Cargill Australia v Viterra Malt - [2023] VSCA 301

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2022 0071

CARGILL AUSTRALIA LIMITED (ACN 004 684 173)	Applicant
v
VITERRA MALT PTY LTD (ACN 096 519 658) (AND OTHERS ACCORDING TO THE ATTACHED SCHEDULE)	Respondents

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JUDGES:	SIFRIS, WALKER and WHELAN JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	27 November 2023
DATE OF JUDGMENT:	7 December 2023
MEDIUM NEUTRAL CITATION:	[2023] VSCA 301 First revision (8 December 2023): [60]
JUDGMENT APPEALED FROM:	[2022] VSC 299 (Elliott J)

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COSTS – Offer of compromise – Claim for damages – Whether respondent could assess the reasonableness of offer – No error of principle alleged – Claims and assessment of damages complex – Trial judge best placed to exercise costs discretion – Stringent approach to costs appeal – Leave to appeal refused.

Supreme Court (General Civil Procedure) Rules 2015, r 26.08; Supreme Court Act 1986, ss 14A, 14C.

House v The King (1936) 55 CLR 499, United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15, Spotless Group Ltd v Premier Building and Consulting Pty Ltd (rec apptd) [2008] VSCA 115, Hanlon v Brookes (1997) 15 ACLR 1626 followed. Grbavac v Hart [1997] 1 VR 154 considered.

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Counsel
Applicant:		Ms K Burke with Ms L Hamzi
Respondents:		Mr SR Senathirajah KC with Mr O Wolahan
Solicitors
Applicant:	Gilbert & Tobin
Respondents:	LK Law

SIFRIS JA
WALKER JA
WHELAN JA:

In October 2013 Cargill Australia Limited (‘Cargill Australia’) purchased a malting business conducted by Joe White Maltings Pty Ltd (‘Joe White’) from the first to third respondents (Viterra Malt Pty Ltd, Viterra Operations Pty Ltd and Viterra Pty Ltd[1]) for the sum of $420 million. Approximately a year after the purchase, on 1 October 2014, Cargill Australia instituted a proceeding against the Viterra Parties for damages in relation to the sale. On 26 March 2015 Cargill Australia made an offer to settle the proceeding for the sum of $85 million plus costs as taxed or agreed (the ‘Cargill Offer’). That offer was not accepted.
[1]Glencore International AG, the fourth respondent, was the ultimate holding company of the Viterra companies, and had been involved in the sale process. The four respondents are hereafter referred to as the ‘Viterra Parties’.
On 28 January 2022, after a long trial, the trial judge held that the Viterra Parties were liable to Cargill Australia for misleading or deceptive conduct and deceit and ordered the Viterra Parties to pay damages in the amount of $168.9 million, being the difference between the price paid and the judge’s conclusion as to the true value of the assets acquired.[2] In a subsequent judgment, the judge held that Cargill Australia was entitled to its costs on the standard basis.[3] In so doing, his Honour rejected Cargill Australia’s submission that, based on r 26.08 of the Supreme Court (General Civil Procedure) Rules 2015 (the ‘Rules’), and because it had received a more favourable outcome than the Cargill Offer, it was entitled to indemnity costs from 11:00…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] VSCA 301
Decision Date: 7 December 2023

CaseChat Overview and Summary

Cargill Australia was involved in a legal dispute with Viterra Malt regarding damages for alleged breaches of contract and statutory provisions. The case was heard in the Supreme Court of Victoria. Viterra Malt sought an assessment of the reasonableness of an offer of compromise made by Cargill Australia and argued that the trial judge erred in exercising their discretion to award costs.

The court was required to determine whether Viterra Malt was in a position to assess the reasonableness of Cargill Australia’s offer and whether the trial judge had erred in exercising their discretion to award costs. The key issue was whether the trial judge had erred in principle in assessing the reasonableness of the offer of compromise and the exercise of discretion over costs. Viterra Malt argued that the trial judge should have followed a more stringent approach to the assessment of the offer of compromise.

The court found that the trial judge was best placed to exercise their discretion over costs, given the complexity of the claims and assessment of damages. The court held that the trial judge had not erred in principle in exercising their discretion over costs and that a stringent approach to appeals from costs decisions was appropriate. The court concluded that there was no error of principle in the trial judge’s assessment of the offer of compromise and the exercise of discretion over costs. Accordingly, Viterra Malt’s appeal was dismissed and leave to appeal was refused.

The court did not make any specific orders but dismissed Viterra Malt’s appeal and refused leave to appeal. The trial judge’s assessment of the offer of compromise and the exercise of discretion over costs was upheld. The court’s decision reinforces the principle that the trial judge is best placed to exercise their discretion over costs in complex cases and that appeals from costs decisions should be approached with a stringent approach.

Orders