The former owner of Van Diemen's Land Company has failed in a legal battle attempting to force Van Dairy Group to pay it $2.2 million stemming from the 2016 sale.
Chinese-owned VDG bought the business - Australia's largest dairy farm, on Tasmania's north-west tip - from New Zealand-owned Tasmanian Land Company for $275 million with a post-closing adjustment.
The sale included an exclusive milk supply agreement with Fonterra through until 2021, including a guarantee for the milk price not to fall under a benchmark.
But just a month after the sale, the price paid by Fonterra decreased significantly due to market conditions.
It meant VDG was facing a substantial decrease in milk price that it would need to bear for the entire 2015-16 season, including the nine months before the sale. In an attempt to balance this out, the Tasmanian Land Company agreed to pay VDG $2.2 million as part of the post-closing adjustment.
In 2017, Fonterra agreed to pay its suppliers an extra payment of 40 cents per kilogram of milk solids on top of the exclusive milk supply agreement to compensate for the reduced price in 2015-16, resulting in more than $3 million for VDG.
The Tasmanian Land Company took this to the Supreme Court, arguing this additional sum meant it should get its $2.2 million back from VDG.
The company claims this stems from the "implied" terms of the 2016 sale agreement.
Justice Michael Brett said there was an "inference" that Fonterra's additional payment was intended to rectify and reverse the issues from the sudden drop in milk prices.
But he said this was also related to ongoing and future relationships with suppliers, and the Fonterra payment did not fall within the "ambit" of the sale agreement.
"Further, and in any event, Fonterra's motivation has nothing to do with the contractual relationship between the parties," Justice Brett wrote in his judgment.
"While the defendant will gain a financial windfall in a general sense, it has not been unjustly enriched as a consequence. It fairly and lawfully purchased for consideration, the assets through which it will derive the financial benefit."
The claim from the Tasmanian Land Company was dismissed.