Plaintiff v Defendants

COSTS - Third party claims - Whether indemnity costs ought to be awarded - Merits - "Walk away" offers - Genuine compromise - Time for award of indemnity costs - Applicable principles - Where proceeding has no prospect of success - Hopeless case - Wilful disregard of known facts or clearly established law - Indemnity costs awarded to relevant third party individuals for duration of the third party proceeding.

COSTS - Appropriate method of assessment of costs - Taxation or gross sum assessment - Unchallenged expert evidence on features of taxation and gross sum assessment - Costs assessment to proceed by taxation.

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

1 This is another set of lengthy reasons for decision in this proceeding, which is regrettable given these reasons are concerned with the question of costs. At the helpful direction of the Court of Appeal,[1] a trial division judge may give rulings with respect to costs without detailed reasons. However, the parties have again asked the court to determine a large number of issues. This is not said by way of criticism, particularly with respect to the individuals who have been the subject of third party claims. Those individuals have been put through years of litigation and were entitled to refer to the claims against them in detail and point out their lack of merit. Further, it is likely that some matters raised by the parties on the question of costs will result in substantial financial consequences, depending on the manner in which they are determined.

2 As part of these reasons, it has been necessary to refer to a number of issues raised for determination at trial. In order to confine the length of these reasons, on occasions summaries have been provided with respect to what had been previously argued or decided. These summaries are not intended to go beyond or to alter what has previously been stated. For a proper understanding of the issues, it may be necessary to read previous decisions in this case.

3 Finally in relation to these introductory remarks, these reasons necessarily make some observations about the way in which this proceeding has been conducted by some of the parties. Nothing that follows should be understood to detract from my full appreciation of the high level of endeavour shown by the legal representatives in this case and the considerable degree of difficulty they endured in representing their clients in such a large and long-running case.

4 The events the subject of this proceeding largely occurred in 2013. On 4 August 2013, the plaintiff, Cargill Australia Ltd ("Cargill Australia"), entered into an agreement to purchase all of the issued shares in the second third party, Joe White Maltings Pty Ltd ("Joe White"), and some additional assets not owned by Joe White for the sum of $420 million ("the Acquisition Agreement"). The sellers were the first 3 defendants, Viterra Malt Pty Ltd ("Viterra Malt"), Viterra Operations Ltd ("Viterra Operations") and Viterra Ltd (collectively, "Viterra"). The ultimate parent company of Viterra, the fourth defendant, Glencore International AG ("Glencore") (Viterra and Glencore together, "the Viterra Parties"), was also heavily involved in the sale process.

5 In addition to contractual breaches, Cargill Australia alleged that the transaction was infected by misleading conduct and impropriety. In October 2014, Cargill Australia commenced this proceeding, which at that time included allegations of misleading or deceptive conduct (under the Australian Competition and Consumer Act 2010 (Cth) ("the Australian Consumer Law")) and breach of contract, but not deceit. There were numerous amendments made to Cargill Australia's claim over the course of the proceeding. A series of interlocutory steps and disputes led to the trial not commencing until 18 June 2018. The trial was lengthy and the interlocutory disputes continued to arise unabated (even after judgment was reserved).[2] Judgment was delivered on 28 January 2022 ("the Principal Judgment").[3]

6 In addition to Joe White, there were 6 other third parties. The first third party was Cargill Australia's parent company, Cargill, Incorporated ("Cargill, Inc") (together with Cargill Australia, "Cargill") (Cargill and Joe White together, "the Cargill Parties"). The remaining third parties ("the Third Party Individuals") were individuals who were employed by Viterra Ltd at all relevant times up until the completion of the Acquisition Agreement on 31 October 2013 ("Completion"). The Third Party Individuals worked as executives of the business conducted by Viterra and Joe White ("the Joe White Business").[4]

7 Broadly speaking, Cargill Australia was successful in establishing various aspects of its case, and accordingly was found to be entitled to damages in a sum being the difference between the purchase price paid and the true value of Joe White. By further judgment delivered on 17 February 2022 the amount of those damages was set at $168.9 million.[5] Also putting it broadly, the Viterra Parties were substantially unsuccessful in their third party claims, although nominal damages were awarded in their favour against the third third party, Gary Hughes ("Hughes").[6]

8 The main issues now in dispute are fivefold. First, whether indemnity costs ought to be awarded against the Viterra Parties in respect of Cargill Australia's claims against them. Secondly, whether indemnity costs ought to be awarded against the Viterra Parties in respect of their unsuccessful third party claims against the Third Party Individuals other than Hughes.[7] Thirdly, if indemnity costs are to be awarded regarding any of these claims, the time from which they ought to be awarded. Fourthly, whether or not it is appropriate for any costs awarded in favour of Cargill Australia to be apportioned. Fifthly, regardless of the basis of the award, in default of agreement whether any costs awarded should be taxed by the Costs Court or be the subject of a gross sum assessment.

9 For the reasons that follow, the answers to these 5 issues are: (1) no, they will be awarded on a standard basis; (2) yes; (3) from the commencement of the third party proceeding; (4) yes, the Viterra Parties will be ordered to pay 92.5 percent of Cargill Australia's costs on a standard basis; (5) in default of agreement, all costs will be taxed by the Costs Court.

B. Offers of compromise and the various iterations of Cargill Australia's pleaded case

10 A number of offers of compromise have been made in accordance with order 26 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) ("the Rules"). None of them was accepted. It is convenient to set out the details of those offers here:

(1) On 26 March 2015, the Cargill Parties served an offer of compromise on the Viterra Parties ("the Cargill Offer"). By the Cargill Offer, Cargill Australia offered to settle all its claims against the Viterra Parties by the Viterra Parties paying to Cargill Australia the sum of $85 million, plus costs as agreed or taxed. The Cargill Offer was open for acceptance until 5.00pm on 16 April 2015.

(2) On 2 June 2015, the Viterra Parties sent an offer of compromise to the Cargill Parties ("the Viterra Offer"). The Viterra Offer was for the Viterra Parties to pay to Cargill Australia the sum of $15 million plus costs as agreed or taxed, in full and final settlement. The Viterra Offer was open for acceptance for 14 days from the date it was made, and was rejected on 16 June 2015.[8]

(3) On 15 June 2018, an offer of compromise was made to the Viterra Parties on behalf of the sixth third party, Douglas Stewart ("Stewart"), offering to compromise the third party claim against him for the sum of $0.00 inclusive of costs and disbursements, and for Stewart to bear his own costs of the proceeding ("the Stewart Offer"). The Stewart Offer expired on 30 June 2018.

(4) On 21 June 2018, offers of compromise were made to the Viterra Parties on behalf of the fourth third party, Peter Youil ("Youil"), and the seventh third party, Scott Argent ("Argent"), in respect of the third party claims against each of them (respectively, "the Youil Offer" and "the Argent Offer"). Both offers were for the claims to be compromised and discontinued without any amount being paid to the Viterra Parties, and with each party bearing its or his own costs. No response to either the Youil Offer or the Argent Offer was received within the 14 day period for acceptance.

(5) On 22 June 2018, the fifth third party, Robert Wicks ("Wicks") made an offer of compromise to the Viterra Parties ("the Wicks Offer"). The Wicks Offer provided for settlement on the basis that Wicks and the Viterra Parties bear their own costs and the claim against Wicks be discontinued without any payment. No response to the Wicks Offer was received within the 14 day period it was open.

B.2 Cargill Australia's pleaded case as amended over approximately 5 years[9]

11 To put the Cargill Offer in its proper context, it is necessary to review how Cargill Australia's case was pleaded at various stages of the proceeding.[10]

12 Cargill Australia's original statement of claim was filed on 1 October 2014. It named Viterra as the defendants. Glencore was not a party at this point. The original statement of claim alleged Viterra had engaged in misleading or deceptive conduct in contravention of section 18 of the Australian Consumer Law by making each of the Financial and Operational Performance Representations,[11] the Warranty Representations,[12] and the Pre-Completion Representations.[13]

13 Further, Cargill Australia alleged Viterra had breached certain Warranties[14] provided in the Acquisition Agreement.

14 Furthermore, in respect of the Financial and Operational Performance Representations, the Warranty Representations and the Pre-Completion Representations, it was alleged that Viterra knew (or ought to have known) that Cargill Australia relied upon these representations. It was also alleged that Viterra owed a duty to take reasonable care in making the representations and in breach of that duty had negligently misrepresented the state of the Joe White Business.

15 By reason of these contraventions and breaches of duty, Cargill Australia alleged it had suffered loss comprising the difference between the purchase price it had paid and (1) the true value of Joe White, or (2) the price that Cargill Australia would have paid for Joe White had the misrepresentations not been made. In respect of this alleged loss, the original statement of claim stated that "further particulars will be provided prior to trial". In relation to the alleged breaches of contract, Cargill Australia referred to and repeated the particulars as summarised immediately above. Further or alternatively, it set out other bases for calculating loss based on loss of production, the incurring of additional operational expenditure and investment in capital expenditure. Again, further particulars were promised prior to trial.

16 In addition, Cargill Australia made a claim concerning the Co-Operative Bulk Agreement.[15] It was alleged certain representations were made about its status that were false and misleading or deceptive in contravention of section 18 of the Australian Consumer Law. It was further alleged that this gave rise to a breach of some of the Warranties. Further still, it was alleged Viterra owed a duty to take reasonable care in providing the Financial and Operational Information[16] and that, by reason of the matters pleaded in relation to representations regarding the Co-Operative Bulk Agreement, that duty was breached. The loss with respect to this claim was alleged to be $2,399,409.10, "being the sum that Cargill has paid to [Co-Operative Bulk]".

17 On 17 November 2014, Cargill Australia filed an amended statement of claim pursuant to orders that also added Glencore as a defendant. The amended statement of claim expanded the nature of Cargill Australia's case, predominantly because Cargill Australia alleged causes of action directly against Glencore (including by reason of conduct allegedly engaged in by Viterra, David Mattiske ("Mattiske")[17] and Hughes) and attributed the actions of Viterra to decisions made by Glencore and its agents.

18 With respect to loss and damage, Cargill Australia again indicated that "further particulars will be provided prior to trial". On 27 February 2015, the solicitors then acting for the Cargill Parties' provided a response to "all outstanding requests for particulars" from the Viterra Parties. General particulars were provided as to the bases upon which it was claimed loss had been suffered. On the alternate scenarios given, the loss was estimated in the range of $187 million to $195 million, alternatively $170 million to $172 million. However, Cargill Australia put these figures forward under cover of an objection and refused to be bound by them. In other words, they were put forward on the basis that they were subject to change. Cargill Australia stated that ascertaining 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. As things transpired, this evidence was not provided by the Cargill Parties until nearly 3 years later.

19 Cargill Australia filed a further amended statement of claim on 2 April 2015, after earlier drafts had been served.[18] It contained additional sections that attributed further responsibility to the Viterra Parties for the misleading representations already pleaded. In replacement of existing particulars, schedule D was inserted and contained lengthy details concerning the Viterra Parties' alleged knowledge of the true state of affairs within Joe White.[19] The further amended statement of claim ran for 63 pages, including schedule D (but not including the pre-existing schedules A, B and C).

20 Importantly, the further amended statement of claim added new and serious causes of action involving alleged dishonesty. Cargill Australia alleged that the Viterra Parties had engaged in common law deceit in light of the fact that they knew the various representations were false, did not genuinely believe the representations were true, or were reckless as to the truth of the representations.[20] For completeness, the Cargill Parties had previously raised allegations concerning fraud and wilful misconduct in Cargill Australia's reply and defence to counterclaim filed 4 February 2015. However, those allegations were devoid of substantive particulars.[21] On 12 February 2015, the Viterra Parties' solicitors stated in correspondence to the Cargill Parties' solicitors that these allegations of fraud should have been struck out. In response to this suggestion, the Cargill Parties' solicitors suggested Cargill Australia would address any substantive issues raised in subsequent amendments.[22] In short, no pleading emanating from Cargill Australia properly identifying how a case of fraud was to be put against the Viterra Parties had been filed or served before the draft further amended statement of claim was provided to the Viterra Parties.

21 For the purpose of the breach of warranty claim, a further section concerning the deemed knowledge of the Viterra Parties was also added.

22 Further, the further amended statement of claim contained additional allegations in relation to the Confidentiality Deed,[23] in respect of which declaratory relief was sought. A new allegation was also made that the Viterra Parties had failed to pay all the amounts owed to Cargill Australia under the Acquisition Agreement by virtue of a determination by the Independent Expert (based on Cargill Australia's interpretation of the determination).[24] It was alleged the amount that Viterra Malt had failed to pay was $774,886.64 plus interest.

B.2.4 Second further amended statement of claim

23 On 11 July 2017, Cargill Australia filed a second further amended statement of claim. This statement of claim made substantial additions to Cargill Australia's deceit claim. Also in relation to deceit, loss was claimed on the same basis as had been claimed for a number of the allegations relating to misleading conduct.[25]

24 Further, 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.[26]

25 Cargill Australia also made substantial amendments to schedule D, which set out additional information regarding the Viterra Parties' alleged knowledge.[27]

26 Cargill Australia's statement of claim went through several additional amendments, culminating in the fifth further amended statement of claim ("the Statement of Claim").[28] A comparison of the second further amended statement of claim (which was the claim as it stood when the trial started) and the Statement of Claim (which was the claim from 13 May 2019 until the end of the trial) reveals the extent to which Cargill Australia's claim changed during the trial.

27 In particular, and without being exhaustive of the further amendments made, the Statement of Claim contained:

(1) Additional detail about the nature and content of the Information Memorandum Statements.[29]

(2) Further particulars concerning the Operations Call Statements and Commercial Call Statements.[30]

(3) The addition of 21 pages of particulars regarding the allegations concerning the existence of the Undisclosed Matters.[31]

(4) New allegations based on the Management Presentation Statements,[32] the Undisclosed Matters and the Financial and Operational Performance Representations.

(5) Additional allegations and particulars as to why it was alleged that the Viterra Parties had engaged in misleading or deceptive conduct.[33]

(6) The introduction of particulars as to why it was alleged that Joe White was in material default of Material Contracts.[34]

(7) New allegations that by reason of the Pre-Completion Representations, Cargill Australia was deprived of the opportunity to obtain properly informed legal advice.

(8) 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.[35]

28 The court's jurisdiction as to costs is conferred by section 24(1) of the Supreme Court Act 1986 (Vic). The court has full power to determine by whom and to what extent costs of and incidental to the proceeding are to be paid, unless otherwise expressly provided for by another Act or the Rules.[36] However, the discretion must be exercised judicially, by reference only to considerations relevant to its exercise and based upon facts connected with or leading up to the litigation.[37]

29 The exercise of the discretion is informed in part by section 65C of the Civil Procedure Act 2010 (Vic), which provides that "[i]n addition to any other power a court may have in relation to costs, a court may make any order as to costs it considers appropriate to further the overarching purpose". The overarching purpose of the Civil Procedure Act is "to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute".[38] In determining whether to make an order under section 65C(1), the court may consider various matters including the complexity of the factual or legal issues raised in the proceeding.[39]

30 Generally speaking, the successful party will be entitled to an award of costs in its favour.[40] An award of costs seeks to indemnify the successful party, as opposed to punish the unsuccessful party.[41]

31 As to the court's approach to resolving costs disputes, in Luxmore Pty Ltd v Hydedale Pty Ltd,[42] the Court of Appeal noted that it is not necessary for judges to give elaborate reasons or advert to every matter raised in argument.[43] Rather, it is to be assumed that every matter addressed in argument on costs has been considered by the court.[44]

32 The court may award costs on a standard basis, an indemnity basis or any other basis as it may direct.[45] Further, in some circumstances the court may dispense with the regular taxation process by awarding costs on a gross sum basis.

33 An order for costs will generally indemnify the successful party, at least in part, for costs incurred in the relevant proceeding.

34 Indemnity costs are to be distinguished from costs awarded on a standard basis. An order for indemnity costs consists of "all costs ... except in so far as they are of an unreasonable amount or have been unreasonably incurred".[46] By contrast, costs awarded on a standard basis comprise "all costs reasonably incurred and of reasonable amount".[47] The point of difference is therefore who bears the onus of establishing that the relevant costs are reasonable or unreasonable.[48] If costs are awarded on an indemnity basis, then the cost will be payable unless the opposing party can show they have been unreasonably incurred or are of an unreasonable amount. Whereas on a taxation of costs awarded on a standard basis, the party in whose favour the award was made must establish the costs were reasonably incurred and are of a reasonable amount.[49]

35 An award of indemnity costs is usually attended by special circumstances which justify the court departing from the ordinary practice of awarding standard costs as part of costs following the event.[50] The circumstances in which indemnity costs may be awarded are not rigid or closed, and each case must be determined on its own particular facts.[51] Nonetheless, indemnity costs may be awarded in the following established categories:[52]

(1) Where proceedings are commenced or continued for an ulterior motive.[53]

(2) Where proceedings are commenced or continued in wilful disregard of known facts or clearly established law.[54]

(3) Cases involving "the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions".[55]

(4) Where a genuine offer of compromise is imprudently refused.[56]

36 In Macedon Ranges Shire Council v Thompson,[57] it was held that indemnity costs may be awarded where it appears that an action has been commenced in circumstances where the applicant, properly advised, should have known it had no chance of success.[58] In considering whether such a conclusion ought be made, a court is required to consider not only what a party knew, but also what it ought to have known including by reason of enquiries it ought to have made and advice it ought to have obtained.[59]

37 In relation to whether a party appreciated the "hopelessness" of its position for the purpose of an award of indemnity costs, in the absence of direct evidence the court must carefully consider the relevant circumstances before drawing any inference about a party's level of understanding or reasons for commencing or continuing with its claim.[60]

38 An offer of compromise which has costs consequences may be effected by common law principles, including relating to the provision of offers made without prejudice save as to costs, or by order 26 of the Rules.

