Viterra Malt Pty Ltd v Cargill Australia Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2022 0039

VITERRA MALT PTY LTD (ACN 096 519 658) & ORS (ACCORDING TO THE ATTACHED SCHEDULE)	Applicants
v
CARGILL AUSTRALIA LIMITED (ACN 004 684 173) & ANOR (ACCORDING TO THE ATTACHED SCHEDULE)	Respondents

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JUDGES:	SIFRIS, WALKER and WHELAN JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	28 February – 8 March 2023
DATE OF JUDGMENT:	23 June 2023
MEDIUM NEUTRAL CITATION:	[2023] VSCA 157
JUDGMENT APPEALED FROM:	[2022] VSC 13 (Elliott J)

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CONTRACT – Australian Consumer Law – Misleading or deceptive conduct – Sale of malt business – Undisclosed dishonest practices underpinned business’s historic performance – Whether seller of malt business engaged in misleading or deceptive conduct – Conduct to be analysed as a whole.

MISLEADING OR DECEPTIVE CONDUCT – Disclaimers – Evidential role of disclaimers – Whether disclaimers modify sellers’ conduct – Exclusion clauses – Whether exclusion clauses can preclude claim of misleading or deceptive conduct – Public policy – Legislative policy of Australian Consumer Law ss 18, 236.

MISLEADING OR DECEPTIVE CONDUCT – Causation – Reliance – Where representations contained in contract – Where claimant alleged representations induced entrance into contract – Whether reliance possible as representations made simultaneously with contract formation.

MISLEADING OR DECEPTIVE CONDUCT – Causation – Where purchaser did not rely upon certain representations – Where purchaser nevertheless lost opportunity to seek advice and terminate – Whether reliance necessary for causation under Australian Consumer Law s 236.

CONTRACT – Construction and interpretation of contracts – Releases and exclusion clauses – Whether clear words needed to exclude liability for fraud.

CONTRACT – Whether exclusion clause in contract procured by misleading conduct or fraud can be relied upon.

TORTS – Deceit – Disclaimers – Whether disclaimers modified representations – Disclaimers did not render representations true – Whether disclaimers modified sense in which representor intended representations to be understood – No innocent sense in which representations could be understood – Onus of proof for establishing fraudulent intention.

LOSS AND DAMAGE – Assessment – Whether Potts v Miller (1940) 64 CLR 282 or ‘left in hands’ approach appropriate – True value of business – Relevance of events subsequent to breach – Extrinsic and intrinsic factors in subsequent performance – Where factors cannot be separated out – Whether ‘synergies’ to be accounted for.

LOSS AND DAMAGE – Assessment – True value of business – What hypothetical purchaser would have assumed – Assumptions adopted by expert witnesses.

LOSS AND DAMAGE – Contributory negligence – Proportionate liability – Claimant did not fail to take reasonable care – Defendants precluded for acting fraudulently.

PRACTICE AND PROCEDURE – New point on appeal.

PRACTICE AND PROCEDURE – Refusal of application to re-open – Delay.

PRACTICE AND PROCEDURE – Interest.

Australian Consumer Law (Competition and Consumer Act 2010 (Cth) sch 2) ss 18, 236; Competition and Consumer Act 2010 (Cth) ss 87CB–87CD, 137B; Supreme Court Act 1986 s 60; Penalty Interest Rates Act 1983 s 2.

Branir Pty Ltd v Owston Nominees [No 2] Pty Ltd (2001) 117 FCR 424, Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592, Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, Hartley Poynton Ltd v Ali (2005) 11 VR 568, Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd [No 1] (1988) 39 FCR 546, HIH Casualty & General Insurance Ltd v Chase Manhattan Bank [2003] 1 All ER (Comm) 349, HTW Valuers v Astonland Pty Ltd (2004) 217 CLR 640, Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281, Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, Lee v Lee (2019) 266 CLR 129, Onley v Catlin Syndicate Ltd (2018) 360 ALR 92, Potts v Miller (1940) 64 CLR 282, S Pearson & Son Ltd v Dublin Corporation [1907] AC 351 applied; Brighton Australia Pty Ltd v Multiplex Constructions Pty Ltd (2018) 56 VR 557, Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498, Miller v Miller (2011) 242 CLR 446, Ruby v Marsh (1975) 132 CLR 642, Westfield Management Ltd v AMP Capital Property (2012) 247 CLR 129 discussed; Ireland v WG Riverview Pty Ltd (2019) 101 NSWLR 658, Manwelland Pty Ltd v Dames & Moore Pty Ltd [2001] ATPR ¶41-845, MWH Australia Pty Ltd v Wynton Stone Australia Pty Ltd (in liq) (2010) 31 VR 575, PPK Willoughby Pty Ltd v Baird [2021] NSWCA 312, Price v Spoor (2021) 270 CLR 450 distinguished.

Richard Scruby, ‘Contracting Out of Statutory Prohibitions against Misleading or Deceptive Conduct’ (2019) 47 Australian Bar Review 181, Dyson Heydon, ‘Avoiding Liability under the Competition and Consumer Act 2010 (Cth)’ (2020) 28 Australian Journal of Competition and Consumer Law 13 discussed.

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Counsel
Applicants:		Mr A Myers KC with Mr S Senathirajah KC and Mr SJ Prendergast and Mr OK Wolahan and Mr TM Wood
Respondent/s:		Mr S Finch SC with Mr PH Solomon KC and Mr T Barry and Mr M Nguyen and Ms L Hamzi
Solicitors
Applicants:	LK Law
Respondent/s:	Gilbert + Tobin

TABLE OF CONTENTS

INTRODUCTION
PART A:. THE LIABILITY GROUNDS
(1).... The nature and extent of the Operational Practices
(2).... The Financial and Operational Performance Representations and the Warranty Representations
(3).... The disclaimers and the correspondence concerning the Indicative and Final Bids
(4).... Summary of relevant findings and conclusions of the primary judge on issues of liability
(5).... The legal principles adopted by the judge relevant to grounds 1–10
(6).... The disclaimers in this case
(a)          The Confidentiality Deed
(b)          The Phase 1 Process Letter and the Information Memorandum
(c)          The Data Room Protocol
(d)          The Management Presentation
(e)          The Acquisition Agreement
(f)          The categories of disclaimers

(7).... Review of the authorities on disclaimers
(a)          Disclaimers in the context of fraud or deceit
(b)          Disclaimers in the context of misleading or deceptive conduct
(c)          High Court authority on disclaimers and misleading or deceptive conduct
(d)          The difference between disclaimers and settlement agreements
(e)          Construction of releases in settlement agreements
(f)          Summary of the authorities on disclaimers

(8).... Ground 1: Is cl 10.3 of the Confidentiality Deed unenforceable in relation to misleading or deceptive conduct?
(a)          The parties’ submissions
(b)          Is this court required to follow Henjo unless it is ‘plainly wrong’?
(c)          Is cl 10.3 unenforceable as a matter of public policy?
(d)          Conclusion on Ground 1

(9).... Ground 2: Is cl 10.3 of the Confidentiality Deed unenforceable in relation to deceit?
(a) The parties’ submissions
(b) Analysis

(10).. Contention 1: Construction of cl 10.3 of the Confidentiality Deed
(a) Does cl 10.3 purport to exclude liability for fraud?
(b) Does cl 10.3 purport to exclude liability for misleading or deceptive conduct?

(11).. Remaining grounds and contentions concerning the Financial and Operational Performance Representations
(12).. Ground 6: Financial and Operational Performance Representations — conduct as a whole
(a) The parties’ submissions
(b) Analysis

(13).. Ground 8: Financial and Operational Performance Representations — reliance
(a)          The parties’ submissions
(b)          The judge’s reasons
(c)          Analysis

(14).. Grounds 4 and 5, and contention 2: Financial and Operational Performance Representations — Acquisition Agreement cl 15.4(b)
(a)          The judge’s findings
(b)          The parties’ submissions
(c)          Analysis

(15).. Ground 7: Financial and Operational Performance Representations — the requisite intention for deceit
(a)          The judge’s findings on intention
(b)          The parties’ submissions
(c)          Analysis

(16).. Summary of conclusions on Financial and Operational Performance Representations claims
(17).. Ground 3: Warranty Representations — Confidentiality Deed cl 10.3 and cl 10.4, and Acquisition Agreement cl 15
(a) The parties’ submissions
(b) Analysis

(18).. Ground 9: Warranty Representations — reliance
(a)          The judge’s findings on reliance
(b)          The parties’ submissions
(c)          Analysis

(19).. Summary of conclusions on Warranty Representations claims
(20).. Ground 11: Pre-Completion Representations — causation
(a) The parties’ submissions
(b) Analysis

(21).. Ground 12: Other Bidders Representations — whether made, reliance and loss
(a) The parties’ submissions
(b) Analysis

(22).. Ground 10, and contention 3: No Reliance Representations
(a) The parties’ submissions
(b) Analysis

(23).. Summary of conclusions on the liability grounds
PART B:. THE LOSS AND DAMAGE GROUNDS
(1).... Potts v Miller versus ‘left in hands’ — the relevant High Court authorities
(2).... Other authorities relied upon in the submissions and raised in the hearing
(3).... The position of the trial judge assessing expert evidence and this Court’s position
(4).... Further relevant factual findings in the primary judgment
(5).... The primary judgment on loss and damage
(6).... Issues raised in relation to loss and damage
(a) The grounds of appeal
(b) Actual performance, intrinsic and extrinsic factors, and the issues as articulated on the hearing of the appeal

(7).... Ground 13: Potts v Miller or ‘left in hands’
(a) The parties’ submissions
(b) Analysis

(8).... Ground 15: True value
(a) The parties’ submissions
(b) Analysis

(9).... Grounds 14 and 16: Synergies
(a) The parties’ submissions
(b) Analysis

(10).. Ground 17: Discount rate of 13.7 per cent
(a) The parties’ submissions
(b) Analysis

(11).. Ground 18: Valuation assumptions
(12).. Ground 19: Klein’s assumption concerning non-compliant malt
(a) The parties’ submissions
(b) Analysis

(13).. Ground 20: General capital expenditure
(a) The parties’ submissions
(b) Analysis

(14).. Ground 21: Actual loss
(a) The parties’ submissions
(b) Analysis

(15).. Summary of conclusions on the loss and damage grounds
PART C:. THE OTHER GROUNDS
(1).... Ground 22: Proportionate liability and contributory negligence
(a)          Relevant statutory provisions
(b)          The judge’s conclusions on ss 137B and 87CB–CD
(c)          The underlying premise of ground 22
(d)          Are the relevant provisions excluded because of the fraudulent conduct of the Viterra Parties (including Glencore)?
(e)          The parties’ submissions on fraud
(f)          Analysis of the fraud exclusion
(g)          The parties’ submissions on reasonable care
(h)          Analysis of reasonable care

(2).... Ground 23: Award of interest
(a)          The judge’s reasons
(b)          The parties’ submissions
(c)          Analysis

(3).... Ground 24: Rejection of the EU Materials
(a)          The judge’s reasons
(b)          The parties’ submissions
(c)          Analysis
(d)          Disposition sought by the Viterra Parties

PART D:. ORDERS

THE COURT:

