Cargill Australia Ltd v Viterra Malt Pty Ltd (No 30)
[2022] VSC 80
•25 February 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S CI 2014 00146
| CARGILL AUSTRALIA LIMITED (ACN 004 684 173) | Plaintiff |
| v | |
| VITERRA MALT PTY LTD (ACN 096 519 658) AND OTHERS | Defendants |
| and | |
| CARGILL, INCORPORATED AND OTHERS | Third parties |
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JUDGE: | Elliott J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 21 February 2022 |
DATE OF JUDGMENT: | 25 February 2022 |
CASE MAY BE CITED AS: | Cargill Australia Ltd v Viterra Malt Pty Ltd (No 30) |
MEDIUM NEUTRAL CITATION: | [2022] VSC 80 |
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INTEREST – Entitlement to interest until judgment – Delay during proceeding – Whether good cause shown to limit period of statutory interest – No good cause shown – Interest allowed from commencement of proceeding until final judgment – Whether penalty interest rate or a lesser rate should apply – Compensatory purpose of penalty interest – “Risk free” rate – Investment risk rate – Discretion – Interest awarded at statutory rate from commencement of the proceeding to the date of judgment – Supreme Court Act 1986 (Vic), s 60(1) – Penalty Interest Rates Act 1983 (Vic), s 2.
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff and the 1st and 2nd third parties | Mr P Solomon QC Dr C Parkinson SC Ms K Burke | Gilbert + Tobin |
| For the defendants | Mr S Senathirajah QC Mr O Wolahan Ms K O’Gorman | Johnson Winter & Slattery |
| For the 3rd third party | Mr S Rosewarne | Maddocks |
| For the 4th third party | Mr D Bongiorno | Gilchrist Connell |
| For the 5th third party | Ms M Szydzik | Gilchrist Connell |
| For the 6th third party | Mr C Archibald QC Mr T Jeffrie | HWL Ebsworth |
| For the 7th third party | Ms C Alden | Gilchrist Connell |
HIS HONOUR:
IntroductionA.
On 28 January 2022, judgment was delivered in relation to the substantive issues in dispute (“the Principal Judgment”).[1] In the Principal Judgment, amongst other things, it was found that the defendants (“the Viterra Parties”) had engaged in misleading or deceptive conduct and common law deceit. As a result, the plaintiff, Cargill Australia Ltd (“Cargill Australia”), was found to be entitled to compensation by way of damages from the Viterra Parties for loss Cargill Australia had suffered.[2] Subsequently, that loss was quantified as $168.9 million.[3]
[1]Cargill Australia Ltd v Viterra Malt Pty Ltd (No 28) [2022] VSC 13.
[2]Ibid. For a summary of the reasons, see [5332]-[5342].
[3]Cargill Australia Ltd v Viterra Malt Pty Ltd (No 29) [2022] VSC 66.
The court is now required to determine whether the Viterra Parties should pay interest to Cargill Australia on the damages awarded in the sum of $168.9 million and, if so, the basis on which that interest should be calculated. Given the size of the judgment sum and the proceeding having been on foot for over 7 years, the issue of interest is significant.
For the reasons that follow, the Viterra Parties will be ordered to pay interest to Cargill Australia on the sum of $168.9 million pursuant to section 60(1) of the Supreme Court Act 1986 (Vic). Damages in the nature of interest will be given at the penalty interest rate fixed from time to time under section 2 of the Penalty Interest Rates Act 1983 (Vic), running from the commencement of the proceeding on 1 October 2014 until 25 February 2022 (being the date judgment is to be ordered upon these reasons being delivered). The total amount of interest payable by the Viterra Parties to Cargill Australia over and above the damages already determined is therefore $124,229,320.30.
Legal principlesB.
Section 60 of the Supreme Court Act provides a statutory basis for the court to award interest in any proceeding for the recovery of debt or damages.
Section 60(1) of the Supreme Court Act states:
The Court, on application in any proceeding for the recovery of debt or damages, must, unless good cause is shown to the contrary, give damages in the nature of interest at such rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 as it thinks fit from the commencement of the proceeding to the date of the judgment over and above the debt or damages awarded.
