Cargill Australia Ltd v Viterra Malt Pty Ltd

Supreme Court of Victoria|2018-12-20|Before: ELLIOTT J

PRACTICE AND PROCEDURE - Notices to produce - Defendants seeking production of documents from plaintiff and third party - Whether notices to produce serve a legitimate forensic purpose - Whether notices to produce too broad or oppressive and ought to be set aside - Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 35.08 - Civil Procedure Act 2010 (Vic), ss 7, 9.

For the plaintiff and the 1st and 2nd third parties

1 On 13 November 2018, the defendants[1] ("the Viterra Parties") served 2 notices to produce ("the Notices") on the plaintiff, Cargill Australia Ltd ("Cargill Australia"), and the second third party, Joe White Maltings Pty Ltd ("Joe White"),[2] requiring production of certain documents. The Notices were called upon on 19 November 2018, during the course of the trial.

2 Broadly speaking, the documents sought by the Notices relate to the use of Hindmarsh barley by Cargill Australia or Joe White for the period 1 November 2013 to 31 December 2015. Cargill Australia and Joe White oppose the breadth of the Notices and argue that they seek to circumvent previous discovery orders made in the proceeding.[3] In an effort to resolve these issues, Cargill Australia and Joe White proposed certain amendments be made to the Notices to narrow their scope, and agreed to produce documents in accordance with those narrower categories. The Viterra Parties rejected this approach.

3 For the reasons that follow, orders will be made requiring Cargill Australia and Joe White to comply with the Notices in part.

4 The key facts of this proceeding have been set out elsewhere and, for the purposes of this application, may be shortly stated.[4]

5 On 4 August 2013, Cargill Australia agreed to purchase the business operated by Joe White ("the Joe White Business"), including certain "shares and the assets used in connection with" the Joe White Business, from the Viterra Parties, other than Glencore, for the sum of $420 million ("the Acquisition Agreement"). The purchase was completed on 31 October 2013 ("the Acquisition").

6 Cargill Australia, together with the first third party, Cargill, Incorporated ("Cargill, Inc"), and Joe White (together, "the Cargill Parties")[5] allege that Cargill Australia completed the Acquisition in reliance on a series of representations and warranties which were misleading. Amongst other things, the Cargill Parties claim that the Viterra Parties failed to disclose the existence of certain practices ("the Viterra Practices") and policies ("the Viterra Policies"). The misleading conduct is alleged to include the deliberate non-disclosure of the "routine" practices of supplying malt to customers which did not comply with contractual requirements and specifications, and supplying customers with certificates of analysis which misstated the results of analytical testing. It is further alleged that the Viterra Practices occurred without the customer's knowledge and were endorsed by the Viterra Policies.[6]

7 The Cargill Parties contend that, had the Viterra Practices and the Viterra Policies been properly disclosed by the Viterra Parties, Cargill Australia would not have acquired Joe White. In their further amended defence filed 13 December 2018, subject to recent admissions made in respect of some aspects of the relevant allegations, the Viterra Parties do not admit the allegations concerning the Viterra Practices and the Viterra Policies and otherwise deny the substantive allegations made against them. They also place reliance on the due diligence conducted prior to the Acquisition, as well as various disclaimers, acknowledgements, releases and limitations of liability contained in documents provided or executed prior to the Acquisition.

8 Relevantly for the purposes of this application, the allegations concerning the Viterra Practices include the use of a barley variety, known as Hindmarsh, to produce malt in circumstances where it had not been approved for use by Joe White's customers and was not an approved malting variety of barley in Australia.[7]

9 Discovery and production of documents relating to Hindmarsh barley have been previously ordered. By summons filed 18 May 2017, the Viterra Parties sought discovery of, amongst other things, documents pertaining to the use of unauthorised barley varieties in the production of malt both before and after the Acquisition. With respect to documents created before the Acquisition, on 6 June 2017 after a contested hearing, the Cargill Parties were ordered to discover:

All documents created between 1 June 2011 and 1 November 2013 which record or evidence the knowledge of [various persons employed by the Cargill Parties][8] of:

(a) The use of barley varieties that were not permitted by customer specifications, including but not limited to Hindmarsh, by any other malting business owned or operated by Cargill, Inc ...

10 As to documents created after the Acquisition, it was ordered that the Cargill Parties discover:

All documents created between 1 November 2013 and 31 October 2014 referring or relating to:

(a) Whether or not malt produced by the [Joe White Business] under [Cargill Australia]'s ownership conformed to customer specifications, including entries from the barley intake records which record or evidence that off-spec or off-grade barley was purchased by [Joe White] under [Cargill Australia]'s ownership, including but not limited to the barley receivable book.

(b) The use of varieties of barley by [Joe White] under [Cargill Australia]'s ownership that were not permitted by customer specifications, including but not limited to Hindmarsh.

11 The Cargill Parties made discovery pursuant to these orders ("the June 2017 Orders"). There was no application by the Viterra Parties for further discovery on the basis of any alleged non-compliance.

12 However, at the hearing on 6 June 2017, the Cargill Parties stated that the Viterra Practices were ceased on 1 November 2013, upon Cargill Australia taking ownership and control of Joe White. On that basis, the June 2017 Orders limited the time period for discovery, in respect of the purchase or use of barley varieties not specified by Joe White's customers, to documents created between 1 November 2013 and 31 October 2014. This was more limited than the time period sought by the Viterra Parties, but was considered sufficient to enable the Cargill Parties' stated position to be tested. I observed at the time that the Viterra Parties could, in due course, seek further discovery with respect to the period after 31 October 2014 if the result of the discovery of documents suggested the assertion made by the Cargill Parties was incorrect. The evidence at trial indicates that Hindmarsh barley may have been used by Joe White after 1 November 2013.

