessor and that, in circumstances where the corresponding lease liability was not included in the calculation of the purchase price, this amount was wrongly included. The relevant plant and equipment is the blow moulder and bottle filling plant. Holdings contends that the amount it owes to Gillion on account of the blow moulder and bottle filling plant is nil: paras 17 and 26(d) of the SFASOC. 252 In considering this claim, two issues arise: (1) has Holdings proved its claim that the blow moulder and bottle filling plant was wrongly included in the January 2016 Settlement Statement because it was owned or leased by the ANZ; and (2) if the answer to the first issue is yes, has Gillion established its positive defence, namely that the purchase price of the blow moulder and bottle filling plant should be added to the purchase price of the Business Sale Agreement pursuant to special condition 4. 4.2.5.1 Parties' submissions 253 According to Holdings, Gillion accepts that Mr Chapman's calculations in the January 2016 Settlement Statement are wrong and that no amount for the blow moulder or bottle filling plant should have been included in the purchase price under the Share Sale Agreement. It notes that by way of defence to its claim Gillion seeks to withhold equivalent amounts from it as adjustments to the purchase price under the Business Sale Agreement. 254 Holdings submits that the Business Sale Agreement completed on 1 October 2015 and that, unlike the Share Sale Agreement, it does not make provision for a purchase price adjustment after an agreed review period, no clause for the adjustment of the purchase price was ever inserted into the Business Sale Agreement, there is no evidence that Gillion understood the Business Sale Agreement to do other than provide for a "once and for all settlement on completion date" and no claim for rectification is brought. 255 Holdings submits that special condition 2 in the Business Sale Agreement does not derogate from this position. It provides that the Business Sale Agreement is "subject to and conditional upon the contemporaneous completion of" the Share Sale Agreement. But, the Share Sale Agreement also completed on 1 October 2015: title and control of Wet Fix vested in Holdings on 1 October 2015 pursuant to cl 14.3 of the Share Sale Agreement; and the parties discharged all obligations attendant upon completion as itemised in cll 14.4 to 14.9 of that agreement. 256 Holdings submits that the provision for adjustment of the purchase price pursuant to cl D of Annexure A to the Share Sale Agreement does not impede or postpone completion of the Share Sale Agreement but simply provides for adjustment of the purchase price. It says that there is no provision for any party to rescind the agreement if the outcome of the "due diligence" contemplated is not satisfactory and the clause contemplates a monetary adjustment only, which is entirely consistent with the transaction prescribed under the Share Sale Agreement having completed. 257 Assuming that Gillion is permitted to claim increases in the purchase price under the Business Sale Agreement, Holdings observes that, in order to retain the overpayments made pursuant to the Share Sale Agreement, Gillion claims two distinct sums: first, $2,110,297.46 on the basis that Gillion made payments using funds it asserts were advanced to it by the ANZ for the blow moulder and bottle filling plant and that these payments constitute amounts "paid by the Seller" for the purposes of special condition 4; and secondly, $1,017,567.69 for equipment which Gillion says was purchased by Wet Fix and on sold to it by way of accounting entries, which is addressed below under the heading "Plant and equipment – post 31 March 2015 assets". 258 In relation to the amount advanced by the ANZ, Holdings submits that Gillion's position is untenable for two reasons. First, special condition 4 captures deposits only and no deposit was paid by Gillion on the blow moulder or bottle filling plant. Secondly, even if special condition 4 is construed more expansively there is no evidence to satisfy the Court that the equipment was "delivered" to Gillion or that it made any payment towards the blow moulder or the bottle filling plant. 259 In relation to the construction of special condition 4, Holdings submits that it is plain from the text that it only captures deposits paid on plant and equipment of the kinds described. It contends that the language is not ambiguous and in those circumstances the Court ought to be very slow to look beyond the text of the document. Holdings submits that to the extent that evidence of the parties' understanding is relevant, the evidence indicates that special condition 4 captures deposits only. No deposit was paid by Gillion on the blow moulder and bottle filling plant, which was accepted by Mrs Gill and recorded in the BSA Equipment Schedule. 260 Holdings submits that, in any event, a broader construction of special condition 4 would not assist Gillion in relation to the blow moulder and the bottle filling plant because the equipment was ordered by Wet Fix, not Gillion, in late 2014. There is no evidence establishing that Gillion made any payment towards either item. Holdings contends that these items were not invoiced by Wet Fix to Gillion and thus cannot have been "paid by" Gillion through the Gillion loan account. The evidence is that Gillion does not have a bank account. Holdings submits that the evidence relating to the Import Finance Facility does not establish what the drawdowns on that facility paid for, as Mr Chapman admitted. 261 Gillion submits that the consequence of Holdings' position is that it obtains a windfall of millions of dollars' worth of equipment because of the terms of a settlement statement prepared by an accountant. It contends that, as a matter of contractual construction, that approach should be rejected. It says that there is no doubt that the Business Sale Agreement, Share Sale Agreement and Vendor Finance Agreement are integral parts of the same transaction intended to regulate, as a totality, the relations, rights and obligations of the parties and they are incapable of being treated as independent of each other. 