Rentiers Pty Ltd v Wingara Wine Group Pty Ltd
[2010] VSC 156
•27 April 2010
| IN THE SUPREME COURT OF VICTORIA |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
LIST A
No. 2077 of 2007
| RENTIERS PTY LTD (ACN 004 615 641) and AMARA PTY LTD (ACN 004 864 831) | Plaintiffs |
| and | |
| WINGARA WINE GROUP PTY LTD (ACN 006 350 787) and FREIXENET SA | Defendants |
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JUDGE: | Pagone J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 1-4, 9-11, 15 March 2010 | |
DATE OF JUDGMENT: | 27 April 2010 | |
CASE MAY BE CITED AS: | Rentiers Pty Ltd & Anor v Wingara Wine Group Pty Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 156 | |
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CONTRACT – Interpretation of terms – Payment of reasonable price – Implied term – Expert determination – Selection of expert – Obligation to abate management fees –Damages – Mackay v Dick (1881) 6 AC 251, BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R Macaw QC with Mr D Star and Mr B Murphy | Strongman & Crouch |
| For the Defendant | Mr C Caleo SC with Mr C Shaw | Norton Rose Australia |
HIS HONOUR:
Rentiers Pty Ltd (“Rentiers”) and Amara Pty Ltd (“Amara”) make a number of claims against Wingara Wine Group Pty Ltd (“Wingara”) and Freixenet SA (“Freixenet”) in respect of Wingara’s management and production of wines on vineyards owned by Rentiers and Amara. The principal claims are made against Wingara. The claims against Freixenet are essentially of inducing Wingara to breach its management agreement with Rentiers. Freixenet is the ultimate Spanish holding company owning Wingara.
Rentiers and Amara each entered into two separate agreements with Wingara in substantially identical terms on the same day. Each entered into a management agreement under which Wingara was engaged to manage certain property on the terms and conditions set out in the agreement. A difference between the management agreement entered into with Wingara by Amara, on the one hand, and the one entered into by Rentiers on the other, is that the former provided for Wingara to manage the property only as a vineyard whilst the latter provided that Wingara manage the property as both a vineyard and a citrus grove. In all relevant respects, however, the two management agreements are essentially the same.
Rentiers and Amara also entered into substantially identical produce supply agreements with Wingara under which Wingara was effectively required to purchase all of the produce which it had undertaken to manage and cultivate under the respective management agreements. All four agreements were entered into on 27 June 2001 for a term of 10 years commencing on 1 July 2001.
Claim 1: Mildura Vineyard Yield Claim
The single largest claim in dollar value is that made by Rentiers for $1,223,528.95 against Wingara and Freixenet for breaches of the Rentiers Management Agreement. The essence of the claim is that Wingara’s irrigation management of the land under vine for the production of white wine varieties on Rentiers’ Mildura land resulted in yields of white wine grapes for chardonnay, sauvignon blanc, riesling, colombard and gordo grapes that were significantly lower than the yields which the vines were capable of producing for commercial vines in the Sunraysia District. The core of this dispute concerns the mature overhead irrigated vines for the white wine grapes from Rentiers’ land, although Rentiers also makes a claim in respect of a chardonnay redeveloped block in 2002.
The duties of Wingara as manager of the Rentiers land under the Rentiers Management Agreement are substantially set out in clause 3.1. Of particular relevance are the duties in clauses sub 3.1(a), (b) and (c) which provided:
For the Term the Manager must:
(a)Standard of Management: do all things reasonably necessary for the efficient management and conduct of the Property for the production of high quality Produce.
(b)Farm and Cultivate: farm, cultivate, harvest and manage the Citrus Trees and Vines according to good horticultural practices and approved methods in the district in which the Citrus Trees and Vines are located, in a proper and workman like manner, including harvesting the Produce.
(c) Care of the Citrus Trees and Vines: tend and take all reasonable steps to protect the Citrus Trees and Vines including:
(1)The proper pruning of Citrus Trees and Vines;
(2) The proper training of Vines;
(3)The proper irrigation of Vines and Citrus Trees;
(4)The proper spraying and fertilising of Citrus Trees and Vines.
There are other provisions in clause 3.1 which are relevant to the construction of these duties and which bear upon the issues in dispute between the parties, but the first claim is essentially about whether the obligations in these three provisions were breached by Wingara and induced to be breached by Freixenet.
The nature of the dispute between Rentiers and Wingara depends to some extent upon whether the latter acted upon a misconstruction of its obligations under the management agreement. Indeed, Rentiers’ first submission in respect of its allegation of a breach of clause 3.1(a) of the management agreement was that Wingara had managed the Mildura land upon an erroneous understanding by its irrigation manager of what the management agreement required Wingara to do. Rentiers maintained, essentially, that Wingara’s obligation was to produce more white wine grapes than it did whilst Wingara maintained that it at all times undertook the process of producing high quality produce in accordance with its management practices. There was no suggestion that Wingara’s management practices were in any way dishonest or undertaken for the purpose of harming Rentiers’ economic interests.
The difference in approach to the contract may conveniently be seen by some correspondence between the parties in November 2005. On 18 November 2005 Mr Peter Yunghanns on behalf of Rentiers wrote to the then Chief Executive of Wingara. The letter from Mr Peter Yunghanns said (in part):
We have never received a quality bonus from grapes grown at Iraak. Yet your management has resulted in higher quality, lower yield grapes for which we are paid the district average price and therefore we have suffered significant financial disadvantage which we will in due course quantify and will add this to our other claims, many of which you are already aware.
We now require the vineyard to be managed so as to maximise the yield so that we do not continue to suffer.
No point was made by the defendant that the use by Mr Peter Yunghanns of the word “now”, in the second paragraph I have quoted, indicated an understanding of the terms of the contract which was inconsistent with the case subsequently maintained by Rentiers in this proceeding. In any event, the question of construction of the contract between the parties does not depend upon any misunderstanding which either, or both, of the parties might have had at some point in time. On the same day David Thompson also wrote on behalf of Rentiers directly to Mr Chris Brodie (the General Manager of vineyards for Wingara) stating, relevantly, that Rentiers “would like [Wingara] to manage the vineyards in such a way as to maximise yields from the vineyards”. The letter went on to direct Wingara about specific matters Rentiers required Wingara to do in the management of the vineyard to maximise yields. On 28 November 2005 Mr Brodie replied to Mr Thompson referring to discussions at a recent meeting in which he had been asked to “consider changing the management” of the vineyards to increase the yields saying:
Wingara has always managed the vineyards in accordance with the Vineyard Management Agreements. The agreement requires Wingara to do all things necessary for the production of high quality produce. Wingara also requires high quality produce so that the produce is capable of being used in its bottled wine. Maximising yields at the expense of quality is not consistent with Wingara’s obligations.
