Cargill Australia Ltd v Viterra Malt Pty Ltd

1 On Friday, 15 March 2019, submissions were made with respect to the admissibility of evidence of an industry expert to be led by the defendants ("the Viterra Parties") in this proceeding. The admissibility issues concerned amendments made to an industry expert report in light of an earlier ruling.[1]

2 Both on Friday and this morning, rulings on the questions of admissibility were delivered. During the course of submissions on Friday, the Viterra Parties also made an application for certain evidence proposed to be led by them through their expert to be kept confidential. Accordingly, on Friday, I heard argument concerning whether or not it was appropriate to make any orders with respect to confidentiality.

3 Essentially, the Viterra Parties' application is to protect the identity of a non-party who is not before the court. The name of the non-party, together with information relating to the alleged conduct and practices of the non-party, is contained in the industry expert report. The plaintiff, Cargill Australia Ltd ("Cargill Australia"), the first third party, Cargill, Incorporated ("Cargill, Inc") and the second third party, Joe White Maltings Pty Ltd ("Joe White")[2] (together, "the Cargill Parties"), opposed any such orders.

4 At the conclusion of argument on Friday, I indicated I would not give a ruling until that non-party had been informed of the application and had had an opportunity to be heard. The Viterra Parties were directed to inform that non-party that it could appear at 10:30 this morning to make any submission on the application. At 5:57 yesterday evening, the Viterra Parties emailed the court conveying that they had been informed the non-party did not wish to be heard on the application.[3]

5 This proceeding was brought by Cargill Australia against the Viterra Parties following its acquisition of a malting company, Joe White. The Viterra Parties consist of the 3 vendor companies: Viterra Malt Pty Ltd, Viterra Operations Ltd and Viterra Ltd, as well as Glencore International AG, the ultimate holding company.

6 Broadly speaking, Cargill Australia alleges that, prior to its acquisition of Joe White, the Viterra Parties failed to disclose to it certain unlawful practices engaged in by Joe White, of which the Viterra Parties were aware. Specifically, it is alleged that Joe White, routinely, without informing customers:

(1) Supplied malt to customers that was produced using barley varieties other than those specified by the customer.

(2) Used gibberellic acid in the malt production process contrary to the terms of customer contracts.

(3) Supplied certificates of analysis to customers that misstated the results of analytical testing on the malt supplied, so that the certificates reported that the malt complied with contractual requirements and specifications when it did not.[4]

7 It is further alleged that the Viterra Practices were recorded and endorsed by certain written policies ("the Viterra Policies"). Cargill Australia claims that, had it known of the Viterra Practices or the Viterra Policies, it would not have executed the acquisition agreement on 4 August 2013 ("the Acquisition Agreement") or completed the purchase of Joe White on 31 October 2013.

8 In response, the Viterra Parties join issue with much of Cargill Australia's allegations on this issue. Further, the Viterra Parties allege that practices similar to the Viterra Practices were known to occur in the malting industry and were considered standard industry practice. In particular, they contend that, in the time leading up to the Acquisition Agreement, other malting companies engaged in practices similar to the Viterra Practices.

9 The Cargill Parties accepted that Cargill Australia appreciated in 2013 that some participants in the commercial malting industry cheated customers by, at times, not complying with contractual specifications or not accurately reporting test results. However, they contend that nothing Cargill Australia knew or suspected about other industry participants could have caused it to conclude that Joe White was cheating its customers in the manner alleged.

10 The key parties in the proceeding have filed opposing expert reports relating to whether participants in the commercial malting industry, at the relevant time, engaged in practices similar to the Viterra Practices.

11 In particular, the Viterra Parties filed a report prepared by their expert, Bruce French ("French") dated 30 March 2018, which was subsequently amended on 8 November 2018 ("the French Report").

12 On 11 February 2019, orders were made requiring that the French Report be revised to reflect a ruling delivered on that date.[5] Pursuant to those orders, the Viterra Parties filed and served a revised report of French on 4 March 2019 ("the Revised French Report"). There is a single page document attached to the Revised French Report, titled "Engagement in industry practices prior to and on or about August 2013" ("Schedule A"). The Viterra Parties make a claim for confidentiality with respect to the contents of Schedule A.

13 Initially, the Viterra Parties applied for a confidentiality order with respect to the entirety of Schedule A. That schedule lists 30 "Malting Company (Maltsters)".[6] Adjacent to the name of each maltster were entries, listed in 3 columns, signifying whether, in French's opinion, that maltster: (1) used gibberellic acid without the approval of its customers; (2) used non-approved varieties of barley; and (3) used certificate-of-analysis procedures similar to Joe White when providing information to its customers.