INTRODUCTION

By an acquisition agreement executed on 4 August 2013 (the ‘Acquisition Agreement’), the first respondent (‘Cargill Australia’) bought the entire share capital of a company named Joe White Maltings Pty Ltd (‘Joe White’) from the first applicant (‘Viterra Malt’). Joe White conducted business as a maltster. It was the largest maltster in Australia. By the Acquisition Agreement, Cargill Australia also bought certain assets used in the business from the second applicant (‘Viterra Operations’) and the third applicant (‘Viterra Ltd’). The second respondent, Cargill, Incorporated (‘Cargill, Inc’), guaranteed the obligations of Cargill Australia.
Cargill Australia bought the share capital of Joe White under a staged sale process involving the fourth applicant (‘Glencore’), which was the parent company of Viterra Malt, Viterra Operations and Viterra Ltd.
The trial judge referred to Cargill Australia and Cargill, Inc together as ‘Cargill’. He referred to the first, second and third applicants together as ‘Viterra’, and he referred to the four applicants together as the ‘Viterra Parties’. Save where it is necessary to refer to particular companies, the same terms are adopted here.
The sale process involved two stages, referred to as ‘Phase 1’ and ‘Phase 2’. Phase 1 culminated in an ‘Indicative Bid’, and Phase 2 in a ‘Final Bid’. In each stage the Viterra Parties provided information about Joe White’s business to Cargill. Cargill used that information in formulating the Indicative Bid and the Final Bid. Under documents forming part of the staged process, the Viterra Parties disclaimed liability for any representations made, Cargill acknowledged and agreed that they could not and would not rely upon any representations made and that they would make and rely upon their own investigations and assessments, and Cargill prospectively released the Viterra Parties from any liability in relation to the provision or non-disclosure of information. An important document in this respect was a confidentiality deed entered into by Glencore and Cargill, Inc, on behalf of themselves and their related companies, bearing the date 27 May 2013, but which Cargill, Inc signed on 13 May 2013 (the ‘Confidentiality Deed’). A disclaimer, an agreement not to sue, and a release provided for in that deed were expressly said not to apply to representations or obligations set forth in separate written agreements between the parties in accordance with the terms of those written agreements.
The Acquisition Agreement was a separate written agreement between the parties. It was entered into at the end of the staged sale process. It contained a schedule of warranties (the ‘Warranties’). By the terms of the agreement, Viterra (but not Glencore) represented and warranted that each Warranty was correct and not misleading at the date of the agreement, and would be correct and not misleading on the ‘Completion’ date; and acknowledged that Cargill had entered into the agreement and would complete in reliance upon the Warranties.
Prior to entry into the Acquisition Agreement (and up to Completion), Joe White for some years had been engaging in three practices which formed the factual foundation for the claims made by Cargill Australia against the Viterra Parties in this proceeding.
The first practice was referred to in the trial as the ‘Reporting Practice’. Various parameters of the malt produced by Joe White were tested in a laboratory before dispatch to the customer. Joe White produced a certificate of analysis which was provided to the customer. The certificate listed the parameters, and set out the ‘results’. If the results which had been obtained by laboratory testing were outside the customer’s specifications, those results were altered by Joe White personnel to bring them within those specifications, in a practice referred to as ‘pencilling’; and the altered results, not the results obtained from the laboratory, were set out on the certificate provided to the customer, without any indication that the results had been altered.
The second practice was referred to in the trial as the ‘Varieties Practice’. This occurred when Joe White used barley varieties not approved by a customer, without disclosing that fact or falsely asserting that an approved variety had been used.
The third practice was referred to in the trial as the ‘Gibberellic Acid Practice’. Gibberellic acid is an additive which may be used in the production process. Some customers prohibited its use. Joe White nevertheless used gibberellic acid in malt delivered to customers who had prohibited its use.
Together, these three practices were referred to as the ‘Operational Practices’. Cargill Australia alleged that these practices were carried out routinely, and without informing customers. When referred to in that sense (that is, as practices carried out routinely and without informing customers) they were called the ‘Viterra Practices’. The judge found the practices were carried out routinely and without informing customers. Nevertheless, in these reasons the term ‘Operational Practices’ is generally adopted.
Cargill Australia instituted this proceeding against the Viterra Parties. It alleged that by reason of the existence of the Operational Practices representations made to it had been false, and misleading or deceptive, and that the Warranties had been breached. The more significant representations in this connection were referred to as the ‘Financial and Operational Performance Representations’ and the ‘Warranty Representations’. The Viterra Parties counterclaimed against Cargill Australia, and they joined Cargill, Inc and a number of other parties as third parties.
Cargill Australia claimed that it entered into, and completed, the acquisition provided for by the Acquisition Agreement in reliance upon, and because of, the conduct by the Viterra Parties of which it complained. It claimed that it would not have acquired Joe White if it had not been misled and deceived. The loss claimed was the difference between the price which it paid and the ‘true value’ of what it acquired.
Before the primary judge, Cargill Australia succeeded on claims based upon misleading or deceptive conduct under sch 2 of the Competition and Consumer Act 2010 (Cth) (the ‘Australian Consumer Law’), and in deceit.[1] It recovered damages of $168.9 million, being the difference between the price paid, $420 million, and the judge’s conclusion as to the true value of the assets acquired, $251.1 million.[2] In a further ruling, the judge ordered damages in the nature of interest, calculated at the rates provided for under the Penalty Interest Rates Act 1983 (‘PIRA’), in a total sum of $124,229,320.30 (the ‘interest ruling’).[3]
[1]Cargill Australia Ltd v Viterra Malt Pty Ltd [No 28] [2022] VSC 13 (the ‘primary judgment’).
[2]The relevant conclusions are to be found in the primary judgment, but the quantification is in Cargill Australia Ltd v Viterra Malt Pty Ltd [No 29] [2022] VSC 66.
[3]Cargill Australia Ltd v Viterra Malt Pty Ltd [No 30] [2022] VSC 80 (the ‘interest ruling’).
The trial commenced on 18 June 2018 and initially concluded on 21 August 2019, after 111 sitting days. After judgment had been reserved, the Viterra Parties made two applications to re-open their case.
In late 2018 and early 2019, Cargill, Inc disposed of its worldwide malt assets, including Joe White. This development was significant because under cl 15.4(b) of the Acquisition Agreement, Viterra was not liable to Cargill Australia for any claim (as defined) if Cargill, Inc ceased to control Joe White or its business. Viterra applied to re-open so as to rely upon cl 15.4(b) in November 2019. That application was successful. The trial judge concluded that the operation of cl 15.4(b) was fatal to some (but not all) of Cargill Australia’s claims.
The second application to re-open was made in March 2020. The Viterra Parties sought to re-open to rely upon evidence referred to as the ‘EU Materials’. This application failed (the ‘re-opening ruling’).[4]
[4]Cargill Australia Ltd v Viterra Malt Pty Ltd [No 25] [2020] VSC 172 (the ‘re-opening ruling’).
The primary judgment was handed down on 28 January 2022.
After initially denying the existence of the Operational Practices, during the course of the trial the Viterra Parties admitted certain aspects of their existence, but they denied Cargill Australia’s allegations as to their extent and their significance. The Viterra Parties alleged that the practices were relevantly the sole responsibility of Joe White and its officers, who they joined as third parties; and they asserted that what was done was in accordance with industry practices of which Cargill was aware.

More importantly for current purposes, on the issues of liability, the Viterra Parties relied upon various contractual provisions in the documents forming part of the sale process, including clauses that:
(a)stated that no representations were made by the Viterra Parties, and no responsibility was accepted as to the accuracy and completeness of information provided (‘no representation clauses’);
(b)stated that Cargill agreed not to rely, and/or had not relied, upon any representations, but would rely upon their own investigations (‘no reliance clauses’); and
(c)purported to exclude, release or limit the Viterra Parties’ liability to Cargill (‘exclusion clauses’).
We shall refer to these kinds of clauses collectively as ‘disclaimers’. As we explain later, these are not rigid categories.
A provision of central importance to the Viterra Parties’ case both before the trial judge and on appeal was a ‘release’ provided for in cl 10.3 of the Confidentiality Deed. The relevant provision uses the terminology of ‘release’, but is better characterised as a contractual exclusion clause.
The Viterra Parties are part of a large publicly listed corporate group. Cargill is part of a large privately held corporate group based in the United States of America. The Viterra Parties submitted at trial, and emphasise on this application, that large, well-resourced parties such as these, who negotiate and agree upon the terms of their transactions, should be held to the terms that they have agreed.
This application for leave to appeal concerns conclusions reached on both liability and damages in the primary judgment, the refusal to permit re-opening in the re-opening ruling, and the quantum of interest awarded in the interest ruling. There are other separate applications for leave to appeal concerning costs rulings.[5] The application for leave and full argument on the proposed grounds were heard together on the basis that if leave were granted the Court would forthwith determine the substantive grounds.
[5]The other applications are an application by the Viterra Parties in S EAPCI 2022 0062 concerning the primary judge’s ruling on costs of the third parties, and an application by Cargill in S EAPCI 2022 0071, concerning the primary judge’s ruling on indemnity costs. Those applications have been deferred pending the resolution of this application.
The proposed grounds of appeal, as amended, and three ‘grounds of law … not decided’ raised by Cargill on a notice of contention, as amended, are set out in full in Annexure A.[6]
[6]For convenience, from here on, we will refer to each proposed ground of appeal simply as a ‘ground’, regardless of whether or not leave to appeal is granted.
Grounds 1, 2, 3, 6, 7, 8 and 10 concern the operation and significance of the disclaimers referred to. The first ground of law not decided raised by the notice of contention (which will be referred to as contention 1) concerns the construction of the release in cl 10.3 of the Confidentiality Deed, and the third (contention 3) concerns certain of the no reliance representations.
Grounds 3 and 9 concern the Warranties. The primary judge described the Cargill Australia claims based upon the Warranty Representations as the ‘most straightforward’. The claim for misleading or deceptive conduct based upon the Warranty Representations succeeded against Viterra (not Glencore), although the contractual claim for breach of the same Warranties failed because of cl 15.4(b) of the Acquisition Agreement.
Grounds 4 and 5, and contention 2, concern the operation of cl 15.4(b) of the Acquisition Agreement and the judge’s conclusion that that provision did not operate so as to defeat Cargill Australia’s claims under the Australian Consumer Law and in deceit. The second ground of law not decided raised by the notice of contention (which will be referred to as contention 2) also concerns the enforceability of this provision.
The legal issues raised by grounds 1–10, and the three contentions, overlap and are interrelated.
Grounds 11 and 12 concern claims based on further representations alleged by Cargill Australia which were successful. These representations were referred to as the ‘Pre-Completion Representations’ and the ‘Other Bidders Representations’.
Grounds 13–21 concern loss and damage.
Ground 22 concerns apportionment, and ground 23 concerns interest.
Ground 24 concerns the judge’s refusal of the Viterra Parties’ application to re-open their case so as to lead and rely upon the EU Materials. This evidence was contended to be relevant to the Viterra Parties’ contention that the Reporting Practice accorded with industry practices of which Cargill was aware.
The primary judgment is 1,810 pages long (comprising 5,354 paragraphs, and 4,826 footnotes) without the annexures, and 1,846 pages with the annexures and schedules. Once the subsequent relevant rulings concerning the refusal of the application to re-open, the quantification of damages, the interest, and the costs are included there are approximately 2,000 pages in all. Some of the issues addressed in the primary judgment are no longer relevant, or are relevant to the issues raised in this application only by way of context. There is no application for leave to appeal from the judge’s dismissal of the third party claims, save for ground 10 which concerns both the counterclaim against Cargill Australia and the third party claim against Cargill, Inc. In the context of the proposed liability grounds (grounds 1–12) the judge’s conclusions as to the nature and prevalence of the Operational Practices are not contested. Thus, substantial parts of the primary judgment do not need to be addressed or considered in detail.
The proposed liability grounds (grounds 1–12) are, with the exception of ground 7 which raises discrete leave issues, all sufficiently arguable to warrant the grant of leave to appeal. The liability grounds will be addressed under the following headings:
(1)The nature and extent of the Operational Practices.
(2)The Financial and Operational Performance Representations and the Warranty Representations.
(3)The disclaimers and correspondence concerning the Indicative and Final Bids.
(4)Summary of relevant findings and conclusions of the primary judge on issues of liability.
(5)The legal principles adopted by the judge relevant to grounds 1–10.
(6)The disclaimers in this case.
(7)Review of the authorities on disclaimers.