For present purposes it is sufficient to note about this correspondence the articulation by the parties of the different way in which each maintained the Rentiers Management Agreement needed to be performed. Rentiers maintained that maximising yield was the primary requirement whilst Wingara maintained that the production of high quality produce was the primary requirement.
There was no dispute between the parties about the principles to be applied in the construction of a commercial contract although there was disagreement about how those principles were to be applied in the case of the Rentiers Management Agreement. In Maggbury Pty Ltd v Hafele Australia Pty Ltd Gleeson CJ, Gummow and Hayne JJ said:
Interpretation of a written contract involves, as Lord Hoffmann has put it: "the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract."[1]
For this purpose it may be accepted, as was contended by Rentiers, that it is relevant to consider not only the text of the document but also the surrounding circumstances known to the parties and the purpose and object of the transaction.[2]
[1](2001) 210 CLR 181, [11].
[2]Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, [22] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 179 [40] (Gleeson CJ, Gummow Hayne, Calllinan and Heydon JJ); International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151, 174 [53] (Gleeson CJ, Gummow, Kirby, Hayne, Heydon, Crennan and Kiefel JJ).
Rentiers maintained that the application of these principles to the facts of this case should lead me to conclude that clause 3.1(a) was breached by Wingara because it acted upon the misunderstanding of its obligation as being to maximise the quality of produce rather than the yield to be produced. Rentiers submitted that Wingara’s alleged misunderstanding of the agreement led it to maximise the quality of the produce by the reduction of irrigation to the vines with an inevitable reduction of yields. The misunderstanding is said in part to be seen in the November 2005 correspondence which I have set out. That correspondence is said to reveal Wingara’s view of the object of the management agreement through the prism of a choice between maximising the quality or maximising the yield. This choice, as Rentiers correctly contended, is a false dichotomy. A problem for Rentiers, however, is not in establishing that the dichotomy is false but, rather, in its reliance upon the dichotomy as one created or acted upon by Wingara. The dichotomy arose from the correspondence commenced by Rentiers not from Wingara. It was in Rentiers’ letters from Mr Peter Yunghanns and Mr David Thompson that a dichotomy was drawn between the maximisation of yields and the increasing of quality of the produce.
Wingara’s obligation cannot sensibly be described by reference to the dichotomy as either one of maximising yield (at the cost of quality) or maximising quality (at the cost of yield). Its obligation was to do all things reasonably necessary for the efficient management and conduct of the property directed to the end of the production of high quality produce. It may reasonably be concluded that the production contemplated by the agreement was to be as much as could reasonably be produced consistently with the description of the produce as being of high quality. In that task yield and quality had a symbiotic relationship which it was Wingara’s duty to manage and balance. Its duty was not to maximise yield at the expense of quality nor to maximise quality in disregard of the yield. The need to strike the right balance between quality and yields was in the interests of both parties. Wingara, under a separate agreement entered into on the same day, had secured the rights to acquire the whole of the crop from the Rentiers and Amara land for its production in wine. It may be assumed that, all things being equal, Wingara would seek to secure as much quality produce as possible for its own commercial activities.
Rentiers contended that Wingara breached its duty by the reduction of irrigation. In support of that proposition it pointed to the evidence of Mr Brodie and Mr Thornton as well as the correspondence in November 2005. Mr Brodie was the general manager of vineyards and viticulture for the Wingara Wine Group. He had been in that position since about November 2005 and was responsible to oversee all vineyard operations in Coonawarra on a daily basis and of its Deakin Estate production in Mildura through Wingara’s manager, Craig Thornton. The day to day management of the vineyards in Mildura was undertaken by Craig Thornton who was Wingara’s vineyard and citrus manager reporting to Mr Brodie. Mr Brodie’s experience with wine production at Coonawarra and Mildura was detailed and considerable. He began his career as a clerk in the Bank of New Zealand after leaving school. He then began work as an assistant orchard manager growing kiwi fruit in New Zealand, eventually becoming the technical services manager and horticulturalist at Wingara Mildura from about August 1997. Mr Thornton also had considerable experience in growing grapes in the Mildura area. He held the position of vineyard and citrus manager at Wingara since 2005 having previously been assistant manager since about September 2000. Before that he was working as an agronomy consultant at Sunraysia Environmental in Mildura from 1998, and between 1995 and 1998 he was the assistant manager with the predecessor company to Wingara in a task described as “technical and trials” in the Mildura region. That involved him in looking after the vineyard areas developed together with Mr Jeff Milne (to whom Mr Thornton reported) and others, and closely checking vines for proper irrigation, healthy growth and the elimination of pest and disease. It was Mr Thornton who made the daily operations decisions when he assumed the role of manager. Before then it had been Mr Milne’s role and Mr Thornton had worked closely with Mr Milne as the latter’s assistant.
Various questions were put to Mr Brodie and Mr Thornton in cross examination designed to bring out the significance which they saw in their tasks of maximising quality to Wingara’s role as manager of the Rentiers Mildura vineyard. There is no doubt that each quite correctly considered quality to be an important consideration in the discharge of Wingara’s duty. Both appreciated the probably self evident connection between maximising quality and the possible reduction of yield. At one point in the cross-examination Mr Brodie accepted that he saw clause 3.1(a) as imposing upon Wingara the principal and overriding objective of the management agreement between Wingara and Rentiers. I do not accept, however, that it was the view of either Mr Brodie or Mr Thornton, or anyone else with the day to day operations of the vineyards by Wingara, that the object of the management agreement was seen through “the prism of a choice between maximising quality or yields” (as was contended). I specifically reject the submission that such a view was apparent from Mr Brodie’s letter dated 28 November 2005. I accept Rentiers’ contention that a choice between maximising quality or yields “is a false dichotomy” but I do not accept that it is a dichotomy, whether false or otherwise, through which Wingara saw the object of the management agreement. The dichotomy was raised and put on behalf of Rentiers in the two letters to which I have previously referred. Mr Brodie’s letter was in response to the correspondence emanating from Rentiers and, if anything, correctly rejecting the implicit dichotomy which neither Mr Brodie nor Mr Thornton had seen themselves as acting upon in their management of the Rentiers Mildura vineyards.
