Cargill Australia Ltd v Viterra Malt Pty Ltd (No 6)
[2018] VSC 44
•9 FEBRUARY 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S ECI 2014 000146
| CARGILL AUSTRALIA LTD (ACN 004 684 173) | Plaintiff/Defendant by Counterclaim |
| v | |
| VITERRA MALT PTY LTD (ACN 096 519 658) AND OTHERS | Defendants/Plaintiffs by Counterclaim |
| and | |
| CARGILL, INCORPORATED AND OTHERS | Third Parties |
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JUDGE: | ELLIOTT J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 9 FEBRUARY 2018 |
DATE OF RULING: | 9 FEBRUARY 2018 |
CASE MAY BE CITED AS: | CARGILL AUSTRALIA LTD v VITERRA MALT PTY LTD (No 6) |
MEDIUM NEUTRAL CITATION: | [2018] VSC 44 |
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PRACTICE AND PROCEDURE – Discovery – Requirement for leave for any further interlocutory applications – Privilege claim – Further and better discovery – Evidence Act 2008 (Vic), s 118 - Supreme Court (General Procedure) Rules 2015 (Vic), r 29.08 – Civil Procedure Act 2010 (Vic), s 7, 8, 24, 29(1)(e).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff/Defendant by Counterclaim and the First and Second Third Parties | Ms L Nichols SC with Mr J Rudd | Gilbert + Tobin |
| For the Defendants/Plaintiffs by Counterclaim | Mr S Senathirajah SC with Ms K Dovey | King & Wood Mallesons |
HIS HONOUR:
A. Introduction
The defendants (“the Viterra Parties”) seek leave to file 2 summonses to make applications to:
(1)Challenge certain claims for privilege made by the plaintiff, Cargill Australia Ltd (“Cargill Australia”), and the first and second third parties, Cargill, Incorporated (“Cargill, Inc”) and Joe White Maltings Pty Ltd (together with Cargill Australia, “the Cargill Parties”) (“the Proposed Privilege Summons”).
(2)Seek further and better discovery (“the Proposed Discovery Summons”).
Leave is required because the court made an order on 5 October 2017 that no further interlocutory applications were to be made in this proceeding without first obtaining leave of the court. As was explained on that day, this order was made as a result of the very large sums that had been spent by the Cargill Parties and the Viterra Parties in costs and disbursements with respect to discovery and related issues. The discovery process has taken several years to date (this proceeding having commenced in 2014) and has involved the expenditure of millions of dollars.[1]
[1]For further detail, see Cargill Australia Ltd v Viterra Malt Pty Ltd (No 5) [2017] VSC 798, [8]-[11].
B. Background
The allegations in this case include claims of fraudulent concealment. Essentially, the issues concern the sale of a business, and allegations by the purchaser that it was deliberately misled by the seller. The seller denies any misleading conduct, and says further that, to the extent that there might have been improper practices in conducting the business as alleged, the purchaser was fully aware of such practices.[2]
[2]For a fuller account of the issues involved, see Cargill Australia Ltd v Viterra Malt Pty Ltd (No 2) [2017] VSC 283, [6]-[38].
C. Proposed privilege challenge application
The Proposed Privilege Summons, with 1 exception, concerned documents listed by the Cargill Parties as privileged in either affidavits of documents or lists of documents filed.[3] The exception related to a document that, in addition to being listed as privileged, was provided and disclosed in full, inadvertently, in a witness statement filed and served by the Cargill Parties.
[3]The court was informed that legal advice privilege is claimed under the Evidence Act 2008 (Vic), s 118.
At the hearing of the application for leave, the Viterra Parties informed the court they wished to amend the Proposed Privilege Summons to narrow the documents the subject of dispute to 29 documents only. Helpfully, the Viterra Parties listed those documents in a schedule using the descriptions that had been provided by the Cargill Parties as part of the discovery process.
The description with respect to each of the 29 documents indicated that each document related to the due diligence process conducted by the Cargill Parties prior to the settlement of the sale, and, on its face, suggested that each document was created for a commercial purpose. Senior counsel for the Cargill Parties properly conceded that the language used was apt to describe a commercial document in each case.