B.2 Calling upon the Notices and subsequent or proposed amendments

13 The contents of each of the Notices as filed were substantially the same. They covered the same time period, being 1 November 2013 to 31 December 2015, and were grouped into 3 categories. Broadly speaking, the only substantive difference was that the notice directed to Joe White ("the Joe White Notice") sought documents recording Joe White's dealings with Hindmarsh barley, whereas the notice directed to Cargill Australia ("the Cargill Australia Notice") sought documents recording Cargill Australia's dealings with Hindmarsh barley. The Notices as filed were in the following form:

TAKE NOTICE that, pursuant to rule 35.08 of the Supreme Court (General Civil Procedure) Rules 2015, the defendants require you to produce ... the following documents or any copies of the documents as are in your possession, custody or power:

all records of [Joe White/Cargill Australia, respectively]'s use of Hindmarsh barley between 1 November 2013 and 31 December 2015 including records or data from [Joe White]'s laboratory information system database and the malt plant production system database (or similar systems used to record inputs to malt production) and certificates of analysis;
all documents recording [Joe White/Cargill Australia, respectively]'s purchase, intake and/or use of Hindmarsh barley between 1 November 2013 and 31 December 2015, including any records of purchases from Glencore Agriculture Pty Ltd, Viterra Pty Ltd, Co-operative Bulk Handling Limited and GrainCorp Limited or their respective affiliates or subsidiaries or any other farming, grain handling, storage, marketing or trading company or co-operative; and
all correspondence created between 1 November 2013 and 31 December 2015 concerning or referring to the blending of Hindmarsh with other barley varieties or the blending of malt produced from Hindmarsh barley with malt produced from other barley varieties.

14 On 18 November 2018, the Cargill Parties' solicitors wrote to the Viterra Parties' solicitors, stating that the Notices ought to be set aside.

15 On 19 November 2018, the Viterra Parties called for production of the documents the subject of the Notices. At the Cargill Parties' request, the call was deferred to a later date.

16 On 21 November 2018, in response to the Cargill Parties' letter, the Viterra Parties filed written submissions ("Viterra's Submissions").

17 On 22 November 2018, the Viterra Parties pressed for the Notices to be addressed. The Cargill Parties stated that they were yet to consider Viterra's Submissions and were not in a position to deal with the Notices. Accordingly, orders were made requiring the Cargill Parties to provide any submissions in opposition to the Notices by 27 November 2018, and for the application to set aside the Notices be heard on 29 November 2018. The hearing was subsequently adjourned to 4 December 2018.[9]

18 The Cargill Parties duly served their submissions ("Cargill's Submissions"). Further, the Cargill Parties subsequently provided a document detailing their proposed amendments to the Notices ("the Proposed Amendments"). In Cargill's Submissions, it was conceded, correctly, that whether Joe White used Hindmarsh barley in producing malt for its customers after the Acquisition was relevant to issues raised in the proceeding.[10] It was also accepted that Cargill Australia's disposition of the Hindmarsh barley stock held by Joe White at the time of Acquisition was a relevant matter.

19 With respect to the Joe White Notice, the Cargill Parties indicated that, subject to the Proposed Amendments, documents falling within the first 2 categories of each of the Notices would be produced. However, the Cargill Parties objected to the whole of the third category. Accordingly, pursuant to the Joe White Notice, the Cargill Parties agreed to produce, between 1 November 2013 and 31 December 2015:

(a) All records recording Joe White's use of Hindmarsh barley in customer malt orders, including records or data from Joe White's laboratory information management system database and the malt plant production system database (or similar systems used to record inputs to malt production) and certificates of analysis.

(b) All records recording Joe White's purchase of Hindmarsh barley.

20 On 3 December 2018, the Viterra Parties served their reply submissions.[11]

21 The Joe White Notice remained unchanged. However, the Viterra Parties provided an amended version of the Cargill Australia Notice, seeking production of all documents between 1 November 2013 and 31 December 2015:

(1) Recording Joe White's use or disposition of Hindmarsh barley.

(a) Purchases of Hindmarsh barley from any company, cooperative, farmer, or grain handler, including, by way of example, Glencore Agriculture Pty Ltd, Viterra Pty Ltd, Co-operative Bulk Handing Limited and GrainCorp Limited or their respective subsidiaries.

(b) Sales of Hindmarsh barley to any company or entity producing malt (or their subsidiaries) including, by way of example, Malteurop Australia Pty Ltd, Barrett Burston Malting Ltd, Coopers Brewery Ltd, GrainCorp Ltd and Bintani Australia Pty Ltd.

(3) Created concerning or referring to the blending of Hindmarsh barley with other barley varieties or the blending of malt produced from Hindmarsh barley with malt produced from other barley varieties.

22 With respect to the Cargill Australia Notice, and in light of their objections to the Joe White Notice, the Cargill Parties objected to the first and third categories of documents by reason that they substantially replicated those categories in the Joe White Notice. However, the Cargill Parties agreed to produce documents in response to the second category, ultimately, as follows:

All documents recording, between 1 November 2013 to 31 December 2015, Cargill Australia's sales of Hindmarsh barley to Joe White.