There is some evidence, however, that greater yields could have been achieved by Wingara on the Rentiers Mildura vineyards. Principally the expert evidence of Ms Davidson, who was called on behalf of Rentiers, is to the effect that greater yields could have been achieved by Wingara. Wingara did not maintain that greater yields could not have been achieved but, rather, that the yields obtained were obtained in the honest and diligent discharge of the management agreement with Rentiers. The probability (to put the evidence of Ms Davidson and others at its highest) that greater yields could have been achieved on Rentiers’ Mildura vineyard does not establish a breach of Wingara’s duties under any of the terms of the Rentiers Management Agreement. Both Mr Brodie and Mr Thornton gave evidence, which I accept, that they (and therefore Wingara) did not adopt an irrigation practice to reduce yields. Mr Brodie said that Wingara did not irrigate to decrease yield but to maintain a healthy canopy and healthy shoots at all times of the year. Mr Thornton said that the irrigation management adopted by Wingara was to apply water at the right time to secure the right canopy architecture and bunch architecture of the grapes. There was no evidence by anyone, including Ms Davidson, to suggest that the farming, cultivating and management of the vines failed to accord with good horticultural practice and approved methods in the district. I accept that some form of irrigation, known as “deficit irrigation” or “regulated deficit irrigation”, formed part of the regular horticultural practices in the Mildura region and in particular of Wingara at the Rentiers land. Ms Davidson expressed the view that this was a high risk management strategy if not done correctly and could have adverse impact, but I accept that it was done correctly by Wingara. It was Mr Brodie and Mr Thornton who had the day to day management responsibility for the irrigation needs of the Rentiers vineyard in Mildura. Their evidence was of detailed attention to the crop to obtain quality produce. Ms Davidson had only limited access to the property some years after the years in dispute. It is impossible, as Ms Davidson agreed in evidence, from a distance of time to second guess the daily decisions of the irrigators and managers about such matters as how much water to apply to vineyards. A table produced as part of her expert report showed that the average yields obtained from the Rentiers vineyards during the periods 1998 to 2001 was, on average, about the same as for the whole of the period from 2002 to 2009. The 2007 year was particularly low but that was explained by Ms Davidson as affected by a previous frost which might also have had an impact on the 2008 year.
Rentiers also pointed to the fact that greater yields were achieved by other growers in the same area as that under Wingara’s management of Rentiers’ land. To this may be added the opinion of Ms Davidson that she thought she could have obtained a greater yield (20% in some cases ) “with water and some other management practices”. However, reliance upon these matters is, in my view, to perpetuate the false dichotomy which Rentiers otherwise rightly criticises. The Rentiers Management Agreement did not require the production of maximum yield. Its obligation in clause 3.1(a) was that Wingara engage in the efficient management and conduct of the property for the production “of high quality produce”. I do not construe that clause as imposing an obligation upon Wingara to produce the maximum amount of high quality produce capable of being produced during the term of the agreement. Such an implication would impose upon Wingara an obligation which is unlikely to be found in the commercial agreement between these parties for the production of grapes where so many variables (including natural climatic variables) may involve difficult judgments on a day to day basis. The standard of management required by the management agreement is deliberately couched in terms of obliging the manager to do all things “reasonably necessary”. The obligation expressed in such terms gives the manger, in this case Wingara, a sufficient band within which to exercise expert and experienced judgment. The obligation in clause 3.1(b) was to farm, cultivate, harvest and manage the vines according to good horticultural practices and approved methods in the district in which the vines were located and to do so in a proper and workmanlike manner including harvesting the produce. The obligation in clause 3.1(c) was to tend and take all reasonable steps to protect the vines including proper pruning, proper training, proper irrigation and proper spraying and fertilising. I do not find established any breach of any of these obligations by the way in which Wingara admittedly undertook its functions under the Rentiers Management Agreement. It did undertake steps directed to the production of high quality produce as it was required to do under the management agreement. That, in part, may have resulted in lower yields than if it had not done things directed to the production of high quality produce but had focussed upon maximising yields. Its obligation, however, was not to maximise yield at the expense of quality. The witnesses for Wingara rejected suggestions that their irrigation of the vines was conducted “so as to reduce” yields. Their evidence (which I accept) was that Wingara’s irrigation was undertaken, rather, with a view to the maintenance of a healthy crop directed to the production of high quality produce. It may be that other growers in the region did achieve higher yields than Wingara on the Rentiers land but that circumstance does not establish the breach of any of the obligations imposed upon Wingara by clause 3.1. No breach of the obligation in clause 3.1(c) for proper irrigation as part of the broader obligation to tend and protect the vines was established in any way by the evidence. The evidence clearly established that the irrigation was undertaken in a careful, planned and constantly monitored basis to ensure the production of good quality produce. In the circumstances I reject the first claim against Wingara of breaches of the Rentiers Management Agreement.
I also reject Wingara’s claim that Freixenet induced Wingara to breach the Rentiers Management Agreement. In this regard it was contented for Rentiers that Wingara’s irrigation management was explicable by Freixenet’s concern about significant wine and grape surpluses coupled with Wingara’s declining sales and increase in inventory. Wingara’s sale decreased between 2001 and 2005 from $41,995,918 to $37,604,064. At the same time Wingara’s inventory was increasing from $24,549,633 to $37,111,709. In 2005 there was a write down by Wingara in its realisable value of bulk wine. Without that write down its inventory would have been $40,106,668.
In 2005 there were emails and instructions from Freixenet to limit production. On 28 January 2005 a Mr Jose Luis Abel from Freixenet in Spain sent an email to Mr David Yunghanns at Wingara (then the General Manager of Wingara) stating that the quantities of production generally (and not by specific reference to the Rentiers land) were higher than budgeted and that this could produce a problem especially in view of the surpluses from previous years. In that context the email said that they needed to “work hard to reduce intake in [the] next vintages”. On 1 April 2005 Mr Abel again wrote to Mr David Yunghanns stating, amongst other things, a worry about “the huge increase in the Mildura’s Chardonnay intake”. In July 2005 a Miquel Salarich prepared a report for the head company in Spain noting, amongst other things, the proposed limitation on production yields, including 25 tonnes per hectare in respect of white grapes.