262 Gillion submits that each of the Business Sale Agreement and the Share Sale Agreement was subject to and conditional upon completion of the other, that cl 14.9 of the Share Sale Agreement obliged Gillion to make available vendor finance and that the terms of the Vendor Finance Agreement permitted the finance to be applied for both the Share Sale Agreement and the Business Sale Agreement. Gillion further submits that the Business Sale Agreement and Share Sale Agreement are complementary and form part of a single transaction, the sale of the water supply business and the accounting for, among other things, all plant and equipment purchased by Wet Fix pursuant to cl A, item 6 in Annexure A to the Share Sale Agreement and by Gillion pursuant to special condition 4 of the Business Sale Agreement after 31 March 2015. 263 Gillion submits that the purpose of these clauses was to permit the parties to agree to a base amount for the water supply business but to ensure that, in addition to those base amounts, compensation was given for the significant amounts that Gillion and Wet Fix incurred for stock and plant and equipment to develop a second bottling line for a Woolworths contract at the Burnside Road Factory which would come to fruition during Holdings' ownership. Gillion submits that that is the commercial context in which the Share Sale Agreement and the Business Sale Agreement were made and it was plainly the intention of the parties that they be dealt with in a composite manner such that a disagreement about plant and equipment included under the Share Sale Agreement would necessitate a review of the amount paid under the Business Sale Agreement. 264 Returning to Holdings' claim in the SFASOC, Gillion submits that Holdings has not proved that the blow moulder and bottle filling plant were owned by the ANZ or leased by the ANZ to anyone and that, quite properly, Holdings does not contend otherwise. Accordingly, Gillion submits that Holdings' claim in respect of this challenge to the purchase price must be dismissed. 265 Gillion submits that Holdings' claim must be dismissed irrespective of whether its positive defence, that the purchase price of the blow moulder and bottle filling plant must be added to the purchase price of the Business Sale Agreement pursuant to special condition 4, succeeds. If Holdings does not prove its claim, it is unnecessary for Gillion to have recourse to its positive defence. It becomes a further answer to an unproved claim. Gillion submits that notwithstanding that Holdings appears to have abandoned its pleaded claim, Holdings makes submissions in response to Gillion's positive defence but, absent proof of Holdings' claim, Holdings' submissions responding to Gillion's positive defence are pointless. 266 For completeness, Gillion responds to Holdings' submission that the amount owed by it for the blow moulder and bottle filling plant is nil because no deposit was paid by Gillion for that equipment and the equipment was ordered by Wet Fix in late 2014. 267 Gillion submits that the evidence of its ownership of the blow moulder and bottle filling plant is strong and often corroborated by business records. 268 Gillion submits that in the Share Sale Agreement Wet Fix is stated as neither having entered into any commitment for capital expenditure to acquire, modernise, or repair any assets (cl 7.8C(b)) nor being subject to any contractual arrangements relating to the business, other than a service or maintenance agreement relating to plant or equipment, which involve total financial liability for Wet Fix which is likely to exceed $100,000 (cl 7.8C(c)), except as specified in Schedule 1 which records "nil" for both items. Gillion says that this could only be true if the parties treated it as having purchased and owned the blow moulder and bottle filling plant. 269 Gillion submits that Holdings' contention that because Wet Fix is named on the invoice, the parties are in a world where Gillion is not entitled to repayment of $2,249,381.50 paid by it to set up a new bottling line is an argument that triumphs form over substance and which fails. 270 Gillion relies on special condition 4 to the Business Sale Agreement and says that it had paid a deposit on the blow moulder and bottle filling plant, albeit the deposit was missed in the BSA Equipment Schedule. If that fails, because the deposit amount was not listed in the BSA Equipment Schedule, Gillion contends that it may also be fairly characterised as "any other plant and equipment ordered but not delivered to [Gillion] prior to 31 March 2015" noting that the parties agree that the blow moulder and bottle filling plant were delivered after 31 March 2015. 271 Gillion submits that Holdings' contention that special condition 4 is limited only to payment of deposits is an interpretation which works a commercial improbability. It says that if it pays the total purchase price for an expensive piece of equipment after 31 March 2015 but prior to completion, it cannot claim anything for that amount under special condition 4 but if it only pays a percentage of the purchase price for that item prior to completion, it can claim back the entirety of that percentage as a deposit. Gillion submits that the Court should avoid an interpretation of the Business Sale Agreement that would work such an outcome and that it is most unlikely that the parties intended for Gillion to gift expensive plant and equipment to Holdings. 272 Gillion submits that having regard to the objective circumstances surrounding the entry by the parties into the Business Sale Agreement, including the transaction they were trying to effect, Holdings' submissions on this issue should be rejected. It submits that special condition 4 should be interpreted as follows: In addition to the Purchase Price at completion, [Holdings] will pay by cash or bank cheque to [Gillion] the sum of (a) the deposits paid by [Gillion] on plant and equipment listed in Schedule "B" and (b) any other plant and equipment ordered but not delivered to [Gillion] prior to 31 March 2015 and (c) any other plant and equipment ordered after 31 March 2015. 