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[2019] VSC 351
Supreme Court of Victoria
2019-05-21
ELLIOTT J
Original judgment source is linked above.
PRACTICE AND PROCEDURE - Pleadings - Application for leave to amend defence during trial - Application for leave to file additional expert report - Application made late - Whether prejudice if leave granted - Whether delay in application a mere oversight or tactical decision - Supreme Court (General Civil Procedure) Rules 2015 (Vic), rr 1.14(1)(b), 36.01(1) - Civil Procedure Act 2010 (Vic), s 7.
For the plaintiff and the 1st and 2nd third parties
1 The defendants ("the Viterra Parties") seek leave to file and serve an expert report very late in the proceeding.[1] Further, and in reliance on this further evidence, the Viterra Parties seek leave to amend their defence to raise allegations concerning standards for the testing, analysis and certification of the production of malt.
2 For the reasons that follow, the Viterra Parties are granted leave to file and serve a limited version of that expert report, and for that expert to give evidence promptly. Further, the Viterra Parties are granted leave to file and serve a further amended defence which reflects issues arising from that further expert evidence, except for 2 proposed subparagraphs which are unsatisfactory for reasons explained below.[2]
3 The key facts of this proceeding have been set out elsewhere and, for the purposes of this application, may be shortly stated.[3]
4 This proceeding was brought by the plaintiff, Cargill Australia Ltd ("Cargill Australia"), following its acquisition of the second third party, Joe White Maltings Pty Ltd ("Joe White"),[4] from the Viterra Parties.
5 The Viterra Parties comprise the 3 vendor companies: Viterra Malt Pty Ltd, Viterra Operations Ltd and Viterra Ltd, as well as Glencore International AG ("Glencore"), the ultimate holding company.
6 On 4 August 2013, Cargill Australia agreed to purchase Joe White from the Viterra Parties, save for Glencore, for the sum of A$420 million ("the Acquisition Agreement"). That purchase was completed on 31 October 2013 ("the Acquisition").
7 Put simply, Cargill Australia, together with the first third party, Cargill, Incorporated ("Cargill, Inc"), and Joe White (together, "the Cargill Parties") allege that Cargill Australia completed the Acquisition in reliance on a series of misleading representations and warranties.
8 Amongst other things, the Cargill Parties claim that the Viterra Parties failed to disclose the existence of certain alleged practices ("the Viterra Practices") engaged in by Joe White ("the Non-Disclosure Allegation").[5] Specifically, it is alleged that Joe White, routinely, and without informing customers:
(1) Supplied malt to customers that was produced using barley varieties other than those specified by the customer ("the Non-Approved Barley Practice").
(2) Used gibberellic acid in the malt production process contrary to the terms of customer contracts ("the Gibberellic Acid Practice").
(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 ("the Certificate of Analysis Practice").[6]
9 The Cargill Parties further allege that the Viterra Practices were recorded and endorsed by certain written policies ("the Viterra Policies").
B.2 The Viterra Parties' defence concerning the Viterra Practices and Policies
10 The Viterra Parties' response to the Non-Disclosure Allegation, has evolved throughout this proceeding, and across several iterations of the defence.
11 First, in their defence filed 19 December 2014, the Viterra Parties did not admit the Non-Disclosure Allegation, and said further that, in any event, there was no requirement for disclosure to Cargill Australia or Cargill, Inc, nor were there any consequences flowing from any non-disclosure.
12 Secondly, in their defence filed 15 August 2017 to the second further amended statement of claim, the Viterra Parties introduced an additional element to their response to the Non-Disclosure Allegation; namely, that prior to entry into the Acquisition Agreement, Cargill Australia and Cargill, Inc had relevant knowledge of the Viterra Practices.
13 Thirdly, in their defence filed 13 December 2018 to the fourth further amended statement of claim, the Viterra Parties, belatedly,[7] moderated their initial blanket non-admission of the Non-Disclosure Allegation. Specifically, the Viterra Parties introduced admissions that Joe White had generally conducted its business in accordance with certain of the Viterra Policies, and that, at least on occasions, Joe White had engaged in the Non-Approved Barley Practice and the Gibberellic Acid Practice.[8]
14 Finally, this application is for leave to introduce a further additional element to the Viterra Parties' response to the Non-Disclosure Allegation; namely, and in very simple terms, that 1 of the Viterra Policies[9] alleged to record and endorse the Certificate of Analysis Practice was a permissible decision-making rule or policy designed to take into account error and uncertainty inherent in chemical testing.[10]
15 To an extent, this application has its genesis in a previous, partially-abandoned, application by Cargill Australia to further amend its statement of claim.