It may be accepted that the period in dispute coincided with an oversupply of grapes and a concern by Freixenet about that oversupply. The fact is, however, that these concerns were not instructions to Wingara and did not bring about any change in or from 2005 in the management by Wingara of the Rentiers land. Neither Mr Brodie nor Mr Thornton saw the report by Mr Salarich of July 2005 and each of them specifically denied ever having received a direction to limit the production of wine from the Rentiers Mildura vineyard. Each gave evidence that their management practices did not change after 2005 and, indeed, the average yields for the bulk of the claim was well below the 25 tonne per hectare which Freixenet had wanted as the cap. Freixenet’s concerns were, at best, of a general nature applying across the board and not specifically related to Wingara’s obligations to Rentiers. Furthermore, there is no evidence that Freixenet knew that what was being sought would be a breach of contract or that Freixenet sought Wingara to do an act knowing that it would be in breach of contract: any breach by Wingara, therefore, was not knowingly and intentionally procured by Freixenet.[3]
[3]Independent Oil Industries Ltd v Shell Co of Australia Ltd (1937) 37 SR NSW 394, 414 (Jordan CJ); Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26, 41-42 (Lindgren J).
Claims 2 & 3: Reasonable Price Claims
I will deal with Rentiers’ second and third claims against Wingara together. The second claim is for $267,708.75 being the difference between the price paid by Wingara in relation to the fruit from Rentiers’ Coonawarra block KE1 and a reasonable price determined with reference to the price paid for the same or similar quality grapes. The third claim is for $145,236.66 being the difference between the price paid by Wingara in relation to the fruit from Rentiers’ Coonawarra Block 2M2 and a reasonable price determined with reference to the price paid for the same or similar quality grapes.
Clause 3.1 of the Rentiers Produce Supply Agreement required Wingara to pay Rentiers “the price calculated in the way set out in the schedule”. The schedule set out a different mechanism to determine the price payable depending upon whether the price was for grapes or for citrus fruits and, in relation to the grapes, whether the grapes were from the Mildura land or the Coonawarra land. The price payable for grapes from the Coonawarra land was provided to be:
The price will be:
(a)Where the Purchaser on-sells the grapes to Orlando Wyndham Group Pty Ltd, the base price and Baume bonus equal to the price and bonus paid to the purchaser by Orlando Wyndham Group Pty Ltd for varietals of equal quality;
(b)Where the grapes are not sold to Orlando Wyndham Group Pty Ltd and where the Purchaser sells the grapes to a third party the price payable to the Purchaser for those grapes by that third party
(c)In any other case, the price for each varietal of grape will be mutually agreed and in the absence of agreement the price for any grape varietal in dispute will be determined by an expert nominated by the Coonawarra Grape Growers Association (or the successor to that association) and clauses 11(b)(c) and (d) will apply to the expert and how the expert’s determination will be made and the expert’s costs.
It is common ground between the parties that the price payable in respect of claims 2 and 3 was governed by clause (c) from the schedule quoted above. None of the grapes were on-sold either to Orlando or any other purchaser. Clauses 11(b)(c) and (d) which are referred to in the provision in the schedule quoted above deal with the function of the expert, the making of submissions to the expert and the payment of the costs of the expert and may be put aside for the moment.
The mechanism adopted by the parties to deal with the price payable for the grapes from Rentiers’ Coonawarra land was for them to agree on a price and in default of agreement to have the price determined by an expert nominated by a third party. It is common ground that the price payable for the relevant grapes was not mutually agreed. Rentiers contended that there is to be implied into the clause a provision that Rentiers pay a reasonable price where the contractual mechanism has failed. Wingara contended that the procedure did not fail but that if it did fail the term to be implied into the contract is not that Wingara would pay a reasonable price but that the parties would cooperate in the selection of an appropriate body to appoint an expert to determine the dispute.
In August 2004 Wingara sought to invoke the expert determination procedure. On 20 August 2004 Wingara’s solicitors wrote to the President of the Coonawarra Grapegrowers Association informing the President that a term of a contract Wingara had with Amara provided that any dispute about the price to be paid for grapes was to be determined by an expert nominated by the Coonawarra Grapegrowers Association. The letter asked for the nomination of an expert pursuant to the agreement for an expert to determine the dispute as to the price to be paid for the grapes. A copy of that letter was sent by Wingara’s solicitors to Mr Peter Yunghanns on behalf of Amara. Identical letters were sent in respect of Rentiers. Wingara’s solicitors were informed that the Coonawarra Grapegrowers Association would not be participating in the dispute resolution and would not be nominating or identifying an expert to determine the dispute. The reason for that appears to be that an industry wide dispute resolution procedure had been developed by which the Wine Industry Relations Committee of the Winemakers’ Federation of Australia made available a list of experts qualified to provide dispute resolution to be agreed upon by the parties to a dispute, and in the absence of agreement, to be appointed by the Chairman of the Wine Industry Relations Committee. Mr Peter Yunghanns was informed of this and asked to participate in such a process but he did not do so. It was submitted on behalf of Wingara that the reason for Mr Peter Yunghanns’ failure to participate was the hostility which had developed towards his son, Mr David Yunghanns, who was at that time the Chief Executive of Wingara.
The mechanism for determination of price by an expert nominated by the Coonawarra Grapegrowers Association as provided for in the schedule to the Rentiers Produce Supply Agreement has failed on its terms. The fact is that what was provided by the Rentiers Produce Supply Agreement cannot occur because the nominated body has said that it will not do what it was asked to do. Each of the competing contentions about what should occur in those circumstances depends upon a need to imply something into the contract. Each of the competing contentions may find some support in principle and from the decided cases. Wingara’s contention relies upon the principle from Mackay v Dick[4] that the parties implicitly agreed to do all that is necessary to be done for the carrying out of that which they had agreed would be done (recently affirmed in Campbell v Backoffice Investments Pty Ltd[5]), where the thing the parties have agreed was to refer any dispute about price to expert determination by a third party. On the other hand Rentiers’ contention of an implied term of a reasonable price finds support in the authorities where the terms may rest on the presumed intention of the parties that a reasonable price be paid.[6]
[4](1881) 6 AC 251, 263 (Lord Blackburn).
[5][2009] HCA 25 (Unreported, Gummow, Hayne, Heydon and Kiefel JJ, 29 July 2009) [169].
[6]BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 283 (Lord Simon, Viscount Dilhorne and Lord Keith); Australian and New Zealand Banking Group Ltd v Frost Holdings Pty Ltd [1989] VR 695, 669-702 (Kaye J).
It is plain that the parties agreed that the grapes should be paid for. It is I think, also plain, that the parties agreed that the price to be paid was to be reasonable. That I think may fairly be inferred from the mechanism adopted of referring any dispute about the price to an independent third party to determine the price as an expert. It is implicit in the exercise to be undertaken by such a person that the price was to be determined by someone who was disinterested in the outcome but would be informed in the decision by expert knowledge and qualification. It is also clear that the parties contemplated that the appointment of the expert would not necessarily be made by the Coonawarra Grapegrowers Association if there was a successor to that association. In that regard it is important to bear in mind that the person to act as expert was not contemplated as being the Coonawarra Grapegrowers Association itself. The association’s role was that of nominating another person who would be the expert to make the determination about price.