(8)Ground 1: Is cl 10.3 of the Confidentiality Deed unenforceable in relation to misleading or deceptive conduct?
(9)Ground 2: Is cl 10.3 of the Confidentiality Deed unenforceable in relation to deceit?
(10)Contention 1: Construction of cl 10.3 of the Confidentiality Deed.
(11)Remaining grounds and contentions concerning the Financial and Operational Performance Representations.
(12)Ground 6: Financial and Operational Performance Representations — conduct as a whole.
(13)Ground 8: Financial and Operational Performance Representations — reliance.
(14)Grounds 4 and 5, and contention 2: Financial and Operational Performance Representations — Acquisition Agreement cl 15.4(b).
(15)Ground 7: Financial and Operational Performance Representations — the requisite intention for deceit.
(16)Summary of conclusions on Financial and Operational Performance Representations claims.
(17)Ground 3: Warranty Representations — Confidentiality Deed cl 10.3 and cl 10.4, and Acquisition Agreement cl 15.
(18)Ground 9: Warranty Representations — reliance.
(19)Summary of conclusions on Warranty Representations claims.
(20)Ground 11: Pre-Completion Representations — causation.
(21)Ground 12: Other Bidders Representations — whether made, reliance and loss.
(22)Ground 10, and contention 3: No Reliance Representations.
(23)Summary of conclusions on the liability grounds.

After addressing the grounds on liability, the grounds on loss and damage (grounds 13–21) will be addressed, followed by the grounds concerning apportionment (ground 22), interest (ground 23), and the re-opening ruling (ground 24).
For the reasons we set out, we have concluded that while leave to appeal will be granted on all but three of the grounds (those three being grounds 7, 20 and 24), the appeal will be dismissed.

PART A:THE LIABILITY GROUNDS
(1)The nature and extent of the Operational Practices
The grounds of appeal on the liability issues do not contest the judge’s findings as to the nature and prevalence of the Operational Practices. However, it is necessary to set out the judge’s significant findings and conclusions in that regard in order to understand the issues raised and place them in their proper context.
The Reporting Practice involved alterations to the ‘results’ to be displayed on certificates of analysis. The judge described these certificates of analysis as follows:
The Certificate of Analysis as issued by Joe White was a relatively straightforward document. The top of the document contained Joe White’s name, the heading ‘Certificate of Analysis’, the customer name and the estimated time of dispatch. Next, there were a series of items, including the laboratory number with respect to the laboratory that conducted the tests. Under this, there were 2 columns headed ‘PARAMETER’ and ‘RESULT’, with the various parameters listed and the ‘result’ reported with respect to each parameter. Most of the ‘results’ reported were numerical. Underneath the parameters and the reported results additional information was provided, which sometimes, but not always, listed the barley variety or varieties that were said to have been used. There was nothing on the face of the Certificates of Analysis to indicate whether there had been any analysis performed beyond that of the laboratory in producing the test results.[7]
[7]Primary judgment, [38].
As indicated earlier, in certain circumstances the results obtained from the laboratory were physically altered by hand, in a practice known as ‘pencilling’, and the altered ‘results’ were entered on the certificates of analysis provided to customers. Personnel particularly involved in this practice were the third third party, Gary Hughes, the sixth third party, Douglas Stewart, and an employee named Laura McIntyre.[8]
[8]After the first reference, individuals are referred to by their surnames. This is for ease of reference. No disrespect is intended.
Of Hughes, the judge said the following:
The third third party was Gary Hughes (‘Hughes’). He worked at Joe White for many years. At the time Glencore purchased Viterra, Hughes held the titles of director and executive manager – malt at Joe White and executive manager for Viterra Malt. He was also a director of each of the Sellers and Joe White, but resigned from those directorships on 17 December 2012; he was reappointed as a director of Joe White on 2 November 2013 and resigned again on 23 June 2014. In addition, while Viterra owned Joe White, and owned some of the assets used by the Joe White Business, Hughes was a member of Viterra’s Australian and New Zealand executive. In this position, Hughes was included in the affairs of Viterra beyond those concerned with Joe White. Hughes was described as very hands-on in his managerial approach. He maintained a detailed familiarity with all aspects of the Joe White Business. Following the Acquisition, Hughes was employed by Cargill Australia as regional general manager, Asia Pacific until June 2014.[9]
[9]Primary judgment, [47].
Stewart was a biochemist who had worked in the malting industry since 2000. In 2010, he was appointed by Viterra Ltd as general manager technical, malt. He reported to Hughes.[10] McIntyre was an employee in the technical department of Joe White. She had no technical qualifications as a maltster.[11] At the relevant times all persons involved in conducting Joe White’s business were employees of Viterra.[12]
[10]Primary judgment, [50].
[11]Primary judgment, [74] n 77.
[12]Primary judgment, [52]. The judge said in two footnotes ([52] n 67, [62] n 71) that ‘[a]lthough the evidence was not entirely clear’, it suggested they were all employees of Viterra Ltd.
In relation to when the practice of pencilling began, the evidence was summarised by the judge as follows:
Precisely when Joe White first engaged in pencilling or other conduct forming part of the Operational Practices was not clear on the evidence. Stewart said at the time he commenced working with Hughes, he was informed by Hughes that it was necessary to engage in pencilling for Joe White to operate in the malting industry. In around 2000, when producing some of his first malt shipments that could not be brought within the customer’s specifications, Hughes told Stewart that it was difficult to get malt perfectly within specification. Hughes said it was acceptable to despatch the out-of-specification malt because the malt would be suitable for the customer. Hughes also said to do so was common practice in the malting industry.
Laura McIntyre (‘McIntyre’), from the technical department of Joe White, deposed that pencilling was in place when she commenced her employment at Joe White in 2005 and, although the practice was not formally recorded, it was standard practice.[13]
[13]Primary judgment, [73]–[74].
McIntyre was the person responsible for the physical preparation of certificates of analysis, including altering the results. The results from the laboratory were recorded on a document known as a ‘Sign-Out Report’. McIntyre’s evidence as to what was physically done was summarised by the judge as follows:
McIntyre was originally informed when she started at Joe White that it was part of her role to ensure that all of the reported results in Certificates of Analysis were within customer specifications. McIntyre explained that she would sit down with hard copies of the Sign-Out Reports and go through them line by line. McIntyre said that if any results were out of specification ‘we’ would strike through them and mark them within specification. She further said that if any of the things that had been changed affected other parameters ‘we’ would ensure that the calculations were correct as some parameters interlinked with others. McIntyre gave evidence that, generally, if results were within specification, no pencilling would occur. However, she said that there were not many Certificates of Analysis that fell into this category. That said, McIntyre was unable to state or even estimate how often the pencilling would only involve 1 or 2 parameters, or a greater number of parameters.
McIntyre further explained that when pencilling results to bring them within specification, the alterations were usually towards the outer limits of a customer’s specification or at a value close enough to the specification that it would pass as legitimate. Sometimes pencilling was engaged in even if the result was within specification. Some customers had targets which were higher than the specifications and alterations were made to make the result look closer to the target than what it was. Her evidence was that ‘we’ did not usually amend the results to be right on the specification as such reporting would look suspicious. Some results were the product of calculations from other test results. Therefore, if an alteration was made to these results, the results for other parameters would also have to be changed so the calculated result was consistent with the other relevant reported results.
Paradoxically, sometimes the pencilling occurred to make the results worse than they actually were. McIntyre’s evidence was that this was done so as to not heighten expectations that Joe White could consistently achieve the results in question. In addition, McIntyre attested that she inserted ‘results’ when, in fact, there had been no testing for the particular parameter. McIntyre said this happened frequently and that the results reported were fabricated, but not with respect to key parameters.[14]
[14]Primary judgment, [76]–[78].
Once amended, a hard copy of the pencilled Sign-Out Report was given to Stewart for his approval.[15] Stewart also had a further role which the judge described as follows:
Stewart also had a role in dealing with any fallout from the quality of malt delivered. McIntyre was the person initially responsible for dealing with customers’ technical complaints. However, Stewart took responsibility for responding to more complex complaints that it was thought might expose the procedures in place. There was a considerable volume of correspondence between Stewart and Joe White’s customers, examples of which were tendered. In that correspondence Stewart referred to things such as typical variations, analytical and laboratory variations, results being at the bottom or top end of a specification and the focus on seeking to provide malt that allowed the breweries to meet their specifications for the beer they produced. However, no mention was made of pencilling.[16]
[15]Primary judgment, [79].
[16]Primary judgment, [80].
Over time, the Operational Practices, or certain aspects of them, were documented. In either 2005 or 2006, a documented procedure referred as the ‘Malt Blend Parameters Procedure’ set out an approved guideline to proceed with the supply of malt outside customer specifications. Stewart reviewed the procedure two or three times a year. Hughes instructed that the Malt Blend Parameters Procedure was to be stored separately from Joe White’s quality procedure manuals and that it was not to be accessible by the International Organisation for Standardisation auditors or the auditors of Joe White’s customers.[17]
[17]Primary judgment, [90].
In 2010, Joe White introduced a project known as the ‘Malt Cost Reduction Transformation Project’. The objective of the project was to reduce the cost of barley acquisitions by using off-grade and off-specification barley. Stewart was unhappy about the introduction of this project. He was of the opinion that Joe White would need to be pencilling results more often if it were using substandard barley. He raised his concerns with Hughes, who agreed with them, but said that the position was ‘not negotiable’.[18]
[18]Primary judgment, [145]–[146].
As to testing by the customers themselves, the judge said:
Whatever the level of testing conducted by Joe White’s customers, it was plainly not adequate to detect the various measures Joe White took to conceal that it was supplying malt that did not meet the specifications required. A critical piece of evidence on this topic was Stewart’s evidence that Joe White was relying on the fact that it was understood that many customers did not test the malt.[19]
[19]Primary judgment, [153].
Viterra had a code of business conduct referred to as the ‘Viterra Code’ which was in place from at least 2008. The Viterra Code as issued in 2008, and revised in 2010 and 2011, provided that employees were to maintain superior standards of honesty, fairness and integrity.[20] In 2010, employees were required to sign the Viterra Code. Some initially refused to do so for reasons related to the Operational Practices. Two of the employees who were uncomfortable at the prospect of signing the Viterra Code were Stewart and McIntyre.[21] The judge said:
Stewart gave extensive evidence on this point. He said his concern arose from Joe White supplying malt that did not meet customer specifications, the use of the Malt Blend Parameters Procedure and the pencilling of Sign-Out Reports. Further, he said that with the adoption of the Malt Cost Reduction Transformation Project and its imperative to use more off-grade barley, this was likely to exacerbate the occasions upon which the issues that were concerning him would arise.
He said that Dr Megan Sheehy (‘Sheehy’), the technical services manager at Joe White, McIntyre and Jones all approached him with concerns about Joe White’s practices regarding Certificates of Analysis and having to sign the Viterra Code. McIntyre also gave evidence of her uneasiness. She said that she was not comfortable signing a statement referring to always being accurate and truthful in dealings with customers and in representing the quality, features and availability of Viterra products and services. She explained her discomfort came from her daily duties including altering results on Sign-Out Reports for Certificates of Analysis. McIntyre discussed her concerns at the time with Sheehy and Naomi Moller (‘Moller’), technical centre chemist. She said they raised their concerns with Stewart and Hughes, both of whom said that they considered their concerns were fair and would do something about it. McIntyre also gave evidence of discussions with Stewart in which she told him that she did not think the pencilling policy was the right thing to do. McIntyre was not cross-examined on her evidence concerning the Viterra Code.
Under cross-examination, Stewart readily agreed that the introduction of the Viterra Code threw into sharp relief the practices that were occurring at the time concerning pencilling and Certificates of Analysis. Stewart said he discussed the concerns that had been raised with Hughes and queried how the Viterra Code could be complied with when the Malt Cost Reduction Transformation Project also had to be satisfied. Stewart said the personal discomfort he felt in signing the Viterra Code because of the conduct in which Joe White was engaged was particularly because of pencilling. Hughes told Stewart that he had already relayed some concerns to Gordon^[[22]] and Malecha.^[[23]] Hughes stated that Malecha had said ‘my spider senses are tingling’ in response to Hughes’ issue. Stewart gave evidence it was important to him that Gordon and those advising Gordon agreed with the manner in which to proceed. However, Stewart was not specific with respect to Hughes providing Gordon’s response.[24]
Stewart did eventually sign the code.[25]
[20]Primary judgment, [58]–[59].
[21]Primary judgment, [64], [156], [158]–[160].
[22]Robert Gordon was the chief executive officer of Viterra Ltd: primary judgment, [108].
[23]Fran Malecha was Viterra’s chief operating officer: primary judgment, [142].
[24]Primary judgment, [159]–[161].
[25]Primary judgment, [167].