16 On 29 March 2019, senior counsel for the Cargill Parties advised the court that Cargill Australia had identified the need to make "some minor and technical amendments" to the most recent iteration of its statement of claim, and that draft proposed amendments had been circulated to the parties. However, no formal application for leave to amend was made at the time.
17 On 30 April 2019, the Cargill Parties advised the court, in correspondence, that Cargill Australia intended to make an application for leave to further amend its statement of claim. That correspondence enclosed an affidavit in support, which exhibited a proposed amended statement of claim ("the Proposed Fifth Further Amended Statement of Claim"). Cargill Australia's application was listed for hearing on 7 May 2019.
18 The Proposed Fifth Further Amended Statement of Claim contained the following proposed amendments, which may be grouped as follows for convenience:
(1) Amendments to paragraphs 19(a) and 48 (together, "the Ryan Amendments").
(2) Amendments to paragraphs 18 and 18A (together, "the Attribution Amendments").
(3) Amendments to paragraphs 37CA, 37CB, 37FA and 37FB (together, "the Youil and Argent Amendments").
(4) Amendments to paragraphs 40, 40B, 42 and 43 (together, "the Certificate of Analysis Amendments").
19 It is presently unnecessary to set out the substance of the Ryan, Attribution, and Youil and Argent Amendments.
20 Of the Certificate of Analysis Amendments, the most significant was a proposed paragraph 40B, which was then cross-referenced in amendments to paragraphs 40, 42, and 43. The proposed paragraph 40B read:
Each of the certificates of analysis identified in the particulars to subparagraph 19(a) (under the heading "analytical specifications"):
(a) stated that the malt supplied to customers with the certificate of analysis complied with the customer's contractual requirements and specifications when it did not, and was accordingly prepared and/or provided to the customer in contravention of section 18 of the [Australian Consumer Law]; and
(b) was incomplete because it did not disclose that the results of analytical testing had been mis-stated on the certificate, in that the certificate reported that the malt supplied with the certificate complied with the customer's contractual requirements and specifications when it did not.
21 On 3 May 2019, the Viterra Parties filed and served an affidavit sworn that day by Mark Anthony Troiani ("Troiani"), a solicitor acting for the Viterra Parties. In that affidavit, Troiani stated that, "in light of the content" of the proposed paragraph 40B:
[I]t was necessary [for the Viterra Parties] to seek some assistance from an expert on measurement uncertainty (and related matters) in order to consider whether, in responding to paragraph 40B, some scientific explanations/rationales on the practice of measuring and reporting of laboratory testing would be useful.
22 Troiani indicated that lawyers for the Viterra Parties had previously instructed Professor D Brynne Hibbert ("Hibbert"), an emeritus professor in analytical chemistry, to prepare an expert report. Hibbert had been initially approached by the Viterra Parties in early March 2019, but was formally instructed on 17 April 2019. His report, dated 3 May 2019, was exhibited to Troiani's 3 May 2019 affidavit ("the Hibbert Report").
23 In the Hibbert Report, Hibbert provides responses to the following 4 questions:
(1) Is it possible to measure (especially in industry/commerce) specific characteristics of an agricultural product such as malt, with complete certainty? ("Question 1").[11]
(2) In light of the response to Question 1, what adjustments might legitimately be made to chemical analysis results, derived purely from an instrument or process, in endeavouring to produce an acceptably accurate measurement of the characteristics of the product? ("Question 2").[12]
(3) With reference to applicable international standards/guidelines, having made 5 specified assumptions,[13] and including an explanation of the role of a decision rule, how might the above matters give rise to a variety of ways in which the measured result of a measurand (as adjusted in accordance with the response to Question 2) might be reported to a customer for specification compliance purposes? ("Question 3").
(4) On the same assumptions as set out for Question 3, is the Joe White Certificate of Analysis Policy[14] an example of a decision rule? ("Question 4").