39 Order 26 enables parties to serve on another party an offer of compromise on specified terms.[61] In form, such an offer must adhere to certain statutory requirements.[62] Such offers, validly made, are taken to be made without prejudice unless otherwise provided.[63]

40 The objectives of order 26 include encouraging the saving of private costs; avoiding the inherent risks, delays and uncertainties of litigation by promoting early offers; enabling the saving of public costs incurred by the litigation; and indemnifying plaintiffs who have made an offer of compromise, later found to be reasonable, from costs incurred after that offer.[64] However, potential litigants should not be discouraged from bringing their dispute to the courts.[65]

41 If a valid offer of compromise was made but has not been accepted at the time of verdict or judgment, costs consequences may ensue.[66] Rule 26.08 provides:

(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 -

(b) in the case of any other claim of the plaintiff,[67] 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.

(4) Where an offer of compromise is made by a defendant and the plaintiff unreasonably fails to accept the offer and the claim to which the offer relates is dismissed or judgment on the claim is entered in favour of the defendant, then unless the Court otherwise orders -

(a) the defendant shall be entitled to an order against the plaintiff for the defendant's costs in respect of the claim until 11.00 a.m. on the second business day after the offer was made, taxed on the ordinarily applicable basis; and

(b) the defendant shall be entitled to an order against the plaintiff in respect of the defendant's costs after the time referred to in paragraph (a) taxed on an indemnity basis.

(7) Paragraphs (2), (3) and (4) shall not apply unless the Court is satisfied by the party serving the offer of compromise that that party was at all material times willing and able to carry out the party's part of what was proposed in the offer.[68]

42 Thus, rule 26.08(2) creates a presumption that indemnity costs will be awarded in circumstances where an offer of compromise is made by a plaintiff but not accepted, and the plaintiff subsequently obtains a judgment no less favourable than the terms of the offer. A like presumption is created for the benefit of a defendant[69] where it has had its offer of compromise unreasonably not accepted and the claim against it is subsequently dismissed or judgment is entered in its favour.

43 In relation to the court's discretion to otherwise order, the party seeking to displace the presumptive rule bears the onus.[70] The decision to otherwise order will not be made lightly, and the court must exercise caution in departing from this rule.[71]

44 The exercise of the discretion to otherwise order depends on whether such an order would advance the purpose of order 26.[72] A relevant question is whether the rejection of the offer was unreasonable in the circumstances, though reasonableness alone is not determinative.[73] In Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2), the Court of Appeal non-exhaustively outlined the factors ordinarily relevant to assessing unreasonableness in the following way:[74]

The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer[75] was unreasonable should ordinarily have regard at least to the following matters:

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(d) the offeree's prospects of success, assessed at the date of the offer;

(e) the clarity with which the terms of the offer were expressed;

(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it.

45 The assessment is a question of judgment and impression, assessed at the time the offer of compromise was made, without the advantages of hindsight.[76] It is not presumed that a refusal is unreasonable simply because the offered sum is higher than the ultimate award.[77]

46 In some circumstances, a "walk away" offer may constitute a genuine attempt to compromise the dispute, rendering a rejection of the offer unreasonable.[78] In others, such offers may be treated as offers to capitulate, which would not be unreasonable for a losing party to have rejected.[79] Such an offer will not attract protection on questions of costs.

(1) The Court may make an order for costs in relation to a particular question in or a particular part of a proceeding.

(2) Where the Court makes an order under paragraph (1), the Court shall by order fix the proportion of the total costs of the proceeding which is attributable to the particular question in or the particular part of the proceeding.

48 This rule reflects the court's broad discretion as to costs, particularly where there has been mixed success. The principles relevant to apportionment were stated by the Court of Appeal in Chen v Chan:[80]

(1) The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim.

(2) The [Rules] permit significant flexibility in determining questions of costs. In particular, the Court is entitled to examine the realities of the case and will attempt to do "substantial justice" as between the parties on matters of costs.

(3) Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a Court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount.

(4) A Court may, when fixing costs in a claim where there has been mixed success, take into account complications which it considers will arise in the taxation of costs, as part of its consideration of the overall interests of justice.

(5) Where a Court determines to make an order apportioning costs, then it does so primarily as "a matter of impression and evaluation," rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.

D. Costs submissions as between the Cargill Parties and the Viterra Parties

D.1 The Cargill Parties' primary submissions, including Cargill Australia's claim for indemnity costs

49 The Cargill Parties submitted that Cargill Australia had been almost wholly successful in its claims against the Viterra Parties, and that as such, in accordance with the ordinary rule that costs follow the event, the Viterra Parties should pay their costs of the proceeding. Further, they submitted that as a result of the Cargill Offer, Cargill Australia's costs should be awarded on an indemnity basis from 11.00am on 30 March 2015 by operation of rule 26.08 of the Rules. Otherwise, they submitted the Cargill Parties' costs should be paid by the Viterra Parties on a standard basis.

50 The Cargill Parties submitted that the 3 questions relevant to an award under rule 26.08(2) were whether an offer was a genuine compromise, whether the judgment obtained was "no less favourable", and whether the court should "otherwise order". They correctly submitted that there was no controversy as to the first 2 questions, and that the determinative question was whether the court should otherwise order.

51 Having regard to the lengthy procedural history of the proceeding, the Cargill Parties submitted that unforeseen developments in the course of litigation, including events that occurred after the date of an offer of compromise, rarely displace the presumptive effect of an offer of compromise.[81]

52 Further, the Cargill Parties characterised the opposing submissions as focusing on whether the Viterra Parties' conduct was reasonable in refusing to accept the Cargill Offer, submitting that the authorities were clear that this alone would not be sufficient to displace the presumption that indemnity costs would be ordered. In making this submission, the Cargill Parties referred to Stevens v Spotless Management Services Pty Ltd (No 2),[82] in which the Court of Appeal determined that while it was not unreasonable for the respondent in that case to reject the relevant offers of compromise, this was only 1 consideration relevant to whether the court would otherwise order for the purposes of rule 26.08.[83]

53 Further, the Cargill Parties referred to several cases concerning the policy rationale underpinning order 26, and its relevance to whether the court will "otherwise order". Broadly, the purpose of the order is to encourage the compromise of litigation, and thereby save public and private costs.[84]

54 The Cargill Parties submitted that at every step in the case - "every interlocutory step, every day of trial, every moment of preparation of judgment" - private and public costs of the litigation were incurred as a result of the Viterra Parties not accepting the Cargill Offer. They contended it was relevant that the Cargill Offer was made approximately 18 months after the transaction had concluded, and approximately 4 months after the amended statement of claim was filed in November 2014.

55 No doubt anticipating the Viterra Parties' response, the Cargill Parties led evidence of information provided in correspondence between the respective solicitors between November 2014 and February 2015. The evidence noted that this correspondence included particulars of relevant malt contracts, the deal model prepared by Cargill for the purposes of calculating the price Cargill Australia was prepared to pay for the Joe White Business, estimates of loss, the volume of malt Joe White was capable of producing within specification and the volume of malt production lost due to the cancellations in the first 6 months after Completion.

D.2 The Viterra Parties' submissions

D.2.1 Overview

56 The Viterra Parties made 3 overarching submissions on the question of indemnity costs.

57 First, the Viterra Parties drew attention to the timing and nature of the Cargill Offer, namely that it was made only 5 months after Cargill Australia commenced the proceeding. Further, the Cargill Offer was made "less than 3 days" after the service of the proposed further amended statement of claim, introducing new allegations including deceit,[85] and 7 days before the further amended statement of claim was filed. Accordingly, the Viterra Parties submitted that a proper appreciation of the claims was not possible without an understanding of the particulars pleaded in support of those claims. They submitted a key component of the particulars was the extent of the alleged practices ("the Viterra Practices").[86] These particulars were contained in a spreadsheet that the Viterra Parties contended required expert analysis. The Viterra Parties submitted it was not possible to undertake that analysis prior to the time of expiry of the Cargill Offer, nor to assess the litigation risks or quantum. On the latter, they drew attention to the fact that the Cargill Parties had sought $85 million, and that no litigant would consider payment of such a sum lightly and without being satisfied that its position was in serious jeopardy.

58 Secondly, the Viterra Parties submitted that they were unable to properly assess the veracity of the evidence provided by the Cargill Parties about the Viterra Practices and the merits of the claim more broadly. In these circumstances, they submitted that the Cargill Parties could not reasonably have expected them to accept the Cargill Offer.

59 Thirdly, more than 3 years later, Cargill Australia made substantial and material changes to its claims in the lead up to trial and during the trial itself. The Viterra Parties submitted that Cargill's conduct after the Cargill Offer was relevant to the exercise of the court's discretion concerning whether to award indemnity costs, as discussed further below.[87]

60 The Viterra Parties broadly noted the underlying policy objectives of order 26 referred to in Grbavac v Hart.[88] However, they noted that the Court of Appeal in a later case had referred to a competing objective of "equal importance", namely:[89]

Potential litigants should not be discouraged from bringing their dispute to the courts. It is such considerations which underlie the general rule that an order for special costs should only be made in special circumstances.

61 The Viterra Parties further submitted that, although not determinative, the critical question in this case was whether the rejection of the Cargill Offer was unreasonable in the circumstances.

62 In response to the Cargill Parties' submission on the relevance of events after the date of an offer of compromise, the Viterra Parties relied upon Hambleton v State Trustees Ltd.[90] In that case, it was stated that "it would be rare, indeed extraordinary, for events which took place after judgment was entered to be a relevant consideration in determining where the liability lies for costs incurred prior to the entry of judgment" (emphasis added).[91] The Viterra Parties submitted that, accordingly, events that occur after an offer of compromise expires but before judgment, which change the nature of the case and the parties' understanding of the case, are relevant considerations.

63 In addition, the Viterra Parties referred to South Eastern Sydney Area Health Service v King[92] to submit that the "large imponderables" in the present case were a relevant consideration in denying the Cargill Parties indemnity costs.[93]

64 As already noted, the Viterra Parties emphasised that the further amended statement of claim was provided to them less than 3 full days before the Cargill Offer. The Viterra Parties submitted that these amendments and their timing constituted "special circumstances" warranting a departure from the usual order set out in rule 26.08. The amendments to that claim contained various further allegations.[94] The Viterra Parties submitted that the allegations of fraud and knowledge were serious matters that were required to be pleaded in proper detail so the opposing parties could adequately comprehend and answer them.

65 In furtherance of this point, the Viterra Parties referred to 2 letters sent in June 2015. The first letter was sent by the Cargill Parties' solicitors rejecting the Viterra Offer. In that letter, it was stated that Cargill's ability to assess the Viterra Offer "even on a commercial basis" was limited in circumstances where the Viterra Parties were still in the process of filing pleadings and discovery had not occurred. In response to that letter, the Viterra Parties' solicitors rejected the asserted inability of Cargill to assess the Viterra Offer. Although it was acknowledged that discovery had not yet taken place, it was stated that the Cargill Parties had in their possession many documents relevant to Cargill Australia's claim. The letter concluded:

In the circumstances, our clients do not accept the suggestion that your client's ability to assess the offer is 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.[95]

66 This correspondence was relied upon as contemporaneous evidence of the Viterra Parties' inability to properly address the Cargill Offer.

67 Generally, the Viterra Parties sought to highlight the disparity between their state of knowledge and the Cargill Parties' knowledge, in circumstances where Cargill Australia was experienced in malt and was in possession of the Joe White Business (including a large amount of documents and data concerning its operations and finance). The Viterra Parties submitted that they did not have access to many of the documents and persons that the Cargill Parties did.[96]

68 In particular, the Viterra Parties submitted that the particulars in respect of the Certificates of Analysis[97] and the use of incorrect barley varieties[98] were lengthy, complicated and could not be properly scrutinised before the Cargill Offer had expired. They referred to the fact that the expert evidence of Liam Ryan ("Ryan"),[99] which underlined this part of the claim, was not provided until a number of years later.[100]

69 Further, the Viterra Parties highlighted that the deal model developed and used by Cargill as part of the decision-making process leading up to the purchase of Joe White[101] was initially provided in locked form, meaning the Viterra Parties were unable to interrogate the formulas upon which the model was constructed until 2017 (when a password was provided upon agreement to a confidentiality regime).[102] It was submitted the Viterra Parties' position that they had limited ability to meaningfully consider the data was borne out by the fact that it was necessary for the court to have further calculation evidence before quantification of Cargill Australia's damages could be finalised.[103]

70 Accordingly, the Viterra Parties submitted the above factors contributed to their inability to assess the claim with any measure of confidence, which rendered their rejection of the Cargill Offer reasonable.

D.2.3 Material changes to Cargill Australia's case

71 The Viterra Parties contended that the Cargill Parties continued to make further substantial changes to Cargill Australia's case up to and during the trial, which self-evidently were factors that could not be taken into account in the Viterra Parties' consideration of the Cargill Offer. Specifically, they drew attention to a number of amendments contained in the third further amended statement of claim, which was filed on the 31st day of trial on 13 August 2018. These included:

(1) The addition of further Information Memorandum Statements.[104]

(2) The introduction of the Management Presentation Statements.

(3) The replacement of the particulars concerning the manner in which Cargill would seek to prove the extent of the Viterra Practices.

(4) The inclusion of additional Financial and Operational Performance Representations, and the addition of particulars to all allegations concerning the Financial and Operational Performance Representations for the first time.[105]

(5) Additional and replaced particulars to the falsity of the Financial and Operational Performance Representations.

(6) The "introduction" of a "no transaction" case,[106] which ultimately formed the foundation of Cargill Australia's loss as found by the court.[107]

(7) The removal of the pre-contractual deceit claim in respect of Glencore.[108]

(8) The introduction of particulars to the allegation of material default in Material Contracts.[109]

(9) Additional and replaced particulars to the claim of loss.

72 Further, the Viterra Parties noted that Cargill had abandoned or materially altered a number of issues at trial that it had pursued at various times during the proceeding. These included:

(1) Allegations that Glencore engaged in deceit prior to entry into the Acquisition Agreement, which were abandoned in the Cargill Parties' written opening dated 21 May 2018, and ultimately removed from the statement of claim on 13 August 2018.

(2) Allegations that Viterra engaged in deceit in making the Warranty Representations, which were abandoned in written closing submissions.[110]

(3) Allegations concerning breach of certain Warranties, which were abandoned in written closing submissions.[111]

(4) The concession in closing submissions that there was no claim for any separate loss in respect of the Independent Expert.[112]

(5) The decision during closing submissions not to rely upon the expert evidence of Greg Meredith ("Meredith") with respect to Cargill Australia's loss, despite having put his reports and evidence in issue up until this point of the trial.[113]

(6) Claims with respect to Co-Operative Bulk, which were abandoned in oral closing submissions.[114]

(7) A claim based on negligent misrepresentation, which was also abandoned in oral closing submissions.[115]

73 The Viterra Parties also referred to the fact that they sought further particulars in relation to the allegations of deceit, and that the particulars addressed complex and important matters of knowledge and the extent of the Viterra Practices. During oral submissions on this application senior counsel stated the Viterra Parties "key" submission in this regard was that the court had found in the Principal Judgment that the Viterra Parties had no knowledge of the Viterra Practices. When it was pointed out that there was no finding that the Viterra Parties had no knowledge, but rather that certain knowledge of the Viterra Practices was attributed to the Viterra Parties, their senior counsel correctly acknowledged this was what had been found. The submission was then recast to the effect that relevant personnel of Glencore and Viterra, "for example" Mattiske, were not aware of the Viterra Practices. This submission was consistent with the recognition in their written submissions that Hughes' knowledge was so attributed by reason of his employment by Viterra Ltd,[116] which allegation was added to the proposed further amended statement of claim on 23 March 2015, as redrafted on 25 March 2015 and then filed on 2 April 2015.

74 Furthermore, the Viterra Parties noted that orders for discovery were not made until 21 August 2015, 5 months after the Cargill Offer was served (and duly lapsed), and that there was a voluminous amount of material ultimately produced in that process.[117] The Viterra Parties also relied on the sheer volume of the transactions involved,[118] together with the fact that the details originally and secondarily put forward by Cargill Australia were ultimately not relied upon.[119] In addition, many parts of the further amended statement of claim contained references to further particulars being provided at a later date or before trial, meaning parts of the claim were necessarily incomplete.[120]

75 The Viterra Parties submitted that, in relation to particulars of loss, the Cargill Parties' case was originally articulated as being on the basis that Cargill Australia would have paid less for the Joe White Business if the Viterra Practices had been disclosed, but then changed to the "no transaction" basis ultimately advanced at trial. With respect to loss, they submitted no further particulars were provided prior to trial. Further, the Viterra Parties took issue with the Cargill Parties' submission that, based on the particulars pleaded, the no transaction case was always Cargill Australia's primary case on loss. The Viterra Parties submitted that at the time of the amended statement of claim the no transaction case was "not viable" because Cargill Australia's case as pleaded in terms of reliance did not incorporate the no transaction aspect.