23 At the hearing on 4 December 2018, the Viterra Parties informed the court that, to the extent there was any overlap in the documents the subject of the Notices, the only documents sought pursuant to the Cargill Australia Notice were documents that were supplementary to any documents to be produced pursuant to the Joe White Notice.

24 A party to a proceeding may serve on another party a notice requiring that party to produce the documents mentioned in the notice on any application in, or at the trial of, the proceeding.[12]

25 Unless the court otherwise orders, parties who have been served with a notice to produce must produce such of the specified documents as are in their possession, custody or power, save for any claim of privilege.[13] If a party fails to comply with a notice, the court may order production or give other such directions as it thinks fit.[14]

26 The considerations to be taken into account in deciding whether to set aside a notice to produce are the same as those that apply to setting aside a subpoena.[15]

27 The court must consider a number of factors.[16] These include whether the party calling on the notice to produce expressly and precisely identifies the legitimate forensic purpose for which access to the documents is sought;[17] whether the notice to produce is too broad or amounts to a fishing expedition (in which case it should not be permitted);[18] whether an application for discovery or further and better discovery is more appropriate in the circumstances;[19] the timing of the notice to produce;[20] and whether the party seeking production can demonstrate that it is "on the cards" or that there "reasonable possibility" the documents will materially assist the case of the party issuing the subpoena.[21]

28 A legitimate forensic purpose will exist where, based on the circumstances of the case, the documentation sought to be produced is not only relevant to the proceeding, but will materially assist in resolving an issue in dispute.[22] For example, it is not a legitimate forensic purpose if the party seeking production, seeks those documents purely to determine their relevance in the proceeding.[23]

29 In order to rule on the Notices, the basis on which the Notices were issued needs to be addressed, as does the nature and degree of the relevance of Hindmarsh barley.

30 The Viterra Parties contended that the Notices were issued after it came to light that Joe White continued to use Hindmarsh barley after the Acquisition. The Viterra Parties referred to the evidence, on 10 October 2018, of Douglas Stewart ("Stewart"),[24] by which Stewart acknowledged that, as far as he was aware,[25] Cargill Australia continued the use of Hindmarsh barley in producing malt as part of the Joe White Business after the Acquisition. In particular, Stewart gave evidence that the "new Cargill malt business[26] made the decision that we were allowed to put 5 percent of off-spec into those blends" and indicated in a later answer that the "off-spec" permitted was Hindmarsh barley.

31 Therefore, it was submitted that the documents sought pursuant to the Notices were relevant, and significantly so, in 2 ways.

32 First, the Viterra Parties submitted the documents would materially assist them in demonstrating whether or not Cargill Australia ceased using Hindmarsh barley in the Joe White Business after the Acquisition. In the fourth further amended statement of claim filed 24 September 2018 ("the Statement of Claim"), Cargill Australia allege they relied on compliance by Joe White with customer specifications concerning barley varieties in entering into the Acquisition Agreement. The Viterra Parties emphasised it was also part of Cargill Australia's case that it was required to "purge" Hindmarsh barley from the Joe White Business following the Acquisition, at considerable cost. Accordingly, the Viterra Parties further contended that, if Cargill Australia and Joe White did in fact continue to use Hindmarsh barley, the documents went to the issue of reliance on representations alleged to have been made by the Viterra Parties, as well as to the question of actual loss or damage suffered by Cargill Australia.

33 Secondly, they submitted the documents were relevant to whether or not Cargill Australia was aware of the practice of Hindmarsh barley being used in malt production by Joe White or in the malting industry more generally. It was submitted that, if documents existed showing that Cargill Australia purchased or sold Hindmarsh barley to maltsters, or that Joe White continued to use Hindmarsh barley after the Acquisition, the court could infer that Cargill Australia either knew, accepted or was ambivalent towards the alleged industry practice relating to Hindmarsh barley.

34 It is without controversy that Hindmarsh barley is not accredited as malt-grade barley in Australia.

35 The use of Hindmarsh barley by Joe White prior to and following the Acquisition in customer malt orders has been ventilated at length during the trial. The knowledge and extent of that use are clearly issues in dispute between the parties. The extent of the use of Hindmarsh barley by Joe White up to 1 November 2013 has been dealt with in evidence by reference to data extracted from Joe White's laboratory information management system. That evidence suggests Hindmarsh barley was used in a little over 1 percent of total malt produced between 1 January 2010 and 31 October 2013. Further, to the extent that the Cargill Parties may be in possession of documents, created between 1 June 2011 and the time of the Acquisition, pertaining to any awareness of any unauthorised use of barley varieties in businesses owned and operated by Cargill, Inc, they have already been the subject of orders for discovery.[27]

36 Further, the use, and the extent of any use, of Hindmarsh barley after the Acquisition touches on numerous issues. It is unnecessary to identify them exhaustively in circumstances where relevance has been conceded,[28] and discovery in respect of those issues has been ordered up to 31 October 2014.[29] It follows, therefore, that documents directly touching on this issue are relevant, and that there is a legitimate forensic purpose to seeking production of the categories of documents set out in the Notices to the extent that they have not already been made available for inspection.

37 The real question is whether production of the range of the documents sought in the Notices is necessary and appropriate for the just, efficient, timely and costeffective determination of the proceeding in light of, amongst other things, the discovery that has already been ordered and provided.[30]

38 The primary position of the Cargill Parties was that the Notices ought to be set aside for a number of reasons. Despite the Cargill Parties' agreement to produce documents as set out above,[31] the question remains as to whether the Notices should stand as ultimately put forward by the Viterra Parties.

