Fonterra is seeking to recover $115,000 in unpaid funds it loaned lead plaintiffs, Lynden and Geoffrey Iddles, after slashing milk prices in May 2016, while the class action is simultaneously before the courts.

The Iddles’ lawyer, David Burstyner, said the pair were owed the money as a result of the step down and had not paid it back on principle, claiming the initial price reduction was “unlawful”.

According to the statement of claim lodged in the Supreme Court of Victoria, the Iddles – who run a 600-head autumn calving herd – lost $205,000 in milk revenue between May and June 2016.

The claim states the pair would have received $311,000 from Fonterra had the step down not have gone ahead.

The latest development follows a four-year battle by dairy farmers who claim Fonterra allegedly breached contractual obligations by implementing a step down in milk price.

They also allege Fonterra engaged in “misleading conduct about the likelihood of a step down” and acted “unconscionably” towards suppliers, court documents reveal.

A Fonterra spokeswoman said the company would defend the claims made in the class action but confirmed it was undertaking “debt recovery action against a particular farmer”.

“… As they refused to repay a significant loan they received from us,” the spokeswoman said.

“Where a farmer leaves or breaches their supply agreement, with an outstanding amount owing, the loan must still be repaid, just like any loan.

“Instead, in response the farmer commenced the class action proceeding against us.”

The payments, known as Fonterra Australia Support Loans or FASLs, were offered to farmers following the 2016 step down to help farmers manage cash flows after milk prices were slashed.

The class action is representing several hundred farmers who supplied to Fonterra in the 2015-2016 season, of which about 85 per cent are in Victoria, while balance are from Tasmania, SA and NSW.

Some of the class actions are farmers with FASL debts.

Mr Burstyner said there were “several” farmers who were being pursued by Fonterra over unpaid FASLs.

He said there were two reasons why these loans had not been repaid.

“One is they are financially desperate because of the step down, or two, because they’re arguing the clawback was unlawful therefore the FASL was unlawful,” Mr Bustyner said.

“I act for a number of farmers who, this year, Fonterra has said they will pursue.

“I am aware of others that Fonterra has issued court proceedings against even recently.”

‘Significant personal distress’
In 2015, Fonterra set its milk prices to match those of competitor Murray Goulburn, in order to attract milk supply, but later dropped prices in response to a step down by MG.

Supreme Court of Victoria documents claim Fonterra’s step down gave unreasonable notice to farmers and was in a manner that was likely to cause significant personal distress.

Mr Burstyner urged affected dairy farmers who had not yet registered their interest to be a part of the class action for compensation to do so.

He said Fonterra opposed sending a notice to its suppliers advising of the class action during a recent court hearing.

“Farmers need to know that there’s an option to push back, to see compensation, and a way to let Fonterra know that processor exploitation will not be tolerated,” Mr Burstyner said.

“We’ve spent four years investigating Fonterra’s step down: watching the Senate inquiry, the ACCC investigation, and other relevant fact-finding missions.

“The legal team and funders wouldn’t risk millions of dollars and years of work unless we thought the case had strong chances of winning.”

Fonterra said it would address claims in the class action at the appropriate time.

“The ACCC investigated the 2016 milk price reduction and in 2017 it decided not to take action against Fonterra,” the spokeswoman said.

“The scope of affected suppliers has not yet been established conclusively and we expect that suppliers will be given notice about the class action in due course as part of the usual court process, if they are part of the class.”

The lawsuit is funded by Litigation Lending Services.

The matter is set to return to the Supreme Court of Victoria after September 18.