Greg Beashel.
Greg Beashel. Array

$60m sugar claim thrown out

WILMAR Sugar's $60 million negligence claim over hedging losses in 2010 has been tossed out by the Supreme Court and now the miller could be slapped with hefty legal costs.

Wilmar, which owns mills in Sarina and Proserpine, was suing Queensland Sugar Limited over an alleged breach of contract.

The complex legal battle, which began in 2015 and totalled $60.86 million plus interest and costs, centred on alleged negligence by QSL, which markets and sells raw sugar, over pricing in the 2010 sugar season.

Chief executive officer Greg Beashel, who welcomed the decision, said QSL intended to seek compensation for costs associated with Wilmar's legal action.

"This legal action instigated by Wilmar has been a costly and time-consuming distraction at a time when our entire industry needs to be focusing on securing strong returns and maximising opportunities for growth," Mr Beashel said.

Due to poor weather, production fell dramatically, leaving Wilmar exposed to meet supply arrangements entered into by QSL.

The shortfall was $105,544,126 with $60.86 million being Wilmar's share of the loss. The figure was not disputed, only whether QSL was liable to Wilmar for the loss.

Justice Peter Davis said Wilmar claimed there was an implied term in the Raw Sugar Supply Agreements with QSL that could "be broadly described as an obligation to take reasonable care in the management of the Seasonal Pool".

However, Justice Davis said a clause in the contract suggested "that the prediction of seasonal variations is a matter for Wilmar and not for QSL" and that under another clause QSL was entitled to pass onto Wilmar "all costs... of any nature that it incurs... in performing its obligations".

"Those costs would include expenses, which have been incurred where QSL has contracted to sell sugar and where Wilmar is unable to deliver the sugar it has estimated," he said.

He found QSL was not in breach of its contractual obligations and no wrongful duty arose, dismissing the case.

Mr Beashel said: "(the decision) validates QSL's position that while the trying circumstances around the 2010 harvest had significant financial consequences for many growers and millers throughout the state, this was first and foremost a result of an unforeseen in-season crop failure".

A Wilmar Sugar Australia spokesperson said the company was disappointed in the decision of the Queensland Supreme Court that denied Wilmar's claim for damages resulting from QSL's 2010 hedging losses.

"Those hedging losses amounted to approximately $105 million across the Queensland sugar industry," the spokesperson said. 

"QSL passed on $60.9 million of its losses to Wilmar when it reduced the sugar price paid to Wilmar.

"We are carefully considering the complex judgment to determine if there are any grounds for appeal.

"In the meantime, we are getting on with business and preparing for the upcoming crushing season."

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