76 It was also submitted that at the time of the Cargill Offer, Cargill Australia's particulars were deficient in respect of the allegations concerning reliance, the Financial and Operational Performance Representations, and the extent of the Viterra Practices regarding testing and misreporting of malt parameters and compliance with barley varieties.[121] The Viterra Parties contended that the inadequacy of particulars for such matters was relevant to how they were to assess the quantification of loss as at the date of the Cargill Offer.

77 In summary, the Viterra Parties sought to point to their inability to assess the merits of Cargill Australia's case, rendering their rejection reasonable. They contended the appropriateness of ordering otherwise for the purpose of rule 26.08(2) was further supported by the subsequent changes made to Cargill Australia's case, which the Viterra Parties were unable to consider at the time of the Cargill Offer. It was submitted that when the circumstances were viewed in their totality, it was appropriate for the court to depart from the usual position of awarding indemnity costs to a plaintiff who has bettered an offer of compromise and to make an order otherwise.

78 The Viterra Parties submitted that in the circumstances, costs should be apportioned, such that the Cargill Parties should receive 75 percent of their costs in the proceeding. They submitted that this was necessary due to the unsatisfactory manner in which the Cargill Parties pursued their case across the life of the proceeding.

79 Broadly, the Viterra Parties noted that apportionment is "a matter of impression and evaluation", and that courts have taken a practical and broad-brush approach to the quantification of costs attributable to specified events. When the Viterra Parties' senior counsel was asked how 75 percent was arrived at, he referred to a "quote from a well-known film, it's the vibe of the case" and acknowledged there was no precision. He submitted the reduction should not be a trivial amount given the factors that had been identified by the Viterra Parties.[122]

80 There was considerable overlap between the Viterra Parties' submissions on the issue of apportionment and their submissions referred to above concerning the Cargill Offer. The Viterra Parties again referred to certain conduct of the Cargill Parties before and during trial, the Viterra Parties' partial success in the proceeding on various points, as well as the quantum of loss awarded in favour of Cargill Australia being significantly less that what had been sought. As to the last of these matters, they contended that the sum of $168.9 million was far smaller than Cargill Australia had claimed and that an award of costs ought to reflect this.[123] Further, the Viterra Parties submitted that the court's finding that the land, buildings, plant and equipment of Joe White provided a floor on any estimate of Joe White's value[124] rendered most of the range of Gordon Klein's ("Klein")[125] valuations and the entire range of Meredith's valuations unrealistic.

81 In relation to the Cargill Parties' conduct before trial, the Viterra Parties first noted that the proceeding initially commenced on a misleading conduct and contractual basis, before deceit claims were later introduced immediately before the Cargill Offer. They submitted that fraud allegations required detailed particulars and that it was obvious that substantial time was then necessary to properly consider and investigate such allegations, including allegations that were ultimately not pursued.

82 They further submitted the case was subject to material change over the course of the proceeding, which had a bearing on the proper understanding of particulars, including those related to loss. The Viterra Parties submitted that responding to these major shifts in the case necessarily caused substantial costs to be incurred, and that this should be recognised by the court. Amongst other things, they referred to the withdrawal and replacement of a vast amount of data upon which Cargill Australia relied in seeking to establish the existence of the Viterra Practices.[126] They also contended that no meaningful particulars were provided with respect to non-compliance with specified barley varieties until 30 March 2017.[127] These particulars were also replaced by subsequent analyses in May 2018[128] and again in October 2018.[129]

83 Further, upon Hughes resigning from his employment with Cargill Australia (which was prior to commencing this proceeding), the Cargill Parties entered into an agreement with Hughes ("the Hughes/Cargill Agreement"),[130] which the Viterra Parties submitted inhibited co-operation with other parties including the Viterra Parties. It was submitted that the conduct of entering into such an agreement should be taken into account in reducing the award of costs.

84 In relation to the Cargill Parties' conduct at trial, the Viterra Parties again referred to matters they contended were further material changes. As already noted,[131] they submitted that in its written opening, Cargill introduced a new articulation of the case, pursuant to which it was alleged Cargill Australia would not have bought Joe White if it had known about the Viterra Practices. Having referred to various amendments made to the third further amended statement of claim,[132] they contended these were "disruptive and significant" and the result of late forensic choices by Cargill.

85 Further, the Viterra Parties again referred to the fact that the Cargill Parties abandoned or materially altered a number of significant issues at trial and during closing submissions.[133]

86 Of the matters referred to in paragraph 71 above, the Viterra Parties submitted that subparagraphs (2), (3), (5) and (6) lent themselves to a broad-brush quantification. In their submission, these matters comprised 14 issues, which amounted to 9.66 percent of the issues in the proceeding, and 7.93 percent of the Viterra Parties' written submissions. They contended the other matters they had identified were more difficult to specificall[134]uantify.134

87 In addition, the Cargill Parties made serious allegations which the Viterra Parties claim should never have been raised in light of the evidence ultimately led, including allegations of actual knowledge, claims abandoned at trial in respect of deceit, negligent misrepresentation, reliance on the Pre-Completion Representations, and the Co-Operative Bulk claims. They contended that if these matters had not been raised, the amount of work involved in the Viterra Parties responding to Cargill Australia's claim would have been substantially less.

88 Ultimately, the Viterra Parties submitted that these factors should be taken into account in the exercise of the court's discretion on costs in order to do "substantial justice".

89 Finally, the Viterra Parties submitted that they had obtained material success on a number of matters. These included findings that:

(1) The Cargill Parties had failed to prove actual knowledge of the Viterra Practices with respect to a large number of persons.[135]

(2) The Cargill Parties failed to prove reliance on the Pre-Completion Representations.[136]

(3) The Cargill Parties engaged in misleading or deceptive conduct in making the No Reliance Representations.[137]

(4) The breach of contract claims were extinguished by reason of the change of control that occurred on the sale of the Joe White Business.[138]

90 The Viterra Parties sought to quantify the proportion of the proceeding that was occupied by matters on which they had material success. They assessed that these matters occupied 5.37 percent of the total pages of the Principal Judgment, 11.11 percent of the total number of issues in the proceeding, and 18.32 percent of the Viterra Parties' written submissions. Further, they submitted that there were additional favourable findings more difficult to quantify. They also submitted that, as a matter of logic, some of the 600 pages of the narrative of key facts in the Principal Judgment were likely to have been devoted to addressing facts relevant to the topics identified.[139]

91 In response to the Cargill Parties' submission that some of the Viterra Parties' conduct was disentitling,[140] the Viterra Parties noted that an order for costs is compensatory and not punitive, and that the Cargill Parties would not be prejudiced because they could recover any costs incurred as a result of the Viterra Parties' conduct in the normal way. Further, the Viterra Parties submitted that they instead ought not to be made liable for costs unnecessarily incurred as a result of the Cargill Parties' own culpable conduct in the course of the proceeding.

D.3 The Cargill Parties' responsive submissions

D.3.1 The Cargill Offer

92 Responding to the Viterra Parties' contention that Cargill's case materially changed after the offer of compromise was issued,[141] the Cargill Parties submitted that the question the court should ask was whether or not the fundamental complexion of the case had changed.[142] To answer that question, the Cargill Parties provided a table identifying the case as pleaded in November 2014. By reference to that table, the Cargill Parties submitted that the essential complexion of the successful misleading or deceptive conduct case was well established at the time the Cargill Offer was served.[143] In particular, the Cargill Parties drew attention to the fact that the monetary claim of $170 million to $195 million[144] identified before the Cargill Offer was served was almost precisely the claim established at trial. They noted that in making submissions in response to the claim for indemnity costs, the Viterra Parties had not engaged with the material put in that table. They contended that, rather, the Viterra Parties had attended to the different proposition of material events that had occurred after the service of the Cargill Offer.

93 On the question of when the Viterra Parties had been put on notice of the fraud allegations in the further amended statement of claim, the Cargill Parties submitted the Viterra Parties had been on notice of such allegations 10 weeks before the expiration of the Cargill Offer. This was put on the basis that Cargill Australia's reply and defence to counterclaim was filed on 4 February 2015.[145] They also noted that the draft further amended statement of claim was served 3 weeks before the Cargill Offer expired.

94 Further, in response to the submission that the case had changed to a "no transaction" case at trial,[146] the Cargill Parties relied upon the particulars of loss in the amended statement of claim filed on 17 November 2014. Cargill Australia's claim then (and at the time of the Cargill Offer) included particulars that provided 2 alternatives. The first of those was loss based on the difference between the purchase price and the true value of the Joe White Business and the shares, which they submitted was fundamentally, and as a matter of legal doctrine, a "no transaction" case.[147]

95 The Cargill Parties initially submitted the Viterra Parties did not lead any evidence on the question of the ability of the Viterra Parties to assess the Cargill Offer. They contended that the court should not treat the letters of June 2015 and in particular "the sentence in a solicitor's letter 2 months after the event responsively as constituting evidence".[148] When queried how this submission was put, it was withdrawn. It was then observed that no individual had given evidence on matters concerning the circumstances to which regard was had in evaluating the Cargill Offer or what the Viterra Parties would say they did or did not know. The Cargill Parties referred to the fact that the current solicitors for the Viterra Parties had not suggested that such evidence was unavailable.[149] Thus, they submitted the Viterra Parties had made a conscious choice not to put on evidence as to their state of mind concerning the relevant issues and therefore the onus they bore to have the court otherwise order had not been discharged.

96 As to the contents of the responsive letter itself, it was submitted that the fact that the Cargill Parties' solicitors had stated in June 2015 that it was too early for Cargill to assess the Viterra Offer was not probative evidence of the ability of the Viterra Parties to assess the earlier Cargill Offer and that the offers needed to be considered severally. It was submitted that, in doing so, the case of misleading conduct based on the Financial and Operational Performance Representations involved facts known to the Viterra Parties, including what had been stated by them in writing as part of the sale process and what was ventilated in October 2013.[150] It was also contended that for the court to be persuaded that the Viterra Parties had discharged their onus there needed to be a feature of the Cargill Offer which made it too early to be considered. As to this, it was submitted that the Cargill Parties did not know what that feature was in order to evaluate it.

97 Ultimately, the Cargill Parties sought an award in the form of a proposed order provided to the court, which relevantly provided that the Viterra Parties would pay Cargill Australia's costs of and incidental to the proceeding, including all reserved costs, on a standard basis until 11.00am on 30 March 2015 and on an indemnity basis thereafter. The proposed order further provided for costs to be awarded on a standard basis to Cargill, Inc and Joe White.

98 In broad summary, the Cargill Parties submitted that even if the Viterra Parties' submissions were accepted, they had failed to demonstrate that this case was any different from the usual case involving the vagaries of litigation.

99 The Cargill Parties referred to Firebird Global Master Fund II Ltd v Republic of Nauru (No 2).[151] In that case, the High Court considered that, in not departing from the general rule that costs should follow the event, there were "good reasons not to encourage applications regarding costs on an issue-by-issue basis, involving apportionments based on degrees of difficulty of issues, time taken to argue them and the like".[152]

100 The Cargill Parties submitted that the Viterra Parties had not provided any substantive basis on which their proposed discount of 25 percent had been calculated. They submitted it was not a measure of success, and had no connection to or basis in the conduct of the proceeding. Further, they submitted the percentages referred to as measures of the proportion of pages in the closing submissions or the Principal Judgment were unreliable and should not be used as a measure of any discount. This was put on the basis that although some aspects of the written submissions identified did relate to causes of action which were unsuccessful, those same written submissions were also relevant to other causes of action in relation to which Cargill Australia was successful.[153]

101 Accordingly, they contended the unfairness and disproportionate impact of such a discount would be stark as it would disproportionately penalise the Cargill Parties for the costs associated with each and every step in the proceeding, and reduce the recoverable costs of every issue.

102 In response to the Viterra Parties' submissions regarding their conduct before and during trial,[154] the Cargill Parties made a number of submissions.

103 First, in relation to the contention that the introduction of the deceit claims in March 2015 was a "major shift" or "material change" in their case, the Cargill Parties noted that the deceit claims were introduced less than 6 months after the proceeding was issued and over 3 years before trial. Further, they submitted the evidence required to establish deceit largely overlapped with the evidence required to prove misleading or deceptive conduct. Furthermore, they submitted the only material difference was the allegations of knowledge of the relevant persons in relation to deceit. It was contended in most cases that the issue of knowledge consisted of conclusions drawn from the evidence already relied upon in establishing the claims based on misleading conduct. In addition, the Cargill Parties relied on the fact that Mattiske was the only witness called by the Viterra Parties regarding this issue.

104 Secondly, in relation to the data provided as evidence of the extent of the Operational Practices, the Cargill Parties noted that while various forms of data were provided between 2014 and 2018, the Viterra Parties had not identified any conduct that would entitle a discount on the associated costs. They referred to the finding that the Cargill Parties successfully established, by reference to the data, that the Operational Practices occurred to a very substantial extent.[155]

105 In addition, they relied upon the fact that the Viterra Parties did not initially admit that the Operational Practices occurred at all. Thus, it was necessary for Cargill Australia to prove their existence and their prevalence. Further, they referred to the lack of evidence suggesting that the Viterra Parties had incurred any substantial or discrete costs in responding to the earlier data that Cargill Australia ultimately did not rely upon. Furthermore, the different iterations of data had a universal source, being the Laboratory Information System,[156] a backup copy of which was at all times in the possession of the Viterra Parties and was not discovered or made available to Cargill despite numerous written requests.[157] The fact that the Viterra Parties failed to take up the invitation to have the data analysed by an expert for their own purposes was also relied upon.[158]

106 Thirdly, the Cargill Parties submitted that the Viterra Parties' argument that the "no transaction" case was introduced for the first time in opening was inaccurate. They submitted it was apparent by the loss as pleaded in the amended statement of claim filed in November 2014.[159]

107 Fourthly, in relation to submissions concerning the Hughes/Cargill Agreement, the Cargill Parties submitted that this was not a relevant matter for the court to consider in relation to an award of costs. They submitted that the Viterra Parties overstated or misconceived the conclusions of the court, as it was found that there was nothing sinister or inimical to the due administration of justice in the Hughes/Cargill Agreement.[160]

108 Fifthly, the Cargill Parties submitted that the Viterra Parties provided no specificity to the generalised complaint that changes to the third further amended statement of claim were "disruptive and significant". Further, they contended that the Viterra Parties did not explain how the costs of the amendments extended beyond the costs of the application, which the Cargill Parties were ordered to pay.

109 Furthermore, the Cargill Parties submitted the amendments referred to by the Viterra Parties were generally not significant amendments.[161] They submitted the only amendments worthy of consideration were the introduction of the Management Presentation Statements and amendments to the particulars concerning the Viterra Practices and the Undisclosed Matters. The Cargill Parties noted that evidence relating to the Management Presentation[162] was contained in witness statements filed in late 2017 and referred to in opening submissions, without objection. Moreover, they contended the amendments to the particulars relating to the prevalence of the Viterra Practices were reflected in the evidence of Ryan dated May 2018, which the Viterra Parties had well in advance of the amendments.

110 Sixthly, in relation to the abandoned claims, it was submitted it was unclear what costs Glencore unnecessarily incurred as a result of the Cargill Parties abandoning in opening submissions the claims that Glencore had engaged in deceit prior to entry into the Acquisition Agreement. Further, it was submitted that the assertion that Cargill Australia only "accepted for the first time the fact of analytical certainty" in closing submissions misrepresented the Cargill Parties' position, which was focused on adjustments to "raw results" by a particular process.[163] Further, in relation to the breach of Warranty claim, the court ultimately found that Viterra had breached the Warranties (as pressed in closing)[164] and made misleading representations based on these Warranties. They acknowledged the finding that Cargill Australia was ultimately unsuccessful in establishing a cause of action based on a breach of any Warranty,[165] but submitted this was only because of events which occurred after the case had closed. In any event, it was submitted that, as it was necessary to prove a breach of the Warranties to also make its case for misleading conduct based on the Warranty Representations (which Cargill Australia successfully did), there was no proper basis not to award costs with respect to matters pertaining to these issues. They submitted that this was an exemplar of the principle that costs should not be apportioned where issues are intertwined. A like submission was made in relation to the Pre-Completion Representations and the failure of Cargill Australia to prove reliance upon those representations but otherwise establishing the allegations concerning this subject matter.

111 Seventhly, on the relevance of the quantum of loss, the Cargill Parties submitted that: they were awarded very substantial damages; the quantification of damages was based on evidence adduced by the Cargill Parties; the true contest was always the expert accounting evidence of the parties; the Viterra Parties' expert evidence was afforded no weight in this dispute; the report of Meredith was extremely well-reasoned mathematically and economically, and was sophisticated from an accounting perspective; and the Cargill Parties should not be penalised for engaging 2 experts to conduct different methods of calculation of loss.

112 Finally, they submitted that any percentage discount would result in a substantial sum of money not being recoverable and that any reduction should be extremely modest.