The purpose of section 60B.1
The beneficial purpose of awarding interest pursuant to section 60 is twofold.[4] First, it is designed to compensate a plaintiff for being kept out of its money; not because it has lost the opportunity to invest it, but because it has been deprived of its use.[5] Interest is not to be awarded to penalise the defendant for failing to pay the plaintiff earlier, however it has been acknowledged that awarding interest may indirectly have this effect.[6]
[4]Carbone v Melton City Council (2020) 60 VR 539, 549 [44] (Tate and Kyrou JJA, Niall JA dissenting but not on this point). Although this case dealt with s 58 of the Supreme Court Act, the observations concerning purpose are applicable to s 60: JAB Nominees (Aust) Pty Ltd v Auswild (Ancillary orders) [2021] VSC 275, [48] (Riordan J); Amcor Ltd v Barnes [No 2] [2019] VSC 849, [74] (Sloss J). See also AHRKalimpa v Schmidt (No 4) [2019] VSC 246, [10] and the cases there cited; Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 3) [2003] VSC 244, [61] (Gillard J).
[5]MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657, 663.5 (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ), applied in Australia Kunqian International Energy Co Pty Ltd v Flash Lighting Company [2020] VSCA 259, [41] (Kyrou, Niall and Hargrave JJA) and Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 396.6 (Fullagar, Marks and J D Phillips JJ). See also Amcor Ltd v Barnes [No 2] [2019] VSC 849, [74].
[6]Australia Kunqian International Energy Co Pty Ltd v Flash Lighting Company [2020] VSCA 259, [41]; Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 396.9-397.1.
Secondly, the award of interest is intended to encourage the early resolution of disputes.[7] It has the broad purpose of ensuring that: [8]
[R]ecalcitrant defendants, owing money or otherwise subject to an award of damages, do not withhold payments properly sought by plaintiffs upon the selfish basis that in the meantime they may without risk invest moneys so owed in a manner which will give them not merely sufficient to repay successful plaintiffs with interest under the [Penalty Interest Rates Act] but with an element of profit which might fairly be perceived as wrongfully obtained.
Determining the interest periodB.2
[7]Grincelis v House (2000) 201 CLR 321, 328-329 [16] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ), applied in Australia Kunqian International Energy Co Pty Ltd v Flash Lighting Company [2020] VSCA 259, [41]. See also Carbone v Melton City Council (2020) 60 VR 539, 549 [44], applied in JAB Nominees (Aust) Pty Ltd v Auswild (Ancillary orders) [2021] VSC 275, [48] and Amcor Ltd v Barnes [2021] VSCA 6, [732] (Ferguson CJ, Beach and Whelan JJA).
[8]Hartley Poynton Ltd v Ali (2005) 11 VR 568, 618 [106] (Ormiston JA, with whom Buchanan and Eames JJA agreed).
As is clear from the language used, a plaintiff is prima facie entitled to interest calculated from the commencement of the proceeding to the date of the judgment, unless the defendant can show “good cause” to the contrary.[9] If there is no good cause to the contrary, the court “must” award interest for the whole period specified in section 60(1).[10] The onus is on the defendant to show good cause,[11] but this does not require the defendant to adduce evidence itself.[12]
[9]Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 389.2 (Fullagar, Marks and J D Phillips JJ).
[10]Ibid, 391.9-392.4.
[11]Kalenik v Apostolidis (No 2) [2009] VSC 410, [12] (Hargrave J), citing Marsh v Ruby [1975] VR 191, 193.4 (Gowans J); both referred to with approval in Carbone v Melton City Council (2020) 60 VR 539, 553 [57] (Tate and Kyrou JJA, Niall JA dissenting but not on this point).
[12]In this regard, the court is entitled to consider all the evidence before the court and not only any evidence led by a defendant: Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 394.8.
In this context, good cause “to the contrary” means good cause “for not allowing it”.[13] Further, in Clarke v Foodland Stores Pty Ltd it was stated that:[14]
[W]e think, that “good cause to the contrary” means no more and no less than good reason, according to the justice of the case, for not allowing interest at all or, if interest is to be allowed, then for not allowing interest for the whole of the period marked out by the section.
What is “good cause” in any given case will therefore depend on the particular facts and circumstances and it would be unwise to attempt to put any gloss on the expression.