273 Gillion submits that even if, contrary to its position, the equipment in issue was purchased by Wet Fix not Gillion, the same outcome prevails because the price of the equipment must be added to the purchase price under cl A, item 6 of Annexure A to the Share Sale Agreement. It says that it does not avail Holdings to point to the fact that the equipment was ordered by Wet Fix prior to 31 March 2015. The parties clearly intended that under the Share Sale Agreement outlays by Wet Fix for plant and equipment between 31 March 2015 and completion would be added to the purchase price. If it were otherwise and, say, Wet Fix paid a 10% deposit on plant and equipment prior to 31 March 2015 and the balance by completion, Holdings would receive the latter 90% for free, which could scarcely be what was intended. 4.2.5.2 Consideration 274 The first issue to consider is whether Holdings has established its pleaded case that the January 2016 Settlement Statement contained errors and omissions because $2,249,381.50 worth of equipment was owned by the ANZ as lessor and, in circumstances where the corresponding lease liability was not included in the calculations, this amount was wrongly included in the January 2016 Settlement Statement. 275 As Gillion points out, Holdings does not seem to press its claim that the blow moulder and bottle filling plant were leased or owned by the ANZ. In any event, there is no lease document relied on by Holdings between the ANZ and Wet Fix or Gillion. Further, the evidence establishes that the blow moulder and bottle filling plant were purchased using the Import Finance Facility made available by the ANZ to Gillion, at settlement of the sale of the Wet Fix Business the outstanding amount owing by Gillion to the ANZ under that facility was paid out by funds borrowed by Holdings from the NAB, and at that time Gillion provided a tax invoice to Holdings for certain equipment including the blow moulder and bottle filling plant. That evidence is set out at [80]-[92] above. In my opinion, Holdings has not established its pleaded case. 276 Holdings' submission that the evidence relating to the Import Finance Facility does not establish the purpose of the drawdowns is rejected. The evidence is sufficient to establish, on the balance of probabilities, that drawdowns on the Import Finance Facility were applied towards payments for the blow moulder and bottle filling plant. Mr Chapman's evidence in cross-examination relied on by Holdings relates to a particular document, Document 9.3, which Mr Chapman included in support of the January 2016 Settlement Statement and the October 2016 Settlement Statements and in relation to which he conceded that it was not possible to ascertain for what the amounts referred to therein as the "ANZ figure" were used. However, Mr Chapman explained that other documents were obtained after he had undertaken his calculations. In particular the email dated 23 May 2017 from Mr Gardner of the ANZ (see [92] above) was obtained from the ANZ. It is that document on which Gillion relies and based on which I am satisfied that monies advanced to Gillion under the Import Finance Facility were applied by it to purchase the blow moulder and bottle filling plant. I am satisfied that Gillion paid for the blow moulder and bottle filling plant, notwithstanding that the suppliers' invoices were issued to Wet Fix. 277 Holdings relies on Mr Chapman's evidence given in cross-examination which is summarised at [124] and [153] above to contend that the amount of $2,249,381.50 of equipment was wrongly included in the January 2016 Settlement Statement. The effect of that evidence is that: (1) Mr Chapman accepted that the January 2016 Settlement Statement did not provide for adjustments under the Share Sale Agreement and Business Sale Agreement. It provided an adjusted price under the Share Sale Agreement calculated in accordance with Annexure A and set out the price under the Business Sale Agreement, being $6 million; and (2) in the October 2016 Settlement Statements, Mr Chapman recalculated the amounts due under the Share Sale Agreement and the Business Sale Agreement by, relevantly, allocating the amount previously included under the Share Sale Agreement for the blow moulder and bottle filling plant and other equipment to the Business Sale Agreement and recalculating the amount due under that agreement, relying on special condition 4 of the Business Sale Agreement. 278 Mr Chapman admits that his calculations of the amount due under the Share Sale Agreement as set out in the January 2016 Settlement Statement were wrong. Although he does not expressly say so, I infer that is because, as Holdings contends, he allocated the blow moulder and bottle filling plant to the Share Sale Agreement. Mr Chapman says that he recalculated the amounts based on a request from Gillion's lawyers at the time in which it seems that some guidance was given as to the items to be included under each agreement. Thereafter, he undertook his calculations independently. 279 In the event that I am wrong in the conclusion I have reached about Holdings' pleaded case, and given the value of this potential adjustment and the detailed submissions made in relation to it, I consider below Gillion's positive defence. 280 Gillion relies on special condition 4 of the Business Sale Agreement as the basis for its addition of the price of the blow moulder and bottle filling plant to the purchase price under that agreement. Holdings disputes Gillion's right to rely on special condition 4 to add the cost of the blow moulder and the bottle filling plant to the purchase price under the Business Sale Agreement. 