It seems to me that the proper construction of the agreement in this respect requires an implication that the parties cooperate in the selection of an appropriate body to appoint an expert rather than an implication that Wingara pay a reasonable price to be determined other than by an expert. It may be assumed for these purposes that the parties have agreed for the payment of an amount ultimately to be determined by an expert to be reasonable in the opinion of the expert. Critical to that determination, however, is that the parties evinced an intention that the determination of what was reasonable was to be made by an expert with all of the qualifications and knowledge that goes into that process rather than by a court of law. The parties specifically provided that the expert was to act as an expert and not an arbitrator (by specifying that clause 11(b) would apply to the expert). The exercise of expert determination is potentially different from judicial determination and the standard may produce different outcomes.
If an implication is to be made into the contract, it should be an implication which best reflects and advances that which can be seen to have been agreed. Here the parties agreed that the nominating body was to be the Coonawarra Grapegrowers Association and not the Wine Industry Relations Committee. They did agree, however, that the determination about price was to be made by an expert, acting as an expert, rather than that Wingara pay the reasonable price. The absence in the contract is about who should nominate an expert if the Coonawarra Grape Association (or its successor) was not able to, or did not for whatever reason, appoint the expert. In BP Refinery (Westernport) Pty Ltd v Shire of Hastings[7] the Privy Council said:
Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.[8]
Implying a term that the parties must cooperate in the selection of an appropriate nominating body more aptly fits the test for an ad-hoc implication than the competing implication urged upon me by Rentiers. The implication of a reasonable price to be determined by a Court potentially does contradict the express term of the contract that the price to be paid was to be determined by an expert. In that regard clause 11(b) specifically provided that the person appointed was to act “as an expert and not as an arbitrator”. It cannot have been the intention of the parties when entering into the Rentiers Produce Supply Agreement that the resolution of a dispute about price by an expert would be nullified for want of agreement about an alternative nominating body[9] and there is no doubt about the ability of an appropriate expert to be appointed by someone. Indeed, there is evidence of the industry wide procedure having been developed by which the Wine Industry Relations Committee makes available a list of experts qualified to provide dispute resolution. Neither party made any submission to the effect that the words “the successor” in the schedule should be read widely so as to enable the Committee to be seen as satisfying the description in place of the Coonawarra Grapegrowers Association. I will therefore decline from expressing any view about whether such a submission, had it been made, would have succeeded. It will be sufficient for me for present purposes to express the view that Rentiers is entitled to be paid for the grapes at the price provided for in the schedule and that it is entitled to maintain that claim upon discharging the implied obligation to do all things necessary to cooperate in the selection of an alternative body to appoint an expert. On the evidence available to me that implied obligation would seem to be satisfied by acceptance of the Wine Industry Relations Committee as the appropriate nominating body.
[7](1977) 180 CLR 266.
[8]Ibid 282-3 (Lord Simon, Viscount Dilhorne and Lord Keith).
[9]See the observations in 1144 Nepean Hwy Pty Ltd v Abnote Australasia Pty Ltd [2009] VSCA 308 (Unreported, Warren CJ, Nettle and Bongiorno JJA, 18 December 2009) [29].
If, however (and contrary to my conclusion), I were required to determine the reasonable price on the evidence available, I would accept the evidence tendered on behalf of Rentiers and find the amount of its claims to have been established. The claim is based upon the prices paid by independent third parties for grapes from the same blocks. Orlando Wyndham was a large producer of grapes and purchased grapes managed by Wingara from designated rows from the very blocks in question. I therefore conclude that the price Wingara paid to Orlando was the reasonable price for those grapes. Cellarmasters also purchased grapes generally from the same areas. Mr Brodie expressed some doubt, for these purposes, about the grapes acquired by Orlando being the same as those produced by Wingara, but his evidence on that was at best speculative. The probability is that the grapes purchased by Orlando were sufficiently the same as those produced by Wingara for Rentiers for the price paid by Orlando to be reliably adopted as the reasonable price to be paid to Rentiers, and indeed, it may be the price which an expert may find to be payable. In those circumstances I would have accepted Rentiers’ calculations and would have made the orders in the amounts they sought in the proceeding.
Claims 4 & 5: The Prodigy and Odyssey Claims
The fourth and fifth claims may also be dealt with together. The fourth claim is that by Rentiers for $32,751.24 said to be its loss and damage for the 2004 and 2005 vintages of Prodigy grapes. The fifth claim is by Amara for $29,450.50 said to be its loss and damage for the 2004 vintage of Odyssey grapes. Rentiers alleges breaches of the Rentiers Produce Supply Agreement and Amara alleges breaches of the Amara Produce Supply Agreement. In each case it is maintained that Wingara did not pay for the grapes as grade one quality grapes.
Both Prodigy and Odyssey are premium wine labels of Wingara. Prodigy is produced from shiraz grapes and Odyssey is produced from cabernet sauvignon grapes. Wingara produced Prodigy wine in 2004 and 2005 and Odyssey wine in 2004. Although these wines are Wingara’s premium wine labels, none of the grapes used for those vintage years were graded as grade one grapes. Notwithstanding this the labels on the relevant bottles indicated an appropriate quality of the fruit in the relevant years. The label for the 2005 Prodigy wine referred to the “outstanding fruit quality with optimal ripeness and exceptional flavour” in the production of that wine. It went on to say that parcels of fruit destined for “Prodigy shiraz were harvested from sections of Katnook Estate’s vineyard which consistently produce intense flavour and fine tannins”.