E. Analysis of primary issues between the Cargill Parties and the Viterra Parties

E.1 Whether the Cargill Parties' costs should be paid on a standard or indemnity basis

113 The Cargill Offer complied with the relevant statutory criteria as to form, content and the time it was open for acceptance.[166] To reiterate, the Cargill Offer proposed that the Viterra Parties pay to Cargill Australia the sum of $85 million, inclusive of interest, plus costs as taxed or agreed. Further, subject to issues concerning apportionment, there was no dispute that the costs of Cargill, Inc and Joe White should be paid by the Viterra Parties on a standard basis. Thus, the only remaining issue for determination on this topic is whether an award of indemnity costs after service of the Cargill Offer is appropriate or whether the court should "otherwise order" and depart from the prima facie position as provided by the Rules.

114 In determining whether to otherwise order, the court will consider all the relevant circumstances in the exercise of its discretion, including whether or not it was reasonable to reject the offer.

115 On the facts of this case there were a number of key factors relevant to the question of whether the court should otherwise order for the purposes of rule 26.08(2).

116 First, a significant factor was the timing of the Cargill Offer. At the time it was made, the proceeding had been on foot for 5 months. This timing of itself does not provide a basis to otherwise order. Further, based on the statement of claim as it had stood for that 5 months, the Viterra Parties were clearly on notice that Cargill Australia's case, at its essence, was that it suffered loss because it was misled in its purchase of Joe White. However, this circumstance did not give notice that Cargill Australia would subsequently make serious allegations of fraud including those that were introduced only very shortly before the Cargill Offer was served. I accept the Viterra Parties' submissions that any proper consideration of such serious allegations would have needed careful consideration after taking detailed instructions.

117 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.[167] 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.[168] 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.

118 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.[169]

119 Moreover, the lack of particulars with respect to matters other than loss was also not trivial. By way of example only,[170] the particulars of the Financial and Operational Performance Representations had not been provided.[171] The claims concerning these representations were central to many of Cargill Australia's key allegations.

120 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.[172]

121 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,[173] and they conducted some investigations[174] such that Mattiske appreciated that Cargill might throw the Viterra Parties "under the bus".[175] 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.[176] 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.

122 With respect to each of the matters that the Cargill Parties suggested had been particularised before the Cargill Offer,[177] in addition to the matters raised above, the extent of the particulars of the deal model should be referred to. In the particulars provided by letter in late February 2015, which purported to give particulars again under objection, Cargill Australia's solicitors stated that the "best particulars that Cargill Australia [was] presently able to provide"[178] were those that had been provided as set out in annexure B to the letter. It consisted of 8 pages of details of how, broadly speaking, Cargill Australia had estimated the present value of Joe White at $427 million before entering into the Acquisition Agreement by reference to the deal model, together with different scenarios of what would have been the position if Cargill Australia had known about the Viterra Practices. It then stated: "Cargill Australia also encloses the Deal Model set out in Annexure C". The provision of this document in annexure C to the letter was of limited value in circumstances where only what appeared on the face of the spreadsheet was available for inspection. Because Cargill Australia did not provide the password to the deal model at that time, there was 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.[179]

123 As for the particulars that were then provided in relation to volumes of malt that Joe White was allegedly capable of producing after Completion, and the volume of malt production alleged to have been lost due to order calculations, because of the overarching objection taken (and the related proviso made),[180] it was far from clear that these matters would ultimately be relied upon as the means of establishing loss. In the end, such matters were not the primary basis upon which Cargill Australia formulated its claim for compensation.[181]

124 I do not accept the submissions put by the Cargill Parties on the suggested lack of evidence concerning the ability or otherwise of the Viterra Parties to properly consider the Cargill Offer. 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.[182]

125 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.

126 Thirdly, although the amount of the Cargill Offer must be viewed relative to the amount that Cargill Australia had agreed to pay and that it was made to 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.

127 Accordingly, the circumstances that existed in late March and early April 2015 when the Cargill Offer was open,[183] made it entirely reasonable for the Viterra Parties to reject the Cargill Offer. Further, not only was it reasonable but 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.

128 Fourthly, there were substantial changes to Cargill Australia's case which occurred after the Cargill Offer was made and which were material; albeit, some of them were not as submitted by the Viterra Parties. To the extent that there were material changes, those changes are relevant to the exercise of the court's discretion. A proper understanding of the changes and their significance requires a discussion in some detail.[184]

129 Before addressing the changes it is important to identify the extent to which, in material respects, the case as ultimately run had already been pleaded by the time of the Cargill Offer. Since the filing of the amended statement of claim in November 2014, allegations were made that:[185]

(1) The Viterra Practices and the Viterra Policies existed and underpinned the financial and operational performance of the Joe White Business, but had not been disclosed to Cargill as part of the sale process (and were alleged to comprise the Undisclosed Matters).

(2) Glencore and Viterra conveyed the Financial and Operational Performance Representations, that those representations were false, that the representations were made in trade or commerce in Australia, that Cargill Australia relied on the representations in entering the Acquisition Agreement, and therefore Glencore or Viterra or both engaged in misleading or deceptive conduct which caused Cargill Australia to suffer loss.

(3) Viterra conveyed the Warranty Representations, that those representations were false, that the representations were made in trade or commerce in Australia, that Cargill Australia relied on the representations in entering the Acquisition Agreement, and therefore Viterra engaged in misleading or deceptive conduct which caused Cargill Australia to suffer loss.

(4) Glencore or Viterra or both made the October 2013 Responses[186] and thereby conveyed the Pre-Completion Representations, that the representations were made in trade or commerce in Australia, and that Glencore or Viterra or both had engaged in misleading or deceptive conduct which caused Cargill Australia to suffer loss.[187]

130 These claims represented a core part of the case on which Cargill succeeded at trial. On the case that was put, if any of the claims relating to the Warranty Representations, the Financial and Operational Performance Representations or the Pre-Completion Representations were successful, this would have been sufficient to entitle Cargill Australia to damages on the basis that, had Viterra not engaged in the relevant conduct, Cargill Australia would not have acquired the shares in Joe White or the related assets.[188]

131 It is also necessary to address the Viterra Parties' submission that the Cargill Parties' case fundamentally changed at trial to a "no transaction" case. In essence, the Viterra Parties submitted that prior to trial, loss was particularised on the basis that Cargill would have paid less for the Joe White Business if the Viterra Practices had been disclosed, but that at trial this had changed to the premise that if Cargill Australia had known about the Viterra Practices, it would not have entered into the transaction.

132 While it was correct to observe at trial Cargill Australia did run a more narrow case than had been originally pleaded based on a no transaction case, and that this made the case the Viterra Parties had to meet more concise and clear, the substance of this submission cannot be accepted. From the filing and service of the amended statement of claim in November 2014 up to the date of the Cargill Offer, it was relevantly pleaded that "[b]y reason of Glencore's and/or Viterra's contraventions of section 18 of the [Australian Consumer Law]... Cargill Australia has suffered loss". The particulars to this paragraph stated that Cargill Australia's loss was:[189]

The difference between the Purchase Price and the true value of the [Joe White] Business and the Shares.[190] Alternatively, the difference between the Purchase Price and the price that Cargill Australia would have paid for the [Joe White] Business and the Shares if the Financial and Operational Performance Representations, the Warranty Representations and further or alternatively the Pre-Completion Representations had not been made.

133 By these particulars, Cargill Australia's primary basis for seeking damages for loss was the difference between the purchase price of $420 million and true value of the Joe White Business. This formulation was entirely consistent with a "no transaction" case; and this formulation formed the foundation of the court's findings on loss.[191] The expressly "alternative" case listed in the particulars of loss, which explicitly recognised a situation where Cargill Australia would have continued with the transaction but amended its purchase price, made it plain that these were separate and distinct bases upon which Cargill Australia was making its claims.

134 In relation to the Viterra Parties submission that the no transaction formulation was not viable because the reliance aspect of the case as pleaded did not incorporate a "no transaction" aspect, it was not explained precisely how this was put.[192] The paragraphs of the statement of claim in question referred to Cargill Australia relying on certain representations in either entering into the Acquisition Agreement or proceeding to Completion. It is far from apparent why such allegations were necessarily inconsistent with a case that if Cargill Australia knew the true position it would not have entered into the transaction or completed it.

135 In addition, reference should be made to the expert report of Michael Potter ("Potter") of 28 March 2018 ("the Potter Report"), being approximately 2½ months before the trial commenced. This report was prepared pursuant to instructions from the Viterra Parties' solicitors. The Potter Report contained a number of references to the concept of a "no transaction" case, including the following extracts below:

"I have been provided with the following assumptions: (a) In assessing damages for misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law, or deceit, in connection with the sale of a business or shares in an alleged 'no transaction case' (i.e. where the purchaser alleges that it would not have proceeded with the purchase at all, even on different terms, if the contravening conduct had not occurred), an approach which is commonly employed is to subtract the 'true value' or 'real value' of the business or shares acquired from the price paid."

"As outlined in paragraph 1.11,[193] I have been instructed that the approach that is commonly adopted in assessing the loss claimed to have been suffered in a "no transaction" case is to deduct from the price that was paid to acquire the business the 'true value' of the business rather than the market value of the business..."

136 The Potter Report proceeded to provide valuations of the Joe White Business according to 2 methods, the first method being the valuation as assessed under a "no transaction" case. The second method concerned loss assessed under the "alternative transaction" case, the premise of which was Cargill Australia still entering the transaction after disclosure of the Viterra Practices, but under different terms. The 2 methods applied by Potter are consistent with the 2 bases for loss provided by Cargill Australia in its particulars to paragraph 75 of the November 2014 statement of claim. In short, there could not be any real issue that the Viterra Parties did not fully appreciate well before the trial commenced that a no transaction case was to be advanced by Cargill Australia.

137 Further, evidence given in various witness statements filed prior to the commencement of trial gave a clear indication that the case would in fact be advanced as a "no transaction" case. By way of background, it has been established that the mere fact that the Cargill, Inc board approved a transaction did not mean that the transaction would necessarily go ahead.[194] Rather, if any business unit leaders, platform leaders, or the Cargill leadership team decided an acquisition should not proceed, that position would be adopted.[195]

138 On this application, the Viterra Parties initially contended that Paul Conway, a member of the Cargill leadership team, was a critical witness to the "no transaction" case but his evidence was only introduced later in the proceeding. However, the Viterra Parties' senior counsel then corrected this, and submitted that he was not "critical" but "very important by virtue of his position". It was then submitted that none of the other witness statements touched on the "no transaction" case formulation, before this was also withdrawn when it was pointed out that the relevant statements did address this issue. Each of Frank Van Lierde ("Van Lierde"),[196] Doug Eden ("Eden"),[197] and Emery Koenig ("Koenig")[198] gave evidence in their witness statements, as filed in their original form in November or December 2017, that if the Viterra Practices had been disclosed, the transaction would not have proceeded.[199] For example:

(1) In Van Lierde's witness statement he noted that he "would not have taken the proposed acquisition forward without the full support of the project team", and would have needed to be satisfied that "the [strategic and business development] team and Goldman Sachs were confident in the appropriateness of the acquisition and capable of defending the proposed price. I do not believe that would have been possible".

(2) In Eden's witness statement he noted that had disclosure been made, "this would have been more than a red flag". In the circumstances and based on the information available at the time, he concluded that "[a] credible valuation would not have been possible... or would have been so low as to not be worth the effort. In these circumstances I would not have been able to take a business case for the acquisition of [Joe White] to Cargill's Board".

(3) In Koenig's witness statement he noted that if the information had come to light just prior to Completion, it would have raised "an enormous red flag and a major reset in our thinking", and he would have had "serious misgivings about continuing with this acquisition". Koenig was confident that "without full disclosure of all the issues and detailed analysis the business leaders would not have sought to bring the acquisition to the board for approval as they would have known it was not defensible and would not have been approved".

139 By these statements, the evidentiary framework of a "no transaction" case was laid bare many months before the trial commenced.[200]

140 Furthermore, the suggestion that the Cargill Parties had materially changed their case in this way would have been a relevant matter at trial. No such submission was made in the Viterra Parties closing submissions. The Viterra Parties were given the opportunity on this hearing to identify any submissions at trial by which it could be said that this had been raised in their trial submissions. In their initial response to this invitation, the Viterra Parties referred generically to the whole of the section concerning reliance in paragraphs 1 to 80 of part 2 of their submissions, "in particular paragraphs 35 to 40" and paragraph 55 of part 1 of the submissions.[201] After being asked to refer with more specificity to precisely where in their submissions the Viterra Parties had highlighted that Cargill had changed its case to a "no transaction" case, senior counsel for the Viterra Parties said the matter would be reviewed over the luncheon adjournment. Upon resuming after lunch the court was taken to, amongst other things, the particulars of loss in paragraph 75 of the third further amended statement of claim filed in August 2018, nearly 2 months after the trial commenced. Those particulars included:

(a) The plaintiff claims the sum equal to the difference between the Purchase Price paid by it under the Acquisition Agreement and the true value of the [Joe White] Business and the Shares, on the grounds that but for the contraventions it would not have entered into the Acquisition Agreement, or alternatively, would not have completed the Acquisition Agreement. The plaintiff relies on the assessment of the true value of the [Joe White] Business and the Shares as at the date of the Acquisition Agreement or alternatively as at Completion:

(A) as assessed in the expert report of Mr Greg Meredith dated 21 February 2018 and Mr Meredith's parts of the Joint Report dated 29 June 2018 as a value of between $47,600,000 and $102,500,000 at the date of the Acquisition Agreement, corresponding to a loss between $317,500,000 and $373,300,000, or, alternatively, a value of between $49,300,000 and $106,400,000 at the date of Completion, corresponding to a loss between $313,600,000 and $370,700,000; or

(B) alternatively, as assessed in the expert report of Mr Gordon Klein dated 21 February 2018 and Mr Klein's parts of the Joint Report dated 29 June 2018 as a value of $163,000,000 if only financial bidders would have remained market participants, corresponding to a loss of $257,000,000, or a value between $185,000,000 and $262,000,000 if strategic bidders would have remained market participants, corresponding to a loss of between $158,000,000 and $235,000,000.

(b) Alternatively, if (which is denied) that notwithstanding the contraventions, Cargill would have entered into the Acquisition Agreement, it would have assessed the value of the [Joe White] Business and the Shares taking into account the effect of the contraventions as a strategic purchaser and valued the [Joe White] Business and the Shares on that basis. The plaintiff relies upon the assessment of Mr Klein of what a strategic purchaser with knowledge of the contraventions would pay for the [Joe White] Business and the Shares in those circumstances in Mr Klein's expert report dated 21 February 2018 and Mr Klein's parts of the Joint Report dated 29 June 2018, being a value between $185,000,000 and $262,000,000 if strategic bidders would have remained market participants, corresponding to a loss of between $158,000,000 and $235,000,000.

In addition, an alternative was put on the basis that the Joe White Business was to be valued at the date of the judgment (which it was alleged was not the appropriate date of valuation). Finally, the promise of further particulars of loss was removed.

141 It was submitted that the no transaction case was being "introduced" by way of the new particulars to this paragraph.

142 There can be no question that the third further amended statement of claim made clearer the way in which Cargill Austalia's loss was to be claimed. It did so by removing the alternative claim for loss on the basis that Cargill Australia would have paid a reduced price. However, it was incorrect to submit that these new particulars introduced the no transaction case.[202]

143 Next, the court was referred to a broad statement during the Viterra Parties' opening at trial regarding the need for explanation of why amendments were sought. This statement read:

Can I just make an observation about the last matter, and modern practice? Our learned friend says "On one hand, these amendments are scarcely necessary. They are doing no more than standing in explication of representations that are otherwise relied upon, or, yes, representations or conduct that's otherwise relied upon." Your Honour, it is usual in my submission that an explanation should be given for why, after the opening these amendments are sought. It is a factor which the court would and should take into account in deciding whether to allow amendments, that they are made very late and without explanation. If our friends don't want to provide such an affidavit, we assert that's a reason why they shouldn't be permitted to have the benefit of these amendments.

When I suggested that this was a broad statement that did not go to this issue necessarily, that was accepted by the Viterra Parties' senior counsel. In short, what was said at trial about why the amendments made in August 2018 ought not to be allowed did not suggest that the no transaction case was new.

144 Next, I was taken to the first 2 paragraphs in the Viterra Parties' loss submissions.[203] There was nothing contained in those paragraphs which suggested that during its opening Cargill Australia fundamentally changed its case or that the no transaction case had been introduced at trial. Essentially, those paragraphs were concerned with what had not been pursued at trial by way of alternatives rather than suggesting anything had been introduced.

145 In summary, none of the matters referred to suggested that it had been previously put at trial on behalf of the Viterra Parties that Cargill Australia had fundamentally changed its case during its opening by introducing a no transaction case. Not only had this not been put but, as the facts set out above demonstrate, it was entirely incorrect to submit this had been introduced at trial. That said, as already acknowledged, the case on loss became far clearer leading up to and at trial than it had been as pleaded in March 2015.

146 Having addressed the problems with some of the Viterra Parties' submissions on this issue, it is convenient to turn to amendments made to Cargill Australia's case after the Cargill Offer had expired. In my opinion, there were material changes as identified by the Viterra Parties 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.[204] 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.

147 Although the introduction of the Management Presentation Statements after the trial had commenced was not insignificant, the level of materiality must be viewed in light of the fact that what was said during the Management Presentation was already a matter that would have been the subject of extensive evidence regardless of whether these amendments had been sought.[205] Further, in the context of determining whether the court should otherwise order, the significance of the subsequent withdrawal of the case of deceit against Glencore should not be overstated. There was a substantial overlap with that case and the deceit case which was successfully run against Viterra.

