Fisher found in August last year that Milk NZ had breached its minimum supply obligations and, as a result, Miraka was entitled to damages for losses rather than liquidated damages for breaches in certain months.
The volume of milk and damages sought have been redacted from public documents, but back in 2017 NBR reported evidence suggesting the payments totalled about $6 million.
In the first season of their contract, which began in 2014, Milk NZ didn't meet the minimum supply agreed on but paid Miraka's invoice for the minimum amount. However, for the two following seasons, it refused to pay.
During the latter two seasons, there were quality issues with the milk and Miraka was unable to process as much due to issues with its factory. Milk NZ was compensated separately by Miraka for those problems.
According to the recently-released decision of Justice Tracey Walker, the arbitrator found that despite there being issues with quality, that was not the reason Milk NZ didn't order as much milk to be processed as contracted.
"The failure was due exclusively to unanticipated slowness in the development of a market for Milk NZ in China, and hence its unwillingness to commit to the minimum volumes," the judgment, dated Oct. 23, says.
In a 56-page decision, Justice Walker upheld all of the arbitrator's findings but said the case should go back to the arbitrator to determine the issue of interest. The amount Milk NZ must pay has been kept confidential.
Miraka, which is owned by several Maori trusts, is a relative minnow in the Kiwi dairy industry. According to the 2019 TDB Advisory dairy industry report, the company had 3.5 per cent milk volume growth annually between 2013 and 2018 but no growth was forecast in the next two years.
The advisory firm's most recent annual revenue estimate for Miraka was $125 million, based on its plant capacity.
- BusinessDesk
