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Timely legal advice for growers
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Winegrape growers are being urged to ensure they are protected legally if the business buying their grapes fails.
Legal advice received by grower bodies is for growers concerned about receiving payment for their fruit to consider asking buyers for a Retention of Title (RoT) clause in the sale and purchase agreement.
Russell Mitchell, from Eggleston Mitchell Lawyers, has advised Murray Valley Winegrowers an effective RoT clause could provide a grower with income from the sale of grapes even if the purchaser was liquidated before paying for the grapes in full. Terms of payment for the sale of winegrapes commonly require three instalments, the last being in September in the year of the harvest.
Murray Valley Winegrowers chief executive Mike Stone said there were recent examples of wineries being placed in receivership or liquidation without meeting debts to growers.
“For example, when receivers were appointed to Normans Wines and more recently to Evans and Tate there were many growers in the Murray Valley who had not received full payment,” Stone said.
“As growers are usually unsecured creditors, their claim on any assets of a failed wine business is ranked behind those of secured creditors, which can result in growers receiving little or nothing of what they’re owed.”
However, Mike Stone says a properly drafted RoT clause could result in the grower maintaining title to the fruit until payment is received in full.
“This is a complex issue because the fruit has been made into an entirely different product, which most likely has been blended with wine made from other growers’ fruit. Because of this complexity it is very important for growers to obtain appropriate professional advice on the drafting of a RoT clause.”
Murray Valley Winegrowers has had a RoT clause prepared which it has been advised should withstand challenge and increase the grower’s chances of receiving payment from any wind-up proceedings.