HUNTER Valley winemaker Hope Wine Group is being sued for more than $1.2 million by Bulga Coal Management following a dispute about alleged unpaid rent and damage to a vineyard at Broke.
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In the mine versus wine battle, Bulga Coal is alleging in the NSW Supreme Court that Hope Wine welshed on a rental agreement and failed to leave the vineyard in good repair when it left.
Bulga purchased the former Hope Wine property in mid-2006 because it wanted to extend its coalmining operations under the land, and leased the vineyard back to the winemaker.
The court heard that after contracts were exchanged for the sale, and as Hope Wine was negotiating to buy another Hunter Valley property, Bulga Coal sought amendments to the lease-back agreement.
This included changes to the length of the lease, cost of rent and notice period for termination.
Now Bulga is claiming that it is owed $1.284 million in damages due to breaches of the lease. The figure includes alleged unpaid rent, rates, water charges, services, land tax and $1.18 million claimed for make-good costs associated with work done at the property after the lease ended.
Hope Wine agrees it did not comply with the lease in relation to rent and outgoings, claiming it did not have to because it was not enforceable. It denies it breached the make-good obligation and that Bulga Coal suffered any loss.
The court heard that Hope Wine claims the miner made "no demand for rent for eight years".
According to Hope Wine director Michael Hope, he had a conversation with Bulga's property manager Val Istomin before the property sale was completed and the lease-back agreement was signed.
Mr Hope says he was told that Bulga's parent company, Swiss mining giant Xstrata now Glencore, would not accept the lease-back to be rent free or $1 per year.
Mr Hope claims it was also discussed that the miner knew he was buying another property and needed to settle the Bulga Coal sale in order to complete the new purchase.
He alleges that the proposed amendments to the lease agreement were presented as a "mere formality" to keep the Xstrata board happy and would not affect the working relationship with Hope Wine and Bulga Coal.
Bulga Coal admits that it said Xstrata would not accept the lease at the rate of $1 per year, but denies that it made any other representations.
During a one-day hearing in November, Hope Wine applied to the court for a host of information and documents from the miner, spanning 16 years, before the matter was due to be listed for trial.
Justice Julie Ward said that Hope believed that the depths of Bulga Coal's IT archives could contain "some smoking gun" in relation to why it did not charge rent for eight years.
Bulga Coal opposed the application on the grounds it did not have a centralised document management system for part of the time, and the documents requested were stored on employees' hard drives.
The miner said it would take between nine and twelve months to set up the necessary systems to retrieve the relevant documents and could cost more than the $1.28 million in damages being claimed.
"Bulga Coal's IT department estimates that the review would take up to six months and external resources would be required to undertake the task," Justice Ward said.
"External IT and administrative support would amount to between $80,000 and $100,000 and, while it is difficult to say with any certainty the number of documents to be retrieved, the breadth of the categories could produce tens of thousands of documents."
Some of the documents requested by Hope Wine related to mine subsidence at the property.
"Hope Wine submits that the issue of mine subsidence will have an impact on both the vines and the state of the trellises," Justice Ward said.
"Noting that Bulga Coal is running a 7,000 hectare mine with underground seams on and in the vicinity of the vineyard."
But Hope admitted it had not investigated if subsidence was linked to crop failures at the site.
Justice Ward dismissed Hope's application and ordered the winemaker to pay the miner's court costs.
"I consider that the categories sought have at best tangential relevance," she said. "And I consider that across all categories there is a large element of fishing."
The matter is expected to be heard next year.
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