Plaintiff v Defendants

Plaintiff v Defendants - [2017] VSC 126 - VSC 2017 case summary — Zoe

[20]

In the statement of claim, Cargill Australia alleges, amongst other things, that:

(a) Glencore and/or Viterra engaged in misleading or deceptive conduct in contravention of s. 18 of the ACL (the Misleading or Deceptive Conduct Claims);

(aa) Glencore and/or Viterra engaged in conduct amounting to deceit (the Deceit Claims);

(b) Viterra breached the Acquisition Agreement (the Contract Claims);

(c) Glencore and/or Viterra engaged in conduct amounting to negligent misrepresentation (the Negligence Claims, with the Misleading or Deceptive Conduct Claims, the Deceit Claims, the Contract Claims and Negligence Claims defined collectively as Cargill Australia's Claims);

(d) the Misleading or Deceptive Conduct Claims, the Deceit Claims, and the Negligence Claims arise from representations made by Glencore and/or Viterra, namely the Representations and (in the case of the Misleading or Deceptive Conduct Claims and the Negligence Claims) the CBH Representations;

(e) the Representations comprise:

(i) the Financial and Operational Performance Representations conveyed by Glencore and/or Viterra;

(ii) the Warranty Representations conveyed by Viterra (paragraphs 28) and

(iii) the Pre-Completion Representations conveyed by Glencore and/or Viterra;

(f) the Financial and Operational Performance Representations were conveyed by Glencore and/or Viterra;

(i) making the Information Memorandum Statements;

(ii) disclosing the Financial and Operational Information;

(iii) making the 18 July 2013 Statements;

(iv) making the 19 July 2013 Statements;

(v) failing to disclose the Undisclosed Matters;

(g) the Warranty Representations were conveyed by Viterra providing the Warranties;

(h) the Pre-Completion Representations were conveyed by Glencore and/or Viterra providing the October 2013 Responses;

(i) the CBH Representations were conveyed as alleged in paragraph 67 of the statement of claim;

(j) in reliance on:

(i) the Financial and Operational Performance Representations, the Warranty Representations and the CBH Representation, it entered into the Acquisition Agreement; and

(ii) the Pre-Completion Representations, it completed the Acquisition Agreement; and

(k) the Representations and the CBH Representations were false.

[38]

We questioned whether JWM has and/or had a practice of issuing certificates of analysis to customers (that may or may not have been provided to others) which represent that the malts supplied to customers met with particular specifications where the malt supplied did not meet those specifications. Our question was focused not only on differences in analysis outcomes that may result from tests undertaken at different times but whether the certificates themselves did not reflect accurately the outcomes of the tests on which each certificate reports. If this practice has occurred:
- What is the frequency of such occurrence and what percentage of JWM's contracts is affected? Also detail how many customers may have received inaccurate certificates and the total annual volume those customers represent.
- Have affected customers been informed and have they consented in writing to such activity?
- Have the certificates of analysis or any inaccurate data found on such certificates of analysis been provided to any further parties, including by JWM, its agents or its customers?
You concede that there have been instances where barley, other than that specified in a particular contract, has been used. You state that the malt delivered has, however, always met the 'technical needs' of the customer and that you are not aware of any complaints or claims from customers about this practice. However, in the absence of disclosure to the customer, a lack of complaints would seem not to be an answer. Further, it is not evident from your response how widespread this practice is or has been. Have affected customers have [sic] been informed of and consented to this practice? Please quantify the number of customers that may have been impacted and outline their total volume and the remaining term of the relevant agreement(s).
Related to paragraph 2, we are concerned that the barley varieties required by some of JWM's customers may not be presently available on commercial terms. Should this be the case, we understand that JWM is not in a position to supply malt in compliance with those affected customer contracts. Is this the case? If so, what percentage (by volume and by total value) of JWM's contracts are affected?
You concede that there has been 'non-compliance with customer requirements around GA3' but JWM is able to produce the specification of malt required to meet customer demands save that modified production conditions may be required. Again, you state that you are not aware of any customer complaints or claims in relation to this practice. Your letter does not address how widespread this practice is or has been and the percentage of JWM's contracts that are affected. With respect to the absence of any consumer complaints or claims, is it the case that full disclosure has been made to affected customers and agreed by them? Last, your letter does not address the volume of product in inventory which is not compliant or the costs arising from any necessary modifications to production conditions to produce the required contract compliant malt.