In relation to the Varieties Practice and the Gibberellic Acid Practice, the judge summarised Stewart’s evidence as follows:
In relation to barley varieties, Stewart fully understood that some customers specified a particular variety or particular varieties, but that Joe White was not always supplying as specified. He further understood that the customers were not only not being told, but it was also being reported the correct variety or varieties were being used. When confronted with these somewhat startling facts, Stewart gave evidence that he did not know how significant these circumstances may have been for the customers. Stewart also knew gibberellic acid was being added to malt contrary to some customers’ specification, and that they were not being informed. He accepted the unauthorised additive should have been disclosed.[26]
[26]Primary judgment, [170].
The next development in the documentation of aspects of the Operational Practices was the creation in February 2011 of the first version of the ‘Viterra Certificate of Analysis Procedure’. On its terms, this first version concerned only export customers.[27]
[27]Primary judgment, [199].
The Viterra Certificate of Analysis Procedure permitted changes to be made to test results ‘where required’ with respect to results that ‘appear[ed] out of specification’ by up to two standard deviations, being what was said to be the analytical error defined for that test parameter under a scheme known as the Malt Proficiency Scheme. The Malt Proficiency Scheme was a form of inter-laboratory comparison by which participant laboratories could assess the calibration and quality of their testing.[28] The Viterra Certificate of Analysis Procedure also permitted the adjustments of results beyond two standard deviations ‘by the consensus of two or more General Managers [and] the Market Manager’.
[28]Primary judgment, [209].
The judge summarised Stewart’s evidence as to the process as follows:
Stewart gave evidence that when he was involved in approving out-of-specification malt, he considered the test results overall, the customer’s needs and whether the malt would nonetheless perform well for the customer. He further said that when he took out-of-specification malt results to Wicks^[[29]] or Youil,^[[30]] or if neither of them were available, Hughes, for co-approval he explained the technical aspects of the malt. Then, the commercial issues would be addressed (including the costs and production implications of withholding the shipment). Stewart said if he was satisfied as to the malt’s quality, its despatch would always be approved. Further, he said even if he was not so satisfied, the despatch would be approved by Wicks, Youil or Hughes. In substance, the perceived commercial imperatives of Joe White drove the decision as to whether malt which did not comply with customer specifications would be despatched to the customer in any event.[31]
[29]Robert Wicks was general manager, commercial for Viterra Malt. He reported to Hughes. He was the fifth third party: primary judgment, [49].
[30]Peter Youil was general manager operations, malt at Joe White. He reported to Hughes. He was the fourth third party: primary judgment, [48].
[31]Primary judgment, [201].
Under the Viterra Certificate of Analysis Procedure, all relevant results (both as reported by the laboratory and as altered) were to be recorded. They were so recorded in the Laboratory Information System (‘LIS’), which was a centralised laboratory, production, and stock management software system. It generated the certificates of analysis for malt supplied to customers. McIntyre was its administrator.[32]
[32]Primary judgment, [202], [255], [258].
In relation to the storing of this data, the judge summarised Stewart’s evidence as follows:
Stewart’s evidence was that it was important that the technical team in head office saw the original results ‘warts and all’, so that any decision about quality and performance leading to adjustment of documentation could be made on a proper basis. Further, he instructed plant managers not to make any adjustments outside the Viterra Certificate of Analysis Procedure.[33]
[33]Primary judgment, [205].
In 2012, two issues arose in relation to the Viterra Certificate of Analysis Procedure. The first was its formal extension to domestic customers, and the second concerned the necessity to ensure that its existence was not discovered by customers or auditors. The judge described what happened as follows:
In early September 2012, Sheehy^[[34]] circulated for review a draft procedure for Certificates of Analysis production and Sign-Out Reports. The main change was to incorporate Joe White’s domestic customers into the procedures already in existence with respect to export customers under the Viterra Certificate of Analysis Procedure. In a follow-up email, she asked for comments or, if there were no comments, to receive that advice so that she could ‘publish the procedures’.
[34]Megan Sheehy was technical services manager at Joe White: primary judgment, [160].
In response, by email to Sheehy sent on 13 September 2012, Miroslav Prazak (‘Prazak’), plant manager in Sydney, stated, in relation to the recent draft of the Viterra Certificate of Analysis Procedure, that ‘documenting that “adjustments are authorised practice” is somewhat damning’, before adding that he had no comment.
On the same date, Sheehy forwarded Prazak’s email to Stewart, stating:
A very good point from [Prazak] below. Should the [Viterra Certificate of Analysis Procedure] actually be an official TRIM procedure? We definitely need these guidelines as this is what we do, but we don’t necessarily want and [sic] auditor or customer to find this in TRIM or a methods manual.
Stewart agreed with Sheehy. During his cross-examination, Stewart acknowledged that he understood both Prazak and Sheehy were stating that it would not be desirable for customers or a quality auditor to discover the document.
…
On 11 October 2012, Sheehy sent an email to certain Joe White staff, copied to others including Stewart and McIntyre, attaching both the Viterra Certificate of Analysis Procedure and a ‘Document Revision Notice’. The email, updating the ‘Certificate of Analysis Generation Procedure with Domestic Customers’, was designated ‘high’ importance and was concerned with how the proposed procedure might be viewed on the Records System. It stated:
Following some excellent feedback from [Prazak], we have decided to make this procedure obsolete in TRIM, but we can still add new revisions into the folder when required. Hence it will live in TRIM still, just unofficially, and should not be stored in any official procedure folders at your site, as we do not want customers or auditors to have access to this procedure.
The email referred to the applicability of the regime to both export and domestic customers, and noted a 3 month trial period of the procedure would commence on 1 November 2012. Stewart gave evidence that the document was marked ‘obsolete’ so ‘it dropped below the radar, effectively’. Later in his evidence he said its existence was disguised. Further, Stewart’s uncontested evidence was that, just as Hughes had directed in relation to the Malt Blend Parameters Procedure, Hughes instructed the executives that the Viterra Certificate of Analysis Procedure was not to be included in the quality procedure manual, which manual was made available to International Organisation for Standardisation and customer auditors. Similarly, Testi’s^[[35]] evidence was that, by placing a document in an ‘obsolete folder’, it was concealed on the system but could still be updated.[36]
[35]Julie Testi was quality manager, Joe White: primary judgment, [92].
[36]Primary judgment, [283]–[285], [287] (emphasis added by the judge).
Cargill’s approach to certificates of analysis was quite different to that of Viterra. The means of analysis was different, but there was also a more striking difference. The judge observed:
Leaving aside the underlying difference in the means of analysis most regularly used in the respective approaches, most strikingly Cargill’s approach involved open disclosure to its customers of the process adopted, whereas the Viterra Certificate of Analysis Procedure was deliberately and mandatorily covert.[37]
[37]Primary judgment, [340].
The existence of the Operational Practices was not the subject of any disclosure by the Viterra Parties to Cargill in the course of the sale process until 15 October 2013, a little more than two months after execution of the Acquisition Agreement, and approximately two weeks prior to the scheduled date for Completion.[38] The content and circumstances of that disclosure will be dealt with later. For present purposes, it is sufficient to record that questions Cargill raised as a consequence of the disclosure which was made prompted the preparation and consideration by Viterra employees, including Hughes and Stewart, of a detailed review of Joe White’s ability to fully meet all customer requirements. The outcome of the review was recorded in a spreadsheet prepared by Stewart with the assistance of McIntyre, referred to as the ‘Customer Review Spreadsheet’. Stewart prepared a memorandum addressing the issues raised by the review which was entitled ‘Cargill Customer Review: Key Recommendations’.[39]
[38]Primary judgment, [1149].
[39]Primary judgment, [1210]–[1211].
The judge reviewed the Customer Review Spreadsheet and the Key Recommendations memorandum in detail.[40] He then observed that the matters set out in the Customer Review Spreadsheet were a ‘far cry’ from the exhortations made in the sale process to the effect that Joe White met its customers’ ‘exact specifications’.[41]
[40]Primary judgment, [1212]–[1231].
[41]Primary judgment, [1232].
On 22 October 2013, Hughes directed that all internal correspondence in relation to those documents was to cease[42] and that the contents of the documents were not to be discussed with Cargill employees or representatives.[43]
[42]Primary judgment, [1265]. The judge found that Hughes was likely acting on instructions in so directing: at [1269].
[43]Primary judgment, [1268].
The parties provided to the primary judge an agreed list of issues requiring determination.[44] There were 145 issues on that list. After setting out the facts and some preliminary matters, the primary judgment separately addressed each issue on the parties’ agreed list in part X of the primary judgment.
[44]Primary judgment, [2144].
Amongst the issues the judge was required to determine were:
(a)whether Joe White, routinely and without informing customers, supplied malt that did not comply with contractual requirements and specifications and supplied certificates of analysis to customers that misstated the analytical testing results;
(b)whether Joe White’s financial and operational performance was substantially underpinned by these practices; and
(c)whether, without the practices, Joe White could not produce and sell malt in the volumes and to the specifications required and as reflected in the financial and operational information disclosed by the Viterra Parties to Cargill in the course of the sale process.[45]
[45]These issues were addressed as issue 10 in the primary judgment: [2269]–[2614].
During the course of the trial, the Viterra Parties conceded that the Joe White business was ‘generally conducted’ in accordance with the Viterra Certificate of Analysis Procedure and the Malt Blend Parameters Procedure. The judge concluded, based upon the evidence of Joe White personnel, and a statistical analysis of orders for the supply of malt, that Joe White routinely and without informing customers supplied malt that did not comply with contractual requirements and specifications; and supplied certificates of analysis that misstated the results, reporting that malt complied with contractual requirements and specifications when it did not.
As to the evidence of Joe White personnel, the judge particularly relied upon the evidence of McIntyre and Stewart, some pertinent aspects of which have been set out above.[46] The judge concluded that ‘this evidence alone’, the substance of which he considered to be ‘clear and unequivocal’, established Cargill Australia’s claim in respect of the Reporting Practice.[47]
[46]Primary judgment, [2276]–[2283].
[47]Primary judgment, [2284].
As to the statistical analysis, the judge relied upon an analysis of data drawn from the LIS, data which he held to be reliable.[48] The judge found that this data ‘strongly corroborated’ the findings he had already made based upon the evidence of the Joe White personnel.[49]
[48]Primary judgment, [2305].
[49]Primary judgment, [2310].
The relevant statistical analysis was undertaken by Liam Ryan from KordaMentha Forensic. The parties agreed on the facts to be derived from this analysis. For present purposes, it suffices to note that of the 4,359 certificates of analysis included in Ryan’s analysis, 88.05 per cent contained one or more parameter results which were outside specification on the laboratory result but which were brought within specification on the certificate of analysis.[50] The judge rejected submissions made by the Viterra Parties that this analysis did not prove that Joe White routinely failed to meet customers’ specifications.
[50]Primary judgment, [2323].
Ryan also undertook a further analysis seeking to identify alterations as a result of pencilling beyond two standard deviations. This analysis was prompted, the judge suggested, by the Viterra Parties’ submission that the mere fact that a test result was outside specification did not necessarily imply that the malt was actually outside specification, and that due to variability in malt, it was generally accepted that a result within two standard deviations was considered statistically within specification. Amongst the relevant agreed facts derived from this analysis was that 42.9 per cent of the 3,070 certificates of analysis included in the analysis contained one or more laboratory results which were out of specification by more than two standard deviations, but which were reported as within specification on the certificate of analysis.[51]
[51]Primary judgment, [2334] n 1457, [2359], [2362].
One of the matters raised by the Viterra Parties in relation to Ryan’s analyses was that the pertinent consideration was the proportion of the total number of results which had been altered (which was lower[52]), rather than the proportion of the number of certificates of analysis which contained a relevantly altered result. The judge rejected that approach. He observed as follows:
Of course, both must be considered but the Cargill Parties’ submissions were far more compelling as to the relevant touchstone in determining the significance of the data. To misstate a single result in a Certificate of Analysis was to misstate the composition of the malt. In other words, if a Certificate of Analysis stated a parameter was within specification when that parameter was a Plus 2 Affected Result, the fact that other parameters were accurately recorded and stated, alternatively less materially inaccurately recorded and stated, did not alter the fact that the Certificate of Analysis misstated the results of the analytical testing of the malt.[53]
[52]Primary judgment, [2367]–[2368].
[53]Primary judgment, [2404].
In relation to the Varieties Practice, the judge observed that eventually there was no issue that Joe White had undertaken this practice ‘on occasions’ without the approval of its customers.[54] In relation to the prevalence of this practice, the judge said:
Again, McIntyre was a critical witness. She gave uncontroverted evidence of a standard practice of reporting the barley variety or varieties required by the customer regardless of whether or not the required varieties were used. Further, the interviews conducted with some of the Joe White executives in October 2013 confirmed the existence of the Varieties Practice. Their accounts disclosed Joe White used barley varieties inconsistent with customer contracts on a significant level, and that there was an awareness that Joe White was breaching customers’ contracts without informing them.
Further, a review of Joe White’s ability to fully meet customer requirements in October 2013 revealed not only an inability to do so, but that varieties of barley were being supplied to customers on a routine basis in breach of contract. This conclusion as to what the Customer Review Spreadsheet indicated on its face was not seriously disputed by the Viterra Parties; rather they sought to attack the reliability of the information it contained. The attack was not successful.
The Viterra Parties submitted that, if the document was to be considered reliable, the issue was confined to a small number of customers and was therefore unlikely to have had a significant impact upon the Joe White Business. This submission did not reflect the evidence. Further, it was entirely contrary to Stewart’s assessment at the time, which was that 6 months ‘for most’ (and 12 months for ‘others’) was required before Joe White would be in a position to achieve barley variety compliance. He gave unchallenged evidence that a 6 month transition period in which procurement and planning could take place was appropriate because an immediate change without advance preparation would have been disruptive to customer relationships and hard to manage. Wicks put it more bluntly. As Joe White’s commercial general manager, he told Fitzgerald^[[55]] in late October 2013 that to attempt to supply barley varieties from 1 November 2013 in accordance with customer contracts would be commercial suicide and Joe White’s brand would be decimated.[56]
[54]Primary judgment, [2415].
[55]Damian Fitzgerald was a lawyer. At the relevant times he was secretary of each of the Viterra Parties other than Glencore, and of Joe White: primary judgment, [114]. ‘On the evidence that was available, it seemed’ that he coordinated the responses to the questions Cargill raised in October 2013 in relation to the Operational Practices: primary judgment, [1375].
[56]Primary judgment, [2416]–[2418].
The judge observed that the evidence reflected a ‘brazen approach at times to the issue of non-compliance on occasions’.[57]
[57]Primary judgment, [2425].
Ryan also carried out an analysis of the LIS data on the issue of the Varieties Practice. Again, facts were agreed as to the outcome of that analysis. Not every certificate of analysis reported a barley variety and not every customer order specified a barley variety. Ryan’s analysis revealed, amongst other things, that:
(a)Of the 4,171 unique orders where the customer had required at least one specific variety of barley to be used, 3,236 of those orders (or 77.58 per cent) contained a variety or varieties which were not the customer’s required varieties.
(b)Of the 2,788 unique orders where there was at least one reported variety written on the certificate of analysis, there were 2,457 orders (or 88.13 per cent) where not all varieties used were reported on the certificate of analysis.
(c)Of the 2,753 unique orders where the customer had required at least one specific variety to be used and where there was at least one barley variety reported on the certificate, 2,429 orders (or 88.23 per cent) contained a variety or varieties which were not the customer’s required varieties, and/or contained a variety or varieties which were not reported on the certificate of analysis.[58]
[58]Primary judgment, [2426]–[2427], [2430], [2431].
The judge said that the evidence, without taking into account Ryan’s statistical analysis, established that Joe White routinely, and without informing customers, supplied malt contrary to the requirements of customers who specified the barley variety to be supplied.[59] The judge nevertheless addressed the statistical analysis, given the substantial attention which had been given to it in the trial.
[59]Primary judgment, [2474].