39 First, the Cargill Parties contended that the Notices were in truth applications for further and better discovery, and that the appropriate course was for the Viterra Parties to seek an order for particular discovery pursuant to r 29.08 of the Supreme Court Rules.[32] The Cargill Parties contended that there ought not be a deviation from the method prescribed by the Supreme Court Rules without cause.

40 Practically, the Cargill Parties also submitted, the Notices were inconvenient to the court at such a late stage of the trial. This was put on the basis that the Notices required the court to receive the documents produced and, if issues of legal privilege arose, the court would necessarily be involved in those issues.[33] This was to be contrasted with the process of further and better discovery, which, for the most part, could be addressed without the involvement of the court.

41 Secondly, it was submitted that the Notices were oppressive in seeking the production of a wide range of documents which not only lacked specificity, but spanned a lengthy period of 25 months. Whilst it was acknowledged some of the documents sought in the Notices were relevant, it was contended that it did not follow that the Cargill Parties should be required to conduct an "at-large and repetitive search" for documents, however "tangentially relevant". Further, it was contended such a search of the magnitude involved and at this stage of the proceeding would significantly prejudice the Cargill Parties.

42 Thirdly, the Cargill Parties submitted that, to the extent the Notices sought documents concerning Glencore Agriculture Pty Ltd[34] and Viterra Pty Ltd, those documents, if they existed, would be in the possession of the Viterra Parties. Similarly, to the extent documents were sought from sources such as the laboratory information management system,[35] the Viterra Parties were aware that the Cargill Parties did not have access to that database. This was because, following a malware attack on Cargill Australia's private cloud storage facility (which contained the laboratory information management system database) in June 2017, the Cargill Parties lost access to any historical data. The Cargill Parties submitted that both the Cargill Parties and the Viterra Parties equally had access to whatever data was available from the laboratory management information system which may be relevant to the Notices, up until April 2014.[36]

43 Fourthly, the Cargill Parties submitted that there was nothing in the Notices that established that any of the documents sought in fact existed, and by seeking hypothetical documents, the Viterra Parties were engaging in a fishing expedition.[37]

44 Fifthly, the Cargill Parties submitted that the general timing of the Notices was unreasonable, as the trial was at the later stages[38] and there was no basis for the Notices having been served at this particular juncture.[39] In this regard, reference was made to the inability of the Viterra Parties to put any documents produced to lay witnesses as all lay witness evidence has been led.

45 On this point, counsel for the Cargill Parties submitted that the Viterra Parties had been on notice for some time of the alleged use or disposition of Hindmarsh barley by Cargill Australia and Joe White after the Acquisition. Counsel for the Cargill Parties contended that the evidence given by Douglas Eden ("Eden"),[40] Phillipa Purser ("Purser"),[41] and Marc Viers ("Viers")[42] in around late June and July this year was of greater probative value than the evidence given by Stewart in October 2018, which the Viterra Parties provided as the basis for the Notices.[43] It was also submitted that there was no basis for the Viterra Parties to allege that the documents sought in the Notices have not already been discovered or produced, particularly when the documents that were put to Stewart were earlier put to Viers, and nothing in their evidence suggested the existence of further documents.

46 Sixthly, the Cargill Parties submitted that there was no basis for the Viterra Parties to contend that Cargill Australia's supply of Hindmarsh barley to maltsters in 2014 and 2015 was prima facie relevant to Cargill Australia's knowledge at the time of the Acquisition. The Cargill Parties also rejected the submission by the Viterra Parties that the documents sought went to the allegation by the Cargill Parties that they were "unaware of an industry practice of using Hindmarsh barley". In circumstances where the Viterra Parties' industry expert explicitly stated in his report that there was no industry practice of using Hindmarsh barley to produce malt,[44] the Cargill Parties submitted that this was "not a live issue in the proceeding" so as to justify the production of documents.

47 As to the wording of the Notices, the Cargill Parties submitted that:

(1) The first category ought to be limited to the use of Hindmarsh barley in "customer malt orders".

(2) The word "use" in the second category had already been addressed in the first category. Further, the word "intake" was unclear. The Cargill Parties submitted that, if "intake" meant the "receipt into storage of Hindmarsh barley", then it overlapped with the word "purchase" which was also used in the second category. Alternatively, if it meant receipt at a particular plant, it was excessively granular and, in any event, such receipts were not relevant to any issue in the case. Furthermore, the phrase "affiliates or subsidiaries" was unclear.

(3) The third category lacked adequate specificity and did not adequately specify the documents sought. The words "concerning or referring to" were too broad and would require the Cargill Parties to exercise considerable judgment in determining what documents were responsive to that category. Further, this category overlapped significantly with the June 2017 Orders[45] and the first and second categories of the Notices.

48 With respect to the Cargill Australia Notice (as amended),[46] the Cargill Parties submitted that the introduction of the words "or disposition" should not be permitted. Reference was made to paragraph 85 of the Statement of Claim, which is concerned with an independent expert determination regarding Hindmarsh barley and malt made from Hindmarsh barley. The Cargill Parties submitted that these issues had already been the subject of determination by the independent expert in favour of Cargill Australia to resolve the "completion accounts dispute". It was submitted that this demonstrated the issue concerning the disposition of Hindmarsh barley had been "on the radar" for a number of years and there had been no suggestion that Cargill Australia's discovery in this regard had been inadequate in any way. It was submitted that the first category of the Cargill Australia Notice was no more than a rearguard application for discovery in circumstances where discovery had already been provided.