14 In the Viterra Parties' written submissions dated 13 March 2019, confidentiality was claimed based on an assertion that French obtained relevant aspects of that information "by virtue of contractually restricted confidential access granted to him by the maltsters" listed in Schedule A. There was no evidence before the court to support this submission.

15 However, during oral submissions, the Viterra Parties did not seek to maintain confidentiality with respect to the information in the third column of Schedule A, dealing with certificate-of-analysis procedures. It was stated that that conduct, of supplying customers with certificates of analysis which misstated the results of analytical testing, was so ubiquitous and well-known in the commercial malting industry that confidentiality could not properly be claimed in respect of it. Obviously, this represented a significant shift from the position stated in the Viterra Parties' written submissions.

16 In order to establish that the balance of the information in question was confidential, the Viterra Parties tendered 2 documents, both from a maltster listed in Schedule A.

17 The first of these was a letter of offer to French dated 5 March 2002 (co-signed by French on 7 March 2002), which included the following:

As you know, you shall not disclose or use either during or after your employment with the company any secret or confidential information, or information which in good faith and good conscience ought to be treated as confidential relating to the [c]ompany, its employees, or its customers without the prior written consent of the company.

18 The second document, entitled "Retirement Agreement" and dated 21 August 2013, listed French as the "Retiree" and contained the following clause:

The Retiree recogni[s]es and acknowledges that during his employment with the [c]ompany he had access to certain confidential and proprietary information, the disclosure of which could be harmful to the interests of the [c]ompany. The Retiree acknowledges and agrees that he has taken and will in future take appropriate precautions to safeguard the [c]onfidential [i]nformation of the [c]ompany.

19 Consistent with these clauses, but, again, in contrast to the Viterra Parties' written submissions, the Viterra Parties informed the court that, in fact, only line 4 of Schedule A (which listed the maltster in the 2 documents referred to above) was the subject of the confidentiality claim. However, it was submitted that it was necessary that any confidentiality order also capture the remaining line items in Schedule A in order to indirectly protect the confidentiality of the maltster referred to. It was submitted that, if the names of the maltsters listed in the remaining line items were disclosed, then the identity of the maltster in question could be ascertained by a process of elimination and by reference to the contents of the Revised French Report.

20 As a solution, counsel for the Viterra Parties submitted that the maltsters listed in Schedule A could be referred to by the numerical order in which they were listed in the document, and that doing so would only constitute a "minor inconvenience to the cross-examiner". It was also submitted that whilst the maltster had been identified in the body of the Revised French Report, it was merely identified as an employer of French and not whether it engaged in the conduct referred to in Schedule A. Similarly, it was submitted that confidentiality had not previously been waived with respect to that maltster, as French had not previously stated whether French's employer had, itself, engaged in the alleged conduct.

21 When asked whether the Viterra Parties were in effect asking the court to be complicit in keeping the alleged practices the subject of the Revised French Report confidential, the Viterra Parties submitted that it was not asking the court to conceal those matters from the public, but to direct the cross-examination in such a way as to preserve French's contractual obligations. Further, it was submitted that the court was not being asked to make any finding or "pass judgment or comment" on a private contractual matter between French and the particular maltster.

22 When invited by the court to refer to any authority which would support the orders sought, the Viterra Parties chose not to identify any. Essentially, the submission was that French had agreed to keep certain information confidential and that preserving that confidentiality required that the contents of Schedule A not be disclosed to those beyond the parties and the court.

23 In response, the Cargill Parties submitted that there was nothing to suggest that disclosing the contents of Schedule A would prejudice the administration of justice. It was also submitted that the wording of the 2 documents tendered on this application was very general in nature and could not apply to the subject matter of the present application. Finally, it was submitted that it was not apparent why it was necessary to conceal the names of the other entities listed in Schedule A, in addition to the entity to whom it was said French owed confidentiality obligations.

24 The first principle relevant to this application is the principle of open justice. This principle requires that, save for in exceptional circumstances, court proceedings occur in open court and the evidence is open to the scrutiny of the public.[7]

25 In John Fairfax & Sons Ltd v Police Tribunal (NSW), McHugh JA explained: [8]

The fundamental rule of the common law is that the administration of justice must take place in open court. A court can only depart from this rule where its observance would frustrate the administration of justice or some other public interest for whose protection Parliament has modified the open justice rule. The principle of open justice also requires that nothing should be done to discourage the making of fair and accurate reports of what occurs in the court room. Accordingly, an order of a court prohibiting the publication of evidence is only valid if it is really necessary to secure the proper administration of justice in proceedings before it. Moreover, an order prohibiting publication of evidence must be clear in its terms and do no more than is necessary to achieve the due administration of justice. The making of the order must also be reasonably necessary; and there must be some material before the court upon which it can reasonably reach the conclusion that it is necessary to make an order prohibiting publication.

