Firm to pay €38.7m over pork recall

A High Court judge has ordered a Northern Ireland company to pay €38.7 million damages to a Co Wexford company arising from the animal feed contamination which led to the recall of all Irish pork products in 2008.

Mr Justice Peter Kelly ruled today Millstream Recycling Ltd was entitled to the damages against O’Neill Fuels Ltd, Annaghmore Hill, Coalisland, Co Tyrone which had denied supplying any fuel containing dioxins.

Stephen Lanigan O’Keeffe SC, for Millstream, said the damages order was a vindication of his client which had been “pilloried” over the contamination.

Millstream, Clohamon Mills, Bunclody, has claimed the PCBs were contained in oil purchased by it for use in the feed manufacturing and said it had not tested the feed for PCBs because these had been banned in the 1970s.

It has sued Gerard Tierney, Newtown Park Avenue, Blackrock, and his company, Newtown Lodge Ltd, Fairview, Dublin, alleging they supplied it with defective oil which contaminated the pig feed with dioxins.

Mr Tierney and Newtown deny the oil supplied to Millstream was defective. Alternatively, they claim, if the oil was contaminated, it was not their fault as, they allege, it was supplied to them by O’Neill Fuels Ltd, which was joined as a third party to the case. O’Neill’s had denied any fuel provided by it contained dioxins or PCBs.

Millstream’s action against Mr Tierney and Newtown Fuels Ltd is fixed for hearing on March 15th next.

At the Commercial Court earlier this month, the judge granted Millstream’s application to dismiss O’Neill’s defence due to O’Neills’ failure to discover documents in the proceedings by Millstream against a number of parties over the contamination.

There was no appearance by or on behalf of O’Neill’s in court on that occasion and the judge was told solicitors which had represented the company were previously allowed to come off record due to non co-operation by the company.

Millstream said O’Neill’s actions had deprived Millstream’s creditors of a substantial indemnity (via insurance) as O’Neills’ failure to instruct its solicitors on discovery led its insurance company to notify O’Neill’s it would repudiate the insurance policy. The court also heard O’Neill’s has ceased trading and may have limited assets.

Mr Justice Kelly adjourned consideration of the damages issue to today when, after hearing evidence for Millstream, he assessed damages in the sum of €38.7 million.

In an affidavit grounding the application for damages, Robert Hogg, managing director of Millstream, said his family had been involved in business in the Wexford area for some 50 years.

Mr Hogg said the cause of the contamination of the animal feed products in 2008 was oil supplied by the defendants. He said Mr Tierny had in April 2008 advised Millsteeam to purchase oil described as recycled mineral oil and that supply began in April 2008. It is now clear that oil was “grossly contaminated with dioxins and PCBs”, he said.

Mr Hogg said Millstream used the oil and, as a result, animal feed products being processed by it were contaminated resulting in “catastrophic losses” for Millstream, its customers and others.

According to a scheme of arrangement prepared for Millstream, the value of the contamination creditors claims was assessed at €34.48 million, Mr Hogg said. Millstream itself had also suffered substantial losses of more than €4.3 million, including €485,548 for loss of profits in 2008 and decontamination and dumping costs to date of some €205,453.

The total losses for Millstream arising from the contamination were €38.7 million, Mr Hogg said.

The contamination led to the recall of all Irish pork products in late 2008 at a cost of more than €180 million.

The recall was ordered after pig meat on a number of farms was found to have had between 80 and 200 times more dioxins than the recognised safety limit. Dioxins such as polychlorinated byphenyls (PCBs) were detected in the biscuit feed meal for pigs and cattle.

In other proceedings last month, the High Court approved a scheme of arrangement under which at least €6.5 million will be distributed between some 25 creditors of Millstream who sued it arising out of the contamination. The €6.5 million sum represented the maximum sum for which Millstream was insured.

Any damages awarded to Millstream in its own proceedings will also be made available to creditors. The scheme also provides for a permanent stay on the creditors’ legal actions.