281 The principles in relation to the construction of a contract were not in dispute. In Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at [46]-[51] French CJ, Nettle and Gordon JJ said: 46 The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose. 47 In determining the meaning of the terms of a commercial contract, it isnecessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract. 48 Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning. 49 However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals. 50 Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations. 51 Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption "that the parties ... intended to produce a commercial result". Put another way, a commercial contract should be construed so as to avoid it "making commercial nonsense or working commercial inconvenience". (Footnotes omitted.) 282 In Toohey v Gunther (1928) 41 CLR 181 Isaacs J considered the construction of separate instruments executed by the same parties at about the same time, observing at 196 that: … The true principle of construction in such cases is stated by Knight Bruce L.J., when delivering the judgment of the Privy Council in Shaw v Jeffery [(1860) 13 Moo. P.C.C. 432, at pp. 456-457.], as follows: "When the same parties execute contemporaneously several instruments relating to different parts of the same transaction, all must be considered together; all must be examined in order to understand each; apparent inconsistencies are to be reconciled; and where there are real inconsistencies, the governing intention of the parties is still to be collected from a consideration of the language of all the instruments, and effect given to it." … 283 I accept that the Business Sale Agreement, Share Sale Agreement and Vendor Finance Agreement were integral parts of the same transaction and together intended to regulate the obligations and rights of the parties in the sale and purchase of the Wet Fix Business. Special condition 2 of the Business Sale Agreement (see [77] above) and cl 6.2 of the Share Sale Agreement (see [69(5)] above) support that view. Further, the Vendor Finance Agreement provides that the amount advanced could be applied in relation to both the Business Sale Agreement and the Share Sale Agreement. 284 I also accept Gillion's submission that the terms of the Business Sale Agreement and the Share Sale Agreement are complementary and form part of a single transaction, namely the sale of the Wet Fix Business. To that end, what was intended was that all plant and equipment purchased by, on the one hand, Wet Fix (see cl A, item 6 of Annexure A to the Share Sale Agreement) and, on the other, Gillion (see special condition 4 of the Business Sale Agreement) be sold. 285 However, Holdings contends that the Business Sale Agreement settled on 1 October 2015 and that, unlike the Share Sale Agreement, no adjustment to the agreed purchase price, $6 million, is available. True it is that, putting to one side special condition 4, there is no clause which permits an adjustment to the purchase price to like effect to that found in the Share Sale Agreement. But the Business Sale Agreement and Share Sale Agreement are each different in nature. Two agreements were required because of the structure and ownership of the Wet Fix Business by Gillion and Wet Fix. The former provides for the sale of the assets owned by Gillion and the latter provides for sale of the shares in Wet Fix, the operating arm of the business. 286 Holdings relies on comments in a letter dated 24 May 2015 (see [49] above) which it describes as coming from "the lawyers for Mr Chapman and Wet Fix" in support of its contention that all parties understood that after completion there could be no adjustment of the purchase price under the Business Sale Agreement. However, that letter is in fact from ANZ Lawyers, who acted for Mr Starling, and is addressed to Messrs Starling and Chapman. Those lawyers comment on, among other things, the Business Sale Agreement, including special condition 4, and Mr Chapman, who was assisting Mr Starling, recorded his response only. The comments in that letter cannot be taken to reflect the intent or understanding of all of the parties to the transaction. 287 Given the nature of the transaction and the intent of the parties that the whole of the Wet Fix Business be sold, I accept Gillion's submission that the purpose of cl A, item 6 of Annexure A to the Share Sale Agreement and special condition 4 of the Business Sale Agreement was to allow the parties to agree to a base amount for the Wet Fix Business but also to ensure that, in addition, payment was made for additional amounts incurred by Gillion and Wet Fix in purchasing equipment, including for the development of the second bottling line. This reflects the commercial context in which the agreements were struck. It could not have been the intention of the parties that, in the event that there was a disagreement about the inclusion of an item of equipment pursuant to cl A, item 6 of Annexure A to the Share Sale Agreement, Holdings would gain a windfall because the Business Sale Agreement had completed. Rather, given the complementary and composite nature of the agreements, those circumstances would necessitate a review of the amount payable under the Business Sale Agreement. 288 Accepting that is so, the next issue is whether special condition 4 permits Gillion to adjust the purchase price under the Business Sale Agreement to include the amount of $2,249,381.50 for the blow moulder and bottle filling plant. 289 Special condition 4 provides: In addition to the Purchase Price, at completion [Holdings] will pay by cash or bank cheque to [Gillion] the sum of the deposits paid by [Gillion] on plant and equipment listed in Schedule "B" and any other plant and equipment ordered but not delivered to [Gillion] prior to 31 March 2015 and any other plant and equipment ordered after 31 March 2015. 