148 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). While there is no suggestion of Cargill Australia having any such motive at the time the Cargill Offer was served, it 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.[206] 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.

149 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.

150 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. Accordingly, subject to the issue of apportionment to be addressed presently,[207] it will be ordered that the Viterra Parties pay the costs of each of the Cargill Parties of and incidental to the proceeding, including reserved costs,[208] on a standard basis.

E.2 Apportionment of the Cargill Parties' costs

151 In light of the relevant principles and the factual matters set out extensively above, this issue can be addressed relatively briefly. Accepting the position as stated by the High Court that generally parties should not be encouraged to argue costs at the end of the trial on an issue-by-issue basis,[209] nevertheless I have formed the view that an apportionment is appropriate.

152 The realities of this case include the fact that some of the conduct of both the Cargill Parties and the Viterra Parties unnecessarily prolonged the case. Examples of the Viterra Parties' conduct are set out below in addressing the way in which their claims were made and pursued against Youil, Wicks, Stewart and Argent.[210] However, for present purposes, it suffices to refer to relevant matters in the conduct of the Cargill Parties' case, and in particular Cargill Australia's case.

153 Insofar as the proceeding concerned Cargill, Inc and Joe White, little need be said. Essentially, both parties were successful in resisting the third party claims made against them by the Viterra Parties. However, Cargill, Inc sought declaratory relief in terms that were far too broad and, for the reasons explained the Principal Judgment, were bound to fail.[211] There were also underlying factual problems with the relief as it was ultimately sought.[212]

154 In relation to Cargill Australia, there can be no question that some allegations were pleaded and some evidence was led that resulted in a waste of time for both opposing parties (which includes the Third Party Individuals) and the court.

155 With respect to the claims concerning the Co-Operative Bulk Agreement[213] and related issues, including the Co-Operative Bulk Representations[214] and the Co-Operative Bulk Information Duty,[215] nothing occurred at trial which demonstrated that these were claims which otherwise reasonably might have been seen at some stage in the proceeding to give rise to a claimable loss. This was not a situation where the absence of any proper basis for loss only could have become apparent after the evidence in the case had been aired. In short, when invited by the court to do so during the trial and on the hearing of this costs application, the Cargill Parties were unable to demonstrate how it was that these claims could have given rise to any material loss.[216] In a similar vein, claims made concerning negligent misrepresentation added nothing of substance, but still resulted in the opposing parties spending time and costs in addressing them. Further, it is difficult to see how the Cargill Parties might have justified making allegations of deceit (which are necessarily serious in nature) in relation to the Warranty Representations given that they were not even pursued in written closing submissions and no evidence was identified which might have supported them.

156 The Cargill Parties' own submissions recorded that none of these issues went to the heart of the causes of action against the Viterra Parties. They described them as minor and peripheral. If this be the correct characterisation (as I think it is), then this provides but yet another reason why these issues ought not to have been raised in the first place.

157 I do not accept the submission that the Cargill Parties' decision not to pursue these matters in closing submissions demonstrated that they and their lawyers were therefore acting in accordance with the Civil Procedure Act at all times. It was not a matter of considering the evidence at the end of the trial and making a judgment call not to pursue them any further, but rather a situation where the claims ought never have been brought (or, having been brought, ought to have been dropped before the trial commenced). If the Cargill Parties had been acting consistently with the Civil Procedure Act, then these unnecessary claims would never have been the subject of a pleading.[217]

158 Leaving aside those matters on the subject that were not pursued, Cargill Australia also made allegations with respect to the knowledge of over a dozen individuals and organisations in seeking to establish certain allegations of fraud. Many aspects of this part of the case were broad-sweeping and disconnected in the sense that they were not properly directed towards proving the necessary elements of the cause of action upon which the serious allegations were made.[218]

159 In terms of the allegations concerning reliance on the Pre-Completion Representations, the position adopted by Cargill Australia was perplexing. Not only were particulars of reliance never provided, no witness gave evidence that any reliance was placed upon these representations. On the contrary, in substance the evidence was that those involved thought they could not be relied upon with any confidence and that Cargill Australia would have to wait until it took control to ascertain what the true circumstances were.[219] Despite this, in the Cargill Parties' closing submissions they contended that the question of whether Cargill Australia relied on the Pre-Completion Representations should be answered in the affirmative. However, their submissions then referred to matters concerned with causation that had no element of actual reliance as part of this aspect of their case. That said, this must be seen in the context of Cargill Australia successfully establishing that the Pre-Completion Representations were made, and that a significant part of the case concerning misleading conduct related to such matters.

160 Another unsatisfactory aspect of Cargill Australia's case was its attempt to rely upon the evidence of Meredith in seeking to establish a far greater level of loss than was considered appropriate by Cargill Australia's other expert, Klein. Suffice to say, there were many difficulties with Meredith's evidence that ought to have been readily apparent (and ultimately were properly accepted by senior counsel in closing submissions).[220] As already acknowledged,[221] some of Meredith's evidence was still of assistance in determining issues relating to loss. However, if a realistic and far more measured approach had been adopted (as it belatedly was), a great deal of time and expense would have been saved.[222]

161 While touching on Meredith's evidence, it is convenient to address the Viterra Parties' submission to the effect that both Meredith's entire range of valuations of Joe White and most of Klein's range of valuations, and Cargill Australia's reliance upon those experts in this regard, were flawed and unrealistic insofar as they estimated loss that was below the value of the land, buildings, plant and equipment of Joe White. This was put on the basis that this later value provided a floor of $238 million on any estimate of Joe White's value.[223] I do not accept this submission, despite its initial superficial attraction.

162 This proposition was not put to either Meredith or Klein, despite the fact that Meredith specifically referred to the relevant valuation of $238 million in his first report.[224] There may have been an explanation as to why, based on their instructions, Meredith and Klein gave the ranges that they did despite a valuation of Joe White's assets at $238 million. Further, the finding made in the Principal Judgment to the effect that this was a floor on Joe White's value was based on uncontested evidence of a Cargill employee[225] who was not called as an expert and had not been asked to consider the question as part of her evidence in chief.[226] In circumstances where it was unchallenged evidence, it formed part of the reasons in the Principal Judgment.[227] Although that finding stands, it does not follow that if the matter had been squarely raised with either Meredith and Klein that they would not have given cogent evidence as to why the alternate valuation based on land, buildings, plant and equipment did not affect the conclusions they had reached in their respective reports.[228]

163 Additionally, a key issue in this case was the large body of evidence that was led to seek to establish from Joe White's own records that the Reporting Practice[229] and the Varieties Practice[230] were implemented routinely as part of Joe White's operations. Although it was not until well after the trial commenced that Cargill Australia provided the evidentiary basis for this part of the case, a ransomware attack meant that much of the inconvenience was caused by an event beyond its control,[231] coupled with the unco-operative position taken by the Viterra Parties.[232] However, this unfortunate event does not explain why it was that Cargill Australia initially provided vast amounts of information by way of particulars, only to withdraw those particulars at a later time. No doubt some of the cost and inconvenience would have been covered by the costs caused by the amendment being costs thrown away,[233] however this would not provide a complete indemnity to the expense and time that followed this approach.[234]

164 Another material issue was Cargill Australia's attempt to withstand allegations of misleading or deceptive conduct by reason of what it stated in writing at the time the Acquisition Agreement was entered into.[235] Cargill Australia chose to adopt a paradoxical position of alleging in this proceeding that it had been misled into entering into the Acquisition Agreement but at the same time maintaining that in acknowledging that it had not been misled that such conduct was not misleading. Even if it might have been thought such a position was arguable, this not insignificant part of the case was unsuccessfully resisted by Cargill Australia with respect to allegations of misleading conduct (although it was successful in arguing it caused no loss).[236]

165 However, a number of the Viterra Parties submissions on this issue cannot be accepted.

166 First, the fact that Cargill Australia did not recover the full amount of the damages it claimed was not something that ought to weigh heavily on the question of apportionment. The experts that were called provided a range of valuations. There were a large number of variables that needed to be considered in arriving at a true value for Joe White as at Completion. It is inherent in this type of assessment that a large range of conclusions may be reasonably justified. In the end, Cargill Australia recovered compensation in the sum of $168.9 million, together with interest in excess of $124 million. In my view, subject to what has been said in relation to Meredith's evidence, no discount should apply to the costs associated with recovering such amounts despite the fact that greater amounts were sought.

167 Secondly, the Viterra Parties' submissions concerning the Hughes/Cargill Agreement appear to ignore the findings made in the Principal Judgment. It was found that there was no basis to conclude that, in Cargill coming to an agreement with Hughes as recorded in that document, such conduct was liable to interfere with the administration of justice.[237] Further, although there was the real possibility that the Hughes/Cargill Agreement may have inhibited the parties co-operating,[238] the Viterra Parties did not lead any evidence on this application to establish that it had any such effect.

168 Thirdly, I have already addressed the issue of deceit. The claim against Glencore was based on allegations that substantially overlapped with those made against Viterra.[239] Nothing needs to be added.

169 Fourthly, while plainly relevant and to be taken into account, I consider the fact that Cargill Australia was ultimately unsuccessful in its claims for breach of Warranties was of minor significance. The relevant allegations were required to be agitated in order for Cargill Australia to make its claims concerning the Warranty Representations (upon which it largely succeeded). Further, the reason for Cargill Australia's lack of success on its contractual claims was predominantly because of events that occurred after the trial had been completed.[240]

170 Fifthly, regarding the Cargill Parties' acceptance in closing submissions that the claims concerning the Independent Expert did not give rise to separate loss if Cargill Australia was successful on its main claim, I do not consider this to be of any real significance. Cargill Australia was entitled to make this claim based on the Independent Expert's determination in the event that it was unsuccessful in its main claim.

171 Sixthly, while it must be accepted that the narration of the facts in the Principal Judgment may have been a little shorter if the issues on which Cargill Australia did not succeed had not been pressed at trial, most of the facts set out formed part of an ongoing chronology that would have needed to have been raised in any event. Again, it is a relevant factor but not of any real significance.

172 Turning to matters more generally, in arriving at a conclusion on this issue, I have also taken into account the fact that each of the Cargill Parties were represented by the same solicitors and barristers. There were many issues that overlapped and were common to all 3 of the Cargill Parties. In order to avoid any undue complexity in the taxation of the Cargill Parties' costs,[241] it is appropriate that the apportionment apply to all of them. In fixing the percentage for the purposes of apportionment, this approach has been taken into account.

173 In making a determination on the question of apportionment, the fact Cargill Australia was successful on a large number of issues weighs heavily in its favour. In my view, an apportionment of 75 percent as put forward by the Viterra Parties would materially overstate the significance of the matters they have raised. However, taking all the submissions on this issue into account, and considering them in the context of how the case was conducted generally,[242] as a matter of impression and evaluation, in my view there ought to be an apportionment of the Cargill Parties' costs. After some considerable reflection, including taking into account the not insignificant period of time spent on issues which were problematic for the Cargill Parties, I have determined the apportionment ought to be in the range of 90 to 95 percent. In circumstances where no attempt should be made to calculate the appropriate percentage with mathematical precision, the centre point of this range will simply be adopted as the appropriate adjustment. Thus, the Cargill Parties will be entitled to 92.5 percent of their costs of and incidental the proceeding, including reserved costs, on a standard basis.

174 This conclusion on apportionment is consistent with the overarching purpose and the overarching obligations in the Civil Procedure Act, which are concerned with the need for the parties to identify and agitate only the real issues in the case and to do so in a just, efficient, timely and cost-effective manner.[243]

F. Costs submissions as between relevant Third Party Individuals and the Viterra Parties

175 Youil submitted that costs should be awarded to him either on an indemnity basis for the duration of the proceeding, or alternatively on a standard basis until 11.00am on 25 June 2018 and on an indemnity basis thereafter for the Viterra Parties' failure to accept the Youil Offer.

F.1.1 Indemnity costs for duration of proceeding

176 Youil referred to the court's discretion for costs under the Civil Procedure Act where a party contravenes an obligation of that Act.[244] Section 18(d) of the Civil Procedure Act provides that a party "must not make any claim or make a response to any claim in a civil proceeding that ... does not, on the factual and legal material available to the person at the time of making the claim or responding to the claim, as the case requires, have a proper basis". Youil submitted that this was similar or analogous to what was stated in Macedon Ranges Shire Council v Thompson[245] concerning the appropriate test for the award of indemnity costs where the proceeding has no prospects of success:[246]

Costs may be ordered whenever it appears that an action has been commenced in circumstances where the applicant properly advised should have known it had no chance of success. When a litigant presses on where on proper consideration their case should have been seen to be hopeless, the discretion to make a special costs order may be enlivened. French J (as he then was) in J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers Western Australia considered that the discretion to award such costs would be enlivened when a party persisted, for whatever reason, in what should on proper consideration have been seen to be a hopeless case, and alluding to the presumption referred to by Woodward J in Fountain Selected Meats said that it was an unnecessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. But where the litigant did not recognise that its case was without merit a court may be disinclined to make a special costs order. The Court must measure the litigant's conduct against the facts then known or which ought to have been known, the inquiries that the litigant ought reasonably to have made and the legal advice which the litigant ought reasonably to have obtained.

(Emphasis added, citations omitted).

177 Youil contended that Viterra had no proper basis to allege that he had verified the Warranties, and properly advised, Viterra should have known the case had no chance of success. He noted that by the third party statement of claim, the Viterra Parties pleaded that prior to entry of the Acquisition Agreement on or about 4 August 2013, Youil represented to Glencore and Viterra that "the Undisclosed Matters did not exist", and "the Warranties were true and correct". By the particulars to this paragraph, Viterra alleged amongst other things that "Youil informed Glencore and Viterra that each of the Warranties referred to above was accurate by verifying the accuracy of it in a meeting with Joshua Wilson-Smith [("Wilson-Smith")[247]] on or about 1 August 2013". The Viterra Parties also alleged that after the verifications, which were also made by the other Third Party Individuals, none of those individuals informed Glencore or Viterra that any of the Warranties was not accurate.

178 Youil submitted that prior to trial the highest Viterra's evidence rose against him was Wilson-Smith's evidence that in the Warranty verification process, Wilson-Smith told each person "the substance of what the Warranty provided and asked them whether this was correct and whether there was any inconsistent information in the Data Room".[248] Youil submitted that even at its highest, telling Youil the substance of what the Warranty provided and asking whether this was correct could not establish the pleaded allegations, which reflected the precise contractual terms. Rather, any representations occurred with less precision in conversation. Further, he noted there was never any suggestion Youil knew anything about the Data Room; and the absence of his involvement was known to the Viterra Parties. As such, he submitted it was a meaningless exercise. Furthermore, various Warranties as set out in the Acquisition Agreement were qualified by reference to the "Share Seller's knowledge and awareness",[249] and Youil submitted that the Viterra Parties did not explain how Youil could make a representation qualified by that state of mind. He noted that Wilson-Smith acknowledged such a proposition was a ridiculous idea.[250] Accordingly, it was submitted it was fanciful to propound that any person could properly verify the Warranties, in light of their definitions (which were not all available at the time of the verification process), the knowledge qualifications for some of the Warranties, and the fact that Youil did not possess a copy of the Warranties either before or during the process.[251]

179 Therefore, Youil submitted that the lack of a basis for the claim against him should have been apparent to the Viterra Parties from the outset, and not merely after the cross-examination of Wilson-Smith. He submitted the representations properly understood and as pleaded had no real basis in fact, and were so inherently unlikely that Viterra should have known that it had no chance of success in establishing that the Youil Representations were made.[252] Further, he submitted the Viterra Parties must have made enquiries about exactly what was said and done in the Warranty verification process between Youil and Wilson-Smith, which was either as recorded in the witness statement filed or was something close to what was ultimately in Wilson-Smith's statement.

180 In addition to the deficiencies in the Warranty verification case as pleaded, Youil submitted that the Viterra Parties had no proper basis to allege that they had done things "in reliance upon" various statements made by him in the Operations Call,[253] or that they suffered loss and damage because of those statements. He submitted that properly advised, Viterra should have known this aspect of the case had no chance of success, because there was no evidence to establish any causal chain between the Operations Call Statements and anything done by Viterra, and no chain of causation was ever articulated.

181 Further, Youil submitted that there was no proper basis to allege Youil was liable by way of accessorial liability. Viterra alleged that Youil was involved, for the purposes of section 2(1) of the Australian Consumer Law, in Joe White's misleading or deceptive conduct. He submitted that the claim was embarrassing, because it failed to articulate the form of Youil's involvement for the purposes of section 2(1), the particulars of Youil's actual knowledge necessary to found that "involvement", and the contravening conduct apart from his own actions with which it was alleged Youil was involved.

182 More broadly, Youil submitted that the Viterra Parties' submission that it was merely a "pass through" claim did not provide any explanation as to why the Viterra Parties proceeded with the claim. He contended that the fact that it was a "pass through" claim could not override the requirement that the case be made on a proper basis, and that a party should not proceed with a case it knows is hopeless.