49 As to the third category in the Cargill Australia Notice, it was submitted that the replacement of the word "correspondence" with "documents" made that category even broader than the impermissibly broad language used in its original form.

50 For completeness, the Cargill Parties submitted that the Proposed Amendments were reasonable and proportionate to the issue of Cargill Australia's use or disposition of Hindmarsh barley after the Acquisition. Further, documents relevant to those issues have previously been discovered, both in the course of the proceeding and pursuant to the June 2017 Orders.[47] Furthermore, it was submitted that since there had already been discovery with respect to Hindmarsh barley, there was likely to be "significant overlap" between the Notices and the June 2017 Orders, which supports the contention that the Notices served no legitimate forensic purpose.

51 The primary submission made by the Viterra Parties was that the Notices ought not be set aside unless the Cargill Parties were able to demonstrate that there was no legitimate forensic purpose to the Notices, and no reasonable possibility that the Notices would materially assist the Viterra Parties' defence.[48] The Viterra Parties also responded directly to the submissions made by the Cargill Parties.

52 First, as to the timing of the Notices, it was submitted that it was not until Stewart gave evidence that the Viterra Parties had a proper basis upon which to issue the Notices. Had the Notices been served based on the evidence of Eden, Purser or Viers alone,[49] the Viterra Parties submitted that this would have been met with fervent opposition by the Cargill Parties, and that any such opposition would have been likely to have been found to be warranted. They submitted that, at this earlier point in time, the Notices would have appeared to be no more than a fishing expedition.

53 Secondly, the Viterra Parties rejected the assertion by the Cargill Parties that the documents sought were hypothetical. Reference was made to the evidence given at trial of the "administratively focused manner in which Cargill runs its malt businesses" in support of the contention that the purchase, use or disposition of Hindmarsh barley would most likely be reflected in contemporaneous documents in the possession of Cargill Australia or Joe White. They contended Stewart's evidence confirmed the use of Hindmarsh barley after the Acquisition, and the inference that ought to be drawn was that Cargill Australia's diligent record-keeping would naturally include documents going to that issue.

54 Thirdly, the Viterra Parties submitted that any documents created after the Acquisition (which is the subject of the Notices) would not be in the possession of the Viterra Parties and, even if they were, that was not a sufficient ground to set aside the Notices, as the documents sought extended beyond those relating to the Viterra Parties or their related entities. The Viterra Parties submitted it would be inefficient to segregate the task of identifying documents that may be in the possession of the Viterra Parties.

55 Fourthly, the Viterra Parties submitted that any onerous task of searching for documents concerning the purchase and use of Hindmarsh barley would be far outweighed by the probative value of those documents and that any potential burden on the Cargill Parties could be addressed by allowing the Cargill Parties sufficient time to comply with the Notices. As to the burden of the task, the Viterra Parties submitted the distinctive nature of the word "Hindmarsh" should make the relevant documents more readily identifiable.

56 Fifthly, the Viterra Parties submitted that engaging in an "academic debate" on the appropriateness of the Notices and whether the documents should be sought by way of further discovery was "inefficient and artificial". The Viterra Parties submitted that they were not seeking to sidestep the evidentiary onus of a discovery application,[50] nor attempting to avoid an earlier adverse or narrower ruling on discovery.[51] They further submitted that there would be no material difference to the workload of the court or to the management of the trial if the documents were produced pursuant to the Notices.

57 Sixthly, according to the Viterra Parties, the description of the documents sought by the Notices did not lack specificity. As Cargill Australia and Joe White were parties to the proceeding and were expected to be mindful of the facts as known to them and to read the Notices sensibly,[52] it was submitted that the descriptions used were more than adequate.

58 In relation to the Proposed Amendments and the amendments made by the Viterra Parties, the Viterra Parties submitted that:

(a) The introduction of the words "in customer malt orders" to the first category would add imprecision and create room for unnecessary judgment calls. For example, the Viterra Parties suggested that including those words would exclude instances where Hindmarsh barley was used, but was not included in a customer malt order. Further, the Viterra Parties submitted that the Cargill Parties' proposal to confine the category in the Joe White Notice to customer malt orders was "an unnecessary qualification" which made the Viterra Parties suspicious.

(b) The Viterra Parties changed "records" to "documents" in the Cargill Australia Notice to encapsulate all documents in Cargill Australia's possession about Joe White's use and disposition of Hindmarsh, including any internal notes within Cargill Australia about Joe White's use of Hindmarsh. Accordingly, this category for Cargill Australia should not be limited to "records".

(c) The words "or disposition" had been added because Cargill Australia has pleaded that it suffered loss by reason that it had to dispose of non-approved varieties as feed.

(d) Production of documents by Cargill Australia was not unnecessary, as Cargill Australia may be in possession of documents that Joe White is not.

(a) The word "use" was necessary to capture internally and externally generated documents, including notes about the use of Hindmarsh barley or notes about communications with or instructions from the Cargill Parties or customers regarding the use of Hindmarsh barley.

(b) The word "intake" referred to the receipt of Hindmarsh barley and was intended to capture, for example, documents recording the allocation of Hindmarsh barley to particular Joe White plants.

(d) It would be inefficient to remove Glencore Agriculture Pty Ltd or Viterra Pty Ltd from the search. Further, given that Glencore Agriculture Pty Ltd was not a party to the proceeding, requiring the Viterra Parties to conduct their own discovery in that respect would result in additional expense.[53]

(3) With respect to the third category, the documents sought in both Notices were necessary to determine whether there exist any internal or external communications "concerning or referring to" the blending of Hindmarsh barley or malt produced from Hindmarsh barley by Joe White.