By reason of the description used, and because the due diligence process conducted by the Cargill Parties is critical to the issues in this case,[4] leave is granted.
[4]See Cargill Australia Ltd v Viterra Malt Pty Ltd (No 4) [2017] VSC 797, [45].
For reasons that will become apparent,[5] it is noted that, during the course of the application for leave to file the Proposed Privilege Summons, there was no suggestion by the Viterra Parties that the requirement for leave to be granted before the application could be made was anything other than appropriate.
[5]See par 18 below.
D. Further and better discovery
The Proposed Discovery Summons sought production from the Cargill Parties of several classes of documents. At the commencement of the application for leave, the Viterra Parties’ senior counsel advised the court that the first 2 classes of documents were not pressed. I will deal with the remaining classes in turn.
First, the Viterra Parties sought an order requiring the Cargill Parties to provide an affidavit explaining their “failure” to discover drafts or the final version of particular due diligence reports the Viterra Parties submitted ought to be in existence, but had not been discovered. Some evidence was led by the Cargill Parties suggesting they were not likely to have ever existed. During the course of argument, I formed the view that a simple way to diffuse the issue (and save the costs of a contested hearing) was to order that the Cargill Parties file and serve an affidavit stating whether such documents exist, or, after making reasonable inquiries of the relevant person or persons, whether they ever existed. Accordingly, this aspect of the summons was not the subject of leave as the orders of the court made any leave unnecessary.
Next, the Viterra Parties sought leave to apply for an order that the Cargill Parties provide a similar affidavit concerning “correspondence in respect of” the due diligence reports the subject of the order referred to in the previous paragraph. It was suggested, initially at least, that there “must be” more than 1 email on this issue.[6] That email, which has already been discovered, referred to not receiving a particular document from an individual involved in the due diligence process and indicated that that person was going to “follow up” the matter with that individual.
[6]Senior counsel later submitted “there might have been emails” of the type identified.
Previously, the Viterra Parties have made assertions that the court ought to form the view that correspondence “must” exist with respect to various classes of documents, including previously discovered correspondence. Repeatedly, those assertions have fallen by the by when affidavit material in response has stated that no such correspondence exists. Further, the specific email relied upon does not necessarily indicate there would be any further correspondence. If the “follow up” actually occurred, about which there is no evidence, it may have been done by way of oral communication, either face to face or by telephone. In circumstances where there was no evidence which directly suggests that any further correspondence existed beyond that already discovered, and the court has made orders with respect to draft and final due diligence reports,[7] leave is refused.
[7]See par 10 above.
Next, leave was sought to apply for discovery of documents found following a search of the inbox of Ruud Hermus (“Hermus”). On a previous application, the Cargill Parties gave evidence, in substance, that it would not be expected that Hermus would have any relevant materials. However, more recent discovery from the Cargill Parties appears to suggest that Hermus may have had a direct role in the due diligence process with respect to “quality”. In these circumstances, leave is granted.
Next, leave was sought with respect to documents found with respect to “Project Hawk” searches conducted across documents of Emery Koenig (“Koenig”).[8] This application was made on the basis that Koenig had been asked to provide documents “relating to the matter of Project Hawk”. In an affidavit of the solicitor for the Cargill Parties, it was stated that:
These searches did not result in any documents being identified, which are required to be discovered, in this proceeding.
The solicitor who swore this affidavit, Janet Whiting, is the solicitor responsible for the conduct of the matter on behalf of the Cargill Parties. She has taken the primary role in overseeing discovery by the Cargill Parties in this proceeding.
[8]Project Hawk was the name given by the Cargill Parties to the then proposed transaction.
In circumstances where there is no evidence to indicate any further relevant documents exist and a senior solicitor has indicated that the search did not result in any further relevant documents being produced by Koenig, leave is not granted. In short, there appears to be little or no prospect of the Viterra Parties establishing the requisite belief for the purposes of r 29.08 of the Supreme Court (General Procedure) Rules 2015 (Vic). Further, given the previous orders of the court, including orders made today, with respect to the requirement to provide all due diligence reports, including all drafts, pursuing this matter would not, in my view, be consistent with the overarching obligations.[9]
[9]See Civil Procedure Act 2010 (Vic), s 7.