The judge said that reaching a conclusion about the statistical analysis on this issue was not ‘without its difficulties’.[60] The judge considered the analysis and also addressed in some detail specific evidence which had been led about particular customers. The judge eventually reached the following conclusion:
In conclusion, the Cargill Parties have been largely successful in establishing the underlying assumptions made by Ryan with respect to the Barley Analysis were appropriate. Although some of the Viterra Parties’ submissions have been accepted, the extent of that success has been minimal and the orders that ought to have been excluded as a result, both individually and collectively, were not so material as to undermine the conclusions reached as a result of the analysis.[61]
[60]Primary judgment, [2475].
[61]Primary judgment, [2537].
The judge said that the results of Ryan’s analysis of the barley varieties ‘demonstrated the extensive use of the Varieties Practice in the operation of the Joe White Business, or, at the very least, strongly corroborated the finding already made as to the Varieties Practice being engaged in routinely as part of the Joe White Business’.[62]
[62]Primary judgment, [2543].
In relation to the Gibberellic Acid Practice, the judge particularly relied upon the account given by Hughes in October 2013, in the course of internal investigations, to the effect that it happened routinely in all plants.[63] It routinely continued right up until Completion on 31 October 2013.[64] The judge addressed each of the particular customers who, it was alleged, had required that gibberellic acid not be used and he found that Cargill Australia had established the existence of that requirement in relation to each such customer, other than one, San Miguel.[65]
[63]Primary judgment, [2544].
[64]Primary judgment, [2544].
[65]Primary judgment, [2553].
In contrast to the records kept concerning the Reporting Practice and Varieties Practice, Joe White did not keep records of the use of gibberellic acid contrary to a customer’s requirement. The judge, however, observed that the Customer Review Spreadsheet shed considerable light on the prohibited use of gibberellic acid, and informative also were the statements made by Joe White personnel internally in October 2013, after questions had been asked by Cargill.[66]
[66]Primary judgment, [2556]–[2557].
On the issue of whether the Operational Practices substantially underpinned the financial and operational performance of Joe White, the judge concluded that they did.
The cessation of the Operational Practices after Cargill took over meant that Cargill Australia was required on many occasions to request what were referred to as ‘derogations’ from customers where the malt to be supplied did not meet the required specifications. The judge observed that it was ‘incontrovertible’ that the need to request these derogations was harmful to the business, whilst observing that the requests were necessary because Cargill discontinued the Operational Practices.[67]
[67]Primary judgment, [2603].
The judge observed:
Joe White engaged in each of the Operational Practices, and did not disclose it to its customers, in order to achieve greater returns and avoid the repercussions of routinely not being able to produce malt that complied with customer requirements and specifications. Further, by not disclosing the Operational Practices, Joe White was able to maintain the façade of supplying malt in accordance with customer specifications when the Joe White executives involved in operations (and other employees also involved in operations) knew that this was not a fact. In particular, Hughes as chief executive officer, was instrumental in creating and maintaining this façade both in the conduct of the Joe White Business and in the contents of the Information Memorandum and other communications made in the sale of the Joe White Business.[68]
[68]Primary judgment, [2607].
The judge’s relevant conclusion was expressed as follows:
The evidence clearly demonstrated that the financial and operational performance of Joe White from 2010 to 31 October 2013 was substantially underpinned by the Operational Practices. By utilising the various aspects of the Operational Practices, Joe White supplied malt in a far more seamless and cost-effective manner than it would have been able to if it had complied with its contractual obligations, or had attempted to do so and been open with its customers when it could not.
The fact that the Viterra Parties were able to point to some other factors after October 2013 that may have adversely affected the performance of the Joe White Business was of little moment. None of these matters altered the fact that, at the time of the Acquisition, the Joe White Business had significant flaws with its operations and was dependent upon the Operational Practices to maintain a level of performance resembling anything like that portrayed in the Information Memorandum, the Management Presentation Memorandum and each of the other pre-contractual communications as recorded in the Acquisition Agreement.[69]
[69]Primary judgment, [2609]–[2610].
The judge concluded his analysis of these issues by observing that the financial and operational performance of Joe White would not have been as was reported to Cargill if Joe White had not engaged in the Operational Practices as it did between 2010 and October 2013.[70]
[70]Primary judgment, [2613].
When addressing subsequent issues, the judge returned to the significance and prevalence of the Operational Practices, repeating the conclusions he had reached and, amongst other things, observing that on any view they ‘involved dishonest business practices’,[71] which had become ‘an entrenched part’ of Joe White’s business operations,[72] so as to be aptly described as ‘customary or widespread’, and, in the case of the Reporting Practice, ‘universal’.[73]
(2)The Financial and Operational Performance Representations and the Warranty Representations
[71]Primary judgment, [2999].
[72]Primary judgment, [3281].
[73]Primary judgment, [3400].
Before setting out the more significant representations successfully relied upon by Cargill Australia, it is necessary to say something about the staged sale process.
The process began with what was referred to as the ‘Phase 1 Process Letter’. The letter from Merrill Lynch on behalf of Glencore to Cargill, Inc was dated 14 May 2013. It referred to the Confidentiality Deed as having been executed (as it had been by Cargill, Inc, notwithstanding that the deed bears a later date), and it enclosed a copy of an ‘Information Memorandum’. The Phase 1 Process Letter sought ‘Indicative Bids’ upon the basis of which Glencore intended to select a shortlist of parties to participate in Phase 2.
Cargill submitted an Indicative Bid and received a ‘Phase 2 Process Letter’ dated 14 June 2013 informing it that it had been shortlisted to participate in Phase 2. Phase 2 was a due diligence process. That process involved a virtual data room, a question and answer process, a management presentation, and site visits. The management presentation was an oral presentation with written material conducted on 26 June 2013 (the ‘Management Presentation’). Access to the virtual data room was subject to a written ‘Data Room Protocol’. The Acquisition Agreement included as annexures a data room index (Annexure B), a record of questions and answers submitted (Annexure C), a summary of the questions and answers in the ‘Management Presentation’ (Annexure D), and a summary of additional questions and answers asked in subsequent management meetings (Annexure E). At the time of Completion, being 31 October 2013, Glencore and Cargill, Inc executed a deed of release in relation to the Confidentiality Deed (the ‘Deed of Release’). The Phase 2 process led to the submission by Cargill of a ‘Final Bid’.
Cargill Australia alleged that representations referred to as the ‘Financial and Operational Performance Representations’ were made to it by the Viterra Parties. These representations were alleged to have been made on the basis of:
(a)express statements in the Information Memorandum;
(b)the financial and operational information disclosed in that Information Memorandum and during the due diligence process (the ‘Financial and Operational Information’);
(c)express statements made in communications between the parties in what were referred to as the ‘Operations Call’ and the ‘Commercial Call’;
(d)express statements made in the Management Presentation; and
(e)by the alleged failure to disclose that the Operational Practices were routinely carried out without informing customers (in that sense the practices were referred to as the ‘Viterra Practices’), were partly recorded and endorsed in written policies, that Joe White’s financial and operational performance was substantially underpinned by the practices, and that but for the practices Joe White could not produce and sell malt in the volumes and to the specifications required by customers and in the volumes and for the returns reflected in the Financial and Operational Information. The matters allegedly not disclosed were referred to as the ‘Undisclosed Matters’.
The Financial and Operational Performance Representations were not said to be express statements. Rather, they were all alleged to be implied from the express statements, the information provided, and the failure to disclose. The ten representations alleged to be so implied were:
(1)The production, sales and earnings figures stated in the Financial and Operational Information were based upon strict quality control procedures and analysis.
(2)The production, sales and earnings figures stated in the Financial and Operational Information were based upon customer contracts including customer specifications being complied with.
(3)By reason of the matters set out in the two preceding subparagraphs, the production and sales figures stated in the Financial and Operational Information had been properly and lawfully achieved.
(4)Joe White had not withheld or concealed material information from customers.
(5)The assets of the Joe White business were sufficient for Joe White to sell malt in the volumes and for the returns stated in the Financial and Operational Information.
(6)Joe White had low future capital expenditure needs in the short to medium term.
(7)When procuring barley, Joe White gave priority to obtaining barley that best met its customers’ specifications and requirements.
(8)Joe White employed technical analysis and strict quality control procedures to ensure that the malt it produced consistently met its customers’ specifications.
(9)A central reason for Joe White’s ability to achieve the performance described in the Information Memorandum was its ability to produce malt that met its customers’ exact specifications and requirements, and its focus on doing so.
(10)The Undisclosed Matters did not exist.[74]
[74]Primary judgment, [1851], [2826].
Turning then to the Warranty Representations, as indicated earlier the Acquisition Agreement expressly provided that Viterra represented and warranted to Cargill Australia a number of matters. Clause 13.1 provided under the heading ‘Accuracy’:
The Sellers [Viterra] represent and warrant to the Buyer [Cargill Australia] that each Warranty [defined as the warranties and representations set out in Schedule 4] is correct and not misleading on the date of this agreement and will be correct and not misleading on the Completion Date as if made on and as at each of those dates except where otherwise provided in the Warranty.
By cl 13.4, Cargill Australia acknowledged and agreed, amongst other things, that it did not rely upon any representation ‘except the Warranties’.
Clause 13.7 was headed ‘Sellers’ acknowledgments’. It relevantly provided as follows:
Each Seller [Viterra] acknowledges that:
(a)the Buyer [Cargill Australia] has entered into this agreement and will Complete in reliance on the Warranties as they are given on the terms of this agreement[.]
For present purposes, it is sufficient to confine consideration to those Warranties which the judge found had been breached, and which constituted the Warranty Representations which the judge found were misleading or deceptive.[75]
[75]Primary judgment, [3568], [3570], [3572]–[3573], [3632], [3673]–[3674], [3684], [3709], [3774].
The relevant Warranties are these:
4.2     Records
The Records:
(a)have been compiled and maintained in good faith;
…
(c)are complete and up-to-date in all material respects.
[‘Records’ was widely defined and expressly included reports, manuals and policies, sales and purchasing records, and all trading and financial records.]
…
7.3No default by Company
To the Share Seller’s [Viterra Malt’s] knowledge and awareness, the Company [Joe White] is not in material default of any Material Contract, nor has anything occurred or been omitted which would be a material default but for the requirement of notice or lapse of time or both.
…
9.2No claims or disputes
At the date of this agreement, there are no Claims or disputes relating to the Business and, to the best of the Share Seller’s knowledge and awareness, there are no facts or circumstances which may give rise to such a Claim or any legal, administrative or government proceedings.
…
12Data Room Documentation
(a)The Data Room Documentation has been collated and disclosed in good faith and with reasonable care.
(b)To the Share Seller’s knowledge and awareness no material information has been omitted from the Data Room Documentation.
(c)To the Share Seller’s knowledge and awareness the Data Room Documentation is true and accurate in all material respects.
…
13      Position since Last Balance Sheet Date
…
13.4     Business carried on
Since the Last Balance Sheet Date the Business has been conducted in the ordinary course in a proper and efficient manner, without any interruption or alteration in its nature, scope or manner.
…
17Compliance with Laws
(a)The Business has been conducted in accordance with applicable Laws and ISO Standards in all material respects.
(3)The disclaimers and the correspondence concerning the Indicative and Final Bids
The first formal step in the sales process was Cargill, Inc’s execution of the Confidentiality Deed.[76] The Confidentiality Deed contained detailed provisions which will be set out more fully later, including various disclaimers. For present purposes, it is sufficient to note that the Confidentiality Deed provided that Cargill acknowledged that no representation was made by the Viterra Parties and acknowledged and agreed that they were required to rely upon their own investigations and analysis (cl 8), and provided that Cargill released the Viterra Parties from all liability in relation to the provision of the information (cl 10.3), save for representations or obligations set forth in separate written agreements between the parties in accordance with the terms of those written agreements (cl 10.4).
[76]The Confidentiality Deed was initially executed by Cargill, Inc on 13 May 2013, although it was not at that date executed by Glencore. The Confidentiality Deed executed by both Cargill, Inc and Glencore was executed after 14 May 2013 and was dated 27 May 2013. There was no material difference between the version executed by Cargill, Inc on 13 May 2013 and the version subsequently executed by both parties, and nothing turns on the two versions of the deed. See primary judgment, [4459]–[4460].
On 14 May 2013, Merrill Lynch sent Cargill the Phase 1 Process Letter. As stated above, the Phase 1 Process Letter enclosed a copy of an Information Memorandum. The Information Memorandum contained express statements and financial and operational performance information upon which Cargill Australia based its allegation that the Financial and Operational Performance Representations were made.
The Phase 1 Process Letter stated that it was ‘an invitation to submit’ an ‘Indicative Bid’, on the basis of which Glencore intended to select a shortlist of parties to participate in Phase 2. The letter stated that the Information Memorandum was provided on the terms outlined in that document and ‘represents Confidential Information as defined in the Confidentiality Deed’.
The letter stated that the Indicative Bid ‘should address’ a number of specified areas, one of which was as follows, under the heading ‘Methodology and key assumptions’:
A description of the valuation methodologies you have adopted and key assumptions underpinning your Indicative Bid (including relevant commercial, financial, tax, legal and foreign exchange assumptions) and any value drivers or additional information that would allow you to improve your offer. In particular, you should note where these assumptions vary from information disclosed in the Information Memorandum.
The letter stated that bidders were required to make and rely upon their own investigations. It stated that no contact was permitted with Glencore or any of its related bodies corporate, or their officers or employees, without the written consent of Merrill Lynch.
In addition to the financial and operational performance information concerning Joe White, the Information Memorandum contained a page headed ‘Legal Disclaimer’. The heading aptly described the page’s contents.
In substance, the ‘Legal Disclaimer’ document relevantly asserted that ‘to the maximum extent permitted by law’ no representation, warranty or undertaking, express or implied, was made, and no liability accepted, as to the adequacy, accuracy, correctness, completeness or reasonableness of the document or any information provided. The document stated that the information provided should not be treated as complete and asserted the need for the recipient to make their own independent assessment. At the outset, the ‘Legal Disclaimer’ page stated that the Information Memorandum was provided on a confidential basis to selected recipients and that in accepting the document each recipient agreed for itself and related bodies corporate that it was provided on the terms and conditions of the disclaimer. The disclaimer’s relevant terms will be set out more fully later in these reasons.
Cargill’s Indicative Bid was submitted under cover of a letter dated 7 June 2013. The letter foreshadowed that the acquisition if it proceeded would be through a wholly owned Australian subsidiary.
Cargill’s Indicative Bid was expressed as a range and was said to be ‘[b]ased on our review of the information contained within the Information Presentation (“IM”) and letter to Cargill from Merrill Lynch dated 14 May 2013 (“Process Letter”)’. Cargill’s letter stated: ‘We intend to refine our valuation with an expectation that we could enhance our value based on more detailed information provided in Phase 2’.
Cargill’s letter addressed ‘Methodology and key assumptions’, as required by the Phase 1 Process Letter, stating:
Cargill has based its Indicative Bid on the information and forecasts contained within the IM and the Process Letter. In submitting this Indicative Bid, Cargill assumes that the information provided by Glencore, Joe White and Merrill Lynch is true and accurate and supported by due diligence findings. … For the purposes of our valuation, we have based our analysis on the pro forma normalised EBITDA provided in the IM.
The Phase 1 Process Letter had required Cargill to identify any variations between the assumptions made by Cargill and the information disclosed in the Information Memorandum. None were identified.
Under the heading ‘Due Diligence’, Cargill’s letter of 7 June 2013 stated:
As is usual, we would expect to have access to all material information related to Joe White, and to be able to submit questions and receive answers from Glencore and its advisers. We would also expect to undertake site inspections and to receive a presentation from Joe White’s management.