F.1.2 Indemnity costs after offer of compromise

183 Alternatively, Youil submitted that indemnity costs should be awarded from after 11.00am on 25 June 2018, in light of the Youil Offer. He submitted that it was unreasonable for the Viterra Parties to fail to accept this "walk away" offer, because:

(1) It should have been evident that the Viterra Parties were likely to fail.

(2) The offer was a significant compromise on Youil's behalf as it involved Youil bearing his costs to the date of trial, which comprised a 3 year period after Youil was joined to the proceeding on 4 February 2015; by the time of the Youil Offer, Youil had been awarded at least 5 interlocutory costs orders in his favour and the Viterra Parties should have anticipated that Youil's costs had been significant to date.

(3) At the time of the Youil Offer, the trial was set down for 14 weeks, and it was unreasonable for the Viterra Parties to decide to "continue to bear arms for that period, rather than lay them down".

184 Wicks similarly submitted that the Viterra Parties ought to pay his costs of the proceeding on an indemnity basis, or alternatively on a standard basis up to 11.00am on 26 June 2018, and then on an indemnity basis.

F.2.1 Indemnity costs for duration of proceeding

185 Wicks submitted that this was an appropriate case for an award of indemnity costs for the duration of the proceeding because properly advised, the Viterra Parties should have known the case against him had no chance of success.

186 In relation to principle, Wicks submitted that the starting point was not, as the Viterra Parties submitted, whether or not the claim was pursued in wilful disregard of known facts or clearly established law. Rather, it was to ask whether, properly advised, the parties should have known that the case had no prospect of success.[254]

187 Wicks noted that the entire claim brought against him turned on an extremely short telephone conversation between himself and Wilson-Smith, while he was travelling to or at an airport.[255] This was alleged to form part of the Warranty verification process, but Wicks submitted it had an inherent informality. Noting the findings in the Principal Judgment concerning deficiencies in the Warranty verification process, Wicks drew attention to the conclusion that "there was no proper basis to find that... Wicks... represented to Glencore or Viterra that any of the Warranties that [he was] asked to verify were true and correct."[256] Further, Wicks noted that the Warranties were multi-faceted, with each containing a number of defined terms within it, which could not have been addressed by Wicks in the process undertaken. In essence, Wicks contended that the case as alleged was divorced from factual reality and that there was a "chasm" between the facts underlying the claim alleged against Wicks, comprising the way the Warranty verification process was undertaken, and the way the case was pleaded.

188 Wicks further submitted that the fact that the claim was a "pass through" claim was of no relevance to the issues in dispute. He noted that the entirety of the "pass through" claim turned on 1 brief conversation, which could not justify the allegations made against him.

189 In response to the Viterra Parties' submission that it only became clear during Wilson-Smith's cross-examination that there were deficiencies in the Warranty verification process, Wicks noted that the process was undertaken by the Viterra Parties themselves. Wilson-Smith was called by the Viterra Parties to establish that the process had occurred and the case against Wicks. Thus, the relevant matters were always known, or available to be known, by the Viterra Parties. Wilson-Smith's witness statement itself was self-evidently deficient, in asserting a "global" case against each of the executives.

190 Further, Wicks highlighted that there were other deficiencies in Viterra's case, including the fundamentally flawed Warranty verification process[257] being a completely inutile exercise,[258] and the question of causation. As to the latter, Wicks referred to the finding that there was no foundation for the Viterra Parties to allege that Wicks (or Youil or Stewart) deprived the Viterra Parties of the opportunity to take the Alleged Steps.[259]

191 In the circumstances, Wicks submitted that the Viterra Parties should have known that they had no chance of establishing the case against Wicks, and further, the commencement and continuation of the claim was in wilful disregard of known facts.

F.2.2 Indemnity costs after offer of compromise

192 Wicks also submitted in the alternative that he ought to be awarded indemnity costs from 11.00am on 26 June 2018 by reason of the Viterra Parties unreasonable failure to accept the Wicks Offer. Wicks made 4 submissions on this point.

193 First, the claim against Wicks was without merit, for the reasons above.

194 Secondly, the Wicks Offer was served shortly after the commencement of the trial. At this point the parties had each filed their lay evidence and opening submissions and had engaged in multiple mediations. Wicks submitted that Wilson-Smith's witness statement was clearly deficient and could not establish a case against Wicks,[260] and these deficiencies were described in Wicks' written opening submissions served on 21 May 2018.

195 Thirdly, the Wicks Offer was a "walk away" offer. In circumstances where the claim had been on foot since February 2015 resulting in considerable costs having been incurred by the time of the Wicks Offer, the claim lacked merit, costs orders had been made in Wicks' favour on 4 earlier occasions in various interlocutory disputes, and the trial had then been listed for 14 weeks in May 2018, the Wicks Offer represented a genuine compromise by Wicks.

196 Fourthly, there was no lack of clarity in the offer.

197 Stewart adopted the same position as Youil and Wicks in seeking costs on an indemnity basis throughout, or alternatively based on the Stewart Offer on a standard basis until 11.00am on 18 June 2018 and on an indemnity basis thereafter.

198 In relation to the appropriate test to be applied, Stewart made submissions in line with Youil and Wicks in contending that the Court of Appeal's decision in Macedon Ranges Shire Council v Thompson requires the court to measure the litigant's conduct against the facts then known or which ought to have been known.[261]

199 In seeking an award of indemnity costs, Stewart made 4 substantive submissions.

F.3.1 Indemnity costs for duration of proceeding

F.3.1.1 Meritless claim

200 Similar to the other Third Party Individuals, Stewart noted that the third party claim against him was narrow in focus and largely based on the Warranty verification process, which comprised a short and informal discussion with Wilson-Smith.[262] Stewart submitted that the Viterra Parties failed on every element of the claim against him.

201 Stewart highlighted the finding made in the Principal Judgment that there was no proper basis on which to conclude that he had made the alleged representations.[263] In part, this was due to the process undertaken by Wilson-Smith. Stewart contended the facts demonstrated the process was not rigorous or systematic and had been found to be materially deficient in both scope and execution.[264] For example, Stewart referred to Wilson-Smith's failure to refer to the lengthy definitions in the Warranties in any substantive way, which he observed had been was found to have made aspects of the verification process virtually meaningless.[265] Further, it was submitted that even if (contrary to the court's findings) Stewart had been found to provide an answer on the 2 Warranties as alleged, this could not have supported the allegation that the Stewart Representations[266] had been made; namely, that all of the Undisclosed Matters did not exist or that all the Warranties giving rise to the Warranty Representations were true and correct.[267] As these matters were central to the third party claim against Stewart, he submitted that the court should conclude the Viterra Parties pursued Stewart, if not knowingly in the face of an inadequate factual basis, then indiscriminately without proper regard to whether such a basis existed.

202 Stewart also submitted that the court had found that the Viterra Parties failed to establish that Stewart had knowledge of a substantial part of the Undisclosed Matters or that the Undisclosed Matters had not otherwise been disclosed. Stewart submitted that critically the Viterra Parties did not adduce evidence from Stewart regarding the Warranty verification process or his knowledge of specific aspects of the Undisclosed Matters despite calling him as a witness in their case. He emphasised that the Viterra Parties persisted in alleging the Stewart Representations were made by Stewart in areas which were never within his field of responsibility. He submitted that while calling him as their witness, the Viterra Parties did not seek to lead evidence to advance their claim against him, yet they persisted in that claim and refused to concede any issues.

203 Broadly, Stewart submitted that the Viterra Parties must have known that the case against him lacked merit based on the knowledge of various persons. These included Wilson-Smith (who for a considerable period had remained a lawyer employed by Viterra), Mattiske and Kate Lindner,[268] the latter 2 having been involved in the investigations that occurred in October 2013 and specifically the interview with Stewart at that time. Stewart submitted the Viterra Parties maintained the non-disclosure claim against him in the face of that knowledge, including the knowledge that Stewart was unaware of a large part of the Undisclosed Matters. He also highlighted that having put non-disclosure by Stewart in issue, as part of the discovery process the Viterra Parties unsuccessfully sought to prevent Stewart from inspecting documents which demonstrated his level of disclosure to the Viterra Parties in October 2013.[269]

204 Further, the court found that there was no basis for the Viterra Parties to reasonably expect Stewart to disclose the Undisclosed Matters, or to assume that Stewart was aware of what information had been provided by Viterra to Cargill.[270]

205 In relation to reliance, Stewart submitted that even if the Viterra Parties could prove that Stewart made the Stewart Representations, they had failed to identify any particular statement by any Third Party Individual that they relied upon. Furthermore, he noted the court rejected the possibility that the Viterra Parties would have taken the Alleged Steps if they had been informed of the Undisclosed Matters or been given accurate verification of the Warranties.

206 Moreover, Stewart noted that the Viterra Parties did not adapt their claim of "pass through" liability to establish any particular loss or the value of any opportunity lost due to the Third Party Individuals. Rather, in their written submissions on this application they accepted that they did not even attempt to quantify damages for the claimed loss of opportunity.

207 Finally, Stewart submitted that it was significant that the court found that no fault or want of care should be attributed to him, with the result that the Viterra Parties were entirely responsible for their own loss.[271]

208 Stewart referred to the fact that the third party claim made a serious allegation that he had acted unethically. Stewart submitted that as a result of the court's findings regarding the flaws in the Warranty verification process, there was no basis to find that Stewart had made the Stewart Representations, and accordingly an order for indemnity costs could be justified as a deterrent against such prejudicial allegations.

209 Accordingly, Stewart submitted that these allegations heightened the disparity between the claim as made and the lack of merit as found in the Principal Judgment.

210 Stewart pointed to the circumstances and conduct of the litigation. He noted that the proceeding was no ordinary proceeding for a third party to become involved in, being a "very large and hotly contested proceeding between 2 multinationals".[272] Stewart referred to the fact that the proceeding spanned more than 7 years, 114 trial days (from June 2018 to August 2019), and was subject to 27 interlocutory judgments before the Principal Judgment was delivered.[273] Stewart noted that the third party claims took up a very small portion of the overall proceeding. He submitted that the Viterra Parties barely opened the case against the Third Party Individuals in writing, and chose not to make an oral opening against the Third Party Individuals.

211 Accordingly, it was submitted Stewart was drawn into a protracted proceeding between other parties, consequentially incurring substantial costs, in circumstances where Viterra did not prominently agitate the third party claim. In the circumstances, Stewart submitted that costs on a standard basis would not fairly or adequately compensate him for the heightened costs of participating in an extremely protracted proceeding found to have no basis, and that this result would be more appropriately achieved by costs on an indemnity basis. This was particularly so, as the rationale for costs on a standard basis is that such an order is a compromise between the interests of the parties. In his submission, in circumstances where Stewart was required to be on trial for 114 days, a bare proportion of which related to the claim against him, there cannot be said to have been a fair compromise as between him and the Viterra Parties.

212 Further, it was submitted that awarding indemnity costs would be consistent with the Civil Procedure Act. Stewart submitted that the Viterra Parties' conduct in drawing him into the proceeding, without sufficient basis, was clearly inimical to their overarching obligations to initiate a proceeding with a proper basis and to ensure that costs remained reasonable and proportionate.

F.3.2 Indemnity costs after offer of compromise

213 The Stewart Offer sought to resolve the claims against Stewart on a "walk away" basis, with the parties bearing their own costs. Stewart submitted that this was unreasonably rejected for 6 reasons.

214 First, by the time the Stewart Offer was made, Stewart had incurred significant costs in the proceeding and in preparation for hearing.

215 Secondly, Viterra must also have incurred material costs in the proceeding as against Stewart, and inevitably incurred further costs in pursuing the claim that would have been avoided by accepting the Stewart Offer. Stewart submitted that any modesty in those costs from Viterra's perspective, for example, by comparing it against the claim of over $300 million, did not dilute the unreasonableness of rejecting the Stewart Offer. He submitted that the proper frame of reference was between Stewart's significant incurred costs up to the start of the trial, and the Stewart Offer to walk away for nothing.

216 Thirdly, at the time of the Stewart Offer, the claim against Stewart had been on foot for over 3 years, and as such, ending the claim would have been in the interests of both parties.

217 Fourthly, the proceeding was substantially advanced at the time the Stewart Offer was made. The Viterra Parties could have clearly and properly assessed it as against the strength of their case.

218 Fifthly, at the time of the Stewart Offer, the Viterra Parties' chance of success against Stewart was low. Stewart noted the Viterra Parties' "caution" in relation to the third party claim was evident in their "meagre written opening" which devoted only 2 paragraphs to summarising the pleading.

219 Sixthly, the Stewart Offer was open for a period of 14 days, and by the time the offer lapsed, the Cargill Parties and the Viterra Parties had orally opened their cases, but the Viterra Parties had chosen not to open the case against the third parties at that time.

220 As his primary position, Argent also sought an order that the Viterra Parties pay his costs of and incidental to the proceeding (including reserved costs) on an indemnity basis, to be taxed in default of agreement. Alternatively, Argent sought an order based on the Argent Offer that the Viterra Parties pay his costs of and incidental to the proceeding (including reserved costs) up to 11.00am on 25 June 2018 on a standard basis, and thereafter on an indemnity basis, to be taxed in default of agreement.

F.4.1 Indemnity costs for duration of proceeding

221 In response to the Viterra Parties' submission that absent direct evidence a court should not find that a party has acted in wilful disregard of known facts or clearly established law,[274] Argent submitted that no such rule was laid down by Harper J in Ugly Tribe Co Pty Ltd v Sikola.[275] Rather, on the evidence before the court, the inference contended for by the first defendant in that case was not available on the balance of probabilities. Accordingly, Argent submitted that the case could not support the proposition that special circumstances are unlikely to be established by inferences.

222 As to the appropriate test, Argent supported the submissions of Youil, Wicks and Stewart[276] in relation to the test set out in Macedon Ranges Shire Council v Thompson.[277] He submitted that the test is not limited to what the litigant knew, the enquiries that were made, and the legal advice that was obtained, but that it also extended to what the litigant reasonably ought to have known, the enquiries that ought to have been made, and the legal advice that ought to have been obtained. Argent submitted the Viterra Parties could not escape this burden by simply asserting that they genuinely believed in their claims.

223 Argent submitted that the Viterra Parties' submissions misinterpreted the decision of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd.[278] He submitted that the case instead stands for the proposition that where the plaintiff properly advised should have known it had no chance of success, the proceeding must be presumed to have been commenced or continued for some ulterior motive, or in disregard of known facts or clearly established law.[279]

224 Argent's submissions set out matters that he contended were either known, or ought to have been known, to the Viterra Parties either at the time of joining Argent to the litigation or at the time of the Argent Offer.

225 The context of such knowledge was that the transaction the subject of the Acquisition Agreement involved parties who were among the world's largest and most sophisticated corporate entities, with well-resourced internal acquisition teams and high quality external advisers. Accordingly, it could not be said that the Viterra Parties did not have the means to make enquiries and obtain the legal advice which ought reasonably to have been obtained concerning the strengths and weaknesses of their claim against Argent. Further, regardless of how genuine the Viterra Parties' belief was in the merit of their claim against Argent, this did not override the requirement that the court must measure conduct against the facts which ought to have been known, the enquiries that ought reasonably to have been made, and the legal advice that ought reasonably to have been obtained.

226 Argent submitted that at the time he was joined to the proceeding, the Viterra Parties knew or ought to have known that his role was focused on financial matters and that he did not have direct knowledge of many aspects of the operational affairs of Joe White. Nor was it part of Argent's responsibilities to negotiate or be involved in the administration of customer contracts, to be aware of specific customer specifications or the reporting of any such specifications, to conduct any technical analysis of malt, or to make decisions with respect to how that might be done or reported. In this regard, he relied on the following finding concerning the Management Presentation:[280]

[T]here was no proper basis to draw any inference that Argent was representing all of the pleaded Management Presentation Statements were true and correct. It would be bordering on the absurd to suggest that anyone at Glencore or Viterra understood that Argent as financial controller was able to positively represent the truth and correctness of every aspect of the operational matters the subject of the Management Presentation Statements. Not surprisingly, no one gave evidence to this effect.

227 Argent submitted that the Viterra Parties' appreciation of these facts was starkly evidenced in October 2013, as Argent was not approached or called upon by them to address the issues that had been raised by Cargill.[281] Argent submitted that this demonstrated the Viterra Parties were aware in 2013 that Argent did not know of the Viterra Practices or the Viterra Policies.

228 Argent further submitted that the Viterra Parties, properly advised, should have known the Argent Representations[282] as alleged against Argent did not occur in trade or commerce.[283] Further, he submitted they should have known that any representations made in the sale process were made in the course of his employment with Viterra Ltd, at the direction or request of Glencore or Viterra or both, for the purpose of selling Joe White. Those representations, save for the Management Presentation Statements, were made internally and were not distributed to any external recipient, meaning they could not be characterised as antecedent or preparatory to conduct in trade or commerce.

229 Further, in seeking to demonstrate Argent's making of the Argent Representations, the Viterra Parties only referred to 2 documents, neither of which disclosed the existence of the Viterra Practices.[284] Despite this deficiency, the Viterra Parties chose not to withdraw any claim against Argent. Particular reliance was placed upon what was recorded in the Principal Judgment about how the Viterra Parties declined the express invitation from the court to revisit their case against the Third Party Individuals, namely:[285]

During oral closing submissions, after I had read all the written submissions, I enquired of the Viterra Parties whether they intended to maintain every claim against each and every third party. The question was taken on notice. When I revisited the issue, I was told that the Viterra Parties had given instructions that they maintained every aspect of the Third Party Claim. Given the obvious difficulties ... I responded directly. I said I would say candidly that such a position was surprising in light of the written submissions. Even after the exchanges referred to above, the Viterra Parties chose not to withdraw any claim the subject of the Third Party Claim.