Finally, leave was sought with respect to proposed orders concerning the manner in which discovery has already been conducted by the Cargill Parties. The proposed orders were as follows:
(1)An affidavit or affidavits of a person or persons from Cargill, Inc with firsthand knowledge of the searches conducted in relation to the orders made by the Honourable Justice Elliott on 6 June 2017 (“the 6 June Orders”), the Honourable Justice Judd on 20 September 2017 (“the 20 September Orders”) and the [orders made by Elliott J on 20 December 2017] (“the 20 December Orders”), which sets out the following information:
(a)the names of those Cargill employees[10] whose inboxes have been searched;
[10]The defendants later clarified that by “Cargill employees” they intended to refer to employees of both Cargill, Inc and Cargill Australia.
(b) the date range(s) searched; and
(c) the search parameters/terms used; and
(2)An affidavit or affidavits of a person or persons from Gilbert + Tobin with firsthand knowledge of the searches conducted in relation to the 6 June Orders, the 20 September Orders and the 20 December Orders, which sets out the following information:
(a)the names of those Cargill employees whose inboxes have been searched;
(b) the date ranges searched; and
(c) the search terms used.
The Viterra Parties submitted that there was reason to believe that the Cargill Parties’ searches for the purposes of discovery have been inadequate. The Viterra Parties referred to the fact that relevant documents were not discovered or produced by the Cargill Parties until after affidavits of documents were sworn on 18 December 2017 and 23 January 2018, with no proper explanation as to why these documents had not been previously discovered. It was submitted that the court ought to be concerned about whether the orders of 6 June 2017, 20 September 2017 and 20 December 2017 have been complied with in these circumstances. The nature and extent of the recent further discovery was, it was submitted, of a sufficient magnitude to justify the orders sought.
In addition to the submissions specific to the form of orders sought,[11] more general observations were made by the Viterra Parties. Senior counsel for the Viterra Parties submitted that, so far as he was aware, there had been no equivalent order requiring leave made in any other commercial proceeding, other than with respect to vexatious litigants. It was submitted that, if leave were refused with respect to these further orders, then the order requiring leave to make further interlocutory applications in the proceeding “would be wrong”. When it was pointed out that that order was made on 5 October 2017, when the Viterra Parties were represented by very experienced Queen’s counsel, and no exception was then taken to the order, it was submitted that, until now, there had been “nothing for [the Viterra Parties] to complain about”. Further, it was submitted that it would be a denial of natural justice if the court were to refuse the Viterra Parties the opportunity to bring the application.
[11]For completeness, during the course of the hearing, senior counsel for the Viterra Parties suggested that what was sought in this respect was not “anything more than what Your Honour ordered in respect of [the Viterra Parties]”. This was put on the basis that, on 5 October 2017, orders had been made requiring production by the Viterra Parties of certain documents, and for the purposes of producing those documents the Viterra Parties’ solicitors were required to make enquiries of certain specific persons employed by the Viterra Parties. Following a discussion with senior counsel, it was accepted that the orders made on 5 October 2017 and those presently sought were “quite different”, and this submission was not pressed.
As to the last point, no denial of natural justice is involved if the court prevents a party from making an irrelevant, hopeless or frivolous application.[12] Further, any right to be heard must also be subject to the application being consistent with the overarching obligations imposed by the Civil Procedure Act 2010 (Vic).[13] Accordingly, I reject the submission that the imposition of a requirement to seek leave, of itself, gives rise to a denial of natural justice if leave is ultimately refused.
[12]Cf, for example, Bodycorp Repairers Pty Ltd v Holding Redlich [2018] VSCA 17, [106] (Whelan and Santamaria JJA and T Forrest AJA), citing Minh v Minister for Immigration and Multicultural Affairs (1998) 86 FCR 304, 314 (Weinberg J).