[13]Marsh v Ruby [1975] VR 191, 193.1, applied in Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 392.1.
[14][1993] 2 VR 382, 394.3, applied in the context of s 60 in Euromark Limited v Smash Enterprises Pty Ltd (No 2) [2021] VSC 393, [63] (Lyons J) and Amcor Ltd v Barnes [No 2] [2019] VSC 849, [85]-[86] (Sloss J).
In keeping with the overall purpose of section 60, when determining whether a “good cause” exists, the discretion is not “intended to be directed to penalising the plaintiff but to alleviating the defendant in a proper case”.[15] However, the “good cause” exception should not be seen as diminishing a defendant’s culpability or wrongdoing. It instead serves only to protect the defendant against any injustice.[16]
[15]Marsh v Ruby [1975] VR 191, 193.4, applied in Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 393.6.
[16]Carbone v Melton City Council (2020) 60 VR 539, 553 [59].
Delay on the part of a plaintiff may be relevant to the question of whether there is good cause to depart from the period of time specified in section 60.[17] The court must consider “whether the plaintiff’s delay, such as it is in a given case, is seen as working such injustice, were the plaintiff to be allowed interest for the whole of the period available” under the legislative provision.[18]
[17]Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 400.7 (Fullagar, Marks and J D Phillips JJ), applied in the context of s 60 in Euromark Limited v Smash Enterprises Pty Ltd (No 2) [2021] VSC 393, [64] (Lyons J) and Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 3) [2003] VSC 244, [49]-[51] (Gillard J).
[18]Ibid.
If good cause can be shown, the court is authorised to disallow interest entirely or allow interest for a lesser period than that specified in section 60.[19]
Determining the interest rateB.3
[19]Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 394.3; see par 9 above.
The words “as [the court] thinks fit” contained in section 60(1) grant the court a discretion to determine the rate at which interest is to be awarded. This discretion is not limited to situations in which the defendant can show “good cause”,[20] rather the court retains the ability to choose the appropriate interest rate at all times.[21] A determination on a rate must be made judicially based on the facts and circumstances of the particular case, so as to achieve justice between the parties.[22] Further, the discretion is not to be constrained by determinations of what must or must not be taken into account.[23]
[20]Australia Kunqian International Energy Co Pty Ltd v Flash Lighting Company [2020] VSCA 259, [42] (Kyrou, Niall and Hargrave JJA).
[21]Ibid; Amcor Ltd v Barnes [No 2] [2019] VSC 849, [75]-[77] (Sloss J); Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 389.6, 394.7.
[22]Amcor Ltd v Barnes [No 2] [2019] VSC 849, [84].
[23]Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 389.7.
There are 2 further matters relevant to the court’s discretion. The first is contained in section 60(1) itself. The phrase “at such rate not exceeding” indicates that the court cannot award interest above the statutory penalty rate contained in section 2(1) of the Penalty Interest Rates Act.[24]
[24]Ibid, 393.5; Australia Kunqian International Energy Co Pty Ltd v Flash Lighting Company [2020] VSCA 259, [42].
The second is a matter of custom. It has been repeatedly confirmed that, when exercising the discretion, the practice in Victoria is to treat the statutory penalty rate as a “starting point”,[25] or “benchmark”.[26] For example, long before the material facts in this proceeding occurred, in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 3), Gillard J stated:[27]
The practice has evolved in this State to apply as a general rule the rate fixed pursuant to the Penalty Interest Rates Act, but clearly the court does have a discretion to fix a lesser rate. The rate fixed pursuant to the Act contains a penalty component and there may be good reasons not to award the total amount of the penalty component, or something less.
[25]Euromark Limited v Smash Enterprises Pty Ltd (No 2) [2021] VSC 393, [61] (Lyons J); Australia Kunqian International Energy Co Pty Ltd v Flash Lighting Company [2020] VSCA 259, [42] (Kyrou, Niall and Hargrave JJA) and the cases there cited.
[26]Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 391.5 (Fullagar, Marks and J D Phillips JJ), applied in Hodgson v Amcor Ltd (No 9) [2012] VSC 205, [36] (Vickery J); Amcor Ltd v Barnes [No 2] [2019] VSC 849, [79] (Sloss J).