(Emphasis added.)

230 In relation to reliance, Argent noted that there was no evidence of any reliance upon the Management Presentation Statements (to the extent that they were made by Argent) and this ought to have been known by the Viterra Parties.

231 He submitted the flawed nature of the Warranty verification process also ought to have been known, given Wilson-Smith was the Viterra Parties' witness. Argent further submitted that the Viterra Parties' persistence and failure to withdraw the Warranty verification allegations following cross-examination was ill-advised and cavalier.

232 Accordingly, Argent submitted that the Viterra Parties were well placed to examine the case and discuss the evidence that would be given by their witnesses before the commencement of the third party proceeding, or at any other stage. He submitted that, had adequate witness preparation been undertaken before trial, or if Wilson-Smith had been adequately examined concerning the matters before the third party claims were made, the deficiencies would have been apparent.

F.4.2 Indemnity costs after offer of compromise

233 Argent highlighted that at the time of the Argent Offer on 21 June 2018, the Viterra Parties had the benefit of Argent's opening submissions, which specifically outlined the weaknesses and deficiencies in the claim against him. Matters raised in those opening submissions relevant to the strength of the case included:

(1) In relation to the Commercial Call Statements, the documents showed that Argent was only acting as a conduit and therefore his conduct would not be established.

(2) In relation to the Argent Representations that the Undisclosed Matters did not exist and the Warranties were true and correct, Argent's non-disclosure of those matters was not capable of being misleading or deceptive as the circumstances could not give rise to a reasonable expectation of disclosure.

(3) Viterra could not be said to have relied upon Argent's conduct as providing a full, complete or adequate exposition of the matters relevant to the Acquisition Agreement. Instead, in this part of the opening, Argent submitted that he had a limited role and was fulfilling his role as an employee tasked with the responsibility of providing financial documents and comment to the Viterra Parties.

(4) Argent's conduct could not be characterised as being "involved" in any misleading or deceptive conduct due to his lack of knowledge of the falsity of any of his representations.

(5) There was no basis on which to find that Argent had breached his contract of service.

234 Argent addressed the ways in which each of these propositions had subsequently been validated by the court's findings in the Principal Judgment. On the basis of the contentions put in his opening submissions, Argent submitted that the Viterra Parties were in a well-informed position to assess the relative merits of the claims and their chances of success, and it ought to have been apparent to the Viterra Parties, upon a meaningful consideration of the evidence, that the claim was highly unlikely to succeed. In her oral submissions, Argent's counsel described the case against him as hopeless.

235 Accordingly, Argent submitted that the rejection of the Argent Offer was unreasonable. Further, he noted that despite the offer being a "walk away" offer, 3 years had then elapsed since he had been joined to the proceeding and he had incurred significant pre-trial costs. These costs, although small relative to the size of the claim, were substantial for an individual being sued by a multinational corporation. Argent submitted that in some circumstances, a walk away offer may constitute a sufficient offer of compromise to make a rejection of the offer unreasonable.[286] Further, the Viterra Parties did not put forward any argument on how it could be said that rejecting the walk away offer, or continuing with the purportedly genuine claim, advanced the purpose of order 26.

236 At a general level, Argent emphasised that a distinct hallmark of this proceeding was the intractable nature of the Viterra Parties, and the cavalier approach taken to the proceeding against Argent.

237 The Viterra Parties properly conceded that because each of Youil, Wicks, Stewart and Argent were successful parties they were therefore entitled to a costs order in their favour with respect to their costs of the proceeding. However, the Viterra Parties submitted that costs should not be awarded on an indemnity basis, either for the entire proceeding or after the "walk away" offers of compromise were made.[287]

238 The Viterra Parties acknowledged that indemnity costs may be awarded in certain special circumstances, and that these relevantly include where a party has commenced or continued a proceeding "in wilful disregard of known facts or clearly established law".[288] However, they contended that absent direct evidence such a motive would not ordinarily be established by inference, and that a court should be slow to assume such a culpable motive by a party. They submitted this was particularly so if such a conclusion was being urged by the party seeking costs based on general observations about whether a party "properly advised, should have known" the claim would fail. In support of this last proposition they referred to Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd,[289] "as applied, for example, in Macedon Ranges Shire Council v Thompson".[290] As to what was stated by the Court of Appeal in the latter case,[291] they submitted what was intended was informed by what had come before in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd.[292] Indeed, it was suggested "all roads lead to this case" and what was stated subsequently by the Court of Appeal rose no higher than this earlier authority. The Viterra Parties also submitted the Court of Appeal's decision should not be treated in the same way as the text of a statute and needed to be construed in accordance with the substance of the analysis. Finally in this regard, it was submitted that a careful reading of the relevant passage from Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd established "the actual test" that the party seeking indemnity costs needed to satisfy; namely, that the commencement or continuation of the proceeding by the unsuccessful party was in wilful disregard of known facts or clearly established law.

239 In seeking to establish that it would be inappropriate to award indemnity costs in favour of the Third Party Individuals, the Viterra Parties addressed 2 points. First, whether the claims were without merit and involved baseless accusations. Secondly, whether they unreasonably rejected the Third Party Individuals' offers of compromise.

240 The Viterra Parties submitted that the third party claims had to be viewed in the context of the Viterra Parties being confronted with serious allegations brought by Cargill Australia. The Viterra Parties' position was that it was appropriate to seek to "pass through" those claims to the Third Party Individuals,[293] who, in the Viterra Parties' submission, were responsible for the Viterra Practices. They submitted that it was these "very individuals who were intimately involved in [the Viterra Practices] occurring and/or knew of them, and who assisted Glencore in the sale process as the managers of the business and ought to have disclosed to the [Viterra Parties] that the practices were going on".

241 The Viterra Parties also pointed to the fact that the loss claims against those third parties were particularised and quantified only as those damages and costs the Viterra Parties were held to have to Cargill Australia. An aspect of this approach was that the Viterra Parties did not seek to independently prove each aspect of Cargill Australia's claims, and they contended they were "constrained" from seeking to prove Cargill Australia's case .

242 Further, the Viterra Parties submitted that the Warranty verification process was a key element of the third party claims against the Third Party Individuals. By reference to findings in the Principal Judgment that the process was "materially deficient" and "inutile as a warranty verification exercise",[294] the Viterra Parties submitted that they had experienced "arguably misplaced optimism" concerning the efficacy of the verification process. That "misplaced optimism" was thus said to be relevant to the reasonableness of their decision to press on with the claims based on the Warranty Representations against each of the Third Party Individuals.

243 Furthermore, the Viterra Parties referred to conduct of the Third Party Individuals in the course of the litigation to demonstrate that the claim was not "hopeless". Namely, that when the Third Party Individuals were joined they did not object, did not make a summary judgment application, and did not make a no case submission. Accordingly, they submitted that the Third Party Individuals' present claims for indemnity costs were "hindsight opportunism".

244 Finally, the Viterra Parties submitted that to the extent the Third Party Individuals contended the length and complexity of the proceeding resulted in costs on a standard basis being inadequate compensation, this was not a matter that justified the award of indemnity costs.

245 With regard to the offers of compromise made, the Viterra Parties made 2 submissions as to why the court should find that rejection of those offers was not unreasonable, or alternatively should not order indemnity costs but "otherwise order".

246 First, the offers were "walk away offers" made at the commencement of trial, meaning the compromise of a walk away with costs at best amounted to a small compromise.

247 Secondly, for the reasons given as to merit, the Viterra Parties' were genuine and it ought not be inferred that because their claims failed, the offers reflected a realistic assessment of the Viterra Parties' claim.

G. Analysis of primary issues as between relevant Third Party Individuals and the Viterra Parties

248 Some general observations need to be made. The Viterra Parties made submissions that broadly applied to each of the relevant Third Party Individuals. As noted above, these went to 2 issues: the merit of each of the relevant third party claims and its relevance to the award of costs, and whether or not it was reasonable to reject the various offers of compromise.

249 Those submissions were made at a high level of generality. Broadly, the Viterra Parties appeared to treat each relevant third party claim as being in the same position, when in reality these Third Party Individuals had differing levels of involvement in the sale process, different responsibilities, and made different representations (to the extent that they did make any). As acknowledged by the Viterra Parties' senior counsel in closing submissions at trial, it was necessary for the Viterra Parties to prove the case against each of the third parties separately.[295] In determining questions relating to costs, it is also necessary to consider them separately.

250 The Viterra Parties' decision not to engage in the various matters raised by the Third Party Individuals on this application was conspicuous. As a result, the Viterra Parties were invited to respond directly to 2 of the matters that had been raised against them,[296] being the lack of particulars to support the allegations made in the third party claims against Stewart concerning the Stewart Representations[297] and Argent concerning the Argent Representations.[298] The response of the Viterra Parties' senior counsel was simply that there was not a satisfactory answer. In light of this, the Viterra Parties were then asked how it was that they made the submissions that they had. In a further response, they contended they were referring to the findings made in the Principal Judgment. When it was pointed out that each of these matters had nothing to do with any findings but related to the cases as pleaded and the evidence that was available to the Viterra Parties "because there was a want of evidence and there was a want of particulars to substantiate this allegation", it was submitted that the Third Party Individuals were reasoning retrospectively. When I enquired further as to how that was put, particularly as there were obviously difficulties (with the stark example of how the case against Argent did not even come close to being able to be made out), senior counsel stated that he could not take the submission any further. In short, when given the opportunity to demonstrate that there had been some proper basis for pursuing these claims (and the others against Youil, Wicks, Stewart and Argent, as these questions were raised expressly only by way of example), the Viterra Parties were unable to give any explanation as to how it could have been thought that the respective claims had any prospects of success even on the facts as pleaded and particularised by them.[299]

251 Further, the Viterra Parties' submission that they were constrained in proving the case against the Third Party Individuals by reason of the fact that they did not wish prove Cargill Australia's case was unpersuasive. This approach was a conscious decision by the Viterra Parties, and a circumstance of their own making. It did not provide a satisfactory reason for them to have commenced and continued the third party proceeding against these Third Party Individuals without a proper basis.

252 In relation to the key area of dispute between the Viterra Parties and these Third Party Individuals concerning the appropriate approach for the court to adopt in order to determine whether a proceeding was hopeless (and therefore the discretion is enlivened to award indemnity costs), there is no need to resolve this issue. For reasons explained below, even if (contrary to the authorities) the discretion to be exercised before indemnity costs could be awarded was based upon a requirement of a wilful disregard of known facts or clearly established law (as the Viterra Parties contended), then I would be so satisfied.

253 For completeness, it should be stated that I see no reason to finesse or read down what was relevantly stated in Macedon Ranges Shire Council v Thompson.[300] The Court of Appeal made it clear that in considering whether the discretion to award indemnity costs may be enlivened where an action has been commenced in circumstances which had no chance of success, the court must consider not only what is proven to be known by the unsuccessful party about the merits of the case, but also what it ought to have known.[301] Further, there is no apparent inconsistency with what was stated and the earlier authorities referred to. This may be explained briefly.

254 In Macedon Ranges Shire Council v Thompson, the Court of Appeal was not seeking to prescribe the circumstances in which indemnity costs will be ordered. Like the cases that preceded it, the passage referred to was simply identifying circumstances in which an indemnity costs order may be made. As has been repeatedly stated, while the discretion in question must be exercised judicially, it is absolute and unfettered. Although there is an obvious inappropriateness in creating a wilderness of cost rulings,[302] a court must consider the particular facts and circumstances of the case at hand in order to determine whether there are special circumstances to warrant a departure from the usual position that a successful party is awarded costs on a standard basis.

G.2 Youil (including matters relevant to Wicks, Stewart and Argent)

255 It was not established that Youil had represented to Glencore or Viterra that any of the Undisclosed Matters did not exist,[303] nor that Youil represented that any Warranties he was asked to verify were true and correct.[304] Although it was established that Youil represented to Glencore and Viterra that the Operations Call Statements,[305] to the extent they were found to have been made, were true and correct,[306] it was further found that this conduct was not in trade or commerce.[307]

256 Focusing on the Warranty verification process, it was clear that, even if the evidence of the Viterra Parties was put at its highest, this aspect of the case was hopeless. Paragraph 54 of the third party claim made allegations directed specifically to Youil. It alleged the Youil Representations were made by him, including representations to the effect that "the Warranties were true and correct".

257 Long before the trial commenced, the Viterra Parties had access to Wilson-Smith and his account of the Warranty verification process. Wilson-Smith was a long-term employee who continued to be employed by Viterra Ltd after this proceeding had commenced, and after the third party claim was filed.[308] As was readily apparent from his witness statement,[309] Wilson-Smith could not provide any direct evidence of what he said to any of the Third Party Individuals as part of the Warranty verification process.[310] It follows that the Viterra Parties must have been aware that the pleaded allegations, which were that representations had been made in precise contractual terms, did not square with Wilson-Smith's evidence that Youil was told about "the substance of what the Warranty provided", which was then alleged to have been "verified" orally.

258 More broadly, the discussions with each Third Party Individual were too short, and in some cases extremely short, relative to the information alleged to have been conveyed during them.[311] Wilson-Smith did not provide or refer to the content of definitions intrinsic to the meaning of the Warranties during those discussions.[312] As explained previously,[313] it was utterly fanciful that any of the Third Party Individuals could have had any proper understanding of the Warranties they were alleged to have verified without having a proper explanation and understanding of the definitions. These matters were apparent on the face of the documents when read in conjunction with Wilson-Smith's witness statement.

259 Another glaring problem with the process was equally apparent from Wilson-Smith's witness statement. He stated that after telling each Third Party Individual the substance of the Warranty he then asked whether there was any inconsistent information in the Data Room. The obvious difficulty with this was that a number of the Third Party Individuals had nothing to do with the compilation of the Data Room. At the time he undertook the Warranty verification process, Wilson-Smith had not ascertained whether the Third Party Individuals, save for Argent, had any familiarity with the Data Room.[314] This lack of knowledge must have been fully appreciated by the Viterra Parties, as the collation of material for the Data Room was conducted by Fitzgerald, Bickmore and, to a lesser extent, Wilson-Smith.[315] Thus, it was a hollow exercise to ask persons with no knowledge of what was contained in the Data Room whether it contained any inconsistent information to what was stated in the Warranties.

260 Not only was the process patently inadequate, but the record of what occurred was also materially wanting. The note-taking was deficient on its face,[316] Wilson-Smith had no recollection of what he actually said to the Third Party Individuals in relation to each Warranty, and the Viterra Parties never verified the purported responses with any of the Third Party Individuals.[317]

261 Another example demonstrating the lengths the Viterra Parties were willing to go in tailoring their case contrary to known and undisputed facts was what occurred with respect to Warranty 12. Briefly, the Viterra Parties pressed a case in which they contended that this Warranty had been verified by the Third Party Individuals as part of the verification process despite the fact that it was materially amended after the process was complete. In other words, the Warranty alleged to have been verified was in a substantially different form when the Acquisition Agreement was subsequently entered into, and yet the Viterra Parties alleged the Third Party Individuals had represented as "accurate by verifying the accuracy of" a warranty that none of them had ever seen before the Acquisition Agreement was entered into. These facts alone demonstrate how utterly hopeless this claim was.[318] As stated in the Principal Judgment,[319] in attempting to put forward such a case the Viterra Parties appeared to ignore a number of key matters. There was no suggestion on this application that somehow the Viterra Parties had overlooked key facts in making their closing submissions at trial.

262 It is unnecessary to elaborate further. In closing submissions at trial, the Cargill Parties listed 13 reasons why it was apparent Wilson-Smith failed to adequately verify the Warranties.[320] All these points were valid.

