A class action seeking compensation for dairy farmers affected by Fonterra Australia's milk price "clawback" in 2016 has been filed in the Supreme Court of Victoria.
The case was filed on Wednesday and will represent dairy farmers who supplied milk to Fonterra in 2015-2016 and be run by law firms Adley Burstyner and Harwood Andrews.
Geoffrey and Lynden Iddles, Strathmerton, are the lead plaintiffs in the case, who lawyer David Burstyner said were third generation farmers who had supplied Fonterra and its predecessors for 45 years.
The defendants are three Australian companies that are part of the global dairy conglomerate headed by Fonterra Co-Operative Group Limited, whose performance can be invested in via the Fonterra Shareholders Fund (ASX:FSF).
The former Bonlac Supply Company will not be included in the class action.
Mr Burstyner, who is responsible for the case, said this was the first time a court would be asked to evaluate Fonterra's conduct and deliver compensation.
"I've looked at the contracts and I've listened to farmers and seen 10 months of Fonterra statements saying, with very limited exception, that the $5.60 price will be paid," Mr Burstyner said.
"The only answer I can come up with as to why the company clawed back is that they didn't ask themselves, 'Is it legal?', they asked themselves, 'Can I get away with it?'.
"And it wasn't even as if it was a question of survival, with the Fonterra Group posting $834 million net profit after tax for the year ending 31 July 2016, up 65 per cent."
The Supreme Court Statement of Claim asks the Court to declare that:
- Fonterra engaged in Misleading and Deceptive Conduct and Unconscionable Conduct, as defined in the Australian Consumer Law; and
- Fonterra breached its supply contract, and its obligation to match the farmgate milk price of Murray Goulburn.
Court proceedings were the ultimate test of conduct and precedent setting, and the case could be an important test of Unconscionable Conduct laws and protections for small business such as agricultural enterprises from conduct of global corporations, Mr Burstyner said.
"I have seen first-hand a great number of farmers distressed, wanting redress from Fonterra," he said.
Farmers will not have to pay any costs of this case out of their own pockets because the case is funded by Litigation Lending Services.
Although all the approximately 1400 farmers who supplied Fonterra in 2015-16 were automatically included in the class action, around 200 had registered with the law firms running the case.
Mr Burstyner said it was important that "a lot more" registered before the case went to court in a few weeks' time to show the funder that "farmers really want" the class action.
Mr Burstyner said registration did not commit farmers to anything, and did not mean they had to pay anything.
He also said the names of farmers who registered would not be made public or shared with Fonterra, unless that was required at some point in the court proceedings and, even then, it would only be after farmers had granted permission.
"Registration simply ensures that farmers are kept in the loop about the case and about the opportunity to receive any money recovered," he said.
Hearings will now be scheduled in the class action, likely starting late July or August 2020.
A Fonterra Australia spokesperson said, "The ACCC investigated the 2016 milk price reduction thoroughly and in 2017 it decided not to take action against Fonterra."
"We've done a lot of work with our farmers since 2016 to rebuild trust and transparency.
"Fonterra takes its legal and regulatory obligations seriously and is committed to fully complying with them.
"We will address these claims comprehensively at the appropriate time."
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