59 As to the date range in the Notices, the Viterra Parties submitted documents between 1 November 2013 and 30 December 2015 were also probative of Cargill Australia's knowledge as to the use or disposition of Hindmarsh barley before the Acquisition. This was because, it was contended, Cargill Australia's approach to Hindmarsh barley would not suddenly change after the Acquisition, which meant that Cargill Australia's state of mind immediately following the Acquisition was relevant to demonstrating Cargill Australia's knowledge during the due diligence component of the Acquisition. In this regard, the Viterra Parties' senior counsel stated that, if they "had [their] time over again", they would have sought documents created prior to the Acquisition.

60 Although there has been some delay between Stewart giving his evidence and the serving of the Notices, it is not of such a magnitude that the Notices ought to be set aside on this basis. Further, the evidence given by Stewart was materially different to that given by Eden, Purser and Viers earlier in the trial.[54] Those witnesses gave evidence to the effect that they were unaware of any use of, or the basis for using, Hindmarsh barley after 1 November 2013. In contrast, Stewart referred to the existence of a decision permitting Hindmarsh barley to be used after 1 November 2013. Although the effect of his evidence cannot be materially probative beyond September 2014,[55] it was fundamentally different to the asserted position of the Cargill Parties on 6 June 2017 that Joe White desisted with the Viterra Practices from 1 November 2013.

61 In ordering production to the extent set out below, the fact that the proceeding will be adjourned now for a considerable time has been taken into account.[56] Whilst there has been some delay in the serving of the Notices,[57] the trial still has some way to proceed.

62 That said, I reject as a proper basis for production the submission that documents created in the period from 1 November 2013 to 31 December 2015 would somehow be instructive as to Cargill Australia's relevant knowledge in the period leading up to the Acquisition.[58] Not only is the link somewhat tenuous (for example, it is difficult to conceive how purchases by Cargill Australia in December 2015 would be probative of relevant matters before 1 November 2013), but, even assuming some relevant connection to the preceding period and the availability of the suggested inference, the mere fact that Cargill Australia might have purchased Hindmarsh barley itself or sold Hindmarsh barley to maltsters before 1 November 2013 does not, without more, give rise to an inference that Cargill Australia must have known of the use of Hindmarsh barley in the production of malt contrary to a customer's contractual requirements or specifications. Further, any witness who might have been able to address this possible issue has already given evidence.

63 Both the Joe White Notice and the Cargill Australia Notice will be amended so that they are limited to customer malt orders. The words "in customer malt orders" is a necessary inclusion to ensure the production involved is proportionate and confined to relevant matters. Further, it is difficult to understand why the addition of these words was resisted by the Viterra Parties. When it was queried as to what relevance documents recording the use of Hindmarsh barley outside customer malt orders might have, the Viterra Parties' senior counsel responded, "We don't know". When pressed as to what such documents, if they existed, might be relevant, the response was, "Nothing ... what we are interested in is the use of Hindmarsh barley to produce malt which is then supplied to customers". Whatever suspicions the Viterra Parties might have,[59] they cannot justify the position adopted.

64 With respect to the introduction of the words "or disposition" in the first category of the Cargill Australia Notice, that amendment will be permitted. Although the issue of Cargill Australia and Joe White disposing of Hindmarsh barley has been raised on the pleadings for a considerable period of time, throughout most of that time the Cargill Parties maintained that Hindmarsh barley was not being used after 1 November 2013. In circumstances where it now appears the evidence at trial indicates this may not be the case, any further documents falling within this category ought to be produced so that a complete picture of any dealings with Hindmarsh barley after the Acquisition may be properly considered.

65 Finally, it is necessary to rule on the Viterra Parties' application to replace "records" with "documents" in the first category of the Cargill Australia Notice. That amendment will not be permitted. No such amendment was sought with respect to the Joe White Notice. Further, the Cargill Parties have agreed to produce records pursuant to the first category under the Joe White Notice and will also be ordered to produce records under the Cargill Australia Notice. In my view, that suffices to serve the legitimate forensic purpose in a proportionate manner. Furthermore, in light of the overarching purpose, the court has an obligation to ensure that it does not encourage the parties to engage in arguments about non-essential matters of minor significance in such a lengthy case that has already manifestly exceeded its estimated duration because of continuous interlocutory disputes.[60]

66 The Cargill Parties have agreed to provide documents falling within the second category of the Joe White Notice that meet the description of "all records recording Joe White's purchase of Hindmarsh barley". By so agreeing, the Cargill Parties have sought to exclude the reference to "documents" and "intake and/or use".[61]

67 There is no apparent reason why the word "documents" should be substituted with "records". No substantive submission was made by the Cargill Parties to justify this amendment. Further, no such limitation was sought to be imposed by the Cargill Parties with respect to the second category of the Cargill Australia Notice.[62] Furthermore, the observations in paragraph 65 above with respect to the overarching purpose are repeated.

68 The Cargill Parties' submissions with respect to "intake and/or use" will be dealt with separately. The word "use" in the second category of the Joe White Notice should be excluded because the limitation imposed in the first category by the words "in customer malt orders" would be made otiose. This is not appropriate in circumstances where it has been found that those words impose an appropriate limitation.

