In relation to particulars of loss and damage, the statement of claim stated that '[f]urther particulars will be provided prior to trial'.

1. On 17 November 2014, Cargill Australia filed an amended statement of claim, which added Glencore International AG as a defendant. With respect to loss and damage, Cargill Australia again stated that '[f]urther particulars will be provided prior to trial'.
2. On 24 December 2014, Cargill Australia provided particulars of the alleged breaches of warranty and what constituted the allegedly misleading or deceptive conduct.
3. On 4 February 2015, Cargill Australia filed a reply and defence to counterclaim, which included allegations of fraud, without providing substantive particulars of the same.
4. On 27 February 2015, Cargill Australia provided further particulars of the alleged breaches of warranty and what constituted the allegedly misleading or deceptive conduct. The letter of 27 February 2015 also provided details of the losses Cargill Australia claimed to have suffered and how those losses were calculated, as follows:
   1. As to sub-paragraph 5.79(a) of your 15 October letter, the true value of the Business and the Shares at Completion is a matter for expert evidence. Under cover of that objection, the best particulars that Cargill Australia is presently able to provide, and without in any way limiting the expert evidence that Cargill Australia may lead at trial, is that as a result of the Viterra Practices:

(a) [Joe White] was only capable of producing approximately 60% of the contracted volumes within customer specifications (the reduced contracted volume) and 40% of malt produced did not comply with customer specifications (the non complying malt); and

(b) additional expenditure (including capital expenditure) was required in an attempt to manufacture and supply malt to contracted volumes within customer specifications,

the true value of the Business and the Shares as at July 2013 was based upon:

(i) the reduced contract volume and the non complying malt;

(ii) non base capital expenditure in the order of $27 million to construct additional storage within 2 years (the construction period) to manufacture and supply malt to contracted volumes within customer specifications;

(iii) the fact that, during the construction period, [Joe White] would be able to sell one eighth of the non complying mall as feed stock (ie 5% of the contracted volume) but would be unable to sell ... seven eight[h]s of the non complying malt (ie 35% of the contracted volume),

is in the range of between $225 to $233 million, resulting in a loss to Cargill Australia in the range of $187 million to $195 million.

1. Alternatively, the true value of the Business and the Shares as at July 2013 based upon:

(a) the matters set out in paragraph 8(i) and (ii) above;

(b) during the construction period [Joe White] would be able to sell one eighth of the non complying malt as feed stock (ie 5% of the contracted volume) and [Joe White] would be able to obtain derogations from clients which would enable [Joe White] to supply half of the non complying malt during the construction period (20% of the contracted volume),

is in the range of between $248 to $250 million resulting in a loss to Cargill Australia in the range of $170 to $172 million.

1. As is apparent, the particulars of loss dated 27 February 2015 were subject to an objection that the true value of the Joe White business (together with the shares the subject of the sale) at the date of completion was a matter for expert evidence.
2. With the particulars provided on 27 February 2015, Cargill Australia enclosed a copy of its 'Deal Model', as Annexure C. The Deal Model was a document prepared by Cargill Australia for the purposes of calculating the price it was prepared to pay for the Joe White business. In the costs judgment, the judge found that the Deal Model 'was not provided in a form that could be interrogated by the Viterra Parties', that 'only what appeared on the face of the spreadsheet was available for inspection' and 'there was no ability for the Viterra Parties to interrogate the underlying formulas'.[6]
3. On 23 March 2015, Cargill Australia provided the Viterra Parties with a draft further amended statement of claim, which included allegations of fraud and particulars in a new Schedule D. A further version of the draft further amended statement of claim was provided on 25 March 2015, after the Viterra Parties' solicitors, King & Wood Mallesons ('KWM'), said that the proposed changes were difficult to identify from earlier changes and not all changes were marked up.
4. On 26 March 2015, KWM sent an email seeking all documents referred to in Schedule D to the statement of claim (which were the documents Cargill Australia relied upon at that time to establish allegations of knowledge). These were provided on 27 March 2015.
5. As noted above, on 26 March 2015, Cargill Australia served the Viterra Parties with the Cargill Offer, pursuant to r 26.08 of the Rules. The offer was in the following terms:
   1. The plaintiff makes to the defendants an offer of compromise to accept from the defendants the sum of $85,000,000 (eighty five million Australian dollars) plus costs as agreed or taxed.
   2. This offer of compromise is open to be accepted until 5:00 pm on 16 April 2015.
   3. This offer of compromise is served in accordance with Part 2 of Order 26 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic).
6. The Cargill Offer was provided to the Viterra Parties under cover of a letter, which read as follows:

We attach, by way of service, our client's offer of compromise.

We refer to our letter to you of 23 March 2015 which attached Cargill Australia's proposed further amended statement of claim, amended reply and defence to counterclaim and the defence to the third party claims on behalf of Cargill Inc and [Joe White].

We refer also to our communications with you and your clients prior to and since the commencement of these proceedings and, in particular:

• our email to Damian Fitzgerald dated 8 August 2014 which attached Cargill's position paper together with a bundle of key documents in support of its claim;

• our letters to you dated 7 November and 24 December 2015 which set out detailed particulars of Cargill's claim and attached documents referred to in the statement of claim;

• our letter to you dated 27 February 2015 which set out and attached further detailed particulars of Cargill's claim including, amongst other things:

o detailed particulars of the Malt Contracts (Annexure A to that letter);

o the deal model prepared by Cargill for the purpose of calculating the maximum offer price it was prepared to make for the Business and the Shares (Annexure C to that letter);

o detailed particulars of loss which indicate a loss suffered by Cargill in excess of $163 million to $185 million (based on the difference between the purchase price and the price that Cargill Australia would have paid for the Business and the Shares) (Annexure B to that letter);

o detailed particulars evidencing that [Joe White] is capable of producing only 60% of the existing customer malt volume within specification in any given week (Annexure D to that letter); and

o detailed particulars evidencing lost production experienced by [Joe White] in the first six months from Completion (Annexure E to that letter).