24 Troiani further indicated that, in light of the allegations included in the Proposed Fifth Further Amended Statement of Claim, the Viterra Parties intended to apply for leave to file an amended defence responsive to the allegations proposed to be introduced ("the Proposed Amended Defence").
25 The critical component of the Proposed Amended Defence was a proposed paragraph 65A, which reflected opinions of Hibbert contained in the Hibbert Report.
26 On 6 May 2019, the court, in correspondence to the parties, requested that the Cargill Parties indicate, in advance of the hearing of Cargill Australia's application:
[I]f leave is granted to Cargill Australia to file and serve the [F]ifth [F]urther [A]mended [S]tatement of [C]laim on the basis that the [Viterra Parties] are entitled to call Professor Hibbert, would Cargill Australia call its own expert on the subject matter, and if so, when it would be in a position to do so?
27 In submissions filed later that day, Cargill Australia stated that it was not yet in a position to adequately consider whether to call evidence from a responsive expert, let alone identify, engage and instruct such an expert, or establish any such expert's availability to give evidence in this proceeding.
28 On 7 May 2019, the hearing of Cargill Australia's application commenced. At that hearing, the Ryan, Attribution, and Youil and Argent Amendments, which did not involve any new evidence, were addressed separately from the Certificate of Analysis Amendments.
29 Senior counsel for the Viterra Parties did not oppose the Ryan Amendments, or Attribution Amendments, but did object to the Youil and Argent Amendments. The Youil and Argent Amendments allege attribution of relevant conduct of each of the fourth third party, Peter Youil ("Youil"), and the seventh third party, Scott Argent ("Argent"), to both of Glencore and Viterra under s 139B(2) of the Competition and Consumer Act 2010 (Cth). In brief, senior counsel for the Viterra Parties objected to the Youil and Argent Amendments on the basis that they constituted a belated and "substantive" change in the way Cargill Australia put its case.
30 Senior counsel for the Cargill Parties, submitted, candidly, that the Youil and Argent Amendments were intended to correct the inadvertent omission of attribution pleadings with respect to Youil and Argent. That omission was, it was said, the product of "human error". The court was informed that it had not been appreciated by the Cargill Parties until it was identified in the process of formulating closing submissions. Senior counsel for the Cargill Parties submitted that correcting that omission would cause no relevant prejudice, as the relevant factual allegations - that Youil and Argent were, at the relevant times, representatives of the Viterra Parties - had long been in the pleadings, and mirrored an existing attribution plea in respect of the third third party, Gary Hughes.
31 Ultimately, I was satisfied that leave to make the Youil and Argent Amendments was appropriate, in substance because it would ensure that the pleadings properly reflected the case that the Cargill Parties were advancing, and because the Youil and Argent Amendments would not require further evidence or cause any material delay or prejudice to the opposing parties. Accordingly, leave was granted for Cargill Australia to make the Ryan, Attribution, and Youil and Argent Amendments.
32 In relation to the Certificate of Analysis Amendments, the Cargill Parties were not, by the time of the hearing on 7 May 2019, able to inform the court as to their position in respect of the timing of any responsive expert evidence to the Hibbert Report. I formed the view that, absent this information, the court could not adequately assess the consequences, including any delay that might follow, should leave be granted to make the Certificate of Analysis Amendments and for the Viterra Parties to file the Proposed Amended Defence including proposed paragraph 65A, and the Hibbert Report. Accordingly, the application was adjourned, part heard, to 9 May 2019.
33 On 9 May 2019, when the hearing of the application resumed, senior counsel for the Cargill Parties informed the court that "because of the practical difficulties that would be caused to [Cargill Australia] by the need to attend to the Hibbert evidence" the Certificate of Analysis Amendments would not be pressed.
34 Nonetheless, senior counsel for the Viterra Parties stated that, notwithstanding the revised position of the Cargill Parties, the Viterra Parties wished to apply for leave to amend their defence substantially in the form of the Proposed Amended Defence, and to rely on the Hibbert Report and the evidence of Hibbert. Not surprisingly, the Cargill Parties stated they needed some time to consider their position.
