A LONG running dispute between Emerald Grain and a group of 47 Western Australian farmers will head back to arbitration outside the legal system after the Western Australian Supreme Court last week ruled for the case to be stayed.
Emerald applied for the case to be stayed and the matter will revert to arbitration with the industry referee, Grain Trade Australia (GTA), as per the arbitration clause in grower contracts with Emerald.
GTA chief executive Pat O’Shannassy confirmed his organisation was aware of the court decision but said he could not comment further.
“A key part of the arbitration process is that it is confidential so we will not comment on the matter further.”
The case centres on Emerald’s 2011-12 pool, which markedly underperformed the broader market, leaving growers an alleged $74 a tonne out of pocket on average over a volume of 100,000 tonnes.
A group of growers, spearheaded by Gabbin farmer Mark Fitzpatrick, enlisted Perth-based legal firm Granich Partners in 2013, with the case heading to the Supreme Court last year, with the growers seeking damages of $7.4 million.
At the time of the case being filed Granich Partners solicitor Nathan Draper said the figure had been calculated on deliveries to the pool of 101,583 tonnes and underperformance of anywhere between $64-84/t depending on the grade of wheat.
From here, documents will be lodged with GTA prior to the arbitration process beginning.
The matter has been described as a ‘matter of principle’ by Mr Fitzpatrick.
“There were other pools operating in WA that year and Emerald came last by a very long way,” he said.
“If there was a smaller shortfall of $10 or $15/t we would have been prepared to wear it, those type of discounts happen, but not something of this magnitude, especially when the market was rising at the time,” he said.
“We have never been told the reason why the pool came in so far below others in the same season, what the strategy was that saw it perform so badly.”
Mr Fitzpatrick said many farmers have faced financial hardship as a result of the failed pool.
Along with this he said the management of the situation had been handled badly, with farmers not realising there would not be another pool distribution.
“We didn’t realise the distribution that ended up being the final one would be the last, there was little communication,” he said.
The court case centred not, as in most disputes, on a breach of contract but rather on a breach of trust, with the legal team arguing growers could be entitled to expect a return reasonably close to the market average.
Previous speculation about the reason for the losses has centred on an intermingling of Emerald’s wheat trading and pool management divisions.
Sumitomo bought 50 per cent of Emerald in 2010 and the remainder of the company in 2014.
David Johnson, managing director of Emerald, declined to comment on the matter until it has been finalised.