For the reasons set out in the above correspondence, Cargill believes it is likely to succeed in its claim against your clients and to recover an amount that reflects its particulars of loss. Notwithstanding that view, we are instructed that Cargill is willing to settle this matter on the terms set out in the attached offer of compromise which is made in accordance with Order 26 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic).

The offer of compromise, which represents a significant discount on the losses suffered by Cargill, is open for acceptance until 5:00 pm on 16 April 2015. For the avoidance of doubt, this offer is an offer to settle the proceeding including the counterclaim and the third party claims.[7]

1. On 2 April 2015, Cargill Australia filed the further amended statement of claim (a draft of which had been circulated on 23 March 2015).
2. On 2 June 2015, the Viterra Parties sent an offer of compromise to Cargill Australia (the 'Viterra Offer'). The Viterra Offer was in the following terms:
   1. The Defendants/Plaintiffs by Counterclaim will pay the sum of $15 million plus costs as agreed or taxed in full settlement of this claim.
   2. This offer of compromise is open for acceptance for a period of 14 days after the day on which it is served.
   3. This offer of compromise is served in accordance with Part 2 of Order 26 of the Rules.
3. On 16 June 2015, Cargill Australia's then solicitors rejected the Viterra Parties' offer of compromise, as follows:

We are instructed to reject your clients' offer of compromise dated 2 June 2015.

In our view, the offer does not amount to a genuine compromise by your clients having regard to the merits of Cargill's claim. This is particularly so in circumstances where the offer falls significantly below the loss suffered by Cargill and significantly below Cargill's offer of compromise dated 26 March 2015. Moreover, Cargill's ability to assess the offer, even on a commercial basis, is limited in circumstances where your clients are still in the process of filing pleadings and discovery has yet to occur.

As you are aware, last year Cargill proposed settlement negotiations between the parties. We confirm that Cargill remains open to engaging in meaningful settlement negotiations with your clients however your present offer falls significantly short of a sensible starting point.

1. On 30 June 2015, KWM responded to the letter of 16 June 2015 as follows:

We refer to your letter dated 16 June 2015.

Our clients reject the assertion that their offer does not amount to a genuine compromise by them. To assert that an offer to pay the amount in the offer is not a genuine compromise is, with respect, a surprising assertion.

Contrary to your letter, whether an offer is a genuine compromise is not determined by reference to the maximum amount of the loss allegedly suffered by your client, nor by reference to any offer made by your client. Rather, the question is whether our clients are giving something away.

Our clients' offer was a substantial offer reflecting a genuine compromise by our clients, in circumstances where our clients deny liability as set out in their defence, and have also counterclaimed against your client and made third party claims in respect of the whole of your client's claim . In circumstances where, if your client is unsuccessful, it will be required to pay our clients' costs of the proceeding, our clients' offer to pay your client the amount in the offer is a significant compromise from the position which will follow if our clients are successful at trial.

You make the observation that our clients are still in the process of filing pleadings. As you know, a number of pleadings have been filed in this matter to date since its commencement in October 2014. The current pleadings in relation to your client's claim comprise the further amended statement of claim dated 2 April 2015, the defence to the further amended statement of claim and amended counterclaim dated 5 May 2015 and the reply to amended defence and defence to amended counterclaim dated 2 June 2015. There has been correspondence between the parties concerning further particularisation of those pleadings. Given the current state of the pleadings, our clients reject your assertion that your client's ability to assess the offer is limited due to the state of the pleadings.

You also observe in your letter that discovery has yet to occur. Whilst that is correct, we observe that, as a result of its acquisition of [Joe White], your client has access to many documents (and potential witnesses) relevant to its claim.

In the circumstances, our clients do not accept the suggestion that your client's ability to assess the offer is as limited as you suggest. However, even if your suggestion is correct, it applies with more force to our clients' limited ability to assess your client's offer.

In the event that our clients are successful at trial they will be relying upon the offer of compromise and the cost consequences which they will contend ought to follow under the Rules.

1. On or around 16 March 2016, the Viterra Parties filed a further affidavit of documents in the proceeding.
2. On 11 July 2017, Cargill Australia filed a second further amended statement of claim. In the costs judgment, the judge said that the second further amended statement of claim 'made substantial additions to Cargill Australia's deceit claim', that 'Cargill Australia introduced a new allegation that the Viterra Parties had engaged in misleading or deceptive conduct and deceit by making the Other Bidders Representations' and that Cargill Australia also made substantial amendments to Schedule D, which set out additional information regarding the Viterra Parties' alleged knowledge.[8]
3. The trial commenced on 18 June 2018 and initially concluded on 21 August 2019, after 111 sitting days.
4. On 13 August 2018, Cargill Australia filed the third further amended statement of claim.
5. On 13 May 2019, Cargill Australia filed the final version of the pleading, the fifth further amended statement of claim. In the costs judgment, the judge held that, compared with the second further amended statement of claim, the fifth further amended statement of claim contained (among other things):[9]

(a) additional detail about the nature and content of the Information Memorandum Statements;[10]

(b) further particulars concerning the Operations Call Statements and Commercial Call Statements;[11]

(c) an additional 21 pages of particulars regarding the allegations concerning the existence of the Undisclosed Matters;[12]

(d) new allegations based on the Management Presentation Statements,[13] the Undisclosed Matters and the Financial and Operational Performance Representations;[14]

(e) additional allegations and particulars as to why it was alleged that the Viterra Parties had engaged in misleading or deceptive conduct;

(f) the introduction of particulars as to why it was alleged that Joe White was in material default of Material Contracts;[15]

(g) new allegations that by reason of the Pre-Completion Representations,[16] Cargill Australia was deprived of the opportunity to obtain properly informed legal advice; and

(h) further particulars concerning how the Viterra Parties had caused loss to Cargill Australia and the quantification of that loss, including the removal of the alternate cases based on a reduced purchase price, loss of production or increased operational or capital expenditure.