[27][2003] VSC 244, [46] (Gillard J).
Importantly, where a defendant contends that a lower rate is warranted, it must present evidence as to what the lower rate should be and why it is more appropriate.[28] The mere fact that the statutory penalty rate is higher than the market rate is not sufficient in itself for adopting a lower rate.[29] The courts have routinely reiterated this position, despite the fact that commercial interest rates have diverged significantly from the statutory penalty rate in recent years.[30]
[28]Australia Kunqian International Energy Co Pty Ltd v Flash Lighting Company [2020] VSCA 259, [42].
[29]Ibid, [43]; Euromark Limited v Smash Enterprises Pty Ltd (No 2) [2021] VSC 393, [59].
[30]See, for example, Australia Kunqian International Energy Co Pty Ltd v Flash Lighting Company [2020] VSCA 259, [46]; Amcor Ltd v Barnes [No 2] [2019] VSC 849, [122], applying Hartley Poynton Ltd v Ali (2005) 11 VR 568, 618 [106] (Ormiston JA, with whom Buchanan and Eames JJA agreed).
Section 2(1) of the Penalty Interest Rates Act provides:
The penalty interest rate is the interest rate expressed as a percentage fixed by the Attorney-General from time to time by notice published in the Government Gazette.
At the relevant times, the penalty interest rate as fixed in the Government Gazette was:
11 August 2014 – 31 May 2015 10.50 percent 1 June 2015 – 31 January 2017 9.50 percent 1 February 2017 onwards 10.00 percent
SubmissionsC.
The Cargill Parties’ submissionsC.1
The Cargill Parties’[31] submissions were straightforward. They contended that the maximum rate under the Penalty Interest Rates Act was the starting point for the exercise of the court’s discretion.[32] Further, they referred to authority that mere reliance upon the fact that the rates under the Penalty Interest Rates Act are higher than market rates is not a reason in itself to apply a lower rate.[33] It was submitted that this was because a standard commercial rate would rarely meet the objectives or purposes of an award of interest.
[31]That is Cargill Australia, together with the 1st third party, Cargill, Incorporated, and the 2nd third party, previously known as Joe White Maltings Pty Ltd.
[32]The Cargill Parties relied on Australia Kunqian International Energy Co Pty Ltd v Flash Lighting Co Ltd (No 2) [2020] VSCA 259, [42] (Kyrou, Niall and Hargrave JJA), referred to with approval in Amcor Ltd v Barnes [2021] VSCA 6, [729] (Ferguson CJ, Beach and Whelan JJA).
[33]Ibid.
Furthermore, the Cargill Parties submitted that the Viterra Parties had had profitable use of the judgment sum since well before Cargill Australia commenced this proceeding.[34] As for Cargill Australia’s position, the Cargill Parties submitted that another purpose of interest is to compensate a plaintiff who has been kept out of its money. The Cargill Parties emphasised the fact that not only had Cargill Australia not received the amount of damages it was entitled to, but it was seeking reimbursement of moneys it had paid out in October 2013. They referred to evidence at trial that Cargill[35] required a minimum internal rate of return of 10 percent on its investments. It was submitted that, to the extent this may be relevant,[36] that rate was commensurate with the rate sought pursuant to the Penalty Interest Rates Act.
[34]An amount well in excess of the judgment sum was paid by Cargill Australia to the Viterra Parties on 31 October 2013.
[35]That is, Cargill Australia and Cargill, Incorporated.
[36]See par 16 above.
Moreover, the Cargill Parties submitted it was highly unusual for the court to depart from the maximum rate,[37] and that there was no reason to do so in this proceeding.
[37]The Cargill Parties relied on Hodgson v Amcor (No 9) [2012] VSC 205, [15]-[43] (Vickery J), and Amcor Ltd v Barnes (No 2) [2019] VSC 849, [126]-[135] (Sloss J), affirmed in Amcor Ltd v Barnes [2021] VSCA 6, [729] (Ferguson CJ, Beach and Whelan JJA).
The Cargill Parties also submitted that it was not appropriate to exclude any period of time after the commencement of this proceeding from the interest calculation, as no good cause had been shown. While acknowledging delay may be relevant, they submitted the facts in this proceeding bore no resemblance to cases where delay was found to be a relevant factor. They contended there was nothing to indicate that the Cargill Parties had sought to delay the adjudication of the issues in this proceeding.