290 Holdings submits that special condition 4 concerns only the payment of deposits. That is, it contends for a narrow reading of the clause by which the words the "sum of the deposits" qualifies each of the three categories of plant and equipment referred to thereafter: that referred to in the BSA Equipment Schedule; any other plant and equipment ordered but not delivered to Gillion prior to 31 March 2015; and any other plant and equipment ordered after 31 March 2015. Assuming that is so, the clause quite plainly refers to a requirement for Holdings to pay in addition to the purchase price, the sum of the deposits paid by Gillion on plant and equipment listed in the BSA Equipment Schedule. The blow moulder and bottle filling plant are listed in the BSA Equipment Schedule and, although "nil" is recorded in the column titled "deposits paid" against each of those items, the fact is that, for each item, a deposit was paid by Gillion. It follows that, despite the omission, on any view, special condition 4 requires Holdings to pay to Gillion, in addition to the purchase price, the amount of the deposits paid for those items. 291 Contrary to Holdings' submission, special condition 4 is not unambiguous or susceptible of only one meaning. It may equally be read to mean that at completion, in addition to the purchase price, Holdings will pay the sum of each of the following categories of equipment: the deposits on plant and equipment set out in the BSA Equipment Schedule; any other plant and equipment ordered but not delivered to Gillion prior to 31 March 2015; and any other plant and equipment ordered after 31 March 2015. Having regard to the objective circumstances surrounding the entry by the parties into the Business Sale Agreement, that interpretation is preferred. 292 As I have already observed, the Business Sale Agreement was entered into to implement a wider transaction by which Holdings was to acquire the whole of the Wet Fix Business. Its purpose was to transfer to Holdings the assets owned by Gillion which were required to operate the Wet Fix Business. A purchase price of $6 million was struck but that price was subject to special condition 4, which contemplated that a further amount was payable for additional equipment which was to be acquired either for which, at the date of the agreement, deposits had been paid, or which otherwise was acquired by Gillion after exchange but prior to completion. In other words, special condition 4 ensured that Gillion was reimbursed for the cost of additional equipment purchased by it. 293 Reading special condition 4 in the way contended for by Holdings would mean that any additional amount payable to Gillion for such plant and equipment would be limited to deposits paid. This would mean, for example, that if Gillion ordered a piece of plant or equipment after 31 March 2015 and paid a 50% deposit then, even if Gillion paid the balance of the purchase price for that plant or equipment prior to settlement, Holdings' liability to Gillion would only be for the 50% deposit paid. Similarly, if Gillion ordered an item of equipment after 31 March 2015, paid no deposit but paid the full purchase price on delivery, which occurred before settlement, on Holdings' construction of special condition 4, it would have no liability for that piece of equipment. In both cases, Holdings would receive a windfall. That cannot have been the intent of the clause. 294 Adopting the preferred construction, insofar as the blow moulder and bottle filling plant are concerned: (1) first, as set out at [290] above, the deposits for each of those items had been paid despite what was recorded in the BSA Equipment Schedule. Holdings was liable to pay Gillion an amount equal to those deposits at settlement; and (2) secondly, even if Holdings was not liable for the deposits because of the recording of "nil" for the amounts of the deposits paid in the BSA Equipment Schedule, those items can be characterised as any other plant and equipment ordered but not delivered to Gillion prior to 31 March 2015. That being so, either the whole or the balance of the price for the blow moulder and bottle filling plant was to be paid by Holdings to Gillion. 4.2.6 Plant and equipment – post 31 March 2015 assets 295 The final issue raised by Holdings in relation to the January 2016 Settlement Statement concerns a different aspect of plant and equipment, namely the amount of $913,427.50 which Gillion claimed for plant and equipment acquired by Wet Fix after 31 March 2015. Holdings alleges that Wet Fix did not acquire assets in that amount after 31 March 2015 such that it should not have been included in the January 2016 Settlement Statement: para 26(b) of the SFASOC. 296 Gillion does not admit the allegation made against it and, in addition, by way of positive defence, alleges that Wet Fix purchased assets in the amount of $1,017,567.69 after 31 March 2015 and that Gillion purchased those assets from Wet Fix. Gillion says that the cost of those assets should be added to the purchase price under the adjustment provisions in the Business Sale Agreement (special condition 4) or the Share Sale Agreement (cl A, item 6 of Annexure A). 4.2.6.1 Parties' submissions 297 Holdings submits that the amount of $1,017,567.69 is made of up of two amounts, each of which it addresses in turn. 298 The first amount is $729,124.72 which is drawn from invoices issued by Wet Fix to Gillion from 30 June 2015 to 30 September 2015. In relation to this amount, Holdings accepts that if Gillion is permitted to reopen the purchase price under the Business Sale Agreement, deposits only on items of plant and equipment for the Wet Fix Business which were paid for by Gillion through invoicing and credits against its loan account are payable under special condition 4. 299 Holdings relies on an annexure to its submissions in which it identifies those items which may be capable of falling within this category. It submits that whether the relevant payments constituted deposits on items of plant and equipment can only be established where the underlying invoices are in evidence. As was established through the cross-examination of Mr Chapman, he did not inspect underlying invoices in respect of all of the amounts he invoiced to Gillion and added to the purchase price under the Business Sale Agreement. Mr Chapman cannot identify those transactions for which he has scrutinised source documents and those he has summarised in reliance on Wet Fix's MYOB ledgers. Holdings submits that those ledgers, except as corrected by BDO upon inspection of source documents or where relevant source documents are in evidence, cannot be taken reliably to record the transactions that they purport to record. 