[69]

(a) all Information Memorandum Statements were true and correct;

(b) the Financial and Operational Information was true and correct;

(c) the 18 July 2013 Statements were true and correct;

(d) the 19 July 2013 Statements were true and correct;

(e) the Undisclosed Matters did not exist; and

(f) the Warranties were true and correct,

(collectively, the JWM Representations).

Particulars

(i) Hughes and Argent participated in the preparation of the Information Memorandum and, on or about 23 and 24 April 2013, prior to the finalisation of the Information Memorandum, Hughes and Argent informed Glencore and Viterra that the Information Memorandum Statements were accurate, including by:

(A) Argent sending an email to Saurabh Thaper and Thomas Nicholls of Merrill Lynch, copied to Hughes, on 23 April 2013 at 1:35pm which attached Hughes' and Argent's comments on a draft of the Information Memorandum; and

(B) Hughes and Argent signing a document entitled 'Verification Table for Information Memorandum' on or about 24 April 2013.

(ii) In relation to the Financial and Operational Information:

(A) Hughes and Argent participated in the preparation of the Information Memorandum and, on or about 23 and 24 April 2013, prior to the finalisation of the Information Memorandum, Hughes and Argent informed Glencore and Viterra that the Financial and Operational Information was accurate, including by taking the steps referred to in sub-paragraph (i) above; and

(B) Hughes and Argent were responsible for providing, and provided, the Financial and Operational Information to Glencore and Viterra for disclosure during Due Diligence.

(iii) On 18 July 2013, Hughes and/or Youil made the 18 July 2013 Statements, and a note of the discussion during which the 18 July 2013 Statements were made was verified by Hughes and Youil on or about 26 July 2013, prior to the finalisation of the Acquisition Agreement. The note of the discussion was subsequently included as part of Annexure E to the Acquisition Agreement.

(iv) On 19 July 2013, Hughes made the 19 July 2013 Statements, and a note of the discussion during which the 19 July 2013 Statements were made was verified by Hughes and Argent on or about 1 August 2013, prior to the finalisation of the Acquisition Agreement. The note of the discussion was subsequently included as part of Annexure E to the Acquisition Agreement.

(v) Prior to about 22 October 2013, none of Hughes, Youil, Wicks, Stewart or Argent disclosed to Glencore or Viterra the Undisclosed Matters.

(vi) In relation to the Warranties:

(A) between about 31 July and 3 August 2013, prior to the finalisation of the Acquisition Agreement, one or more of Hughes, Youil, Wicks, Stewart and Argent informed Glencore and Viterra that each of the Warranties the subject of the statement of claim was accurate by verifying the accuracy of it; and

(B) prior to Completion, none of Hughes, Youil, Wicks, Stewart or Argent informed Glencore or Viterra that any of the Warranties was not accurate despite having been requested to do so if any of the Warranties was not accurate.