In a responsive submission to the Viterra Parties’ contention that the Cargill Parties had caused 3 separate delays, the Cargill Parties referred to proposed amended defences put forward by the Viterra Parties on 20 and 28 November 2018, and the amended defence filed on 13 December 2018 in accordance with a ruling given the previous day.[38]
[38]Cargill Australia Ltd v Viterra Malt Pty Ltd (No 18) [2018] VSC 772.
Further, they drew attention to a hearing held during the course of the trial on 20 December 2018. Although this hearing was concerned with a ruling requiring the production of documents which were the subject of notices to produce served by the Viterra Parties,[39] it also dealt with procedural matters consequential upon interlocutory steps taken belatedly by the Viterra Parties. These matters included issues arising out of the amended defence filed on 13 December 2018, as well as a pleading problem with the amended defence that had arisen in light of particulars that had been filed after leave had been granted the week before.
[39]Cargill Australia Ltd v Viterra Malt Pty Ltd (No 19) [2018] VSC 798. See in particular at [65] where (1) an application by the Viterra Parties to amend the wording of a category of documents was refused, and (2) observations were made about the parties engaging in arguments over non-essential matters of minor significance and the considerable increase in the duration of the trial because of continuous interlocutory disputes. These observations were also repeated at the hearing on 20 December 2018.
Furthermore, the Cargill Parties referred to correspondence leading up to the proposed further amended defences served on 4 February 2019 and 8 February 2019, and further amended defence as filed after leave was granted on 11 February 2019.
Moreover, they referred to yet another application on 3 May 2019 by the Viterra Parties to amend their defence, with leave ultimately being granted on 22 May 2019. With regard to the last of the amended defences, the Cargill Parties noted that this resulted in further expert evidence being given by 2 witnesses on 14 June 2019 and 16 July 2019.
In raising these delays, the Cargill Parties contended that the significant delay between November 2018 and mid-2019 was largely attributable to the Viterra Parties.
The Viterra Parties’ further evidence and submissionsC.2
The Viterra Parties submitted a lower rate of interest was appropriate. They also contended there should be a reduction in the number of days for which interest would otherwise accrue, in order to take into account delay not attributable to them.
On the question of the appropriate rate, the Viterra Parties relied upon an affidavit of Terence Michael Potter (“Potter”), a chartered accountant, [40] sworn 18 February 2022. Potter was instructed to provide his opinion on the approach to interest in light of the Cargill Parties’ reference to Cargill’s minimum required rate of return of 10 percent. Consistent with the evidence at trial, Potter noted that such a rate of return included an allowance for the risk associated with undertaking an investment.[41] Potter also gave evidence concerning a “risk free” rate, which only represented the time value of money and did not include an allowance for investment risk. Again, by reference to evidence at trial, he noted that the risk free rate in October 2013 was 4 percent. Potter then stated that the risk free rate had declined since that time, and set out the annual yield on 10-year Australian government bonds from 1 October 2014 to 31 January 2022. These ranged from 3.32 percent to 0.82 percent, with an average of 2.07 percent.[42]
[40]For further details on Potter’s background, see Principal Judgment, fn 3303.
[41]See also Principal Judgment, [3957], [4203].
[42]In the Viterra Parties’ written submissions, only the average of 2.07 percent was put forward as the proper basis for calculating interest. During the hearing on 21 February 2022, the court invited the Viterra Parties to make the calculations based on the actual daily rates rather than simply using the average percentage rate. This information was provided the following day.
The Viterra Parties submitted that the touchstone of an award of interest is compensatory; to compensate a plaintiff for being out of money that a court has found is owed.[43] They also correctly acknowledged that although the purpose of awarding interest is not to penalise a defendant, it may have that effect.[44]
[43]Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 396.9-397.1 (Fullagar, Marks and J D Phillips JJ).
[44]Ibid, and the cases there cited. See also fn 6 above.
