Moulamein Grain Co-operative liquidation: Growers lose claim to 1300 tonnes of grain in legal fight

A group of growers and traders have lost a legal fight over grain ownership with the liquidator of Moulamein Grain Co-operative.

A group of seven grain growers and traders have lost a legal skirmish over the ownership of 1300 tonnes of grain after Moulamein Grain Co-operative went into liquidation. PICTURE: ZOE PHILLIPS

A group of grain growers and traders have lost a legal skirmish with the liquidator of a failed NSW grain company over the ownership of 1300 tonnes of grain.

Moulamein Grain Co-operative went into liquidation in September last year with debts of more than $4 million, including $1.9 million owed to unsecured creditors.

Seven companies — AgRisk Management, Riordan Group, Melaluka Trading, Robinson Grain Trading Co, Chester Commodities, CL Commodities, and L McKenzie Trading — which owned a combined 51 per cent of the grain stored at the co-operative’s Burraboi and Moulamein sites, faced liquidators Nathan Deppeler and Matthew Jess in court this month over their method of distributing the proceeds of grain sales.

More than 6200 tonnes of wheat and barley was recorded as having been delivered to the co-operative’s sites by growers, which eventually generated sales of about $1.6 million.

The Co-operative recorded the type and grade of grain each grower delivered into storage, but when liquidators sold the grain early last year, 1368 tonnes was identified and graded that did not match the grade and grain type recorded in the co-operative’s records.

Growers were unable to prove their ownership of 1300 tonnes of grain delivered to Moulamein Grain Co-operative. Picture: Zoe Phillips

Because of the conflicting records, no grower was able to establish ownership of the 1368 tonnes of grain, and the liquidators proposed that the proceeds of that “surplus grain” should be distributed among all of the company’s creditors, not just to the growers.

The companies disputed this, telling the court in a submission that the grain being reclassified did not extinguish their ownership of it.

They proposed an alternative method for distributing the proceeds from the grain sales to growers, which used a calculation based on the co-operative’s original records.

Grain Trade Australia chief executive Pat O’Shannessy told the court he endorsed the companies’ distribution method, which he said was consistent with the Australian Grain Industry Code of Practice.

The liquidators gave growers until March 31 to “substantiate a claim to ownership of the surplus grain” but none were able to.

The Federal Court ruled last week that the proceeds of the “surplus grain” could not be distributed to growers unless they could prove their ownership of it.

“The true position, it seems to me, is that the growers who once had, and must have had, claims to the surplus grain or to the proceeds of it, in light of the receivers unsuccessful efforts to solicit such claims, are to be taken as having abandoned them. And the Co-operative, having been in possession of the surplus grain, and now being in possession of the proceeds of sale thus has a legal right to those proceeds,” Justice David O’Callaghan ruled.

The court will meet again to determine the fairest way to distribute the proceeds of the grain over which growers were able to establish ownership.