1. Cargill Australia sought leave to rely on two additional documents on the present application for leave to appeal that were not before the judge in relation to the costs decision. The documents were:

(a) an email dated 25 February 2016 from KWM (the Viterra Parties' solicitors) requesting a 'native copy' of the Deal Model that had been provided by Cargill Australia around one year earlier, on 27 February 2015; and

(b) correspondence between Cargill Australia's solicitors and KWM showing that a 'native copy' of the Deal Model was provided to KWM on 13 May 2016, and that KWM requested a password for it on 8 November 2016.

1. Cargill Australia also sought to rely on a page of transcript from the hearing of the costs application before the judge, containing the Viterra Parties' submissions regarding its access to the Deal Model.
2. Cargill Australia accepted that this Court will ordinarily refuse to admit such evidence unless it is satisfied that:

(a) the evidence is sufficiently credible;

(b) the evidence could not have been obtained with reasonable diligence for use at the trial; and

(c) there is a high probability that the result would have been different had the evidence been received at trial.[17]

1. In the present case there is no issue concerning the credibility of the evidence. However, in our opinion neither of the other ordinary preconditions for the admission of further evidence have been met.
2. Cargill Australia quite properly conceded that it could not be said that the further evidence 'could not have been obtained with reasonable diligence for use at the trial', because the evidence had in fact been discovered in the trial process; it had simply been overlooked at the time of the costs hearing. Cargill Australia sought to sidestep this requirement by submitting that it was the Viterra Parties' responsibility to provide this evidence to the judge, given their submissions concerning the Deal Model; their failure to do so meant that the judge did not have a complete account of the factual matters relevant to the costs application. However, it remains the case that the further evidence was available to Cargill Australia, who could have placed it before the judge at the time of the costs hearing, or at any time prior to the delivery of the costs judgment. No affidavit was filed explaining Cargill Australia's failure to do so; rather, it appears to have been accepted that the material was simply overlooked at the time of the costs hearing.[18]
3. Even assuming that the point above could provide a basis for departing from the usual approach to the admission of further evidence, an additional problem for Cargill Australia is that we are not persuaded that there is a high probability that the result would have been different had the further evidence been before the judge for the purposes of the costs decision. The point that Cargill Australia sought to draw from the further evidence was that, had it been before the judge, his Honour would not have concluded that the Viterra Parties were deprived of the opportunity to interrogate the Deal Model and were thereby justified in rejecting the Cargill Offer. This, Cargill Australia submitted, was the basis on which the judge 'otherwise ordered'[19] that Cargill Australia was not entitled to indemnity costs.
4. We do not accept that submission. While we accept that the further evidence might have made a difference to the judge's reliance on the Viterra Parties' inability to interrogate the Deal Model, the Deal Model was but one (potential) integer relevant to the quantification of loss. Equally important was the 'true value' of Joe White. As the judge observed, quantification of loss was 'not simply a mathematical exercise that the Viterra Parties could have been expected to undertake in the absence of adequate particulars of how the alleged loss was to be claimed'.[20] That was so not only because of the inability to interrogate the Deal Model, but also because of the lack of sufficient material directed to true value. In those circumstances the further evidence was unlikely to have made any difference to the result.
5. For the above reasons, we would refuse leave to Cargill Australia to rely upon the further evidence.

1. Section 24 of the Supreme Court Act 1986 provides that the costs of and incidental to matters in the Court are in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid. That provision is subject to any express provision contained in the Act or any other Act, or by the Rules.
2. Rule 63.02 of the Rules provides that the power and discretion of the Court as to costs under s 24 of the Supreme Court Act should be exercised subject to and in accordance with ord 63. Rule 63.31 provides that, except as provided by the Rules, or any other order of the Court, costs shall be taxed on the standard basis.
3. Part 2 of ord 26 of the Rules deals with offers of compromise. Rule 26.02 sets out certain requirements concerning offers of compromise. There is no dispute in the present case that the Cargill Offer satisfied those requirements.
4. Rule 26.03, which deals with the time for making and accepting an offer, relevantly provides for the service of an offer of compromise at any time before verdict or judgment, for a party to serve more than one offer of compromise, for an offer of compromise to be open for at least 14 days, and for an offer of compromise to be open for acceptance even if the party upon whom it was served has made its own offer of compromise to the serving party.
5. Rule 26.08 relevantly provides as follows:

26.08 Costs consequences of failure to accept

(1) This Rule applies to an offer of compromise which has not been accepted at the time of verdict or judgment.

(2) Where an offer of compromise is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains a judgment on the claim to which the offer relates no less favourable to the plaintiff than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled -

(a) if the claim of the plaintiff is for damages for or arising out of death or bodily injury, to an order against the defendant for the plaintiff's costs in respect of the claim taxed on an indemnity basis;

(b) in the case of any other claim of the plaintiff, to an order against the defendant for the plaintiff's costs in respect of the claim before 11.00 a.m. on the second business day after the offer was served, taxed on the ordinarily applicable basis and for the plaintiff's costs thereafter taxed on an indemnity basis.