While accepting that the authorities indicated the statutory rate was the starting point, the Viterra Parties submitted that applying a rate equivalent to Cargill’s minimum required internal rate of return (instead of the “risk free” rate) would give Cargill Australia a windfall gain because the higher rate included a premium for investment risk.[45] They contended this did “not tally” with the compensatory function. On this basis, the Viterra Parties submitted that the problem of awarding interest at the higher rate was that it would provide a significant component above and beyond what Cargill Australia had actually lost by not having use of the judgment sum. The Viterra Parties also submitted that any investment Cargill might have made if it had had the use of the money carried risk with it, and that this risk should be taken into account in the interest rate applied.[46]
[45]It was accepted that the evidence at trial established Cargill’s required internal rate of return was as contended for by the Cargill Parties. However, the Viterra Parties noted there was no evidence that Cargill actually achieved the required internal rate of return.
[46]Nevertheless, it was also accepted that Cargill might have achieved a greater internal rate of return than that required at the time any investment might have been made.
Further, the Viterra Parties submitted that an order by the court for payment of interest carried with it no investment risk, as Cargill Australia’s receipt of that amount was “relevantly certain”.[47] As an extension of this submission, they contended that the level of certainty now present[48] made it appropriate to use the “risk free” rate or the average of that rate. For the period from 1 October 2014 to 21 February 2022, this equated to an amount of $25,862,523.29[49] or $25,895,064.00.[50]
[47]When asked whether there was any authority regarding whether the ability or otherwise of a judgment debtor to actually pay the judgment sum or the amount of interest was a relevant consideration to setting the rate of interest, the Viterra Parties indicated there was none and that it appeared that the contention had not been put before.
[48]It was submitted the time to consider the question of certainty was the present, and that the court was not entitled to consider the level of certainty at the time at which the proceeding commenced. No authority was cited for this proposition and the language of s 60(1) itself was not identified as requiring such a limitation.
[49]Using the average of 2.07 percent (not including 21 February 2022).
[50]In performing the calculation of interest on a daily basis, the Viterra Parties converted the annual rate into a daily interest rate. The daily interest rate was calculated by dividing the annual rate by 100 (to convert it into a percentage) and then by 365.25 (to convert the annual rate into a daily rate). Daily interest was then calculated by multiplying the daily rate by the amount of $168.9 million (inclusive of 21 February 2022). Where there was no daily rate for a particular day (falling on weekends or public holidays), the rate applied by the Viterra Parties was from the previous trading day. By way of illustration, on 24 December 2014 the daily rate was 2.95 percent. This rate was applied in the interest calculation until trading resumed on 29 December 2014 (following the weekend and public holidays), when the rate applied was 2.92 percent. The Viterra Parties noted that due to the “more granular nature” of the calculations, there were also some rounding issues which caused the overall interest amount to increase when compared to the figure originally contained in the Viterra Parties’ submissions, which used the average figure of 2.07 percent.
The Viterra Parties acknowledged that they bore the onus in relation to showing good cause to the contrary, but submitted that the onus did not apply in relation to the question of the appropriate interest rate.[51]
[51]Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 394.3 (Fullagar, Marks and J D Phillips JJ).
In relation to the period during which interest ought to accrue, the Viterra Parties did not contend that interest should not run from the date this proceeding was commenced. However, they submitted there were 3 periods of time between 1 October 2014 and the date of judgment during which interest ought not to accrue.
First, they referred to the successful application made by the Cargill Parties on 19 April 2018 to adjourn the trial date from 7 May 2018 to 28 May 2018 by reason of the retainer of new senior counsel for the Cargill Parties.
Secondly, they referred to a further adjournment of the trial date from 28 May 2018 to 18 June 2018. It was submitted this adjournment was the consequence of the Cargill Parties making available for inspection a large number of documents that had previously been the subject of claims of legal privilege.
Thirdly, the Viterra Parties submitted there were 83 days of delay (from 14 September 2018 to 6 December 2018),[52] or alternatively 55 days of delay (from 12 October 2018[53] to 6 December 2018), because of the Cargill Parties’ refusal to give more extensive access to certain confidential documents. These documents had been discovered during the course of the trial,[54] with the Cargill Parties only granting the barristers and solicitors of opposing parties access on the condition they provided confidentiality undertakings. These undertakings prevented the confidential information from being disclosed to the other parties. The Cargill Parties refused to grant access to the in-house counsel who was providing instructions on behalf of the Viterra Parties. After further evidence and submissions on 23 and 24 October 2018, access was ultimately ordered to be given.[55]
[52]These being the dates upon which I delivered my first and second rulings on the issue of access: Cargill Australia Ltd v Viterra Malt Pty Ltd (No 16) [2018] VSC 529 and Cargill Australia Ltd v Viterra Malt Pty Ltd (No 17) [2018] VSC 750.
