The claim is linked to the $307m sale of the council’s Tasmanian dairy farm operation to Moon Lake Investment in 2016, in which the sale price was dropped in anticipation of a reduction in the milk price that year.
But council claimed the price of milk did not go down as predicted and is looking to recover the money that was discounted.
In a written statement the Moon Lake Investments owned Van Dairy Group denied any liability and said they would vigorously defend the claim.
“The purchase price was subject to various adjustments that were standard for such an agreement, including an adjustment to reflect the milk price step-down that occurred in relation to the 2015/2016 milking season,” the statement said.
“Nearly a year later, on May 10, 2017, Van Dairy Group’s milk processor, Fonterra, announced that it would pay to its suppliers an additional 40c per kilogram of milk solids produced during the 2017/2018 milking season.”
Van Dairy said the council’s holding company Tasmanian Land Company then issued a writ in August 2018, saying it was entitled to the additional payment for milk supplied in the 2017/18 season, or a refund of the purchase-price adjustment.
In November, the Supreme Court of Victoria ordered that the claim be transferred to the Supreme Court of Tasmania. The claim is ongoing.
NPDC said that they expected the matter to be resolved by the end of the year but did not expect pre-trial mediation to be successful.
The claim is expected to cost up to $300,000 and will be paid with from funds held by the Tasmanian Land Company.