1. In deciding whether Cargill Australia ought to be granted indemnity costs as a consequence of its service of the Cargill Offer, the judge identified and considered various matters that were relevant to whether he ought to otherwise order for the purposes of r 26.08.
2. First, the judge considered the timing of the Cargill Offer, which his Honour described as 'a significant factor'. The Cargill Offer was made after the proceeding had been on foot for five months. Although at this point in time the Viterra Parties were on notice of the 'essence' of Cargill Australia's case, namely that Cargill Australia had suffered loss as a result of being misled by the Viterra Parties, the serious allegations of fraud were only introduced a few days before the Cargill Offer was served. The judge accepted that 'any proper consideration of such serious allegations would have needed careful consideration after taking detailed instructions'.[21]
3. The judge also observed that the timing was relevant to the quantification of the loss or damage alleged, as follows:

Further, during the course of that first 5 months Cargill Australia had failed to properly identify the amount of its claim or any meaningful basis upon which it would be made. All particulars of loss to that time had been subject to an overarching objection that the matter was properly the subject of expert evidence and that the basis of the claim might change upon that expert evidence being obtained. Further, the subject matter was such that it was not something about which the Viterra Parties could be presumed to know how the case was going to be put. As explained in the Principal Judgment, there are potentially numerous different ways in which a plaintiff might claim it has suffered loss when it has allegedly been misled into acquiring a business. In short, it was not simply a mathematical exercise that the Viterra Parties could have been expected to undertake in the absence of adequate particulars of how the alleged loss was to be claimed.

Furthermore, these difficulties were compounded by a number of matters. These included the alternatives Cargill Australia were then putting forward (which had the potential to make a material difference to the amount of loss that could be claimed). This was in a context where the deal model, which was the basis on which Cargill assessed and evaluated the Joe White Business, was not provided in a form that could be interrogated by the Viterra Parties.

...

Accordingly, the Cargill Offer was made at a time when the Cargill Parties had not made clear the basis of material aspects of Cargill Australia's claim, including the basis upon which Cargill Australia would seek to quantify the loss alleged to have been suffered.[22]

1. Secondly, the judge considered the Viterra Parties' ability to evaluate the claims made against them, as follows:

Secondly, and compounding the difficulties created by the lack of specificity in the claims made, the Viterra Parties' ability to make their own assessment of the merits of the claims against them (including their level of exposure because of those claims) was limited. Although the Viterra Parties did have some relevant knowledge, it was materially inadequate for the evaluation of their position. As to what was known, they became fully aware of the existence of the Operational Practices in October 2013 after enquiries were made by Cargill, and they conducted some investigations ... . However, by the time of the Cargill Offer in March 2015, information had not been provided to the Viterra Parties at a level that would have enabled the Viterra Parties to make any meaningful assessment of any loss alleged to have been suffered. This lack of information was compounded by the fact that the executives with hands-on knowledge of the Joe White Business were no longer in their employ, having moved to Cargill pursuant to the terms of the Acquisition Agreement. In addition, discovery had not taken place in March 2015.[23]

1. On this second issue, the judge made the following observation in a footnote:

On 26 March 2015, the Viterra Parties' solicitors sent an email seeking all documents referred to in schedule D to the statement of claim (which were the documents Cargill Australia relied upon at that time to establish allegations of knowledge). These were forwarded on 27 March 2015. However, the size and complexity of the case meant that this situation could not be remedied by promptly requesting a handful of critical documents from the Cargill Parties. The time involved to make a proper assessment of the information required, and then to analyse that information, far exceeded the time available while the Cargill Offer was open.[24]

1. The judge also observed, in dealing with the Viterra Parties' ability to evaluate the claims, that in addition to the above matters, when Cargill Australia's solicitors provided particulars of the Deal Model in late February 2015, which were given under objection, they stated that the 'best particulars that Cargill Australia [was] presently able to provide' were those that had been provided as set out in annexure B to the letter. They also provided the Deal Model. However, the judge observed that the Deal Model so provided 'was of limited value' because 'only what appeared on the face of the spreadsheet was available for inspection', because Cargill Australia had not provided the password to the Deal Model. Thus, he observed, the Viterra Parties had 'no ability to interrogate the underlying formulas or properly understand how all the figures had been arrived at until well after the Cargill Offer had expired'.[25]
2. In relation to this second factor, the judge also dealt with a submission by Cargill Australia that there was a 'lack of evidence concerning the ability or otherwise of the Viterra Parties to properly consider the Cargill Offer', as follows:

The objective facts before the court demonstrated there must have been real and substantial difficulties in making any meaningful assessment about whether the Cargill Offer ought to have been accepted. The veracity of what was stated on behalf of the Viterra Parties in June 2015 was supported not only by the matters referred to above, but also by the fact that Cargill itself maintained it was unable to properly assess the Viterra Offer soon after the Cargill Offer had lapsed. Although Cargill's situation was obviously different and the Viterra Parties' position must be considered separately, the position that both camps found themselves in when the respective offers were open had a commonality: large amounts of relevant information were not available to them that could have materially affected the outcome of the case once that information became known. If the positions are to be distinguished, it was highly likely that Cargill was in a better position to assess the Viterra Offer than the Viterra Parties had been to assess the Cargill Offer because Cargill was then in control of the Joe White Business and its management.

Further, there was no need for someone on behalf of the Viterra Parties in 2022 to provide an affidavit deposing as to the position in early 2015. In my view, the evidence of the far more contemporaneous correspondence from both firms of solicitors about their difficulties and the surrounding circumstances at and shortly after the relevant time provided compelling grounds for their stated positions. Such evidence was far more probative than any self-serving evidence which might have been given nearly 7 years after the relevant period.[26]

1. Thirdly, the judge considered the amount of the Cargill Offer, namely $85 million. His Honour accepted that, although the amount was to be viewed relative to the purchase price, and the proceeding involved companies of a multinational organisation engaged in business on a large scale, 'some weight must be afforded to the Viterra Parties' submission that a decision to pay $85 million (plus costs) is not to be made lightly'.[27]
2. In light of these three matters, the judge concluded that, at the time when the Cargill Offer was open, it was 'entirely reasonable for the Viterra Parties to reject the Cargill Offer'. Further, he held that

the lack of clarity in Cargill Australia's claim in material respects and the level of information available to the Viterra Parties meant that it was extremely difficult, if not entirely implausible, for the Viterra Parties to make any rational assessment of whether the amount of $85 million was in the vicinity of what they might ultimately be liable to pay.[28]

1. The judge then went on to consider, as a fourth matter, the changes to Cargill Australia's case that occurred after the Cargill Offer was made (although his Honour rejected the Viterra Parties' submission that Cargill Australia had only introduced a 'no transaction' case at trial):

In my opinion, there were material changes ... which, while not determinative of whether the court should otherwise order, need to be taken into account in the exercise of the court's discretion. They were as follows:

(1) The introduction of new particulars concerning the case establishing the prevalence of the Viterra Practices.