[53]This being the date the Court of Appeal handed down its decision: Cargill Australia Ltd v Viterra Malt Pty Ltd [2018] VSCA 260 (Kyrou and McLeish JJA, Whelan JA dissenting).
[54]Most of which did not exist at the time the trial commenced.
[55]Cargill Australia Ltd v Viterra Malt Pty Ltd (No 17) [2018] VSC 750.
In addition to the delay referred to above, the Viterra Parties contended that because of the unavailability of witnesses to be called in the trial of this proceeding, and the existence of another trial which had been listed before me in February 2019, the delay arising out of this access issue continued until 18 March 2019 when the industry experts were called to give evidence. The Viterra Parties submitted the additional delay of 102 days (from 6 December 2018 to 18 March 2019) should be added to the period of time in which interest should not be awarded.
AnalysisD.
D.1 Good cause to the contrary?
Undoubtedly, there was some basis to suggest that applications made by the Cargill Parties throughout the proceeding delayed the timing of its resolution. However, the Viterra Parties also made repeated applications and sought to agitate a variety of matters both before and during the trial. In short, the combative manner in which the litigation was conducted between the key parties was indistinguishable.[56] In my view, pointing to particular actions of the Cargill Parties which were said to cause some delay, when the main parties chose to lock horns in the manner in which they did, did not establish a basis for showing good cause for the purposes of section 60(1).
[56]See also Principal Judgment, [5332], [5353].
In any event, the matters raised by the Viterra Parties did not demonstrate that the Cargill Parties were solely or even largely responsible for the delays in question, or that most, if not all, of the delay during the periods identified would otherwise not have occurred.
Dealing with the matters raised by the Viterra Parties, there can be no doubt that delay was caused by the Cargill Parties’ refusal to give the in-house counsel access to certain confidential documents.[57] However, nearly all the delay arose from the decision of the majority of the Court of Appeal to overturn the initial decision to grant access that had been made on 14 September 2018. Had that initial decision not been overturned, there would have been no material delay to the trial. Although the Viterra Parties were ultimately successful in obtaining access to the documents when the matter was remitted for hearing, at that later hearing the Viterra Parties gave an undertaking as to damages which had not previously been proffered. Further, the delay from 12 October 2018 to 6 December 2018 flowed from a consequential 2-day hearing in light of the Court of Appeal’s ruling,[58] including oral evidence and cross-examination.[59] Furthermore, additional delay was caused by the fact that I was required to complete a part-heard case in late October and early November 2018 in a different proceeding. Moreover, once I delivered my reasons in relation to the remitted hearing (again permitting access) on 6 December 2018, in addition to another trial being listed before me in February 2019, independent witnesses had availability issues.
[57]See par 37 above. To be clear, the Cargill Parties were initially willing to grant access to another person who was also in-house counsel, but not the in-house counsel preferred by the Viterra Parties: Cargill Australia Ltd v Viterra Malt Pty Ltd (No 17) [2018] VSC 750, [60], [85], [155], [202], [271].
[58]For further details of the circumstances, see Cargill Australia Ltd v Viterra Malt Pty Ltd (No 17) [2018] VSC 750, [1]-[4].
[59]Both the Cargill Parties and the Viterra Parties took the opportunity to file further affidavits in support of their respective positions.
In summary, there were extraneous factors which resulted in significant delay. These factors cannot be said to be the fault of the Cargill Parties. As was noted when I gave the ruling on 6 December 2018, all interlocutory applications made during the trial up until this time had been dealt with without any material disruption to the trial, and rulings had been given either on the same day or the day after each application was heard.[60]
[60]Cargill Australia Ltd v Viterra Malt Pty Ltd (No 17) [2018] VSC 750, [20].