The grapes were not graded as grade one quality wine grapes at the relevant time. There is no suggestion of any dishonesty on the part of those grading the grapes at the time. Mr Brodie’s evidence was that wine produced from grapes graded as grade two may nonetheless be assessed to have reached the standard necessary for release under those premium labels. However good the wine may have been once produced, and however much the ultimate quality may owe to the grapes (as distinct from the skill of the winemaker), there is no secure foundation to reject the appropriateness of the grading of the grapes at the time when they were graded nor to grade them now as grade one grapes. There was no direct evidence about the grapes from which I could determine that they were grade one grapes. Understandably no grapes were tendered nor was there any evidence about their quality or features from which I could form a judgment that they were grade one grapes. The evidence from which such a conclusion was urged upon me was that the grapes were used to produce the premium quality labelled wines of Prodigy and Odyssey. However, the process from harvesting to bottling is consistent with grade two grapes being used. Wingara graded the grapes after fermentation some six months after harvest. There was no determination or evaluation of the grapes at that time beyond that undertaken by Wingara and not then challenged. There is no material from which I can conclude that the grading done at that time was wrong. Mr Brodie’s evidence was that it was possible that grapes graded as grade one and earmarked for Prodigy and Odyssey might not ultimately be used in those bottles under those labels and vice versa. His evidence was that it was a matter for the winemaker to determine whether the grapes may be assessed to have reached the standard necessary for release under those premium labels notwithstanding that they might initially have been graded (correctly) as grade two grapes. I have no reason to doubt his evidence and accept it in this regard completely. Accordingly, I do not accept this claim to have been made out.
Claim 6: High Price Claim Mildura
The sixth claim by Rentiers is for $424,936.30 as the price payable by Wingara to Rentiers for the Mildura grapes under the Rentiers Produce Supply Agreement. Clause 3.1 of the agreement, as previously noted, required Wingara to pay the price calculated in the way set out in the schedule. The schedule provided a mechanism for the price payable for the grapes in the Mildura land. It relevantly provided:
For Grapes
Price will be:
(a) the greater of:
(1)the weighted average price for each varietal for each year of all grapes supplied to Sunraysia Wineries as published by the Victorian and Murray Valley Wine Grape Council Inc or any successor or replacement to that Council from time to time; and
(2)for each varietal of grapes, the highest price offered during the relevant season by the Purchaser to other growers which supply grapes to the Purchaser for the relevant varietal of grapes of the same quality;
(b)plus the Baume bonus on qualifying varietals of an amount equal to that offered by the Purchaser to other growers supplying grapes of the same qualifying varieties with the same Baume level to the Purchaser; …
It is plain that what had been agreed under this mechanism was for Rentiers to be paid the highest price which Wingara offered to the supplier of any comparable grapes in the region. The success of this claim depends upon the interpretation of the expression “the highest price offered during the relevant season by the Purchaser to other growers” and in particular of the word “offered” in the context of that phrase.
Wingara entered into many contracts with other growers before and after entering into the Rentiers Produce Supply Agreement. At least some of these contained minimum price terms that remained current during the terms of the Rentiers Produce Supply Agreement and, therefore, provided for amounts to become payable by Wingara to other growers. A consequence of this is that there were contracts which required Wingara to pay during the currency of the Rentiers Produce Supply Agreement amounts that were higher than the weighted average price as contemplated by paragraph (a) in the comparative formula for the determination of the price which Wingara had to pay to Rentiers. Rentiers contended that the phrase “the highest price offered during the relevant season” included prices under contracts entered into before the season in respect of which Wingara was to pay amounts to Rentiers pursuant to the formula. I am unable to agree with that construction. The intention revealed by the clause is to secure for Rentiers the highest price “offered” during any relevant season. Rentiers was thereby guaranteed to receive the best price on “offer” for its grapes during any year provided that it was not less than the weighted average price. The use of the word “offered” as distinct from the word “paid” is perhaps sufficient to reveal the intention that what Rentiers was to receive was the best price Wingara was prepared to offer someone else as distinct from a price it might historically have become obliged to pay but would not otherwise have offered when required to pay it. I should also add that the construction urged upon me by Rentiers would render nugatory the point of the comparison provided for in the formula agreed for the determination of price, since it is of the nature of a weighted average price that it will be less than the highest price offered: in other words, the construction urged upon me by Rentiers would render the first limb of clause (a) unnecessary. Accordingly, I am unable to accept this claim.
Claim 7: Mildura District Weighted Average Claim
The seventh claim by Rentiers is for $198,789.88 on the basis that the average weighted price made payable under clause (a)(1) of the schedule of the Rentiers Produce Supply Agreement should have been calculated without reference to the indicative prices supplied by Wingara when determining the weighted average price. In respect of this claim it is significant that Rentiers has expressly disavowed any claim for rectification of the agreement.
The requirement in the clause, on its terms, is not that Wingara was to pay the weighted average price for each varietal, but rather, that it would pay the amount identified and published as such by the Victorian and Murray Valley Wine Grape Council Inc. Rentiers’ complaint about the application of the pricing formula arose from the circumstance that Wingara supplied the Council with the indicative prices payable to Rentiers which were taken into account by the Council in its publication of the weighted average prices. It was said, therefore, that the published figures of the weighted average prices were not truly the weighted average prices because they included some indicative prices including those payable to Rentiers.
The relevant survey when the Rentiers Produce Supply Agreement was entered into was the Regional Wine Grape Crush Survey 2000 to which Rentiers urged that I should have regard when construing the provision for payment of the district weighted average price. Having regard to the document, however, does little to assist in construing the terms of the agreement. Page 10 of the survey stated that the weighted average was calculated “by dividing the total farm gate value … (summed across all wineries) by the total tonnes of the same variety purchased from other growers. Winery grown grapes are not included in the calculation of weighted average price”. It does not, however, indicate whether the survey took into account indicative prices of the kind subsequently supplied by Wingara and complained about in these proceedings by Rentiers. It is probable that it did. It is clear that subsequent publications were based upon calculations taking into account indicative prices as well as actual prices. It is accepted that Wingara submitted indicative prices for each variety of grapes for vintages from 2002 to 2009 and I infer that it did so before the year 2002. In any event, there is no evidence led on behalf of Rentiers that Wingara did not submit indicative prices in the years before 2002 or that the survey was not based in part upon such indicative prices. No suggestion has been made, and none is open on the evidence, that the supply by Wingara of indicative prices was made improperly to defeat Rentiers’ entitlements under the Rentiers Produce Supply Agreement. Nor is it clear that the inclusion of indicative prices would necessarily be to the disadvantage of Rentiers. In the circumstances it seems to me that the term should be construed at face value, namely, that the amount payable was that identified as the weighted average price in the publication nominated in the agreement. The contract selected the price by reference to the act of another entity, namely, the publication by the relevant Council or any successor or replacement. As such, Wingara’s obligation would remain one to pay the price “as published”. Accordingly I reject this claim by Rentiers.