35 In anticipation of the Viterra Parties' application, I invited the Viterra Parties to consider the extent to which the Viterra Parties wished to rely on the Hibbert Report. In particular, I suggested that the Viterra Parties consider whether they wished to rely on all of the Hibbert Report, including Hibbert's opinions in response to Question 4 in relation to the specific position of Joe White and the characterisation of the Viterra Practices and Policies, or whether the Viterra Parties wished to rely only on that part of the Hibbert Report relating to how_, in general_, an analytical chemist might approach testing. I foreshadowed that seeking to rely on the entirety of Hibbert's evidence may have more significant procedural repercussions, including that it would increase the likelihood that certain other witnesses, whose evidence had also characterised the Viterra Practices and Policies, may need to be recalled.
37 The Viterra Parties filed and served a summons, seeking the following orders:
38 Simultaneously, the Viterra Parties filed and served an outline of submissions, and the second affidavit sworn by Troiani.
39 Exhibited to Troiani's second affidavit is a further version of the Proposed Amended Defence revised to reflect Cargill Australia's abandonment of the Certificate of Analysis Amendments ("the Revised Amended Defence"). The key revision is the relocation of paragraph 65A of the Proposed Amended Defence to paragraph 30 of the Revised Amended Defence. Paragraph 30 of the Revised Amended Defence relevantly provides:
30. As to paragraph 19, they:
...
(e) say further that:
(i) any laboratory test measurement of the properties of material such as malt is necessarily subject to error and uncertainty;
(ii) the main causes of such error and uncertainty are:
(A) inherent limitations on the precision of the testing equipment and testing procedures;
(B) random effects, including natural variability of the material;
(C) sampling effects; and
(D) systematic/recovery bias errors;
(iii) as a result, any laboratory test measurement is only an estimate/approximation of the true value of the measurand (ie the physical/chemical property being measured) and merely implies a range of values which can be reasonably attributed to the measurand, such that the true value of the measurand cannot be determined;
(iv) accordingly, the supplier/producer must seek to ensure that any laboratory test measurement best takes into account all of the known effects of error and uncertainty including the application of the subjective experience or expertise of the laboratory professionals conducting the measurements;
(v) recognising the matters sets out in (iii) and (iv) above, a supplier/producer's process for determining whether or not a product complied with contractual specifications such that it can be released to its customer, can include a set of decision-making rules or polices (a Decision Rule);
(vi) uncertainty in laboratory test measurement can be addressed by the application of subjective experience/expertise of a suitably qualified person;
(vii) a Decision Rule can take into account:
(A) inherent limitations on the precision of the testing equipment and testing procedures; and/or
(B) random effects including natural variability of the material'
by reference to industry accepted objective quantification of the magnitude of such uncertainty;
(viii) one such objective quantification accepted within the commercial malting industry and brewing industry is that derived from continuing (corroborative) programs such as the ASBC Laboratory Proficiency Program (LPP) and the Maltsters of Great Britain Malt Analytes Proficiency Testing Scheme (MAPS) to incorporate a tolerance of two standard deviations to the measurement of measurands in respect of malt;
(ix) the Viterra Malt Certificate of Analysis Generation Procedure referred to at subparagraphs (bb) and (bc) above[15] is an example of a Decision Rule ([Joe White] Decision Rule).
Particulars
The defendants refer to:
(a) The expert report of Professor D Brynn Hibbert dated 3 May 2019;
(b) Eurachem/CITAC Guide entitled "Use of uncertainty information in compliance assessment" (2007);
(c) JCGM 100:2008 entitled "Evaluation of measurement data - Guide to the expression of uncertainty in measurement", and referred to in the expert report of Professor Hibbert as the "GUM";
(d) JCGM 106:2012 entitled "Evaluation of measurement data - The role of uncertainty in conformity assessment"; and
(e) JCGM 200 entitled "International vocabulary of metrology - Basic and general concepts and associated terms".