Finally in relation to this ground, it is necessary to observe that the Viterra Parties did not contend that, in the event of success on this ground, the proceeding should be remitted back to the trial judge. Rather, they submitted that this Court should, without any further guidance, examine the EU Materials that they say should have been admitted into evidence and make use of them in whatever manner we considered appropriate.
This is a course to which we could not accede even if we considered that the judge had erred. First, it amounts to an application to rely upon further evidence on an appeal, without any such application being made. Secondly, the Viterra Parties did not explain, other in the most general of terms, how the EU Materials would be understood and used by us in determining relevant matters. That is an entirely unsatisfactory approach.
If the EU Materials were to be admitted, it is highly likely that it would be necessary to recall witnesses, that Cargill would seek to call further evidence, and that further submissions canvassing significant issues on both liability and quantum would be required. That proposition only has to be stated to be rejected. But if further evidence and submissions were not permitted, that would involve a denial of procedural fairness to Cargill.
To the extent that the application was to be understood as, or treated as analogous to, an application to adduce further evidence on appeal, we observe that in order to admit further evidence on an appeal it is generally necessary to establish that such evidence was not available despite the exercise of reasonable diligence. This Court addressed the admission of further evidence on appeal in Knight 34 Langdon Road Pty Ltd v Bell as follows:
It is well-established that this Court will generally refuse leave to appeal based on further evidence unless it is satisfied of three matters:
(a)that, by the exercise of reasonable diligence, the evidence could not have been discovered in time to be used in the original trial;
(b)that there is a high probability that the result would have been different had the evidence been received at trial; and
(c)that the evidence is sufficiently credible.
In Foody v Horewood, Chernov JA described this as a stringent test, as emphasised by Dixon J (as his Honour then was) in Orr v Holmes, who said this:
The evidence must be so persuasive of the existence of the fact it tends to prove that a finding to the contrary, if it has been given, would, upon the materials before the court, appear to have been improbable if not unreasonable.[997]
[997][2023] VSCA 54, [48]–[49] (Emerton P, Walker JA and J Forrest AJA) (citations omitted).
The Viterra Parties have not persuaded us that the EU Materials could not have been discovered in time to be used in the original trial. Nor have they persuaded us that there is a high probability that the result would have been different had the EU Materials been received at trial, or that the EU Materials are so persuasive that a finding against them would be improbable. In our opinion, it is fair to say they have not seriously attempted to do so.
For these reasons, leave to appeal on this ground will be refused.
PART D:ORDERS
Given the conclusions we have reached, the orders we will make are as follows:
(1)On grounds 7, 20 and 24, leave to appeal is refused.
(2)On grounds 1, 2, 3, 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 21, 22 and 23, leave to appeal is granted.
(3)The appeal on grounds 1, 2, 3, 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 21, 22 and 23 is dismissed.