300 Holdings submits that the only transactions in relation to which Gillion should be permitted to claim any adjustment of the purchase price under the Business Sale Agreement are those where the Court has objective evidence establishing that the relevant purchase was of plant and equipment and confirming that the amount paid was a deposit. Those transactions which meet that criteria are identified in the annexure to its submissions. 301 The second amount is $288,443.20 for purchases made by Wet Fix which Mr Chapman says were incorrectly coded and thus not picked up and invoiced to Gillion earlier. Holdings submits that as these items have not been invoiced to Gillion, the claim that they have been "paid by" Gillion should fail. 302 Holdings contends that, in any event, the evidence does not establish that these transactions related to the purchase of plant and equipment for the Burnside Road Factory: there are notations of "Burnside" against some but not all of the items included in the amount; and even for those entries which do bear the notation of "Burnside", this fact alone does not provide an adequate basis for a finding that the purchases were as Mr Chapman describes them. Holdings submits that the ledgers maintained by Wet Fix during Mr Chapman's time as its accountant have been proved to be unreliable and the fact that a purchase somehow related to "Burnside" does not establish that it was a purchase of plant and equipment to which special condition 4 responds. 303 Holdings submits that, absent objective evidence that the amounts comprising $288,443.20 were paid towards plant and equipment, the claim for an increase of the price in that amount under special condition 4 of the Business Sale Agreement should fail. Holdings relies on the annexure to its submissions, noting that for the majority of transactions there are no underlying documents in evidence. As a consequence, it submits that the amount of $288,443.20 should be excluded from any special condition 4 adjustment; alternatively, only those amounts which were deposits for which an underlying invoice is in evidence and which were invoiced to Gillion should be payable as adjustments under special condition 4; or, further in the alternative, only those amounts for which an underlying invoice is in evidence should be payable as adjustments under special condition 4. 304 Gillion submits that, again, Holdings has not proved its allegation that Wet Fix did not acquire assets in the amount of $913,427.50. Rather, Holdings queries the extent to which Gillion subsequently acquired the assets from Wet Fix and appears to concede that the assets were acquired after 31 March 2015. Gillion submits that, it follows, Holdings' claim must be dismissed, making its positive defence unnecessary. 305 In relation to its positive defence, Gillion accepts that Wet Fix would often enter into agreements for the purchase of plant and equipment because Gillion was a non-trading entity. Gillion refers to the evidence of Mrs Gill and Mr Chapman to the effect that, at the end of each quarter and at the end of each financial year, assets and equipment purchased in the name of Wet Fix were transferred to Gillion by way of general ledger entries, the payment for which was resolved by way of inter-company loan. Gillion notes that this is accepted by both parties. 4.2.6.2 Consideration 306 Holdings' claim as pleaded is that the January 2016 Settlement Statement contained errors and omissions in that, relevantly, $913,427.50 of fixed assets were included as assets when those assets were not acquired after 31 March 2015 (which was the relevant date for the purposes of cl A, item 6 of Annexure A to the Share Sale Agreement). 307 Holdings has not led any evidence in support of its contention that the relevant assets were acquired by Wet Fix before 31 March 2015 but relies on Mr Chapman's evidence to make good its claim. Mr Chapman gives the following evidence: (1) he explains that Document 9.1 provided with the January 2016 Settlement Statement in support of the inclusion of $913,427.50 for the item described as "Physical purchases" (see [122] above) is the accumulated amount of the purchases of equipment made after 31 March 2015 by Wet Fix, which were sold to Gillion and journalled against the Gillion loan account in Wet Fix for a total amount of $913,427.50. He says that the Gillion loan account ledger in Wet Fix was broken up into various sub-ledgers; (2) during the time that the shares in Wet Fix were owned by Gillion, if equipment was purchased by Wet Fix during a financial year (which would sometimes happen, depending on whether Gillion or Wet Fix was invoiced by the supplier) then, at the end of the quarter or the financial year, that equipment would be sold by Wet Fix to Gillion and recorded by journal entries in the inter-company loan account. An invoice would be raised by Wet Fix to Gillion for the equipment, the amount payable would be journalled against the Gillion loan account and the assets would then be taken up in Gillion's ledgers as its assets. Mr Chapman says that this is what happened in respect of the amounts listed in Document 9.1 provided with the January 2016 Settlement Statement; and (3) Mr Chapman then refers to three invoices issued by Wet Fix to Gillion dated 30 June 2015 (in the case of two of the invoices) and 30 September 2015 (in the case of the third) by which certain equipment was sold by Wet Fix to Gillion. Mr Chapman included the amounts in these invoices, subject to some slight adjustments, in calculating the amount he then included in the January 2016 Settlement Statement. 