[13]See, for example, Northern Health v Kuipers [2015] VSCA 172, [22] (Kyrou and McLeish JJA); Eaton v ISS Catering Services Pty Ltd (2013) 42 VR 635, 647-648 [48]-[49] (Neave JA, Hargrave and Dixon AJJA); Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303, 322-323 [55]-[57] (French CJ, Kiefel, Bell, Gageler and Keane JJ).
Further, the submission concerning the imposition of a requirement to seek leave being wrong, if leave is refused, as a general proposition, is also rejected. There are a number of responses to make to this submission.
First, as already noted, the regime has been in place since 5 October 2017. There was no appeal from this ruling. Further, no exception has been taken to the regime until, belatedly, the submission was made with respect to the last category of documents to be considered by the court, in circumstances where senior counsel for the Viterra Parties apprehended that leave may not be granted in respect of that category.[14]
[14]The ruling of the court was given orally and in stages, so that all previous categories had been dealt with by this stage of the hearing.
Secondly, with respect to the submission that there has previously been nothing to complain about, on 1 December 2017, the court refused leave to the Viterra Parties with respect to another proposed application.[15] No exception was taken to the leave regime at that point in time.
[15]On that occasion, the Viterra Parties sought leave to amend a previously filed summons which sought the court’s approval to make an application for the production of documents and deposition testimony pursuant to 28 United States Code, §1782: see Cargill Australia Pty Ltd v Viterra Malt Pty Ltd (No 5) [2017] VSC 798, [1]-[2]. As a result of the Viterra Parties’ application, I granted leave to amend certain aspects of the summons, and refused leave with respect to other aspects. On that occasion, senior counsel for the Viterra Parties accepted that leave was required pursuant to orders made on 5 October 2017 (T 2.31), and did not raise any of the present concerns when leave was refused (T 8.23).
Finally, in the particular circumstances of this case, the imposition of the requirement for leave in relation to any further interlocutory applications was an attempt by the court, consistent with its obligations under the Civil Procedure Act, to ensure that the costs being incurred in this proceeding were, and continue to be, proportionate and appropriate.[16] Although in many cases the imposition of such a regime would be an unwarranted step, in my view in this proceeding this has been necessary to ensure (or at least to use the court’s best endeavours to ensure) that the overarching obligations are adhered to.
[16]Civil Procedure Act, ss 8, 24, 29(1)(e).
Accordingly, for the reasons set out above, I reject the general submissions made by the Viterra Parties as to the suggested inappropriateness of the leave regime.
However, leave will be granted on the basis that there may be a proper basis for requiring further affidavits from the Cargill Parties, given the lateness of the further discovery and the previous sworn evidence that discovery was complete.[17] That said, the fact that leave is granted does not relieve the Viterra Parties of carefully considering whether pursuing such an application is consistent with their obligations under the Civil Procedure Act, and in particular whether the costs that would be involved in the Cargill Parties complying in the event that the orders are made can be justified.
[17]For example, in an affidavit sworn on 26 February 2016, 1 of the Cargill Parties’ internal lawyers stated that to the best of her knowledge, information and belief, “neither the Cargill [Parties] nor their solicitor nor any other person on their behalf has now, or ever had, in his, her or its possession, custody or power, any document required to be discovered, other than [certain listed documents]”. A similar statement was made in an affidavit affirmed by another of the Cargill Parties’ internal lawyers on 7 February 2017, by which further documents were produced. On 1 September 2017, it was sworn by Whiting on behalf of the Cargill Parties that to the best of her knowledge, information and belief, “neither the Cargill [Parties] nor their solicitor nor any other person on their behalf has now, or ever had, in his, her or its possession, custody or power, any document other than the documents [listed in this affidavit] which are required to be discovered” pursuant to orders made on 6 June 2017. More recently, on 6 February 2018, Whiting swore on behalf of the Cargill Parties that “[t]o the extent that documents are both relevant and in the possession of the Cargill Parties, it is my belief that they have been discovered in accordance with the Cargill Parties’ general discovery obligations”.
E. Conclusion
Orders will be made accordingly.
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