Susan and Bruce McGorlick v Cathy Palmer: Locheilan Farmhouse Cheese case dismissed

A legal contest about the ownership of a Goulburn Valley dairy farm and cheese business has been resolved in the County Court.

A dispute about ownership of a Goulburn Valley dairy farm and artisan cheese business has been resolved in the County Court, nearly six years after the operation was listed for sale.

Former Locheilan Farmhouse Cheese owners Susan and Bruce McGorlick’s case against their former tenant Cathy Palmer for $633,758.50 worth of damages, after she did not buy the farm and business in 2017, has been dismissed.

The dispute dates back to 2016, when the McGoldricks listed their Wunghnu dairy farm for sale for $1.1 million and the Locheilan Farmhouse Cheese business for sale for $200,000 with an eye to retirement after 35 years farming.

Susan and Bruce McGorlick, the owners of the now defunct Locheilan Farmhouse Cheese.

By January 2017 Ms Palmer had moved on to the farm and begun manufacturing cheese and in mid-February 2017 the parties signed a heads of agreement, the subject of the legal contest.

This agreement included terms of the proposed transaction and details of the lease agreement between the parties for the farm at 754 Central Mundoona Rd.

The court heard during 2017 Ms Palmer failed to make multiple payments due under the heads of agreement and the McGorlicks took repossession of the farm several times.

Later that year the McGorlicks instructed their solicitor to prepare formal transaction documents for the sale of the farm and the business under the heads of agreement on November 15.

Ms Palmer refused to sign the contract of sale and asset sale agreement because she did not believe she had agreed to and did not want to buy the farm.

But the McGorlicks believed according to their agreement Ms Palmer was due to purchase the farm and business for the listed $1.3 million.

When Cathy Palmer was at Wunghnu she launched her How Now dairy product range and supplied milk to Locheilan Cheese. Picture: Chloe Smith.

After Ms Palmer refused to purchase the farm, the McGorlicks terminated the lease and took possession of the farm in late December 2017.

The Wunghnu farm was then sold to the McGorlicks’ neighbour’s son for $750,000 on July 2, 2018, and the business was not sold.

The McGorlicks did not sell the business, claiming upon their re-entry to the farm the business no longer existed in a form that would have easily been capable of resumption or resale.

Judge Ryan dismissed the McGorlicks’ claim against Ms Palmer, deeming their agreement was not an immediately binding contract for the sale of the farm and business because it was an agreement to agree “which is not capable of being enforced”.

She concluded a reasonable person considering the text of the McGorlicks’ and Ms Palmer’s legal agreement in the context of the circumstances in which they came into being, would have formed the view that the parties did not intend to create a binding contract until a formal contract of sale was exchanged.

The McGorlicks were ordered to pay Ms Palmer’s costs of the proceeding.