(2) A large body of particulars being introduced to substantiate the allegations concerning the Undisclosed Matters.

(3) The introduction of particulars in relation to the Financial and Operational Performance Representations.

(4) The introduction of particulars concerning the material defaults of Material Contracts.

(5) Substantial amendments to the particulars of loss.

Each of these represented significant additions or adjustments to Cargill Australia's case that were not available for consideration at the time of the Cargill Offer and would have been material to any decision to accept or reject it.[29]

1. The judge concluded his reasons in relation to Cargill Australia's claim for indemnity costs as follows:

In conclusion, taking into account each of the matters raised by the Cargill Parties and the Viterra Parties, in my opinion it would be contrary to the interests of justice to not otherwise order for the purposes of rule 26.08(2). ... [I]t is important that the regime under order 26 does not have the effect of placing undue pressure on an opposing party to accept an offer when it is not in a position to make any meaningful assessment of the amount or even the approximate amount of the claim against it. This observation is not inconsistent with the rationale underlying order 26. Nor does taking such matters into account undermine the purposes of order 26 or result in its operation being less than what was intended.

In the first half of 2015, Cargill itself appreciated the difficulties in it assessing an offer of compromise at that time. Further, the Viterra Parties made it clear that they were labouring under substantial difficulties, and justifiably so. In such a long-running case, there was nothing stopping Cargill Australia making another offer of compromise at a later time when it had properly formulated its case, at least to the degree that the Viterra Parties were able to make some worthwhile assessment of their potential exposure.

For the reasons stated the Viterra Parties have met the heavy burden that arose in avoiding an award of indemnity costs against them by reason of the Cargill Offer and the ultimate result being not less favourable.[30]

1. Cargill Australia contended that the reason given by the judge for refusing to order indemnity costs was that 'the Viterra parties were "not in a position to make any meaningful assessment of the amount or even the approximate amount of the claim against [them]"'. It submitted that judge had 'supported this decision by the following subsidiary findings':

(a) 'the Cargill Offer was made at a time when the Cargill Parties had not made clear the basis of material aspects of Cargill Australia's claim, including the basis upon which Cargill Australia would seek to quantify the loss alleged to have been suffered';[31]

(b) the offer was made at a time when 'the Viterra Parties' ability to make their own assessment of the merits of the claims against them (including their level of exposure because of those claims) was limited';[32]

(c) the amount of $85 million set out in the offer coupled with the above circumstances meant 'it was extremely difficult, if not entirely implausible, for the Viterra Parties to make any rational assessment of whether the amount of $85 million was in the vicinity of what they might ultimately be liable to pay';[33] and

(d) Cargill Australia made material changes to its claim that 'were not available for consideration at the time of the Cargill Offer and would have been material to any decision to accept or reject it'.[34]

1. Cargill Australia submitted that these findings were inconsistent with, and contradicted by, the evidence.
2. It commenced its more detailed contentions in support of this submission with two 'preliminary observations':

(a) First, it submitted that the Viterra Parties had not rejected the Cargill Offer 'for the reason that they were unable to properly assess either the merits of the claims against them or the reasonableness of the offer sum'. Rather, they had 'only raised this issue in their lawyers' letter of 30 June 2015 and then only as a retort to Cargill Australia's contention that it was not in a position to assess the reasonableness of the Viterra Parties' counteroffer'.

(b) Secondly, it submitted that the onus of displacing the presumption in favour of indemnity costs lay on the Viterra Parties and is not readily discharged. But the Viterra Parties had 'led no evidence of any step taken by them or their lawyers to assess the merits of the claims and the reasonableness of the offer of compromise', or any evidence 'about what difficulty (if any) they faced in carrying out the tasks imposed on them by rule 26'.

1. These two matters, alone, Cargill Australia submitted, were sufficient to have required the judge to have found that the Viterra Parties did not displace the presumption created by r 26.08.
2. Cargill Australia then submitted that there was considerable evidence to demonstrate that the Viterra Parties were 'well placed to consider their risks in the litigation and to consider the reasonableness' of the Cargill Offer.

(a) In so far as the causes of action were concerned, Cargill Australia submitted that the alleged factual circumstances did not vary significantly from when they were first made to the trial. They had been 'extensively detailed' in the notice served on the Viterra Parties in April 2014, and in the original statement of claim served in October 2014, and 'amplified' in the particulars provided before the Cargill Offer was made. Cargill Australia also observed that, as the judge had held in the substantive judgment, the Viterra Parties 'became fully aware of the existence of Operational Practices in October 2013 after enquiries were made by Cargill'. Finally, Cargill Australia submitted that it 'must be assumed, in these circumstances, that the Viterra Parties' lawyers had formed views about the validity of the allegation' that the Joe White business practices had been concealed; were that not so, the lawyers would not have been in a position to prepare the Viterra Parties' defence, which was filed on 19 December 2014.

