Dairy farmers successful in dismissing injunction
A group of 16 dairy farmers had a significant win in the High Court earlier this week following a dispute with milk processor, Watson’s Dairies Ltd.
The Judge, The Honourable Mr Justice Smith, comprehensively dismissed an application for an interim injunction brought by Watson’s Dairies (part of the Medina group) against Meadow Milk, a milk production cooperative. The application was made by Watson’s Dairies as part of a wider dispute between the milk processor and the farmers. This litigation was initiated by Watson’s Dairies following the farmers’ service of notices to terminate their milk supply contracts with the processor. These notices expired on 30 September and Watson’s Dairies sought and obtained on Wednesday 30 September a short interim injunction restraining the farmers from selling their milk elsewhere, causing significant difficulties for the farmers who had signed new milk supply contracts. However, on return to the court on Tuesday 6 October the Judge refused to allow that injunction to continue to trial and dismissed the application leaving the farmers free to supply their milk to their new processors.
Our team of agricultural law specialists, an NFU Panel Firm, are representing the group of 16 farmers.
Dispute Resolution Partner Esther Woolford said: “We are delighted with this result for our clients.
“The applicant’s case for the injunction was that its long-term financial viability depended on the supply of milk from our clients. The judge did not accept this argument pointing to the fact that the applicant could obtain the milk that it needs from elsewhere in the market.
“The Judge also noted that a deal had been reached between two of the members of Meadow Milk who had also given notice (and against whom the litigation had not been brought) on better terms and that tying the remaining 16 farmers to a more disadvantageous relationship would be to subvert the free market. The Judge commented that this underlined the pernicious nature of granting an injunction.
“The on-going litigation between Watson’s Dairies and our clients is a reflection of the unfairness that prevails in the dairy industry today. Dairy farmers are expected to bear the risk of contracts that are weighted heavily in favour of the milk processors who unilaterally introduce revised contract terms, pricing mechanisms and price cuts without negotiation. In the case of our clients, when the notified milk price went below a safety net basket of prices, they served three months’ notice in accordance with the terms of their contracts. The validity of these notices is being contested by Watson’s Dairies in the main litigation which our clients wholeheartedly defend.”
Esther continued: “Whilst we are delighted that the injunction has been dismissed, we must now focus our attention on continuing to robustly defend our clients’ case in the continuing litigation but we are relieved that our clients are no longer tied into unfavourable contracts with Watson’s Dairies and are free to send their milk elsewhere and under better terms and conditions.
“The farmers have received significant financial assistance from the NFU and its Legal Assistance Scheme in defending their position. This support was given in part due to the nature of the application for injunctive relief (having been issued on the very last day of supply on a without notice basis) and also due to concerns in relation to fairness in the dairy industry more generally, which has been subject to a recent government consultation. In addition to financial support, the NFU also supported the farmers by their Chief Dairy Advisor, James Osman, giving witness evidence explaining the operation of the dairy industry and the NFU’s concerns as to fairness in contracts, particularly in relation to pricing and the length of notice periods.”
Mr Proctor of Meadow Milk Limited said: “We would like to thank our legal team, the NFU and its Legal Assistance Scheme for their support and input, without which we could not have successfully achieved this fantastic outcome in defending these injunctive proceedings for the benefit of both Meadow Milk Limited and the many other dairy farmers.”
For further information about this article please contact a member of our team.