SCHEDULE OF PARTIES

VITERRA MALT PTY LTD (ACN 096 519 658)	First applicant
VITERRA OPERATIONS PTY LTD (ACN 007 556 256) (formerly VITERRA OPERATIONS LTD)	Second applicant
VITERRA PTY LTD (ACN 084 962 130) (formerly VITERRA LTD)	Third applicant
GLENCORE INTERNATIONAL AG	Fourth applicant
and
CARGILL AUSTRALIA LIMITED (ACN 004 684 173)	First respondent
CARGILL, INCORPORATED	Second respondent

ANNEXURE A: PROPOSED AMENDED GROUNDS OF APPEAL AND AMENDED NOTICE OF CONTENTION

PROPOSED AMENDED GROUNDS OF APPEAL

Clause 10.3 of the Confidentiality Deed

Ground 1:

1.1The Judge erred by concluding that clause 10.3 of the Confidentiality Deed (Deed) was void and/or unenforceable as a matter of ‘public policy’ in so far as it operated in relation to Cargill Australia’s claims under s 236 of the Australian Consumer Law (ACL).
1.2The Judge should have concluded that the release provided by clause 10.3 of the Deed provided a complete defence to Cargill Australia’s claims under s 236 of the ACL.

Ground 2:

2.1The Judge erred by concluding that clause 10.3 of the Deed was void and/or unenforceable as a matter of ‘public policy’ in so far as it operated in relation to Cargill Australia’s claims for deceit.
2.2The Judge should have concluded that the release provided by clause 10.3 of the Deed provided a complete defence to Cargill Australia’s claims for deceit.

Ground 3:

3.1The Judge erred by concluding that clause 10.4 of the Confidentiality Deed had the effect that clause 10.3 of the Confidentiality Deed had no operation in respect of the Warranty Representations ([4502] and fn 3898).
3.2The Judge should have concluded that:
(a)clause 10.4 of the Confidentiality Deed only excluded from the scope of clause 10.3 of the Confidentiality Deed any contractual claims arising from the terms of [the] Acquisition Agreement; and
(b)alternatively, in accordance with clause 15.4(b) of the Acquisition Agreement the Applicants had no responsibility for the Warranty Representations under s 236 of the ACL,

and therefore clause 10.4 did not exclude the operation of the release (given pursuant to clause 10.3) from Cargill Australia’s misleading and deceptive conduct claim based on the Warranty Representations.
3.3Alternatively, if the Judge was correct to find that the Warranty Representations fell within clause 10.4 of the Confidentiality Deed, the Judge should have held that clauses 15.8(b) and 15.9 of the Acquisition Agreement imposed a cap on Viterra’s liability at $100m and excluded any liability for indirect loss.
Clause 15.4(b) of the Acquisition Agreement

Ground 4:

4.1The Judge erred by concluding that clause 15.4(b) of the Acquisition Agreement did not operate to provide a defence to Cargill Australia’s claims under s 236 of the ACL.
4.2The Judge should have concluded that the release provided by that clause provided a complete defence to Cargill Australia’s claims under s 236 of the ACL.

Ground 5:

5.1The Judge erred by concluding that clause 15.4(b) of the Acquisition Agreement did not operate to provide a defence to Cargill Australia’s claims for deceit.
5.2The Judge should have concluded that the release provided by that clause provided a complete defence to Cargill Australia’s claims for deceit.
Financial and Operational Performance Representations

Ground 6:

6.1The Judge erred in holding that the Viterra Parties made the Financial and Operational Performance Representations, and/or in holding that those representations were misleading and deceptive (or false), in that the Judge considered the effect of the Sale Process Disclaimers in isolation from, and only after he had first taken into account, all of the matters relied upon by Cargill Australia to establish that the Financial and Operational Performance Representations were made and were misleading and deceptive ([2831]).
6.2The Judge should have found that the Financial and Operational Performance Representations were not made and/or were not misleading or deceptive (or false) having regard to the nature of the parties, the character of the transaction, the terms of Sale Process Disclaimers and all other relevant circumstances.

Ground 7:

7.1Further and/or alternatively to Ground 6 above, the Judge erred in holding that the Viterra Parties intended that the Financial and Operational Performance Representations should be relied upon in the sense alleged, because the Judge considered the effect of the Sale Process Disclaimers in isolation from, and only after he had first taken into account, all of the circumstances that the Cargill Parties relied upon to show that the Viterra Parties had that intention (see [3274]–[3275]).
7.2The Judge should have found, and erred by not finding, that in all the circumstances, the Viterra Parties did not intend for Cargill Australia to understand the relevant conduct in the same sense in which Cargill Australia understood the Financial and Operational Performance Representations.

Ground 8:

8.1Further and/or alternatively to Grounds 6 and 7 above, the Judge erred in holding that Cargill Australia entered into the Acquisition Agreement in reliance on the Financial and Operational Performance Representations, having regard to all of the circumstances, including:
8.1.1that the Financial and Operational Performance Representations were made in the context of, and after or at the same time as, the giving of the Sale Process Disclaimers;
8.1.2the weaknesses in the hindsight evidence given by Conway, Van Lierde, Eden and Koenig ([3199]–[3201]);
8.1.3the fact that at no time before Cargill Australia entered into the Acquisition Agreement did any representative of Cargill ask for a copy of any policy Joe White may have had with respect to the analysis and reporting of test results for malt delivered to its customers ([1015]–[1019]);
8.1.4the circumstances surrounding the negotiation of the terms of the Warranties (see [979]–[980], [989], [992]);
8.1.5the circumstances surrounding the final stages of negotiation of the terms of the Acquisition Agreement (see [3798], [3800]–[3801], [3803], [3805]); and
8.1.6the fact that Cargill Australia agreed to the Acquisition Agreement Liability Terms, including that it agreed that in entering into the Acquisition Agreement, it did not rely on any statement, representation, warranty, condition, promise, forecast or other conduct, which may have been made by or on behalf of the Viterra Parties, except the Warranties (cl 13.4(a)).

Warranty Representations

Ground 9:

9.1In circumstances where the Judge correctly concluded that the time of the making of the Warranty Representations coincided with the time at which Cargill Australia entered into the Acquisition Agreement ([3756], see also [3753]), the Judge erred in concluding that Cargill Australia relied on those representations in entering into the Acquisition Agreement.
9.2The Judge should have concluded that Cargill Australia did not rely on the Warranty Representations in entering into the Acquisition Agreement, because those representations were not made prior to the formation of the Acquisition Agreement and therefore were not capable of being relied upon by Cargill Australia in entering the Acquisition Agreement.
Viterra Parties’ Loss because of No Reliance Representations

Ground 10:

10.1In circumstances where the Judge concluded that:
10.1.1Cargill Australia engaged in misleading and/or deceptive conduct by making the No Reliance Representations (see [4582], [4765]); and
10.1.2the Viterra Parties relied on those representations in entering into the Acquisition Agreement (see [4569]–[4570])

the Judge erred in holding that the Viterra Parties suffered no loss or damage as a result of that conduct by Cargill Australia.
10.2The Judge should have concluded that the Viterra Parties suffered loss or damage as result of the exposure to Cargill Australia’s claims in this proceeding (see [4590]– [4592]), including the costs ordered to be paid to Cargill Australia and the costs incurred by the Viterra Parties themselves (see [4587]).
Pre-Completion Representations

Ground 11:

11.1The Judge erred in concluding that the Pre-Completion Representations caused Cargill Australia loss or damage by:
11.1.1failing to undertake any proper analysis of whether the Pre-Completion Representations caused Cargill Australia loss or damage, having found that that [sic] Cargill Australia did not rely upon the Pre-Completion Representations in completing the Acquisition Agreement ([3351]–[3352]);
11.1.2finding that Allens would have advised Cargill Australia that it could lawfully terminate the Acquisition Agreement because of contraventions of the ACL because: (1) contravention of the ACL does not give rise to a right to terminate; and (2) in any event, there was no such contravention having regard to Grounds 6, 8 and 9 above; and
11.1.3finding that, had it received such advice, Cargill Australia would have terminated the Acquisition Agreement prior to Completion, including having regard to the fact that Cargill Australia never sought to exercise such a right, but rather affirmed the Agreement and sought damages by way of this proceeding.

11.2The Judge should have concluded that the Pre-Completion Representations did not cause Cargill Australia loss or damage.
Other Bidders Representations

Ground 12:

12.1The Judge erred in holding that Cargill Australia is entitled to recover by way of damages the additional $15 million it agreed to pay in reliance upon the Other Bidders Representations because:
12.1.1the Judge erred in concluding that the Other Bidders Representations were made;
12.1.2the Judge erred in concluding that Cargill Australia relied on the Other Bidders Representations in deciding to increase its First Final Bid for Joe White to $420 million and then enter into the Acquisition Agreement; and/or
12.1.3Cargill Australia secured additional conditions (incorporated into the Acquisition Agreement) in return for offering the additional $15 million.

12.2The Judge should have dismissed all of Cargill Australia’s claims that were based on the Other Bidders Representations.
Loss and Damage

Ground 13:

13.1The Judge erred in holding at [3939] to [3944] that the Potts v Miller approach, rather than a ‘left in hands’ approach, was the appropriate approach to determine whether loss had been suffered by Cargill Australia and the amount of damages which would provide fair compensation for that loss.

Ground 14:

14.1The Judge erred in arriving at his assessment of damages, in that his assessment failed to account for all value generating attributes of the Joe White business, including valuable benefits that Cargill acquired and/or subsequently derived from the integration of the Joe White business with Cargill’s businesses.

Ground 15:

15.1Alternatively to Ground 13 above, in applying the Potts v Miller approach to the assessment of damages, the Judge erred because his Honour misconceived the measure of the true value of what was acquired by Cargill Australia by:
15.1.1confining the task (as per the holding at [4088]) to considerations of what a hypothetical purchaser might have assumed in valuing and bidding for Joe White, rather than assessing the true value of what was actually received by Cargill Australia at the time of acquisition;
15.1.2disregarding evidence of subsequent events, which illuminated the true value of what was received by Cargill Australia; and
15.1.3not giving proper consideration to whether Cargill Australia might be over-compensated by any award of damages (including the amount of any such award), and as a result, over-compensated Cargill Australia.

