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TPA spells new threat for AWB

TPA spells new threat for AWB

EMBATTLED WHEAT body AWB has just been dealt a further blow, with the Federal Court finding it had breached provisions of the Trade Practices Act (TPA) in its dealings with grain traders, and…

EMBATTLED WHEAT body AWB has just been dealt a further blow, with the Federal Court finding it had breached provisions of the Trade Practices Act (TPA) in its dealings with grain traders, and further cases could arise as a result.

According to Dibbs Abbott Stillman partner Dale Kemp, the domestic division of the body, AWB Australia Ltd, may now be exposed to a series of copycat lawsuits, on top of a shareholder action by Maurice Blackburn Cashman and a potential billion dollar suit originating from the US.

AWB was found to have been guilty of misleading and deceptive conduct under section 52 of the TPA, through comments made to feedlot operator, Bective Station, at the end of 2002. Dibbs argued that AWB’s Toowoomba agent had urged Bective to purchase grain for early 2003 — when prices were at record levels — or there would be none available until the next harvest in October of that year.

In reality grain imports saw prices fall dramatically, and so the firm sought to have the contract set aside.

According to Kemp, AWB’s defence was that “such a statement was so ridiculous that it would never have been said”. Yet the Federal Court not only believed the representations had been made by AWB, but that they came right at the time when permits had been issued by the Australian Quarantine and Inspection service for the import of grain.

When the market learned of the imminent arrival of the imported grain, the domestic price sunk. Yet Bective was contractually forced to continue purchasing at the greater negotiated price.

The resulting finding of breach was no surprise to Kemp, as for “once the Court accepted our client’s factual version of the conversation with AWB’s agent, the finding of misleading and deceptive practice was a given,” he told Lawyers Weekly.

“This was a very good result for our client because they did not have to outlay approximately $2 million, which represented the contracted purchase price plus interest,” he said. “Accordingly they did not suffer any financial detriment.

“As any business person will attest, preventing money loss now is much better than trying to claw it back later,” he said. “Our client was advised to take early action as a plaintiff seeking relief, rather than paying the contract amount and facing the prospect of having a tough fight to get it back through damages a number of years after the money had gone.”

Kemp said that an intriguing aspect of the case lay in trying to locate other grain buyers who had been similarly injured by AWB representations, for the purposes of providing supporting evidence. He anticipates that many of these grain buyers may be now looking to launch TPA actions of their own, and Dibbs would be more than happy to accommodate them.

“We are currently talking with these people and if they do decide to take action we will be delighted to represent them,” he said.

A spokesperson for AWB Australia Ltd declined to comment.

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