Nonna's Bakehouse loses $2.5m lawsuit against Dubbo's Ben Furney Flour Mills
The dispute with Ben Furney Flour Mills reached the New South Wales Supreme Court last week after the Dubbo-based business launched legal action over more than $780,000 in invoices not paid since 2022.
Nonna's Bakehouse hit back with a $2.5m countersuit alleging breach of contract and misleading conduct, claiming the mill "nosedived" the quality of its bread with "inconsistent flour".
According to court documents, the bakehouse began experiencing problems in 2021 when its bread became "sticky" and absorbed less water, prompting one of its directors to urge the mill to "fix the issue".
The mill investigated production data, ran test bakes, sent technical staff to the bakery and made adjustments with its milling processes, but could not identify any fault with the flour.
In handing down her judgement, Justice Kelly Anne Rees found that while there may have been some variation in the flour due to seasonal factors and grain sourcing, the real shift occurred in late 2021 when Nonna's Bakehouse changed its head baker.
During the proceedings the court heard Nonna's Bakehouse's technical support manager, Sergio Soria, resigned in October 2021 and that Jorge Gironda, who was not a baker by trade, took over the role.
The court heard Mr Soria had explained to chief executive Sarah Furney that he did not "agree with the direction" the company wanted to head in.
"This isn't Nonna's — this is not who we are or what we stand for," he said of a restructure at the company.
Justice Rees found that after the change in leadership the company instructed Mr Gironda to revert to its "original recipe," which contributed significantly to the baking issues.
"This departed from Mr Soria's process of adding gluten or malt if needed to achieve a consistent baking product," Justice Rees found.
Court documents showed that following a change in bread quality Mr Gironda emailed the mill and insisted it was its job to supply "the right fuel to run the Ferrari".
When the mill failed to identify any fault with the flour Mr Gironda requested tests on each bag of the product and not just the bulk tankers.
Justice Rees found that despite being told the mill could not meet the bakery's specific needs, Nonna's Bakehouse continued to order flour and refused to adapt its process, which was not required under the contract.
In May 2022 Nonna's Bakehouse stopped paying its invoices to the flour mill and, after ignoring offers to set up a payment plan, Furney's ceased supply by August.
Justice Rees also ruled that the bakehouse's claims of financial hardship as a result of the mill and its "inconsistent flour" were unsubstantiated.
"What is immediately striking from the historical financial performance of the baker, for the 2019 to 2023 financial years, is the significant increase in the baker's sales over those years, increasing by 45 per cent overall," she said.
She ruled in favour of Ben Furney Flour Mills and ordered Nonna's to pay $783,178, plus interest and legal costs.
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