(b) In so far as the assessment of the quantum of the claim was concerned, Cargill Australia submitted that the uncontested facts were as follows:

(i) the basis on which damages were claimed - the difference between the price paid and the value of the Joe White shares - was first articulated in the notice of 23 April 2014;

(ii) the quantum of that claim was detailed in the particulars provided on 27 February 2015;

(iii) the basis upon which the quantum calculation was based (largely that Joe White's turnover had decreased by 60% to enable it to meet customers' specific requirements) was also detailed both in the particulars in the original statement of claim and in the additional particulars provided; and

(iv) '[s]ubject to a very minor and insignificant amendment in the amended statement of claim, these were the particulars of loss as they stood in the original statement of claim, the amended statement of claim and the further amended statement of claim'.[35]

1. Cargill Australia also submitted that the Viterra Parties had two assessments of the value of the Joe White shares based on there being no fraudulent concealment of important information. The first was the Deal Model, being the assessment of value upon which Cargill Australia based its decision to acquire the Joe White shares. The other was their own assessment of the value of those shares undertaken for the purposes of the sale process.
2. Cargill Australia submitted that '[i]n the absence of direct evidence that would explain why it was not possible, even on a rough and ready basis, to determine the true value of the [Joe White] shares, the judge's conclusion that this could not be done (based in part on findings of fact made by way of inference) was simply not open to make'.
3. Cargill further submitted that 'an examination of the additional factors relied upon by the judge' do not support the judge's decision.

(a) As to the judge's conclusion that the allegation of fraud was made shortly before the offer of compromise was made and 'would have needed careful consideration after taking detailed instructions',[36] Cargill Australia submitted that the fraud allegation 'did not raise anything new other than that withholding the information was done with an intention to deceive', and added nothing to the quantum of Cargill Australia's claim which it sought to recover for breach of the warranties or for misleading or deceptive conduct.

(b) As to the judge's conclusion that Cargill Australia had failed to properly identify the amount of its claim or any meaningful basis upon which it would be made,[37] Cargill Australia contended that there was no justification for this comment. It accepted that the particulars asserted that, at trial, the quantum of the claim would be the subject of expert evidence. But, it submitted, that is true of most large damages claims and does not undermine, and may even ignore, the fact that the Viterra Parties had been provided with 'detailed particulars' of the loss suffered, sufficient for them to make the required assessment. They further submitted that the fact that knowledge of the recipient of an offer of compromise is incomplete is not a basis to for the recipient to avoid undertaking an assessment of the offer, noting that perfect foresight is impossible and litigation is 'inescapably chancy'.[38]

(c) As to the judge's conclusion that the Deal Model was provided in a form that could not be interrogated by the Viterra Parties,[39] Cargill Australia submitted that the Viterra Parties 'had their own discounted cashflow valuation model', so that '[i]f interrogation of a model was a relevant step to take (an unlikely proposition), the Viterra Parties could interrogate their own model to see what the consequence would be if the [Joe White] business had declined in the manner alleged'.

(d) As to the judge's conclusion that the 'lack of particulars with respect to matters other than costs was also not trivial',[40] Cargill Australia submitted that this was a reference to the particulars of the representations alleged to have been made. This, it submitted, overlooked the judge's finding that the Viterra Parties were 'well aware of what the alleged representations were'.

(e) As to the judge's conclusion that the Viterra Parties' knowledge of matters necessary to make their own assessment of the merits of the claims 'was materially inadequate for the evaluation of their position',[41] Cargill Australia submitted that the judge did not set out what were the relevant matters that were not known to the Viterra Parties. They knew what the alleged representations were, how it was said the false representations caused loss, and the quantum of that loss. Thus, all they needed to do was:

(i) determine what information had been concealed - which they had done;

(ii) determine what the effect of that concealment was - and the information required for that purpose had been provided to them; and

(iii) assess the quantum of the loss claimed - which any qualified expert could do (and, presumably, they had access to such a person).

(f) As to the judge's conclusion that the evidence of the 'far more contemporaneous correspondence from both firms of solicitors about their difficulties [in assessing the offers] provided compelling grounds for their stated positions',[42] Cargill Australia submitted that it is 'difficult to understand how a single sentence without details or explanation claiming difficulties in assessing an offer is compelling when compared with the actual facts of what was known by the Viterra Parties and the lack of evidence explaining what the difficulties they might face in assessing the offer'.

(g) As to the judge's conclusion that a decision to pay $85 million plus costs is 'not to be made lightly',[43] Cargill Australia submitted that the import of this remark is not clear. However, it submitted that if the judge was of the opinion that 'large claims might be outside the ambit of rule 26 or that some lengthy period must be given for a large offer to be considered', his Honour erred as a matter of principle. It submitted that, if further time was needed to give proper consideration to the offer, 'any reasonable lawyer would have asked for time'.

(h) As to the judge's conclusion that some substantial changes were made to Cargill Australia's case after the offer of compromise was made,[44] Cargill Australia submitted that the material changes were the fraud allegation (which had been foreshadowed prior to the offer) and claims relating to the Other Bidders Representations, which gave rise to a standalone claim for damages of $15 million. The latter claim, it submitted, 'would likely have been anticipated as Cargill Australia would discover the falsity of those claims after discovery'.

In its written submissions Cargill Australia submitted that the post-offer changes 'cannot, as a matter of logic, affect the duty imposed by rule 26 on the offeree party and its lawyers'. It submitted that it 'is not uncommon for a case to settle on the basis of claims that might be changed if the matter goes to trial. But that could not affect the utility or operation of the rule'. In oral argument, Cargill Australia framed this argument not as the judge taking into account an irrelevant consideration, but as a factual error, namely that 'the changes were material such that they affected or afflicted [the Viterra Parties'] capacity to assess the reasonableness of the offer'.[45]

1. Ultimately, Cargill Australia contended that this Court should infer that the Viterra Parties 'did not intend to and did not make any assessment of the Cargill Offer, not because they were unable to but because it was never something they intended to do'. Rather, they 'always intended to deny the factual allegations', and to 'fall back on the exemption and non-reliance clauses' if necessary.
2. In oral argument Cargill Australia addressed the question whether this Court should, in the exercise of its 'residual discretion', refuse leave even where there are real prospects of success. It submitted that relevant to the exercise of that discretion is the fact that the Viterra Parties engaged in fraud, and that it would be 'inherently unjust' for a party that has been found to have engaged in fraudulent and seriously misleading conduct to be able to avail itself of the benefit of the residual discretion. The second reason Cargill Australia advanced as to why this Court ought not exercise the residual discretion was that the errors of fact said to have been made by the trial judge were 'serious', such that there would be a 'substantial injustice if the order was allowed to stand'.