Claim 8: Baume Bonus
The eighth claim by Rentiers is for $29,038.95 for the non payment of a Baume bonus. The relevant terms of the Rentiers Produce Supply Agreement required Wingara to pay a Baume bonus “of an amount equal to that offered” by Wingara “to other growers supplying grapes of the same qualifying varieties with the same Baume level”. Wingara maintained that no amount was payable by way of Baume bonus because a precondition to the entitlement of Rentiers to such a payment was not met. Wingara maintained, in short, that the Baume bonus was not payable because no Baume bonus was offered or paid to any other grower for the 2002 season.
By letter dated 13 February 2002 Wingara wrote to Rentiers regarding the 2002 vintage grape prices stating that a bonus would be paid for cabernet sauvignon, shiraz and merlot at the rate of “2% per 0.1Be above 13.0Be up to a maximum of 10% for 13.5Be and above”. This letter was sent as a standard form letter to all growers that supplied Wingara, including to a Mr Tony Taylor of A.E. & E.M. Taylor & Sons who was called to give evidence. Rentiers maintained that these letters constituted offers sufficient to enliven the entitlement for Wingara to be paid a Baume bonus pursuant to the Rentiers Produce Supply Agreement. I agree.
In my view Rentiers has established an entitlement to a Baume bonus. Its claim does not depend upon any grower being paid any amount, but, rather, that a Baume bonus was offered to any other grower on qualifying varietals. The standard letter of 13 February 2002, and the specific letter in those terms to at least Mr Taylor, is sufficient to constitute an offer to a grower other than to Rentiers. That it was never paid is not to the point. Accordingly, I find that Rentiers has established this claim. Its calculation for cabernet sauvignon grapes is for $19,563.98 based upon the tonnage of those grapes shown on various dockets dated April 2002. The total payable for the merlot grapes is $9,474.97 based upon the tonnages of those grapes as shown in dockets for the 2002 vintage year.
Claim 9: Abatement Claims
Rentiers’ ninth claim is for $223,326.17 which it claims should have been abated from Wingara’s management fees on account of events defined as “Abatement Events” in the Rentiers Management Agreement.
Clause 6.1 of the Rentiers Management Agreement required Rentiers to pay Wingara a management fee as set out in a schedule. Clause 12(a) provided that the management fee would be reduced by an amount representing the value of services under the agreement which Wingara was not required to perform on an area in respect of which an abatement event occurred. Abatement events were defined in clause 1.1 to include the redevelopment of more than one hectare of vines or citrus trees. The abatement amount was to be agreed between the parties and in default of agreement to be determined by a person nominated as an expert to make the determination by the President of the Victorian and Murray Valley Wine Grape Council Inc.
Four abatement events are relied upon by Rentiers. The first was the redevelopment of 5.2 hectares of vines and citrus trees which were redeveloped to vines on the Mildura land during the period of 1 July 2001 to 30 June 2002. The second was the redevelopment of vines and citrus trees on 37.2 hectares of land in Mildura during the period of 1 March 2002 to 1 July 2004 including 19.8 hectares of citrus trees removed in December 2001. The third was the redevelopment of vines and citrus trees on 40.5 hectares of Mildura land during the period from December 2002 to 1 July 2005 including 14.9 hectares of citrus trees removed in December 2002. The fourth concerned the removal of 45.83 hectares of vines and citrus trees removed in October and November 2007.
Wingara contested Rentiers’ claim on a number of bases. The first was that the claim was said to be misconceived as a breach of contract because there was no obligation imposed upon Wingara which has been breached. In that regard Wingara contended that clause 12(a) did not impose upon Wingara a “relevant obligation”. The clause on its terms provided that the management fee payable to the manager “will be reduced by” the amount referrable to the abatement events. This, in my view, required Wingara to charge less by way of management fee than it did if the abatement events occurred. In my view it breached its obligation if it continued to charge, and receive, a higher amount than that payable if clause 12(a) was enlivened. The claim does not cease to be a breach of contract claim merely because in form it may require the repayment of an amount which was overpaid. The form of any order may appear to be restitutionary but that circumstance does not of itself prevent the claim being one for breach of express or implied contract and for an order to be made for the payment of damages. The contractual obligation to reduce the fee payable by reference to amounts referable to abatement events is clear and its breach may be recovered as damages if the breach is established.
Wingara next maintained that the claim could not succeed because clause 12(b) required the amount of abatement to be determined by an expert appointed by the President of the Victorian and Murray Valley Wine Grape Council Inc. The clause relevantly provided:
If the parties cannot agree as to the amount of the abatement of the fee, then either party may have the President or his or her nominee of Victorian and Murray Valley Wine Grape Council Inc, (or any successor to or replacement of that body) appoint an expert to make the determination of the amount by which the fee is to abate, and the expert’s decision will bind the parties.
On 20 August 2004 Wingara’s lawyers wrote to Mr Peter Yunghanns at Rentiers seeking to have an expert appointed to determine the dispute concerning the abatement of the management fee at Mildura. On the same day Wingara’s solicitors wrote to the President of the Murray Valley Winegrowers Inc seeking the appointment of an expert to determine the dispute about the abatement of management fees pursuant to the Rentiers Management Agreement. On 14 September 2004 the Chief Executive Officer of Murray Valley Winegrowers Inc wrote to Wingara’s solicitors confirming a conversation which had taken place that day to the effect that Murray Valley Winegrowers Inc did not provide a service whereby it appointed experts for the purposes of dispute resolution but that it had contributed to, and was party to, an industry wide dispute resolution procedure that had been developed by the Wine Industry Relations Committee.
On 16 September 2004 the Winemakers’ Federation of Australia sent a list of experts identified by the Committee to Wingara’s solicitors. On 27 September 2004 that information was sent by Wingara’s solicitors to Mr Peter Yunghanns requesting agreement that the Chairman of the Wine Industry Relations Committee could appoint the expert in place of the Murray Valley Wine Grape Council Inc. On 14 October 2004 Wingara’s solicitors renewed their request to Mr Peter Yunghanns and did so again on 26 November 2004. An expert was not appointed and this fact was mentioned in a further letter from Wingara’s solicitors on 23 December 2004 to Mr Peter Yunghanns. That produced a response the following day in a letter from which it can be deduced that Mr Peter Yunghanns would not arrange for Rentiers to participate in the appointment of an expert although that fact is not specifically referred to.