[173]

In this position, my responsibilities included:

(a) being the lead lawyer for Viterra (which includes Viterra Limited and its subsidiaries, as well as other operating companies), supervising the legal team including, at the relevant time, Joshua Wilson-Smith and Alicia Burgemeister and paralegals/law clerks and providing legal review and input into the legal services provided by them to the business;

(b) managing Viterra's Legal Panel of external law firms, including reviewing and determining what matters should be briefed, the nature of the legal service required, the provision of instructions and the advice or other legal service ultimately provided;

(c) managing all legal expenditure, including setting the annual legal budget and approving all invoices from external firms;

(d) advising on and leading legal aspects of transactions, including mergers and acquisitions, joint ventures and other partnerships with external companies;

(e) providing legal advice on regulatory, governance and compliance matters, including foreign investment regulation and competition law issues;

(f) setting legal policies for Viterra and providing training in respect of those policies;

(g) advising traders in relation to contract disputes with customers;

(h) advising on litigation, mediation and settlement negotiations arising from operational and employment contract claims;

(i) advising the human resources department on investigations into employee issues, including bullying and harassment, fraud, work health and safety;

(j) advising the business on contract negotiations and interpretation issues;

(k) preparing submissions for regulatory inquiries into the grain industry at Commonwealth and State levels;

(l) advising the Executives on legal issues ... in particular, their Directors' and Officers' duties and their obligations under WH&S and Chain of Responsibility legislation; and

(m) supervising Viterra's corporate governance, including preparing agendas and ensuring the correct materials were tabled before Executive meetings, and attending Executive meetings.

[424]

(a) Section 122 of the Evidence Act is intended to import the common law test for issue waiver: Vic Hotel Pty Ltd v DC Payments Australasia Pty Ltd [2015] VSCA 101; (2015) 321 ALR 191.

(b) What brings about the waiver is the inconsistency, which the courts, when necessary informed by considerations of fairness, perceive, between the conduct of the privilege holder and the maintenance of the confidentiality: Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1.

(c) In some cases, waiver will be imputed by the law with the consequence that a privilege is lost, even though that consequence was not intended by the party losing the privilege. Intention will be imputed when the actions of a party are plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect: Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303.

(d) Issue waiver is not limited to where there has been express or implied assertions about the contents of the communication, and extends to circumstances that include the laying open of the confidentiality to necessary scrutiny, and by doing so (that is by expressly or impliedly making an assertion about the contents of the communication or laying the communication open to scrutiny) the inconsistency enunciated by Mann v Carnell is brought about - it is the existence of that inconsistency that is important: DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384; (2003) 127 FCR 499; Skarbek v The Society of Jesus in Victoria [2016] VSC 622.

(e) Assessing whether there has been a waiver of privilege requires a fact based enquiry as to whether, in effect, the privilege holder has directly or indirectly put the contents of an otherwise privileged communication in issue in litigation, either in making a claim or by way of defence: Federal Commissioner of Taxation v Rio Tinto [2006] FCAFC 86; (2006) 151 FCR 341.

(f) In determining whether there has been an implied waiver of privilege, the court's focus will be on whether there has been conduct that is inconsistent with the maintenance of confidentiality in the communication over which privilege is asserted. The court's assessment of whether there has been an implied waiver will be informed by considerations of forensic unfairness in allowing the claim to proceed without disclosure of the communication: DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384; (2003) 127 FCR 499, Vic Hotel v DC Payments; Macquarie Bank Limited v Arup Pty Ltd [2016] FCAFC 117; The Oswal Matters - In Trial Rulings - Confidentiality, Discovery and Privilege [2017] VSC 19.

(g) The relevant inconsistency and unfairness may exist if the client is making assertions about the client's state of mind in circumstances where there were confidential communications likely to have affected that state of mind: Council of the NSW Bar Association v Archer [2008] NSWCA 164; (2008) 72 NSWLR 236; Chong v CC Containers Pty Ltd [2015] VSCA 137.

(h) To determine whether there is relevant inconsistency, the Court will consider the precise issue in dispute and how the relevant confidential communications impact upon that issue: Liquorland (Australia) Pty Ltd v Anghie [2003] VSC 73; (2003) 7 VR 27; Patrick Stevedore Operations (No 2) Pty Ltd v Port of Melbourne Corporation (No 2) [2016] VSC 467.

At a glance

Court

Decision date

Before

Source

Judgment (569 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (14)