Former dairy owners of Van Diemen’s Land Company fail to sue new owners for $2.3 million

New Zealand-owned Tasmanian Land Company has failed to sue Chinese Van Dairy Group over millions of dollars it claims it was owed in the fallout of shocking milk price drops in 2016.

THE former owner of the Van Diemen’s Land Company, a dairying giant based in Circular Head, has failed to sue its new Chinese owners for $2.3 million.

The stoush, which was fought in the Supreme Court of Tasmania during late 2020, was waged in the wake of drastic milk farm price drops during 2016 and subsequent lump sum repayments to suppliers.

But on Wednesday, Justice Michael Brett said the Tasmanian Land Company had failed to establish its claim against Van Dairy Group “on any basis”.

The dispute began after Van Dairy, previously Moon Lake Investments owned by Chinese businessman Xianfeng Lu, bought the company in 2016 for $275 million.

The controversial purchase has since been dogged by complaints over animal welfare, effluent management and workplace issues.

The conditions of the 2016 sale included an existing agreement to supply milk exclusively to processor and exporter Fonterra.

Van Diemen's Land Company owner Xianfeng Lu.

But about a month after the sale closed, in May 2016, Fonterra made a shock announcement that it would drastically cut milk prices and claw back payments made up to almost a year prior – a move that farmers across Tasmania and Victoria said left them financially devastated.

As a result, TLC agreed to compensate Van Dairy to the tune of $2.2 million to account for the disadvantage it suffered as a result of the post-closing price slashing.

However, a year later, Fonterra reversed its price decrease, repaying Van Dairy more than $3 million – money that TLC argued should have been reimbursed to its coffers.

In his published judgment, Justice Brett noted Van Dairy disputed that it had been “unjustly enriched” by the income, and argued the $2.2 million paid to it by TLC was “properly payable under the contract”.

It also claimed the additional payments were a benefit of Van Dairy’s “subsequent ownership of the business”.

The Van Diemen’s Land Company sold its Woolnorth property to the TRT Pastoral Group in late 2021.

Justice Brett said those additional payments depended on the work that would be performed by Van Dairy in the future and over an extended period – using the assets it had purchased from TLC.

He also said the decision by Fonterra to repay was related to its “ongoing and future relationships with suppliers”.

Justice Brett said while it wasn’t difficult to understand why TLC said Van Dairy had effectively received “double compensation”, that wasn’t enough for TLC to win its case.

He said the initial advance payment was legitimately made after negotiation, and in “full and final” settlement of both companies’ rights and obligations under the contract.

The Van Diemen's Land Company was the biggest dairy farm in Australia.

However, he said of the additional payments, Van Dairy was “entitled to the fruits of its ownership of the assets and its production of milk in the 2017-18 year”.

“While the defendant will gain a financial windfall in a general sense, it has not been unjustly enriched as a consequence,” he said.

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