The question arising in the context of this claim is similar to that which arose in claims 2 and 3 considered above. It is similar in the sense that a question arises about whether clause 12(a) requires an implication that Rentiers was required to do all things necessary to agree to the substitution of the nominating body if the nominating body provided for in the agreement ceased to exist, had no successor or was otherwise unwilling or unable to nominate an expert to make a determination of the amount by which a fee was to be abated. The question is not exactly the same as that which arose in claims 2 and 3, however, because the task for the expert is qualitatively different: the determination of an abatement amount is not the same as the determination of the price payable for grapes of particular varieties and quality under the Rentiers Produce Agreement. Having said that, however, the differences are not sufficient to justify a different conclusion about the term to be implied in the circumstances where an implication is necessary. In both cases the parties had contemplated the relevant decision to be made by an expert as an expert. The decision of the amount of abatement was to be determined by an expert upon an evaluation of the amount representing “the value of the duties [which] the manager” was not required to perform on the area affected by the abatement events. In these circumstances it seems to me that Rentiers’ claim under this heading is substantially the same as its claim for the implication of the payment of a reasonable amount in claims 2 and 3. In my view the necessary implication to be made is that it should do all things necessary to cooperate to have an expert appointed to determine the dispute.
If, contrary to the conclusions I have reached, it had been necessary for me to consider the quantum of the amount by which the management fee was to be abated, I would accept the calculations made by Rentiers and the basis upon which they were made. The claim for citrus tree redevelopment was made in large part based upon calculations by reference to Wingara’s methodology which had been approved by Mr Chris Pike, its Chief Executive Officer. Essentially the methodology was to determine the duties that were no longer performed by reason of the abatement event and which were referrable to the removal of the citrus trees. The Company Secretary for Rentiers, Mr Sean O’Brien, was called to give evidence about calculations made to determine the abatement amounts. Essentially he used the methodology which Mr Pike had approved when calculating the components of the claims concerning the removal of the citrus trees and the level of abatement of Wingara’s management fees. I accept that in respect to the first and third redevelopments Wingara would not have incurred a number of expenses including some for consulting fees, electrical irrigation, grape levies, repairs and maintenance and technical services. I also accept that in respect to the fourth redevelopment Wingara’s documents reveal that works to the value of only $8,553.05 were undertaken in respect of the relevant part of the vineyard. That amount was credited in Mr O’Brien’s calculations and, accordingly, if I had been required to do so, I would have found that Rentiers had made its claim for the abatement amounts totalling $223,326.17.
Claim 10: Calculations if Claims 6 & 7 Succeed
Rentiers’ tenth claim is for $644,460.19 if it had succeeded in relation to both claims 6 and 7. It has not succeeded on those claims and, therefore, claim 10 fails also.
Plaintiff’s Claim for Interest
The only claim by Rentiers for interest that needs to be considered is that on $29,038.95 for the Baume bonus claimed above. In that regard Rentiers claims interest of $30,351.67 plus daily interest of $11.14. That claim is based upon clause 10.9 of Rentiers Produce Supply Agreement which requires payment of interest at the rate of 2% per annum above the rate set under the Penalty Interest Rate Act 1983 (Vic) at the time the amount became due. Wingara maintained that the amount only became due upon the making of the demand but, in my view, that submission must be rejected. The Baume bonus was payable as part of the price and, for these purposes, may be taken to have become payable as at the 2002 vintage. It has been calculated from 30 September 2009 which I consider the evidence to support as the time from which the Baume bonus was payable. Accordingly I accept that the plaintiff is entitled to the interest claimed of $30,351.67 to the date of conclusion of the hearing on 16 March 2010 and from 17 March 2010 accruing daily at the rate of $11.14.
Wingara’s Set Off and Counter Claim
Wingara’s set off and counter claim against Rentiers and Amara are substantially admitted. Wingara claims $529,752.15 from Rentiers in respect of outstanding management fees. I say “substantially” because the amount is admitted but the date from which it is said to have been payable is not. The difference in date (26 February 2010 is alleged by Wingara and 28 February 2010 is admitted by Rentiers) is of no consequence and, as I have said, the quantum of the debt is admitted. The same is true in respect of Wingara’s claim of $53,728.80 against Amara for outstanding management fees. The amount is admitted and the disagreement of the date from which it is payable is immaterial.
Under both management agreements Wingara is also entitled to interest on the amount of the management fee due, but unpaid, at a rate equal to 2% above the rate set under the Penalty Interest Rates Act 1983 (Vic). This has been calculated for the amount due from Rentiers at $15,299.21 to 28 February 2010 and a daily rate of $174.17 from 1 March 2010. The interest due from Amara to 28 February 2010 is $1,049.28 and from 1 March 2010 at the rate of $17.66 per day.
Orders
The parties have asked to be heard on any orders about costs. I will hear the parties on that and, subject to that, make the following orders and determinations:
A. The first plaintiff (“Rentiers”) pay the first defendant (“Wingara”) the sum of $529,752.15 in respect of outstanding management fees together with interest of $15,299.21 to 28 February 2010 and at the rate of $174.17 per day from 1 March 2010.
B. The second plaintiff (“Amara”) pay Wingara the sum of $53,728.80 for outstanding management fees together with interest of $1,049.28 to 28 February 2010 and at the rate of $17.66 per day from 1 March 2010.
C. Wingara pay $29,038.95 to Rentiers for Baume bonus together with interest of $30,351.65 to 16 March 2010 and at the rate of $11.14 per day from 17 March 2010.
D. It is declared to be a term of the “Produce Supply Agreement” between Rentiers and Wingara made 27 June 2001 that each party do all things necessary to agree upon an appropriate body, in substitution of the Coonawarra Grapegrowers Association, to nominate an expert to determine the price payable pursuant to clause (c) for grapes in respect of the Coonawarra land.
E. Upon an expert being appointed and making a determination pursuant to the declared term of the Produce Supply Agreement, Wingara pay to Rentiers such amount, if any, as may be determined by the expert in excess of the amounts already paid by Wingara for the fruit from Rentiers Coonawarra Block KE1 for each of the vintages from 2002 and to 2009 (inclusive) and Rentiers Coonawarrra Block 2M2 for each of the vintages from 2002 to 2005 (inclusive).
F. It is declared to be a term of the “Vineyard and Citrus Grove Management Agreement” between Rentiers and Wingara made 27 June 2001 that each party do all things necessary to agree upon an appropriate body, in substitution of the President of the Victorian and Murray Valley Wine Grape Council Inc, to nominate an expert to make a determination pursuant to clause 12 of the amount by which the fee payable by Rentiers to Wingara is to abate.
G. Upon an expert being appointed and making any such determination pursuant to the declared term of the Vineyard and Citrus Grove Management Agreement, Wingara pay to Rentiers the amount by which the management fees paid by Rentiers exceeded the amount (if any) by which the expert may determine the management fee is to be abated.
H. All other claims and cross claims against the parties are otherwise dismissed.
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