69 As to the use of the word "intake", I reject the submission suggesting a lack of relevance. In the particulars to the allegations concerning the Viterra Practices in the Statement of Claim, the Cargill Parties plead that, after the Acquisition, "Joe White was required to transport varieties of barley between plants in order to supply malt that complied with the required barley varieties in Joe White's malt supply contracts, incurring higher costs". In this context, it is relevant to know whether or not the varieties transported after the Acquisition included Hindmarsh barley. Documents recording "intake" would cover such transport. Further, there is no difficulty with understanding what is contemplated by "intake".[63] That word was used in the June 2017 Orders, in the context of barley intake records,[64] and there was no suggestion by the Cargill Parties that it gave rise to any confusion.

70 The words "affiliates or subsidiaries" fall away with the removal of the words that preceded them.[65] In any event, they appear to serve no real forensic purpose and seem to add little of substance.

71 Accordingly, with respect to the Joe White Notice, Joe White will be required to produce:

All documents recording Joe White's purchase and/or intake of Hindmarsh barley between 1 November 2013 and 31 December 2015.

72 However, the relevance of any documents falling in the second category of the Cargill Australia Notice, beyond those documents the Cargill Parties have agreed to produce, is tenuous.[66] In contrast, the documents the Cargill Parties have agreed to produce is focussed on a class of documents which have a direct connection to what is materially relevant, namely Joe White's alleged use of Hindmarsh barley in the specified time period. Accordingly, no further documents will be required to be produced under this category beyond the relevant Proposed Amendment.[67]

73 The third category will be set aside in both the Joe White Notice and the Cargill Australia Notice. The words "concerning or referring to" are too broad and do not provide adequate specificity as to the documents sought.[68] There are potentially a large number of documents that may fall within this category. Further, there is a real risk that a significant number of documents encapsulated by these words would not be relevant to the issues in dispute between the parties. When it was put to the Viterra Parties' senior counsel that "concerning" in this context must mean something other than "referring to", it was submitted the word "concerning" would include, for example, references to "off-spec" barley.[69] When it was suggested that this may require production of documents that have nothing to do with Hindmarsh barley, it was submitted that, if there were "an unmanageable number of hits", the Viterra Parties would "be sensible and deal with it at the next level".

74 In these circumstances, to require the Cargill Parties to conduct the onerous and unclear task of searching for and collating all documents responsive to the third category would not achieve the just, efficient, timely and cost-effective resolution of the issues in this proceeding. Further, the use of such vague language would necessarily require the Cargill Parties to engage in making assessments involving judgment. This would then be likely to be the subject of challenge and further disputation, given the manner in which this case has been conducted to date.

75 The Cargill Parties will be ordered to produce documents pursuant to the Notices in accordance with the reasons set out above. The parties will be invited to make submissions about the appropriate timeframe. Otherwise, the Notices will be set aside.

[1] The defendants are Viterra Malt Pty Ltd, Viterra Operations Ltd and Viterra Ltd, together with their ultimate holding company, Glencore International AG ("Glencore").

[2] Joe White is now known as Cargill Malt Asia Pacific Pty Ltd.

[3] See pars 9-12 below.

[4] For a more detailed account of the facts, see Cargill Australia Ltd v Viterra Malt Pty Ltd (No 2) [2017] VSC 283, [6]-[9]; Cargill Australia Ltd v Viterra Malt Pty Ltd [2017] VSC 126, [2]-[28] (Daly AsJ).

[5] Without being specific, broadly speaking Cargill, Inc and Joe White adopt the allegations made by Cargill Australia.

[6] One such policy was entitled the "Viterra Malt Certificate of Analysis Generation Procedure".

[7] See further pars 29-36 below.

[8] These persons included Eden, Purser and Viers: see par 45 below.

[9] By email dated 28 November 2018, the Viterra Parties informed the court that they were not in a position to comply with court orders in relation to a separate application for leave to amend their defence. Accordingly, the hearings of the applications for leave to amend the defence and to set aside the Notices were re-listed on 4 December 2018.

[10] See further pars 29-36 below.

[11] It should be noted that the Cargill Parties and the Viterra Parties were directed by the court to confer and agree upon a proportionate response to the issue of any outstanding documents sought in the Notices, without the intervention of the court. The parties were unable to reach an agreement.

[13] Supreme Court Rules, r 35.08(2).

[14] Such directions include directions for the proof of any matter in relation to a document sought, such as its contents, and its making, delivery or receipt: see r 35.08(3).

[15] Matthews v SPI Electricity Pty Ltd (Ruling No 27) [2013] VSC 483, [5] (J Forrest J); Jefferson Ford Pty Ltd v Ford Motor Company of Australia Pty Ltd [2007] VSC 450, [19], [33]-[34] (Hollingworth J); Crown Joinery Pty Ltd v Lyleho Pty Ltd [2007] VSC 214, [31]-[32] (Maxwell P).

[16] 1045 Burke Rd Pty Ltd v Bosi [2018] VSC 157, [18]-[19] (Derham AsJ), and the cases there cited; Webb v Wheatley [2015] VSC 153, [55]-[56] (Derham AsJ), and the cases there cited; Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) [2012] FCA 61, [6] (Collier J).

[17] R v Saleam (1989) 16 NSWLR 14, 18C (Hunt J, with whom Carruthers and Grove JJ agreed).

[18] Rinehart v Rinehart [2018] NSWSC 1102, [48] (Ward CJ in Eq); 1045 Burke Rd Pty Ltd v Bosi [2018] VSC 157, [20].

[19] Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) [2012] FCA 61, [6(3)] (Collier J).