(f) say further that, to the extent that the contents of the certificate of analysis identified in the particulars to subparagraph 19(a) of the Fifth Further Amended Statement of Claim (under the heading "analytical specifications") included measurements which had been adjusted to account for error, such adjustments were consistent with relevant international standards (as identified in the particulars to subparagraph (e) above); and
(g) say further that, to the extent that the contents of the certificates of analysis identified in the particulars to subparagraph 19(a) of the Fifth Further Amended Statement of Claim (under the heading "analytical specifications") included measurements which had been adjusted by references to requirements and specifications set out in customer contracts (which is denied), those certificates were prepared by [Joe White] in compliance with the [Joe White] Decision Rule, and, therefore, in accordance with relevant international standards (as identified in the particulars to subparagraph (e) above).
Particulars
In respect to the allegation that certificates of analysis were prepared by [Joe White] in compliance with the [Joe White] Decision Rule, the defendants refer to:
(a) McIntyre (P20), [58]-[59],
(b) Stewart (D8), [125] where he said, "I instructed plant managers and other staff not to make any adjustments outside the procedure."
40 Also exhibited to Troiani's second affidavit is a version of the Hibbert Report in which the parts of the Hibbert Report the Viterra Parties no longer wish to rely upon have been struck through ("the Revised Hibbert Report").[16] The Revised Hibbert Report comprises only Hibbert's responses to Questions 1, 2, and 3.
41 On 17 May 2019, the Cargill Parties filed and served submissions opposing the Viterra Parties' summons, and an affidavit sworn by Janet Whiting ("Whiting"), a solicitor acting for the Cargill Parties. On 19 May 2019, the Cargill Parties filed and served a second affidavit sworn by Whiting. The Whiting affidavits, amongst other things, set out details of documents recently obtained containing communications between the Viterra Parties' solicitors and Hibbert, and complained that there were still further documents that had been requested that were yet to be provided.
C.2 The court's enquiries in relation to responsive evidence
42 On 10 May 2019, the court, in correspondence to the parties, requested that the Cargill Parties provide to the court, by 15 May 2019, responses to the following questions:
2. If so, how much time would the Cargill Parties require to do so?
43 Further, in that correspondence, it was directed that, if the answer to the first question was "yes", the Cargill Parties take pro-active steps in advance of the hearing of the Viterra Parties' application to engage and instruct any responsive expert.[17]
44 That correspondence made plain that no view had been formed on the merits of the Viterra Parties' application, and that the responses sought and the direction given were simply to minimise any potential delay and disruption to the proceeding. These steps were taken so that the court would be in the best position to determine the outcome of the application in accordance with the overarching purpose.[18]
45 On 15 May 2019, the Cargill Parties responded, stating that they had made "various enquiries" seeking to identify possible responsive experts, but were not in a position to advise the court as to how much time would be required to put on any responsive evidence. Further, the Cargill Parties stated that the steps required to respond to the Revised Amended Defence would be more extensive than simply engaging a responsive expert, and that, as a result, the Cargill Parties would not be able to fully and effectively respond to the court's enquiries until the court had made a decision on the Viterra Parties' application.
46 On 16 May 2019, the court, in correspondence to the parties, indicated that this response did not assist the court, and requested a further response from the Cargill Parties by 17 May 2019. The Cargill Parties were asked to assume, strictly for the purpose of that response, that the Viterra Parties' application would be successful.
47 Later on 16 May 2019, the Cargill Parties, in correspondence to the court, indicated that, should the Viterra Parties' application succeed, the Cargill Parties would cross-examine Hibbert, but not call any expert evidence in response to Hibbert's evidence. The Cargill Parties further indicated that, should the Viterra Parties' application succeed, the Cargill Parties would ask that the timing of his evidence be the subject of consultation between the parties, so as to accommodate the schedule of senior counsel for the Cargill Parties. Finally, the Cargill Parties requested a short extension to file and serve any further material in response, which was granted.
C.3 The court's enquiries in relation to proposed subparagraphs (f) and (g)
48 On 15 May 2019, the court, in correspondence to the parties, referred to proposed subparagraphs (f) and (g) of paragraph 30 of the Revised Amended Defence. Those subparagraphs raised allegations that "to the extent that" certain certificates of analysis had been adjusted to account for error, or adjusted by reference to customer requirements and contractual specifications, that such adjustments were in accordance with relevant international standards.