308 This evidence does not establish that the equipment which made up the amount of $913,427.50 included in the January 2016 Settlement Statement was acquired by Wet Fix prior to 31 March 2015. Rather, it establishes the contrary. That is, that the assets were acquired after 31 March 2015. It follows that Holdings has not proved its pleaded case and its claim in relation to this aspect of the January 2016 Settlement Statement must fail. 309 Although it is not necessary to do so, for completeness I briefly address Gillion's positive defence (see [296] above). 310 As set out above, the relevant equipment was purchased after 31 March 2015. It is also apparent, based on Mr Chapman's evidence, that Wet Fix sold equipment to Gillion. However, I am not satisfied that this includes the equipment in the amount of $288,443.20. Mr Chapman's evidence is that: (1) the total of $288,443.20 is made up of equipment and set up costs for the Burnside Road Factory which were incorrectly coded to the wrong sub-account; (2) Wet Fix purchased the equipment but it was then recorded in the Gillion loan account to reflect a sale by Wet Fix to Gillion of the relevant equipment; (3) it was his usual process to prepare an invoice at the end of each quarter from Wet Fix to Gillion for the plant and equipment purchased using Wet Fix funds, which were then coded to the Gillion loan account and for which Gillion ultimately paid or had set-off debts. But, as these amounts were not entered into the correct sub-account, i.e. the plant and equipment sub-account, they were not entered on the September 2015 invoice from Wet Fix to Gillion; and (4) through the loan journal, Gillion "paid" Wet Fix for these items and they should have been invoiced across by Wet Fix to Gillion and picked up in its assets. It was an administrative oversight that they were not. 311 In the absence of evidence establishing payment by Gillion for these items of equipment and/or invoices from Wet Fix to Gillion together with a record of the amounts in the Gillion loan account, I am not satisfied that Gillion can claim the amount of $288,443.20 pursuant to special condition 4 of the Business Sale Agreement. However, as those assets were purchased by Wet Fix after 31 March 2015 and remained in its name, they can be added to the purchase price pursuant to cl A, item 6 of Annexure A to the Share Sale Agreement. 312 Thus, Gillion has established its positive defence in relation to the equipment to the value of $1,017,567.69. It can recover the amount of $729,124.72 pursuant to the Business Sale Agreement (special condition 4) and the amount of $288,443.20 pursuant to the Share Sale Agreement (cl A, item 6 of Annexure A). As to the former, contrary to Holdings' submissions, it can recover the full value of that equipment, and not just deposits paid for it, under special condition 4 of the Business Sale Agreement. 5. Gillion's cross-claim 313 As set out at [185] above, the January 2016 Settlement Statement claimed that an amount of $89,726.49 was owing by Holdings to Gillion for the purchase of the Wet Fix Business. However, in its cross-claim, Gillion makes no claim for payment of that amount and limits its claim to recovery of the amount it contends remains owing under the Vendor Finance Agreement, being $948,190.34. This is the difference between the amount owed and the amount paid by Holdings pursuant to the Share Sale Agreement and the Business Sale Agreement. The parties agree that no cash was paid in this amount. Rather, the loan was notionally drawn down as partial consideration by Holdings for the purchase of the Wet Fix Business. 5.1 Vendor Finance Agreement 314 The Vendor Finance Agreement is between Gillion as lender, Holdings as borrower and Wet Fix and Mr Starling as guarantors. It relevantly provides: (1) at cl 1 for Gillion to lend Holdings $1.75 million (referred to as the Principal Sum) on the terms and subject to the conditions set out in the Vendor Finance Agreement; (2) at cl 2 that Holdings will repay the Principal Sum to Gillion 36 months from the date of the Vendor Finance Agreement or as agreed between the parties; (3) under the heading "Interest" that: 3.1 Interest shall be payable on the Principal Sum or the balance of the Principal Sum then outstanding at the target "cash rate" which is the market interest rate on overnight funds set by the Reserve Bank of Australia plus four percent (4%). 3.2 [Holdings] must pay [Gillion] interest calculated from the date of this Agreement with the first interest payment due on the date which is one (1) calendar month after the date of this Agreement and thereafter on the same day of each succeeding month. 3.3 For the avoidance of doubt, the interest payable will compound monthly and each amount of unpaid interest will be treated as an accretion to the Principal Sum or balance of the Principal Sum then outstanding for the purposes of the calculation of further interest payable. (4) at cl 5.1, which concerns costs, that: [Holdings] covenants with [Gillion] to pay all costs, charges and expenses including all reasonable legal and other professional fees. and stamp duty paid or payable by [Gillion] for or in relation to the negotiation, preparation, execution and stamping of this Agreement, the exercise or attempted exercise of any of the rights, powers and privileges of [Gillion] hereunder, the waiver, variation, release or discharge of this Agreement, and [Holdings] will also pay all stamp duty chargeable by virtue of anything contained in this Agreement or by virtue of anything done pursuant to this Agreement. (5) at cl 5.2 for an indemnity requiring Holdings and the guarantors, Wet Fix and Mr Starling, to indemnify Gillion against any liability or loss arising from, and any costs, charges and expenses incurred in connection with: 5.2.1 the payment, omission to make payment or delay in making payment of amounts referred to in clause 5.1; 5.2.2 the Principal Sum or any part of it being repaid, discharged or made payable for any reason other than in accordance with this Agreement or any other payment required to be made under this Agreement not being made on its due date; or 5.2.3 [Gillion] acting in connection with this Agreement in good faith on any facsimile or telephone instructions purporting to originate from [Holdings]; including, without limitation, liability, loss, costs, charges or expenses on account of funds borrowed, contracted for or used to fund any amount payable under this Agreement and including in each case, without limitation, reasonable legal fees. (6) at cl 5.3 that: Each indemnity in this Agreement is a continuing obligation, separate and independent from the other obligations of [Holdings] and [Wet Fix and Mr Starling] and survives termination of this Agreement. (7) under the heading "Termination Consequences" that: 7.1 On the expiry or other termination of this Agreement: 7.1.1 The loan, together with all interest accrued on the loan and not then paid and all other amounts payable under this Agreement and unpaid shall, at the option of [Gillion], notwithstanding any delay or previous waiver of the right to exercise that option, shall immediately become due and payable without the necessity of any demand or notice to [Holdings] or [Wet Fix and Mr Starling]. 7.2 [Gillion] may exercise its rights under Clause 7.1: 7.2.1 notwithstanding acceptance of any part of any of the amounts payable under this Agreement after the occurrence of any event of default; 7.2.2 notwithstanding the occurrence of any previous or other event of default; and 7.2.3 without the necessity for any notice to, or of any consent or concurrence on the part of [Holdings]. 5.1.1 Consideration 315 There was no dispute that, if Holdings was unsuccessful in its claim, either because it was precluded from raising any objections to the January 2016 Settlement Statement or because its objections were not made out, it was liable to Gillion for the amount that it had advanced pursuant to the Vendor Finance Agreement as claimed in its cross-claim. 316 As Holdings has been unsuccessful in its claim, the amount advanced pursuant to the Vendor Finance Agreement remains outstanding. 317 On 3 September 2018 Gillion served a "notice of breach under the [Vendor Finance Agreement]" dated 29 August 2018 on Holdings, copied to Mr Starling and Wet Fix, alleging breach of cll 3.1 and 3.2 of the Vendor Finance Agreement and demanding that Holdings rectify the breaches by paying the amount due, which at the time was $23,068.11 for interest payable on the amount advanced, within 14 days. The breach notice also included: Gillion notifies Holdings, Wet Fix and Darren Starling that if the breaches of the [Vendor Finance Agreement] detailed in this Notice are not rectified as required by this Notice, Gillion may terminate the [Vendor Finance Agreement] pursuant to clause 6.1 of the [Vendor Finance Agreement], and/or commencing proceedings against Holdings, Wet Fix and Darren Starling seeking recovery of all amounts owing to Gillion under the [Vendor Finance Agreement], together with interest and costs. 318 No payment was made by Holdings to Gillion rectifying the alleged breach of the Vendor Finance Agreement. 319 Pursuant to cl 2.1 of that agreement, Holdings was required to repay the balance of the Principal Sum outstanding on 11 June 2018 or as agreed. There is no evidence of any agreement extending the date for repayment. 320 By notice dated 27 September 2018 addressed to Holdings and copied to Wet Fix and Mr Starling, Gillion terminated the Vendor Finance Agreement. 321 Whether by reason of the termination or the expiry of the term of the Vendor Finance Agreement, pursuant to cl 7.1 the Principal Sum outstanding plus any interest accrued thereon is due and payable by Holdings to Gillion. 322 Further, pursuant to cl 5.1, Holdings is liable for any costs associated with the exercise or attempted exercise of any of Gillion's "rights, powers and privileges" under the Vendor Finance Agreement. In the alternative, pursuant to cl 5.2, Holdings indemnifies Gillion against any liability or loss arising from, and any costs, charges and expenses incurred in connection with, among other things, payment of amounts referred to in cl 5.1. 323 Gillion is entitled to judgment on its cross-claim for the combined total of these amounts. 324 Gillion has not provided a calculation of the interest payable on the amount outstanding under the Vendor Finance Agreement, being $948,190.34, or of any additional costs claimed pursuant to cl 5.1. I will make an order for Gillion to file and serve an affidavit setting out the amount it claims is due. 6. Conclusion 325 It follows from the above that: (1) Holdings has failed to establish its claim and the SFASOC should be dismissed; and (2) Gillion has succeeded on its cross-claim and is entitled to judgment for the amount outstanding under the Vendor Finance Agreement plus interest accrued and unpaid on that amount and any costs pursuant to cl 5.1 of the Vendor Finance Agreement. As there is no evidence of the total amount claimed, Gillion will be required to file and serve an affidavit setting out that amount within seven days of the date of publication of these reasons. 326 Within 14 days of the date of publication of these reasons, the parties should provide to my associate draft orders reflecting these reasons. If the parties cannot agree on the form of orders then, within that timeframe, each party is to provide its proposed draft orders to give effect to these reasons together with submissions, not exceeding two pages in length, explaining why those orders should be made. In the event that the parties cannot agree on a form of orders, the proceeding will be listed before me on 26 February 2021 at 9.30 am. 327 The parties asked that I reserve on the question of costs of the proceeding. Accordingly, in the absence of agreement on this issue between the parties, I will also make orders requiring the parties to provide submissions in relation to the costs of the proceeding, not exceeding three pages in length, within 21 days of the date of publication of these reasons. Unless either party requests an oral hearing, the question of costs will be dealt with on the papers. I certify that the preceding three hundred and twenty-seven (327) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Markovic. Associate: Dated: 5 February 2021