[21] 1045 Burke Rd Pty Ltd v Bosi [2018] VSC 157, [18(c)]; Rinehart v Rinehart [2018] NSWSC 1102, [47] (Ward CJ in Eq); Director of Public Prosecutions v Selway (No 2) [2007] VSC 244; (2007) 16 VR 508, 512-514 [8]-[10] (Cummins J); Alister v The Queen [1984] HCA 85; (1984) 154 CLR 404, 414.5 (Gibbs CJ).

[22] See Rinehart v Rinehart [2018] NSWSC 1102, [43]-[44]; ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307, [9] (Tobias JA, with whom Basten JA and Handley AJA agreed), citing ICAP Pty Ltd v Moebes [2009] NSWSC 306, [30] (Nicholas J).

[23] Webb v Wheatley [2015] VSC 153, [55(e)] (Derham AsJ) and the cases there cited.

[24] Stewart is the sixth third party in the proceeding. At the relevant times, he was employed by Joe White as general manager, technical - malt. Stewart was called to give evidence by the Viterra Parties.

[25] Stewart ceased his employment with Joe White in September 2014.

[26] That is, the Joe White Business as owned and controlled by Cargill Australia after the Acquisition.

[27] See par 9 above.

[28] See par 18 above.

[29] See par 10 above.

[31] See pars 19, 22 above.

[32] See Australian Competition and Consumer Commission v Shell Co of Australia Ltd [1999] FCA 212; (1999) 161 ALR 686, 696 [50] (Cooper J).

[33] Cf Morris v Riverwild Management Pty Ltd [2009] VSC 654, [30] (Gardiner AsJ), citing The Commissioner for Railways v Small [1938] NSWStRp 29; (1938) 38 SR (NSW) 564, 574.8 (Jordan CJ, with whom Davidson and Owen JJ agreed).

[34] Evidence has been given at trial that Glencore owns a 50 percent shareholding in Glencore Agriculture Pty Ltd.

[35] The laboratory information management system was used by Joe white to maintain data concerning the production and testing of malt, as well as the storage of malt and barley.

[36] During the trial, the Viterra Parties located a back-up tape of the laboratory information management system for April 2014, which was subsequently restored by the Cargill Parties, discovered in the proceeding and the subject of evidence.

[37] This submission appears to have been superseded to the extent the Cargill Parties agreed to provide documents in accordance with the Proposed Amendments.

[38] At the time the Notices were served, there had been 66 days of trial, 38 lay witnesses had given evidence and Stewart had given evidence approximately 5 weeks prior to the Notices being served.

[39] Counsel for the Cargill Parties referred to general case management concerns, such as minimising the cost and delay to a proceeding: Civil Procedure Act 2010 (Vic), s 7. See also the case management principles enunciated in AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 213 [97]-[98], 214-215 [102], 217 [111] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

[40] Eden was, at the relevant time, the president, business unit leader, malt of Cargill, Inc, and a key executive involved in the Acquisition.

[41] Purser was, at the relevant time, the managing director of Cargill Australia, and a key executive involved in the Acquisition.

[42] Viers was, at the relevant time, the global commercial manager of Cargill, Inc's malt business, and a key executive involved in the Acquisition. He was also involved in managing the Joe White Business after the Acquisition.

[43] See par 30 above.

[44] See par 33 above. The report of the Viterra Parties' industry expert contains a statement to the effect that using Hindmarsh barley in making malt is not an industry practice. The report is yet to be tendered, and is the subject of objection.

[45] See par 10 above.

[46] See par 21 above.

[47] See par 11 above.

[48] Cf par 27 above.

[49] Evidence was given by each of Eden, Purser and Viers that, in substance, they were not aware of or were not involved in the purchase, use, sale or disposition of Hindmarsh barley by Cargill Australia or Joe White.

[50] Cf Australian Competition and Consumer Commission v Shell Co of Australia Ltd [1999] FCA 212; (1999) 161 ALR 686, 694-696 [47]-[51] (Cooper J).

[51] Cf Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) [2012] FCA 61, 7 [11]-[13] (Collier J).

[52] Pico Holdings Inc v Voss and NAB Limited [2002] VSC 269, [26]-[28] (Gillard J), citing McColl v Lehmann [1987] VicRp 46; [1987] VR 503, 513.3 (Kaye J).

[53] This issue fell away during oral submissions as it was agreed by the parties that all records of Hindmarsh barley (regardless of the source) would be produced.

[54] See pars 30, 45, 52 above.

[55] See fn 25 above.

[56] The case is not scheduled to resume until at least 18 March 2019, by reason that the parties' trial estimate has been exceeded significantly and the court needing to attend to other cases.

[57] See par 30, fn 38 above.

[59] See par 58(1)(a) above.

[60] Civil Procedure Act, ss 7, 8, 9; Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303, 323 [56]-[57] (French CJ, Kiefel, Bell, Gageler and Keane JJ).

[61] The words "including" and following in the second category are superfluous: see fn 53 above.

[62] See par 22 above.

[63] Cf par 47(2) above.

[64] See par 10 above.

[65] See fnn 53, 61 above.

[66] See par 62 above.

[68] The Viterra Parties refused to entertain narrowing the scope of this category and insisted that the word "concerning" remain.

[69] The evidence at trial indicates that a reference to "off-spec" barley includes barley used in the production of malt that did not meet a customer's specifications.

Court (General Civil Procedure) Rules 2015

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Judgment (168 paragraphs)

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Legislation Cited (2)

Cases Cited (6)