Relevant principles in relation to appeals against costs orders

1. A decision whether to 'otherwise order' pursuant to r 26.08 is a discretionary decision, such that an appeal from such an order is governed by the principles in House v The King. In that case, Dixon, Evatt and McTiernan JJ explained as follows:

The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.[46]

1. In relation to costs decisions, this Court has repeatedly observed that appeals from orders as to costs are treated as exceptional and require this Court to exercise particular restraint. The authorities explain that the principal rationale for that caution is that the trial judge is almost always best placed to assess in whose favour and to what extent the discretion as to costs should be exercised.[47] That is particularly so after a long and complex trial.[48] The test is not whether we would have exercised the discretion in the same way as the judge did, but whether there was a ground on which the judge could reasonably have made the order in question.
2. Furthermore, pursuant to s 14C of the Supreme Court Act the Court retains a discretion to refuse to grant leave to appeal despite being satisfied that an appeal has a real prospect of success.[49] Thus the leave question may sometimes be approached by considering first whether there are discretionary considerations justifying the refusal of leave, irrespective of the proposed appeal's prospect of success. One example where that may occur concerns an application for leave to appeal from a costs order, because it is exceptional to grant leave to appeal from such an order.[50]

1. Bearing in mind the principles set out above, we consider that this is a case that warrants the refusal of leave to appeal irrespective of whether the appeal has a real prospect of success. Our reasons for that conclusion are as follows.
2. Cargill Australia seeks leave to appeal against a costs order and thus faces a difficult task - it is only in an exceptional case that this Court will grant leave to appeal in such a case. We are not satisfied that this case is exceptional.
3. Cargill Australia advances a single proposed ground of appeal, which involves a challenge to a finding of fact made by the judge, namely that the Viterra Parties could not assess the reasonableness of the Cargill Offer; no error of principle is alleged.[51] Further, we observe that counsel for Cargill Australia was unable to point to anything that the judge said that was factually incorrect. Rather, Cargill Australia sought to characterise the overarching error concerning the Viterra Parties' inability to assess the Cargill Offer as resulting from incomplete findings. For our part, we do not consider that the errors the judge is alleged to have made could properly be described as 'serious', as suggested by Cargill Australia, in the circumstances of this case.
4. Furthermore, the alleged overarching error of fact relates principally to the judge's conclusion that, at the time the offer was made, the Viterra Parties were not in a position to evaluate Cargill Australia's claimed quantum of loss.[52] That was quintessentially a matter that the judge was in a better position to evaluate than this Court.
5. In the original statement of claim, loss was particularised as either the difference between the purchase price and the true value, or alternatively the difference between the purchase price and the price that Cargill Australia would have paid had the misrepresentations not been made. Thus at that stage there were two potential pathways to the quantification of loss. The original statement of claim also stated that 'further particulars will be provided prior to trial'. When particulars were provided on 27 February 2015, they were provided under cover of objection and were stated not to limit the expert evidence that may be led at trial.
6. Ultimately, quantum of loss was the subject of extensive expert evidence at trial and on the substantive appeal in this matter. It turned not only on what Cargill Australia had paid for Joe White, or what value Cargill Australia or the Viterra Parties ascribed to Joe White, but also on the 'true value' of Joe White. The true value could not be determined in any straightforward manner. The judge was plainly correct (as Cargill Australia accepted) when he said that, at the time of the Cargill Offer, an assessment of the amount of any loss 'was not simply a mathematical exercise that the Viterra Parties could have been expected to undertake in the absence of adequate particulars of how the alleged loss was to be claimed'.[53]
7. The claims were complex, and the assessment of damages was particularly complex, involving multiple expert reports from three experts, each of whom differed on the true value of Joe White. Those expert reports were not, of course, available at the time the Cargill Offer was served. Thus Cargill Australia's submission that 'all [the Viterra Parties] needed to do was ... assess the quantum of loss claimed - which any qualified expert could do' materially understates the complexity of the task required prior to the expiry of the offer. At trial the question of quantum occupied many days of oral expert evidence and submissions, and many pages of written submissions. That issue then occupied more than 400 paragraphs in the substantive judgment. In that regard, the judge was also plainly correct when he said that '[t]he time involved to make a proper assessment of the information required, and then to analyse that information, far exceeded the time available while the Cargill Offer was open'.[54]
8. The importance of the issue of quantum to the decision whether to accept the Cargill Offer is such that there was a sound basis for that ultimate conclusion - namely, that the Viterra Parties were not in a position to make any meaningful assessment of the amount or even the approximate amount of the claim against them - based solely on the inability to assess the claimed quantum of loss.
9. These matters make this case a paradigm example of a case where the trial judge was best placed to assess in whose favour and to what extent the discretion as to costs should be exercised.
10. Finally, we do not consider that the fact that the Viterra Parties were ultimately found to have committed fraud and serious misrepresentations requires any different approach to the residual discretion. Again we consider that the judge was in the best position to evaluate the relevance of that conduct in determining whether costs ought to be awarded on the indemnity basis.