49 In that correspondence, the court raised the following 2 issues, which it requested that the counsel for the parties be prepared to address at the hearing of this application:
(1) To which certificates of analysis, amongst the 4,362 certificates of analysis, do the allegations in proposed subparagraphs (f) and (g) of paragraph 30 of the Revised Amended Defence relate?[19]
(2) Relatedly, and in accordance with a direction given by the court prior to the trial commencing, how would certificates of analysis and related material be presented to the court, consistently with the overarching purpose, and so that it would not be necessary for the court to consider each of the 4,362 certificates of analysis individually (other than, perhaps, by way of a test case in relation to particular categories)?
50 Again, these pro-active enquiries were made by the court so that the parties would be well-placed to address relevant issues at the hearing of this application, and therefore to minimise the potential for delay and disruption to the proceeding.
51 It was common ground that it was necessary for the Viterra Parties to separately seek leave to file and serve the Hibbert Report and to file and serve the Revised Amended Defence. Further, there were certain aspects of the Revised Amended Defence to which, ultimately, the Cargill Parties did not object, namely, subparagraphs (i), (ii), (iii), (iv) and (vi) of paragraph 30(e) of the Revised Amended Defence. This non-objection was appropriate in circumstances where those amendments deal with matters that have already been the subject of extensive evidence and no delay or prejudice will arise from leave being granted in this regard.
52 The principles relating to the grant or refusal of leave to amend pleadings are well established, and have been set out in previous rulings in this proceeding.[20] They are repeated in brief for convenience.
53 Rule 36.01(1) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) empowers the court to grant leave, at any stage of the proceeding, to any party to amend any document for, amongst other purposes, the purpose of "determining the real question in controversy between the parties to any proceeding".
54 There is no right or entitlement for a party to amend its pleading.[21] Rather, the power to grant leave to a party to amend its pleading to raise an arguable issue is discretionary.
55 In deciding whether to exercise its discretion to grant leave to a party to amend its pleadings, the court must consider, amongst other factors:
(1) Whether the proposed amendments facilitate the identification of the real issues in dispute and the just resolution of the proceeding.[22]
(2) The nature and importance of the proposed amendments.[23]
(3) The case management considerations such as cost, delay and the potential for unfair prejudice to other parties to the proceeding, the court and other litigants that might arise if the proposed amendments are allowed.[24]
56 In exercising the discretionary power to grant leave, the court may give any direction or impose any term or condition it thinks fit.[25]
57 In my view, leave ought to be granted with respect to the Revised Hibbert Report. As the Cargill Parties' themselves submitted, the matters raised in Questions 1 and 2 have already been the subject of extensive evidence, including by way of cross-examination. Further, Question 3 is related to Questions 1 and 2 and relevant to the issues in the case. In short, such evidence will assist the court in determining the real issues between the parties concerning the practices and policies alleged to underlie the Viterra Practices and Policies.
58 However, it must be stated that the Cargill Parties were justified in their criticism of the timing of this application. It is extremely late. Further, the Hibbert Report could have been prepared long before the trial commenced as it does not arise out of matters that have been disclosed for the first time during the course of the trial. That said, the obvious oversight by the legal representatives of the Viterra Parties (which was candidly acknowledged by them) must be seen in the context of a very large case with multifarious issues. In a difficult case such as this, and in the circumstances presently before the court, some latitude ought to be given for delay which is the product of mere oversight, rather than a deliberate tactical decision to delay raising an issue until late in the trial.[26] A similar attitude was taken recently by the court in relation to the Cargill Parties' application for leave to file the Proposed Fifth Further Amended Statement of Claim.[27]
59 This was not the only criticism made. The Cargill Parties submitted that there had been an absence of candour from the Viterra Parties with respect to their dealings with Hibbert. I do not propose to descend into the details of these submissions, save to say that I reject any suggestion that there was any attempt to mislead the court about the basis upon which Hibbert was retained. From the moment the Hibbert Report was filed and served on 3 May 2019, it was openly disclosed that Hibbert had been initially approached in early March 2019. The timing of that initial approach is entirely consistent with the final decision to instruct Hibbert to prepare the Hibbert Report being made after the Cargill Parties foreshadowed amending the statement of claim in the manner in which they did.[28]
60 As to the effect on the trial of allowing this further evidence, the inconvenience is minimal. The evidence in the case has now concluded and closing submissions are due to commence on 18 June 2019.[29] Hibbert is available on numerous dates before then and his evidence will not go beyond a day. Accordingly, there will be little if any disruption to the overall timetable if the Viterra Parties are allowed to rely on the Revised Hibbert Report.