Ground 16:

16.1In assessing the true value of what was acquired by Cargill Australia, the Judge erred by:
16.1.1excluding from the value of synergies that were to be taken into account those synergies that were only realisable by Cargill specifically;
16.1.2alternatively to 16.1.1, taking into account only common synergies that would be available to all hypothetical strategic bidders in the industry (at [4189]);
16.1.3further or alternatively to sub-paragraphs 16.1.1 to 16.1.2 above, excluding from the value of the common synergies those synergies that related to Cargill’s grain and oilseeds supply chain business (at [4191]–[4192]); and
16.1.4disregarding evidence of the actual synergies that were realised by Cargill as a result of the acquisition of Joe White.

Ground 17:

17.1The Judge erred in adopting a discount rate of 13.7% for the purpose of assessing the true value of Joe White because:
17.1.1it was wrong to adopt the discount rate used by Deloitte (cf [4232]) as it:
(i)contained a market risk premium which was 1% higher than the generally accepted rate in Australia (which was adopted by Meredith and Potter); and
(ii)contained a specific company risk premium of 4–5%, which was higher than the 2.5% adopted by Meredith and the 1% adopted by Potter and did not properly reflect the specific risk of Joe White;

17.1.2it was wrong and/or involved double-counting (cf [4244]) to increase the discount rate to reflect risks associated with the Viterra Practices after adjustments had already been made to the cashflows for that reason;
17.1.3it was wrong (cf [4243]) to increase the discount rate to reflect risks that did not actually materialise;
17.1.4it was wrong (cf [4239]) to adopt a rate (13.7%) which included a further uplift of 2% in addition to an uplift of 1.5% which had already been accepted (at [4233]–[4234]) based on analogies with financial misstatement benchmarks; and
17.1.5it was wrong (cf [4235], [4236] and [4244]) for a discount rate which contained uplifts for risks associated with the Viterra Practices to be applied at the same rate in perpetuity.

Ground 18:

18.1When assessing the true value of Joe White, the Judge erred in accepting the following assumptions made by Klein, which assumptions were not established or were contradicted by the evidence:
18.1.1that due to Joe White’s history of supplying malt that in some cases did not comply with barley variety specifications:
(i)sales volumes would decline by approximately 40 kilotonnes per year for a period of 3 years and then recover at the same rate over the following three years (at [4086(2)]); and
(ii)there would be a permanent increase in the cost of barley of $8.1 per tonne (at [4133]);

18.1.2that due to ceasing the non-compliant use of gibberellic acid, for all years post-acquisition (ie in perpetuity), Joe White would be required to produce at least 70 kilotonnes of additional malt without the use of gibberellic acid and that this would cause:
(i)an annual loss of manufacturing capacity of 16.35 kilotonnes (at [4086(6)]); and
(ii)an increase in production costs of $3.25 per tonne with respect to the additional malt that was produced without using gibberellic acid (at [4134]);

18.1.3that due to loss of reputation consequent upon the Viterra Practices and Policies being disclosed to customers, Joe White would not be able to charge 50% of its historical $25 per tonne price premium for a period of 2 years (post acquisition), which would gradually improve until the financial year 2019 when it would be restored in full (at [4110], [4113]);
18.1.4that in order to rectify the certificate of analysis practices, Joe White would incur $30 million of capital expenditure, allocated pro rata over the first five years post-acquisition (at [4157]–[4158]); and
18.1.5that for a period of 2 years after acquisition:
(i)Joe White would continue to produce export pale malt which contained at least one parameter which was tested and recorded as not being within customer specifications at the same rates as those at which Joe White had historically supplied such malt (being approximately 90% of all export malt produced) (at [4002], [4086(3)], [4112]); and

(ii)half (ie 50%) of that malt would be rejected by customers and sold at a discount of $50 per tonne (at [4112]).

Ground 19:

19.1Further or alternatively to sub-paragraph 18.1.5 above, when accepting Klein’s assumptions, the Judge erred:
19.1.1by accepting that any raw test result which had been adjusted to fit within specification should be treated as a [sic] non-compliant, as Klein had done for the purpose of his assumptions;
19.1.2by excluding from the evidence a report and regulations from the European Union which indicated that it was a legitimate practice in Europe to adjust inherently uncertain raw test results within two standard deviations when assessing compliance with specifications (Cargill Australia Ltd v Viterra Malt Pty Ltd [No 25] [2020] VSC 172);
19.1.3by denying the Viterra Parties the opportunity of obtaining discovery from Cargill relating to Cargill’s knowledge of the European practice referred to in sub-paragraph 19.1.2 above;
19.1.4by failing to give effect to other uncontradicted evidence relating to [sic] legitimacy of making adjustments to raw test results within 2 standard deviations, where that evidence would have materially decreased the likelihood of customers actually rejecting the malt which Klein assumed would be non-compliant;
19.1.5by failing to give effect to agreed facts drawn from Liam Ryan’s evidence showing that historically only 42.90% (including parameters which were assigned a standard deviation of 0) or 25.31% (excluding parameters which were assigned a standard deviation of 0) of Joe Whites’ export pale malt shipments contained at least one parameter which was outside specification by more than two standard deviations but reported within specification (Affected Results); and
19.1.6by failing to give effect to agreed facts drawn from Liam Ryan’s evidence that only between 1.66% and 4.01% (depending upon whether certain parameters were included or excluded) of all of the individual entries on certificates of analysis were Affected Results.

Ground 20:

20.1By finding at [4302] that Klein’s strategic bidder valuation accurately reflected the true value of Joe White subject only to the adjustments identified at [4303], the Judge erred in accepting Klein’s assumed level of forecast general capital expenditure, being 4.8% of sales revenue, because:
20.1.1Klein adopted that capital expenditure forecast from a valuation prepared by Deloitte in December 2014 for the purpose of a purchase price allocation exercise for Cargill’s compliance with United States financial reporting requirements;
20.1.2that level of capital expenditure was materially higher than the historical or forecast levels of capital expenditure in the Joe White Information Memorandum (adopted by Meredith), the Deal Model (adopted by Potter) and the Goldman Sachs’ [sic] valuation; and
20.1.3Klein did not provide any justification in his valuation for adopting the capital expenditure forecast prepared by Deloitte in 2014, in place of either the forecast capital expenditure in the Joe White Information Memorandum, the Deal Model or Goldman Sachs’ valuation.

Ground 21:

21.1The Judge erred in arriving at his assessment of damages in that:
21.1.1it ignored or was inconsistent with evidence concerning the actual performance of and/or value of the Joe White business in the period following its acquisition by Cargill Australia; and/or
21.1.2having regard to the evidence referred to in sub-paragraph 21.1.1 above, the Judge should have held that Cargill had failed to prove that it had suffered any actual loss or damage by reason of the Viterra Parties’ conduct, or alternatively, its actual loss or damage was substantially less than that assessed by his Honour.

Ground 22:

22.1The Judge erred in:
22.1.1declining to reduce or apportion Cargill Australia’s loss pursuant to the Competition and Consumer Act 2010 (Cth) s 137B or s 87CB respectively on the basis that its loss had been intentionally or fraudulently caused: [4429] and [4488]; and
22.1.2holding that Cargill Australia and Cargill Inc acted with reasonable care in entering into the Acquisition Agreement: [4434].

Award of Interest

Ground 23:

23.1The Judge’s discretion miscarried because, in awarding the rate fixed under the Penalty Interest Rates Act 1983, his Honour failed to properly take into account a relevant matter — namely, the ancillary component of that rate was a disproportionately significant portion of the interest rate awarded (ie between 78%, when the penalty interest rate was 9.5%, and 80%, when the penalty interest rate was 10.5%).
23.2The Judge took into account an irrelevant consideration, namely his assessment that the moral culpability of the defendants supported or justified a significant penalty being imposed by way of the penalty rate.

Rejection of the EU Materials

Ground 24:
24.1The Judge’s discretion miscarried because, in refusing the Applicants’ application for leave to reopen their case to tender the EU Materials (and file the summons seeking that leave), his Honour assessed the reasons for the delay in bringing that application in isolation from the other relevant considerations which weighed in favour of the grant of leave;
24.2The Judge failed to have regard to material facts and mistook a number of material facts in that:
24.2.1the Judge failed to have regard to the obligations on Viterra’s instructing solicitors in certifying the application to re-open before the application could be filed;
24.2.2the Judge erroneously relied on an assumption that the EU Materials ‘would not make a difference to the outcome’ of the Liability Judgment (Reopening Judgment [104]);
24.2.3the Judge proceeded on the incorrect basis that Viterra did not contend that the EU Materials were relevant to Viterra’s defence that participants in the commercial malting industry (including Cargill) were aware of the practice of adjusting raw analytical results to account for measurement uncertainty (Reopening Judgment fn 68); and
24.2.4the Judge erred in law, or proceeded on an incorrect basis, by considering whether the EU Materials were available at trial, in circumstances where the Applicants’ application was advanced on the basis of inadvertent error, not unavailability of the evidence (Reopening Judgment [118]).
24.3The Judge should have given the defendants leave to file the draft summons dated 13 March 2020 (filed in accordance with the orders of 5 October 2017) and granted the relief sought in that summons.

AMENDED NOTICE OF CONTENTION

Ground 1 of law not decided

The judge held that cl 10.3 of the Confidentiality Deed was unenforceable on the ground of public policy insofar as it protected Viterra against liability for fraud or deceit or misleading or deceptive conduct. Therefore, it did not operate to exclude Cargill Australia’s claims in deceit or for misleading or deceptive conduct.
Another question is whether, on its proper construction, cl 10.3 of the Confidentiality Deed in fact purported to ‘release’ liability in deceit or for misleading or deceptive conduct. The judge said that cl 10.3 ‘on its face’ purported to release ‘any liability’, but it is not apparent that the judge reached a concluded view on whether that was its proper construction.
Cargill contends that the judge should have held that cl 10.3 of the Confidentiality Deed, on its proper construction, did not operate on liability for fraud or deceit or misleading or deceptive conduct and was therefore not a defence to Cargill Australia’s claims in deceit or for misleading or deceptive conduct.

Ground 2 of law not decided

The judge held that Viterra could not rely on cl 15.4(b) of the Acquisition Agreement to defeat Cargill Australia’s claims for misleading or deceptive conduct or deceit. The judge did so on the basis that, because Cargill Australia would not have entered into the Acquisition Agreement in the absence of Viterra’s misleading or deceptive conduct and deceit, Viterra could not rely on the exclusion clause as a defence to liability for such conduct.
Cargill also submitted that cl 15.4(b) was unenforceable as a matter of public policy to the extent that it excluded Viterra’s liability for misleading or deceptive conduct or deceit. The judge referred to the submission but did not determine whether it was correct.
Cargill contends that the judge should have held that cl 15.4(b) of the Acquisition Agreement was unenforceable as a matter of public policy, to the extent that it purported to extinguish claims for misleading or deceptive conduct and deceit.

Ground 3 of law not decided

The trial judge concluded that Viterra’s counterclaim under s 18 of the ACL, could not succeed, because its claim for loss was based on a single measure of damages, which was flawed and therefore unavailable.
That conclusion was also available (and should be affirmed) on the basis that Viterra could not rely on cls 13.4(1) and (d) of the Acquisition Agreement to mount its counterclaim (or otherwise defeat Cargill Australia’s ACL or deceit claims) in circumstances where Cargill Australia would not have entered into the Acquisition Agreement but for Applicants’ misleading or fraudulent conduct.

[2023] VSCA 157

23 June 2023