26 Although the legislation is not directly applicable to this application,[9] it is noteworthy that the principle of open justice has now been enshrined by Parliament in the Open Courts Act 2013 (Vic).[10] In referring to that Act, the High Court stated in Commissioner for the Australian Federal Police v Zhao:[11]

The rationale of the principle is that court proceedings should be subjected to public and professional scrutiny, and courts will not act contrary to the principle save in exceptional circumstances.

27 Further, in Dye v Commonwealth Securities Ltd (No 2), the purposes served by public scrutiny of the evidence led in a proceeding were explained as follows:[12]

The principle of open justice operates on the premise that all the material placed in evidence before a court and on which, in open court, it is asked to act is open to public scrutiny. That is because publicity itself has purposes of both informing the public of how judicial power is exercised and ensuring that the courts are accountable for the use of that power entrusted to them.

28 In exceptional circumstances, the administration of justice may require that the principle of open justice give way to a compelling need for confidentiality. However, any such departure from the principle of open justice must be justified, and no more than is strictly required for the administration of justice.[13] For example, a compelling need for confidentiality may require that a court make a pseudonym order,[14] de-identifying a party to a proceeding or a person the subject of evidence. However, for a court to make a pseudonym order, it will ordinarily be necessary for the person seeking such an order to provide the court with cogent evidence capable of persuading the court that such an order is necessary to secure the proper administration of justice.[15]

29 In addition, another principle known as the "iniquity rule" is relevant.

30 The authorities relating to the existence and scope of this principle were canvassed by Kaye J in British American Tobacco Australia Ltd v Gordon (No 3).[16] In short, information whose subject matter pertains to the "existence or real likelihood of the existence of an iniquity in the sense of a crime, civil wrong or serious misdeed of public importance"[17] will lack the necessary attribute of confidence required to prevent disclosure to interested third parties.[18]

31 What is required is a consideration of whether an iniquity exists, by reference to what "conscionable behaviour demands". This is a different approach than merely requiring the party seeking disclosure of the confidential information to identify public interest grounds.[19]

32 Based on the materials before me, I cannot be satisfied that there exists a compelling need for confidentiality capable of justifying a departure from the evidence being given openly in open court. There are a number of matters giving rise to this conclusion.

33 First, there was no obligation on French to disclose to the Viterra Parties the information the subject of this application said to be confidential to French's former employer. French voluntarily did so.

34 It was submitted by the Viterra Parties that French did not anticipate that, by initially disclosing in the French Report the prevalence of practices and procedures similar to the Viterra Practices in the commercial malting industry, he would then be required to disclose the names of the maltsters said to engage in those practices. It was submitted that French had revealed the names of maltsters only after a court order compelled him to do so.[20]

35 This submission is not compelling. It is notable that French did not give any evidence to that effect. This is not surprising given that French undoubtedly would have expected to have been the subject of cross-examination, and the Cargill Parties have to date strongly disputed that practices similar to the Viterra Practices were common in the commercial malting industry. Certainly, the Viterra Parties could hardly have reasonably reassured French that, by allowing the French Report to be filed and served, he would not be required to disclose the names of the maltsters which he subsequently identified in Schedule A.

36 It is also notable that after the court made orders compelling the disclosure of the names of the maltsters said to engage in practices similar to the Viterra Practices,[21] French was again willing to - and did - disclose that information without first ascertaining whether the parties and the court would agree to that information being kept confidential. This is despite the fact that the Viterra Parties had made it clear they intended to rely on that evidence in open court.

37 Secondly, there is no obligation on the Viterra Parties to lead the evidence the subject of this application. The Revised French Report, which includes Schedule A, has been filed voluntarily by the Viterra Parties. French is to be called as a witness in circumstances where there is no obligation on the Viterra Parties to call him.

38 Thirdly, and in any event, the information the subject of this application is not said to be confidential to French, but to his former employer, the maltster identified in line 4 of Schedule A. As noted above,[22] this maltster has had notice of this application and has chosen not to be heard on it. It is of considerable significance that the person for whom protection is being sought by French or the Viterra Parties has chosen not to make any submissions seeking to maintain the confidentiality said to be owed to it.