61 It is convenient to first deal with the proposed subparagraphs (f) and (g) to paragraph 30 of the Revised Amended Defence. During the course of argument, the court raised with the Viterra Parties a number of difficulties it had with those subparagraphs.[30]
62 As to proposed subparagraph (f), the allegation did not identify "the extent" to which certificates of analysis included measurements that have been adjusted to account for error. In short, the reader has no ability to identify which certificates of analysis are the subject of the allegation. In circumstances where 4,362 certificates of analysis have been the subject of evidence and are to be relied upon by Cargill Australia, some level of specificity is essential.[31] Further, the allegation did not identify the adjustments referred to. Furthermore, there was no attempt to state how any such unidentified adjustments "were consistent with" the relevant international standards.
63 As to proposed subparagraph (g), similar observations can be made insofar as the allegation contains the imprecise phrases "to the extent that", "included measurements which had been adjusted" and "requirements and specifications set out in customer contracts". Further, the phrase "those certificates" is also necessarily unclear. Furthermore, how it was said that any such certificates were "in compliance with the [Joe White] Decision Rule and, therefore, in accordance with relevant international standards" was not stated. In short, the proposed pleading is devoid of specificity and the reader is unable to precisely identify the certificates of analysis the subject of the allegation. In those circumstances, it follows that the ambit of the denial is also unclear.
64 These matters, together with the general impracticality of the court or the parties being unable to identify precisely what was being alleged, were raised with senior counsel for the Viterra Parties. He stated that any imprecision and impracticality was not intended by the Viterra Parties. Specifically, he stated, it was not intended that the proposed pleading require the court or the parties to consider certificates of analysis individually to identify which of those certificates are the subject of the allegations in subparagraphs (f) and (g). In any event, senior counsel for the Viterra Parties proposed that these subparagraphs of the Revised Amended Defence be re-drafted to better reflect the Viterra Parties' intent.
65 As a result of this exchange, leave to amend was refused with respect to these subparagraphs. Senior counsel for the Viterra Parties stated that they would promptly re-draft these subparagraphs and then seek further leave to amend the defence to include the subparagraphs as re-drafted. The application for further leave has been fixed to be heard today.
66 The remaining matters to address are subparagraphs (v), (vii), (viii) and (ix) of paragraph 30(e) of the Revised Amended Defence. Consistent with my ruling with respect to the Revised Hibbert Report, in my view leave should be granted to allow these further allegations to be made. There has been extensive evidence already concerning whether or not the Viterra Practices or Policies can be justified on a scientific basis. To date, the court has not had the benefit of any independent expert evidence on this issue. Although Hibbert's evidence will not now specifically address the practices and policies under consideration, his expert evidence will provide a basis for the Viterra Parties to allege that such practices and policies were consistent with established scientific principles and practices. Of course, the extent to which any of Hibbert's evidence has the capability of being ultimately determinative of the issues for the court to decide will be a matter for final submissions. Nonetheless, the Viterra Parties ought to be able to advance this aspect of the defence, which has been alluded to throughout the trial, though not with nearly the specificity now identified.
67 In my view, the Cargill Parties have not identified any real prejudice that would arise if these amendments are allowed. Although they have undoubtedly made forensic decisions concerning evidence to be called and matters to be the subject of cross-examination without the benefit of knowing of Hibbert's evidence, broadly speaking, the issues raised have been live ones throughout the trial. Moreover, the Cargill Parties effectively indicated during oral submissions that, if leave were granted, they would not seek to have any witness recalled or to call any fresh evidence. Accordingly, the level of disruption and inconvenience is, relatively, quite small.
68 Leave will be granted to the Viterra Parties to file and serve the Hibbert Report, and tender it at trial, on the basis that Hibbert is made available for cross-examination in the near future. Further, leave will be granted to amend the defence to include the allegations in paragraph 30(e) of the Revised Amended Defence. However, leave will be refused with respect to paragraph 30(f) and (g) of the Revised Amended Defence.
69 Orders will be made accordingly, together with any consequential timetabling orders relating to pleadings and closing submissions.
