The Supreme Court of Victoria has ordered Woolworths to pay $11 million in damages to private property owner North East Solution on Thursday. The verdict came after the supermarket giant abandoned its plans to build a Masters store at a site in Bendigo leased out to it by the North East Solution.

Woolworths and Masters had jointly entered into the deal in 2009 and leased the site for 12 years from the private property owner in 2010. But the supermarket giant walked away from the deal midway and sought another lease in another site in Bendigo which was also being pursued by rival hardware chain Bunnings.

Property Developer Brendan Blake was represented by Tisher Liner FC Law and left the outgoing chief executive of the Woolworths Grant O’Brian with a red face. The verdict also delivered a blow to Woolworths’ venture into the home improvement sector.

“I have found that, on the evidence, Masters and Woolworths did not act reasonably and in good faith to resolve relevant differences that arose, and that they terminated the relevant agreement for reasons that that agreement did not allow,” the Sydney Morning Herald quoted Judge Clyde Croft as saying. “Masters and Woolworths terminated the relevant agreement because the construction costs exceeded an undisclosed budget and because they wanted to pursue an alternative site in Bendigo,”

The fine to be paid by the Woolworths to Blake has exceeded $11 million after considering the interest on an amount of $10.875 million, given the deal was signed in 2009. The amount is equivalent to the cost of the lease for a period of 12 years.

In May 2015, the counsel for Woolworths told the court that there was only a negotiation between Woolworths and Blake and no formal agreement. The Daily Telegraph reported that Woolworths also had concerns with the financial crunch faced by the North East Solutions at that time.

The court case has also brought to the forefront the extent the Woolworths’ management is willing to go to compete with its rivals.

In other news…

Woolworths along with Coles have appeared in the Business Benchmark on Farm Animal Welfare report for the first time and have been encouraged to perform better. The BBFAW ranks global companies on their standards of farm animal welfare on the basis of publicly available information. The ABC reported that while Woolworths made it to tier 4, Coles appeared at tier 5. Tier 1 in this respect represents the best standards while tier 6 the worst.

“Tier 4 indicates ‘making progress on implementation’ and tier 5 indicates ‘on the business agenda but limited evidence of implementation,” the report said.