39 Finally, the Viterra Parties seek to lead evidence of practices they contend prevail throughout all, or substantial parts, of the commercial malting industry internationally. It has been foreshadowed that French will give evidence to the effect that commercial maltsters commonly use a substance, gibberellic acid, in malt production even when contractually prohibited from doing so; use barley varieties beyond those contractually permitted; change certificates of analysis provided to customers such that those certificates do not accurately record the results of testing; and that maltsters also fail to disclose any such conduct to their customers.

40 In these circumstances, the Viterra Parties' application amounts to an invitation to the court to limit proper disclosure of what, on the face of the French Revised Report (at least as characterised by the Viterra Parties), could only be described, at best, as unsatisfactory commercial practice. It is difficult to see how the court could act consistently with the principles of open justice, and the principles underpinning the iniquity rule, if it were to assist the Viterra Parties or French from keeping any part of the relevant information confidential.

41 Put bluntly, given the nature of the proposed evidence, there would have to be very strong competing factors to those which mandate open justice in commercial cases generally for the court to make orders protecting such information. None have been demonstrated on this application.

42 It must follow that no order will be made with respect to any claim for confidentiality by the Viterra Parties.

[1] Cargill Australia Limited v Viterra Malt Pty Ltd (No 20) [2019] VSC 44.

[2] Now known as Cargill Malt Asia Pacific Pty Ltd.

[3] An email from the non-party was provided to the court, which stated its position.

[4] Certificates of analysis accompanied malt supplied by Joe White to its customers and included or purported to include details of testing that had been conducted in respect of the malt supplied.

[6] Two of these maltsters were Cargill, Inc and Joe White, for which French did not record entries in the corresponding columns.

[7] Botsman v Bolitho [2018] VSCA 278, [244] (Tate, Whelan and Niall JJA). See also Hogan v Hinch [2011] HCA 4; (2011) 243 CLR 506, 530-532 [20]-[22] (French CJ), and the cases there cited.

[8] (1986) 5 NSWLR 465, 476G-477C.

[9] Secretary, Department of Justice and Regulation v Zhong (No 2) [2017] VSCA 19, [3] (Santamaria, Ferguson and McLeish JJA); PQR v Secretary, Department of Justice and Regulation (No 1) (2017) 53 VR 45, 53-54 [24] (Bell J), and the cases there cited.

[11] [2015] HCA 5; (2015) 255 CLR 46, 60 [44] (French CJ, Hayne, Kiefel, Bell and Keane JJ).

[12] [2010] FCAFC 118, [121] (Marshall, Rares and Flick JJ).

[13] Botsman v Bolitho [2018] VSCA 278, [245] (Tate, Whelan and Niall JJA); Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663, [437] (Osborn JA).

[14] The use of pseudonyms are generally reserved for cases involving matters such as children, mental impairment, family violence, guardianship, sexual offence complainants and criminal intelligence. See also PQR v Secretary, Department of Justice and Regulation (No 1) (2017) 53 VR 45, 52 [21], 70-71 [65]-[77].

[15] See, for example, Secretary, Department of Justice and Regulation v Zhong (No 2) [2017] VSCA 19, [3]-[4] (Santamaria, Ferguson and McLeish JJA); ABC v D1; Ex Parte The Herald & Weekly Times Limited [2007] VSC 480, [62], [65], [67]-[68], [71] (Forrest J).

[16] [2009] VSC 619, [105]-[119]. See also Australian Football League v The Age Company Ltd [2006] VSC 308; (2006) 15 VR 419, 436-437 [67]-[71] (Kellam J).

[17] British American Tobacco Australia Ltd v Gordon (No 3) [2009] VSC 619, [108], [113], and the cases there cited.

[18] See also Corrs Pavey Whiting and Byrne v Collector of Customs (Vic) [1987] FCA 266; (1987) 14 FCR 434, 454.1 (Gummow J).

[19] Sullivan v Sclanders [2000] SASC 273; (2000) 77 SASR 419, 426-427 [41]-[45] (Gray J, with whom Prior and Williams JJ agreed). See also Australian Football League v The Age Company Ltd [2006] VSC 308; (2006) 15 VR 419, 440 [83] (Kellam J).

[20] The orders dated 11 February 2019 stated:

6. The defendants file and serve further particulars to paragraph 44(a) of their defence, to the extent that the defendants are able to do so, identifying in accordance with paragraph 37(1) of Cargill Australia Ltd v Viterra Malt Pty Ltd (No 18) [2018] VSC 772, by name, location, or other relevant matter, the other commercial malthouses that are said to have engaged in the "Industry Practices".