[1] The trial of the proceeding commenced on 18 June 2018. The evidence concluded on 9 May 2019.
[3] For a more detailed account of the facts, see Cargill Australia Ltd v Viterra Malt Pty Ltd [2017] VSC 126, [2]-[28] (Daly AsJ).
[4] Joe White is now known as Cargill Malt Asia Pacific Pty Ltd.
[5] The Non-Disclosure Allegation is contained in paragraph 19 of the statement of claim.
[6] Certificates of analysis accompanied malt supplied by Joe White to its customers and included or purported to include details of the malt supplied, including the results of testing that had been conducted in respect of that malt.
[7] On numerous occasions before this time, in light of the evidence at trial, the court raised with the Viterra Parties the lack of detail in this part of their defence.
[8] It is pleaded that these were matters about which the Viterra Parties were not aware prior to 22 October 2013.
[9] Namely, the Viterra Malt Certificate of Analysis Generation Procedure.
[11] In answering Question 1, Hibbert was asked to consider and explain, if and as appropriate, uncertainties arising from: (1) limitations of testing equipment and testing procedures; (2) random effects such as natural variability of the product; (3) sampling; and (4) systemic (for example, recovery) or bias errors.
[12] In answering Question 2, Hibbert was asked to consider and explain, if and as appropriate, methods such as: (1) correction or adjustment to compensate for quantified uncertainties; and (2) application of subjective experience or expertise of a suitably qualified person with reference to any applicable international standards/guidelines.
[13] The 5 assumptions are: (1) a laboratory, on the instructions of a supplier of malt, has measured (in accordance with standard laboratory practices) a certain parameter of the product (measurand) and has made any appropriate adjustments in accordance with your answer to Question 2; (2) the supplier is required to report that measurand to its customer for the product, in order to demonstrate conformity with an express contractual specification; (3) continuing (corroborative) programs such as the ASBC Laboratory Proficiency Program and the Maltsters of Great Britain Malt Analyte Testing Scheme track and confirm (to the brewing and malting industry) expected variances between laboratories regarding measurement of particular measurands; (4) the brewing and malting industry accepts (including because of the results of programs of the type referred to in (3) above) that measured results that are outside specification by 2 standard deviations of the specification limit might actually be in specification; and (5) those programs are silent on the use of the established variance when reporting results to customers. Similarly, any relevant contract between the supplier and its customer is silent on this topic.
[14] A copy of that policy was appended to the letter of instruction provided to Hibbert.
[15] These subparagraphs relevantly provide that Joe White had, as written policies, versions of the Malt Blend Parameters Procedure, and the Viterra Malt Certificate of Analysis Generation Procedure, and that at all material times until about 31 October 2013 Joe White's business was generally conducted in accordance with those 2 policies as they existed from time to time.
[17] It was stated that any costs consequences that might flow from such a course could be addressed at an appropriate time.
[18] Civil Procedure Act 2010 (Vic), s 7.
[19] This was first raised with senior counsel for the Viterra Parties on 7 May 2019, at the hearing of Cargill Australia's application to file and serve the Proposed Fifth Further Amended Statement of Claim, in relation to the equivalent portions of proposed paragraph 65A of the Proposed Amended Defence; namely, subparagraphs (c) and (d).
[20] See Cargill Australia Ltd v Viterra Malt Pty Ltd (No 10) [2018] VSC 439, [16]-[18]; Cargill Australia Ltd v Viterra Malt Pty Ltd (No 18) [2018] VSC 772, [31]-[34].
[21] AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 182 [6], 185 [14], 191-192 [28]-[30], 195 [35] (French CJ), 212-213 [96], 213 [98][99], 217 [111] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).
[24] Ibid, 195 [35], 213 [98]-[99], 214-215 [102], 217 [111]; Civil Procedure Act 2010 (Vic), s 7.
[25] Supreme Court Rules, r 1.14(1)(b).
[26] Cf AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 182 [4], 189 [24] (French CJ), 216 [106]-[109] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).
[29] At the request of the parties, this has now been deferred to 20 June 2019.
[31] Each certificate contains many reported measurements.
Cargill Australia Ltd
Viterra Malt Pty Ltd
(2009) 239 CLR 175