In addition, between November 2018 and July 2019, substantial periods of delay were caused by the Viterra Parties. Although some of these matters arose because of events which were occurring at that time in relation to a prospective sale, many matters the Viterra Parties agitated were based on historical facts that were before the court long before the various applications were made.[61]
[61]See pars 23-2626 above. See also Cargill Australia Ltd v Viterra Malt Pty Ltd (No 25) [2020] VSC 172, [19], [22], [60]-[64], [76].
Going back earlier in time to the adjournment of the trial date from 7 May to 28 May 2018, the circumstances which gave rise to the application were not of the Cargill Parties’ making. It suffices to note that, when the adjournment was granted at the hearing on 19 April 2018, I observed that “[w]hat’s happened is not something that can be said to be the fault of the parties concerned”. No exception was taken concerning this observation by the Viterra Parties. In any event, it was far from apparent that the trial could have been sensibly commenced at that time. Significant interlocutory issues were still being agitated between the Viterra Parties and the Cargill Parties, including those the subject of a hearing before the Court of Appeal on 24 April 2018, with judgment delivered on 11 May 2018.[62]
[62]Viterra Malt Pty Ltd v Cargill Australia Pty Ltd (2018) 58 VR 333 (Whelan, Kyrou and McLeish JJA).
This leads into the delay caused by the further adjournment of the start of the trial from 28 May 2018 to 18 June 2018. In granting this adjournment, I specifically noted that I made no assessment of the appropriateness of the timing of the Cargill Parties’ waiver of privilege. Without going into all the details, the Cargill Parties had repeatedly been successful in maintaining privilege up until they chose to waive it shortly before the trial.[63] It is difficult to see how the Cargill Parties could be properly criticised for maintaining a right that the court had repeatedly ruled they were entitled to uphold. Further, the evidence before the court in May 2018 was that on 21 May 2018 an application for special leave had been filed in the High Court of Australia to challenge the Court of Appeal’s dismissal of the Viterra Parties’ appeal. Plainly, this application could not have been heard and determined by the High Court before 28 May 2018. The Cargill Parties chose to waive privilege on 22 May 2018, which then avoided any delay that may have been caused by the hearing and determination of the special leave application, and possibly an appeal if special leave would have been granted.
[63]Ibid; Cargill Australia Ltd v Viterra Malt Pty Ltd (No 7) [2018] VSC 99 (Macaulay J); Cargill Australia Ltd v Viterra Malt Pty Ltd (No 3) [2017] VSC 650 (Daly AsJ).
Furthermore, a reading of the transcript of a directions hearing held on 30 May 2018 demonstrates that there were many other outstanding issues which would have been highly likely to have disrupted the conduct of the trial if it had started on 28 May 2018.
Accordingly, although in my view it was not necessary to descend to the detail, having done so I remain satisfied that no good cause has been demonstrated.
D.2 Interest rate
The Viterra Parties’ submissions on the difference between the interest rates under the Penalty Interest Rates Act and “risk-free” rates were far from persuasive. There was no meaningful attempt by the Viterra Parties to distinguish this case from any other case, and therefore to demonstrate why a very significant departure from the statutory rate ought to be applied to the judgment sum in the particular circumstances of this case. Numerous authorities have made it plain that simply comparing commercial rates with those under the Act does not ordinarily justify departing from the “starting point” of applying the statutory rates.[64]
[64]See par 16 above.
Having taken into account the matters raised by the Viterra Parties in the context of the facts of this case (which involved misleading conduct and deceit, and a finding that Cargill Australia would never have entered into the transaction had it not been misled and deceived),[65] I am not satisfied that there ought to be any departure from the starting point of applying the statutory rate. Indeed, I am positively satisfied that that rate is appropriate.
[65]Principal Judgment, [3387]-[3415].
This approach could not give rise to any injustice to the Viterra Parties. Not only has Cargill Australia been deprived of the judgment sum, but the Viterra Parties have had the use of a very significant sum of money (actually paid by Cargill to them) for a substantial period of time. There was no evidence to suggest that the Viterra Parties have not had the ability to use these funds to their commercial advantage for the 7-plus years in question.
ConclusionE.
Accordingly, it will be ordered in favour of Cargill Australia that damages in the nature of interest will be given in the sum of $124,229,320.30.
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