1. For the foregoing reasons, we would refuse leave to appeal.
2. Notwithstanding the public interest objectives of ord 26 - in particular to encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise, and to save the public costs associated with litigation[55] - those objectives do not render this an exceptional case in which leave to appeal from a costs decision ought to be granted. This case remains one where the trial judge was best placed to exercise the costs discretion. However, nothing in these reasons ought to be understood as endorsing a general proposition that difficulty in assessing the quantum of a claim is a ground for avoiding the consequences provided for by r 26.08. Rather, our exercise of the residual discretion reflects the Court's stringent approach to costs appeals and the particular position of the trial judge in the context of this unique and complex litigation.

[1] Glencore International AG, the fourth respondent, was the ultimate holding company of the Viterra companies, and had been involved in the sale process. The four respondents are hereafter referred to as the 'Viterra Parties'.

[2] Cargill Australia Limited v Viterra Malt Pty Ltd [2022] VSC 13 (Elliott J) (the 'substantive judgment'). In a further ruling, the judge ordered damages in the nature of interest, calculated at the rates provided for under the Penalty Interest Rates Act 1983, in the sum of $124,229,320.30: Cargill Australia Ltd v Viterra Malt Pty Ltd (No 30) [2022] VSC 80.

[3] Cargill Australia Ltd v Viterra Malt Pty Ltd (No 32) [2022] VSC 299 (the 'costs judgment').

[4] The submission as to the time and date was by reason of the operation of r 26.08(2)(b) of the Rules.

[5] Viterra Malt Pty Ltd v Cargill Australia Limited [2023] VSCA 157 (the 'substantive appeal judgment').

[6] Costs judgment, [69], [118], [122].

[10] The Information Memorandum Statements were statements made by the Viterra Parties in the Information Memorandum entitled 'Joe White Maltings Information Presentation May 2013', which Cargill Australia contended that it relied upon: see the substantive judgment, [470], [2146].

[11] The Operations Call Statements were statements made by the Viterra Parties during a telephone call on 18 July 2013 between Gary Hughes, Peter Youil, Steven De Samblanx, Bank of America Merrill Lynch and Goldman Sachs: see the substantive judgment, [865], [2149]. The Commercial Call Statements were statements made by the Viterra Parties during a telephone call on 19 July 2013 between Gary Hughes, Doug Eden, Marc Viers, Bank of America Merrill Lynch and Goldman Sachs: see the substantive judgment, [910], [2165].

[12] The Undisclosed Matters were matters that Cargill Australia alleged were not disclosed in the Information Memorandum referred to in n 10 above or during the conduct of due diligence on Joe White and the Joe White Businesses as defined in the Acquisition Agreement executed on 4 August 2013: see the substantive judgment, [1851].

[13] The Management Presentation Statements were statements made by the Viterra Parties during an oral presentation delivered on 26 June 2013: see the substantive judgment, [708], [2168].

[14] The Financial and Operational Performance Representations were representations made about the financial and operational performance of Joe White as detailed in paragraph 27 of the fifth further amended statement of claim: see the substantive judgment, [2826].

[15] Material Contracts were certain contracts defined in the Acquisition Agreement executed on 4 August 2013: see the substantive judgment, [1022].

[16] The Pre-Completion Representations were representations made by the Viterra Parties after the entry into the Acquisition Agreement, but before completion, as a result of the responses made in October 2013 to Cargill Australia's queries concerning Joe White's operational practices: see the substantive judgment, [3299].

[17] Carroll v Goff [2021] VSCA 267, [55] (Maxwell P, Kennedy and Walker JJA).

[18] In the written submissions filed in support of the application to rely on further evidence, Cargill Australia described the material as having been '(re)discovered in the course of preparing for this appeal' (emphasis added).

[19] Within the meaning of r 26.08(2) of the Rules.

[22] Costs judgment, [117]-[118], [120] (citations omitted).

[23] Costs judgment, [121] (citations omitted).

[25] Costs judgment, [122] (citations omitted).

[26] Costs judgment, [124]-[125] (citations omitted).

[28] Costs judgment, [127] (citations omitted).

[30] Costs judgment, [148]-[150] (citations omitted).

[38] Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721, 725 (the Court).

[42] Costs judgment, [125]. The 'correspondence' is the letter from Cargill Australia's solicitors dated 16 June 2015 and the letter from the Viterra Parties' solicitors dated 30 June 2015.

[45] The application for leave to appeal, as originally framed, dealt with this issue by alleging an error in the nature of taking into account an irrelevant consideration. That proposed ground was abandoned upon the filing of the amended application of leave to appeal, although it was to some extent revived in the written submissions.

[46] (1936) 55 CLR 499, 504-5 (emphasis added).

[47] See, eg, United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15, [124] (Whelan, McLeish and Niall JJA); Spotless Group Ltd v Premier Building and Consulting Pty Ltd [2008] VSCA 115, [10]-[11] (Redlich JA, Dodds-Streeton JA agreeing at [47]).

[48] Hanlon v Brookes (1997) 15 ACLR 1626, 1632 (Callaway JA).

[49] Kennedy v Shire of Campaspe [2015] VSCA 47, [5] (Whelan and Ferguson JJA).

[50] PCCEF Pty Ltd v Geelong Football Club Ltd [No 2] [2019] VSCA 148, [40]-[41] (Whelan, McLeish and Emerton JJA); Bodycorp Repairers Pty Ltd v GDG Legal Pty Ltd [2018] VSCA 32, [18] (Ferguson CJ, Whelan and McLeish JJA); 24 Hour Fitness Pty Ltd v W & B Investment Group Pty Ltd [2015] VSCA 216, [53] (Hansen, Ferguson, McLeish JJA).

[51] We accept that, contrary to the Viterra Parties' submissions, the error so articulated was an error of the House v The King kind.

[52] In oral argument, Cargill Australia also emphasised the Viterra Parties' knowledge of the facts relevant to liability. That knowledge, however, does not alter the factual position in relation to question of quantum of loss.

[55] Grbavac v Hart [1996] VSC 37; [1997] 1 VR 154, 164 (Hayne JA), citing Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721, 724 (the Court).