263 Nothing that occurred at trial revealed any of these matters. The critical facts were already clear from Wilson-Smith's witness statement and the contemporaneous Viterra documents in the possession of the Viterra Parties at all relevant times. Moreover, this was not a matter of weighing up competing evidence. None of the Third Party Individuals gave any relevant evidence.[321]

264 In summary, the Warranty verification process was materially deficient in both scope and execution.[322] On the Viterra Parties' own case, there was no possible basis to find that any of the Third Party Individuals, including Youil, represented to Glencore or Viterra that the Warranties they were asked to verify (albeit in an unsatisfactory manner) were true and correct.[323]

265 But the significance of these flaws did not end there. With respect to the allegations more generally against Youil (as well as Wicks, Stewart and Argent), the Warranty verification process was a cornerstone of the case against him. As part of the allegation that Youil represented the Undisclosed Matters did not exist, it was alleged this occurred because there was a reasonable expectation he would have disclosed the Undisclosed Matters because he had informed the Viterra Parties that each of the Warranties was accurate "by verifying the accuracy of it". With a fundamentally flawed case against Youil concerning the Warranty verification process, the main plank of the reasonable expectation alleged (as part of seeking to establish the Youil Representations) necessarily could not be maintained. To expand on this, it would have been hopeless to mount a case against Youil based on his involvement in the Operations Call alone to seek to establish he represented the Undisclosed Matters did not exist. Leading up to the Operations Call, Youil had had no involvement in what had been previously disclosed by the Viterra Parties as part of the sale process.[324] Further, he was specifically directed that during the Operations Call he was not to disclose anything beyond what was directly requested by Cargill.[325] In addition, Hughes was present to ensure no one strayed from the intended message.[326]

266 Other aspects of the case were similarly hopeless, including causation. In the absence of any probative evidence that Youil, Wicks and Stewart made the representations that the Warranties were true and correct, there was no foundation to allege that any of them had deprived the Viterra Parties of the opportunity to take the Alleged Steps.[327]

267 Further, I accept Youil's submission that the Viterra Parties did not provide evidence of any reliance on statements made by him during the Operations Call. In closing submissions at trial, the Viterra Parties broadly referred to certain sections of their factual submissions to support the conclusion that they had relied on the various representations. However, the relevant section of the factual submissions did not articulate any chain of causation specifically in relation to Youil. With the exception of the patently flawed Warranty verification process, it was clear that each of Youil, Wicks and Stewart were not involved in the events leading up to the execution of the Acquisition Agreement in any meaningful way.[328]

268 Similarly, the allegation of accessorial liability was misconceived. The Viterra Parties made no attempt to identify how each Third Party Individual's conduct amounted to involvement[329] in the various representations alleged.[330] At trial, this was explicitly raised with the Viterra Parties' lead senior counsel, but was ultimately left unaddressed.[331]

269 In short, the claims made against Youil both individually and collectively were devoid of merit from the outset and remained so. Thus an award of indemnity costs will be made in Youil's favour for all his costs of and incidental to the proceeding.

270 In the alternative, I also consider that the Youil Offer represented a genuine compromise. The fact that the offer was a "walk away" offer did not diminish the substantial nature of the compromise, as the parties had by then incurred significant costs while the claims against Youil remained without substance. At the time of each of the third party offers of compromise, the proceeding had been on foot for over 3 years and the trial was commencing. The Viterra Parties could have readily made a proper assessment of the weakness of their case at this point. Given the terms of the Youil Offer, its timing being on the cusp of a lengthy trial where the Viterra Parties ought to have known the deficiencies in their case, the significant amount of costs that had undoubtedly been incurred to date, and the fact that, as discussed above, the claim had no prospect of success, the Youil Offer was more than an invitation to the Viterra Parties to give up. Further, the relative positions of the parties were relevant; Youil being an individual, and the Viterra Parties being a large multinational corporate entity. This imbalance is an additional reason why the Youil Offer could not be viewed as an invitation to capitulate, and rather demonstrated that it represented a genuine compromise on his part. In these circumstances, it was unreasonable for the Viterra Parties to reject the Youil Offer.

271 In summary, the case against Youil had no prospects of success. It was a hopeless case. Accordingly, in relation to his costs of and incidental to the proceeding, they will be awarded on an indemnity basis. Further, if I had reached a different view on this primary basis for Youil seeking indemnity costs, then based on the rejection of the Youil Offer I would have ordered indemnity costs in his favour from 11.00am on 25 June 2018.

272 The third party claim against Wicks contained similar deficiencies to those identified with respect to Youil. A large part of the claim against Wicks was also tied to the Warranty verification process.

273 That said, the deficiencies in relation to the claims against Wicks were more glaring. The representations to found the basis of the claim against Wicks were alleged to have arisen from a discussion that took place on a telephone call, while Wicks was travelling and about to get on a plane.[332] Wilson-Smith acknowledged that the call was brief, potentially even only 5 minutes long.[333] It was conducted informally. Although Wilson-Smith's handwritten notes of the call recorded responses from Wicks in relation to 22 of the Warranties, Wilson-Smith had no recollection of putting the substance of those Warranties to Wicks.[334]

274 As with the position in relation to Youil, there were many obvious difficulties with questions of causation concerning Wick's conduct.[335] Equally, Wicks was not "involved" and could not be said to be "involved" on the case as put. Again, the Viterra Parties did not even attempt to seek to establish this allegation during the course of the trial or in closing submissions in any meaningful way.[336]

275 In the alternative, for the same reasons given in relation to Youil, the Wicks Offer was a genuine compromise and its rejection by the Viterra Parties was unreasonable.[337]

276 For the reasons above, indemnity costs will also be awarded to Wicks for his costs of and incidental to the third party proceeding. Further, if I had not been minded to award indemnity costs on this more general basis, based on the rejection of the Wicks Offer I would have ordered all Wicks' costs of and incidental to the proceeding be paid on an indemnity basis from 11.00am on 26 June 2018.

277 The third party claim against Stewart was also largely based on the purported Warranty verification process. As has been discussed in relation to the other Third Party Individuals, the deficiencies in the process and the evidence given by Wilson-Smith fell well short of establishing any representations by Stewart to the effect that the Warranties were true and correct.[338]

278 Even if Stewart had provided an answer which amounted to a verification of accuracy in relation to the limited number of Warranties it was alleged that he did (which he plainly did not), this still would not have supported the pleaded case that Stewart represented that all of the Undisclosed Matters did not exist, or that all the Warranties alleged to give rise to Viterra making the Warranty Representations were true and correct.[339] The following extract from the Principal Judgment, while lengthy, provides insight into the manner in which the case was pleaded, and how this was materially deficient in relation to Stewart:[340]

Stewart had no involvement at all in any of the Information Memorandum Statements, the Operations Call Statements, the Commercial Call Statements or the Management Presentation Statements. Reflecting this lack of involvement, of the 10 pages of particulars referred to which were claimed to support these allegations against Stewart, in substance Stewart was only mentioned twice, and in a limited manner.

First, it was pleaded that Stewart, along with the other Third Party Individuals, did not disclose the Undisclosed Matters in circumstances where there was a reasonable expectation that they would do so because of 5 matters which were identified. Four of these matters concerned events in which Stewart simply had no involvement. The other matter related to his involvement in the Warranty verification process.

Secondly, his involvement in the Warranty verification process was relied upon separately, and even then not in relation to all of the Warranties that were alleged to have been verified by the Third Party Individuals. Quite the contrary, in relation to Stewart there were only 2 Warranties that were referred to, namely Warranty 7.3 (concerning material defaults of Material Contracts) and Warranty 17(a) (concerning compliance with Laws). No doubt this was because these were the only Warranties Stewart was asked to verify that were relevant to the Warranty Representations_. After referring to these matters, the Viterra Parties repeated the pleading that after the "respective verifications" and before the Acquisition Agreement was entered into, Stewart and the other Third Party Individuals did not inform the Viterra Parties that any of the Warranties was not accurate in circumstances where there was a reasonable expectation that they would._

And yet, despite this very small fraction of involvement of Stewart in the overall conduct (being the entirety of the Joe White Executives' Representations)[341] alleged to constitute the basis upon which Glencore and Viterra made all of the Financial and Operational Performance Representations, and Viterra gave the Warranties and made the Warranty Representations, it was alleged that those representations were made by the Viterra Parties because of Stewart's conduct.

279 Thus, as has already been found,[342] even if the Warranty verification process had been conducted properly, and Stewart had verified Warranties 7.3 and 17(a), this could not possibly have supported the allegation that the Stewart Representations were made. Again as already found,[343] there was "a complete absence of connection" between Stewart's verification of Warranties 7.3 and 17(a) and the remaining Warranties the subject of the Warranty Representations.

280 Further, significantly, although Stewart was called as a witness as part of the Viterra Parties' case, they chose not to adduce any evidence from Stewart regarding the Warranty verification process or his knowledge of specific aspects of the Undisclosed Matters.[344] It was also found that many of the matters giving rise to the Financial and Operational Performance Representations could not possibly have anything to do with Stewart as those matters were alleged to have occurred before Stewart had any alleged involvement in the relevant events. Despite this, the third party claim alleged that all of the Financial and Operational Performance Representations were made by reason of Stewart making the Stewart Representations.[345]

281 As to the alternative basis to claim indemnity costs, for the same reasons given in relation to Youil, the Stewart Offer was a genuine compromise and its rejection by the Viterra Parties was unreasonable.[346]

282 In the circumstances, Stewart's submission that having been drawn into a long, intractable proceeding, costs awarded on a standard basis would be inadequate, must be accepted. Accordingly, Stewart's costs of and incidental to the proceeding will be awarded on an indemnity for the duration of the third party proceeding. Again, had I not been so minded, on the basis of the rejection of the Stewart Offer, I would have awarded indemnity costs in favour of Stewart from 11.00am on 19 June 2018.[347]

283 Argent, as financial controller of Joe White, was not directly involved in the operational side of the Joe White Business.[348] Although Argent was involved in the drafting of the Management Presentation Memorandum,[349] and specifically the section concerning risk management, there was no proper basis to draw the inference that Argent represented that all of the pleaded Management Presentation Statements were true and correct.[350] It has been found that in the circumstances (including those matters directed specifically towards detailed operational matters), such a proposition would be "bordering on the absurd".[351] There was no evidence, direct or inferentially, that he was familiar with or knew of the existence of the Viterra Practices.[352] The submission that Argent represented that all of the Undisclosed Matters did not exist was "devoid of merit".[353] Nor did the Viterra Parties demonstrate that Argent ought to have known of the Undisclosed Matters.[354]

284 More broadly, at trial the Viterra Parties' senior counsel was asked how Argent could be said to have been "involved" in any representations concerning the Viterra Practices, when only 2 documents had been referred to in seeking to establish his knowledge, both of which did not disclose the existence of the Operational Practices.[355] The point was effectively conceded, there being simply no basis on which the claim could succeed.[356] Despite this, there was no withdrawal of the allegation itself.

285 Additionally, and as with the other Third Party Individuals in relation to the representations alleged against them, the Viterra Parties failed to demonstrate reliance on the Argent Representations. For example, the Viterra Parties did not identify any decision-maker within Glencore or Viterra who was influenced by what Argent said in his limited statements during the Management Presentation.[357] The Viterra Parties' lack of reliance on anything represented by Argent was also supported by the fact that he was not called upon by the Viterra Parties to explain or address the issues raised by Cargill in October 2013.[358] This lack of reliance concerning operational matters must have been known to the Viterra Parties, given that Mattiske and Ian King,[359] who were directly involved in preparations for the Management Presentation (and other relevant events), were their witnesses.

286 Finally, and as with the remaining Third Party Individuals, the aspects of the claim against Argent relating to the Warranty verification process also represented a serious and patent deficiency in the Viterra Parties' case.[360] Little more need be said on the matter.

287 Thus, based on the serious and obvious problems with the Viterra Parties' case against Argent from the outset, he will be awarded his costs of and incidental to the proceeding on an indemnity basis.

288 In the alternative, for the same reasons given in relation to Youil, the Argent Offer was a genuine compromise and its rejection by the Viterra Parties was unreasonable.[361] To this, it must be added that Argent's submissions comprehensively addressed the manner in which Argent's opening submissions at trial laid bare the undeniable flaws in the Viterra Parties' claim against him.[362] These comprised areas in which key findings were made in favour of Argent, including those in relation to the Commercial Call Statements,[363] the lack of a reasonable expectation of disclosure of the Undisclosed Matters,[364] the fact that Argent was not aware of the Viterra Practices,[365] the Viterra Parties' lack of reliance on Argent's conduct,[366] the fact that Argent's conduct could not be characterised as being "involved" in any misleading or deceptive conduct,[367] and findings that he did not breach his contract of service.[368]

289 Accordingly, for the reasons stated, indemnity costs will be awarded in favour of Argent for the duration of the proceeding. Again, if I had reached a different conclusion on the claim for indemnity costs based on the absence of any merit, I would have ordered that Argent's costs of and incidental to the proceeding would have to be paid on an indemnity basis from 11.00am on 25 June 2018.

290 With respect to the third party claims against Youil, Wicks, Stewart and Argent, the Viterra Parties chose to adopt and maintain a combative approach throughout the proceeding. They failed to concede key points at key intervals. At trial, with the benefit of the full picture of the evidence that could be led against the Third Party Individuals, the Viterra Parties opted to maintain the claims. Even when the court was very direct about the obvious difficulties they faced, the Viterra Parties made a conscious decision to continue.[369] Senior counsel for Stewart summarised the position as follows: "[the Third Party Individuals], we would submit, were treated like pawns in this proceeding [by the Viterra Parties]" (emphasis added). I consider this appraisal to be a fair characterisation of the position.

291 For the reasons set out above, I consider that the third party claims as against Youil, Wicks, Stewart and Argent had no real prospects of success. In circumstances where this was the position based on the Viterra Parties' own evidence, this must have been readily apparent to them at all relevant times. The fact that the Viterra Parties were acting in wilful disregard of known facts and clearly established law was made abundantly clear from their response during closing submissions to the invitation to drop parts of the case against the Third Party Individuals which on any fair reading of their own closing submissions simply had not been established.[370] Further, for reasons already explained, the patent deficiencies in their case were apparent at all times. Accordingly, indemnity costs will be awarded in favour of each of the Third Party Individuals (except Hughes) for the duration of the proceeding against them.

292 For completeness, it obviously follows from what is stated above that if consideration is also given to the facts which ought to have been known by the Viterra Parties, the inquiries they ought reasonably to have made and the legal advice they ought reasonably to have obtained, then it is plain they ought to have not commenced the proceeding or, having commenced it, ought to have discontinued it. The Viterra Parties had available to them almost unlimited resources and highly qualified professional advice. This is not a case where it might be thought that there was a realistic possibility that the Viterra Parties were in ignorance or somehow mistaken about their prospects in relation to the claims discussed above.[371] The entire case was being carefully scrutinised and directed by a highly experienced and senior in-house lawyer who monitored every step of the proceeding.[372]

H. Appropriate approach for the assessment of costs

293 At the time the Principal Judgment was delivered, I referred back to what I had previously stated to the parties about the requirement for them to take a strictly proportionate approach to resolving any costs issues.[373] For the purpose of finalising all outstanding costs issues I indicated, subject to any submissions any party might wish to make, that the parties would be required to consider whether it was appropriate for costs to be determined on a gross sum basis or some other broad-brush approach by which a lengthy taxation could be avoided.[374]

294 In relation to the appropriate method for assessing costs, the Cargill Parties embraced an approach which did not involve a taxation. They relied upon an affidavit of Christiana McCudden ("McCudden"), a solicitor acting on their behalf who is an experienced commercial litigator ("the McCudden Affidavit"). The McCudden Affidavit was prepared on the basis of her substantial general experience advising and acting for clients in large commercial litigation for around 20 years, and her specific experience in relation to gross sum costs assessments and large-scale taxations. She gave an example of a large case in which a gross sum assessment conducted by a judicial registrar of this court took less than 8 days.[375]

295 The McCudden Affidavit set out her various estimates in relation to any taxation in this proceeding. These were the result of her assessments, including that preparation of an itemised bill of costs would take between 12 to 15 months, that such a bill would cost in excess of $300,000 to prepare, that total costs incurred by all parties in the costs proceeding itself could be in excess of $1,000,000, and that there would be no final determination until the second half of 2024. Accordingly, the Cargill Parties submitted that it was more appropriate for costs to be assessed on a gross sum basis with the assistance of a referee appointed by the court.

296 As part of the Cargill Parties' submissions in support of a gross sum approach, they contended that if the matter were to be heard before the Costs Court it would likely require the presiding judicial officer to become as familiar with the issues in the case as the trial judge. The Cargill Parties agreed with observations I had previously made about any such requirement being an inefficient use of judicial resources and that it may place an unnecessary burden on the Costs Court if this eventuated. They contended that it was equally not efficient for a trial judge to be conducting a detailed hearing concerning itemised bills of costs and thus the appointment of an independent referee would be appropriate with respect to any substantive disputes as part of a gross sum assessment.

297 The Viterra Parties disagreed with the Cargill Parties' position. In doing so, they relied upon an expert report of Paul Linsdell ("Linsdell"), a lawyer specialising in the assessment of legal costs ("the First Linsdell Report"). In the First Linsdell Report, Linsdell gave reasons as to why he disagreed with McCudden's assessment of various elements of that process. He concluded that an itemised bill could be prepared in less than 12 to 15 months, that the cost of preparing evidence for the purpose of a gross sum application would be comparable to the cost of preparing a bill for taxation, that the estimate of $1,000,000 in costs being incurred by the parties was unrealistic, and that the taxation process would likely be finalised prior to the second half of 2024.

298 Further, a significant amount of detail was provided about the taxation process, including the means by which it is generally sought to keep the expense of a taxation in check. It is unnecessary to refer to this at any length. However, Linsdell noted a significant benefit to the taxation process was that a costs registrar does not need to analyse the issues of the proceeding akin to the analysis conducted by a trial judge. It was explained on the basis that the Costs Court is not required to address the underlying issues, but instead is focused on making an appropriate allowance for the work undertaken. This was said to be enhanced by the utilisation of the court's scale of costs, which provides an objective benchmark for determining the reasonableness of costs by reference to the specific activity or document in question.

299 Furthermore, the First Linsdell Report addressed the nature of gross sum assessments. Based on his experience, he noted that gross sum assessments are not cheaper, quicker, or necessarily simpler than having the matter proceed to taxation. He explained that disputes often arise in gross sum assessments in relation to the appropriate methodology, loadings and arbitrary reductions. Nor, in Linsdell's opinion, was it appropriate for a special referee to be appointed in preference to the matter being referred to the Costs Court. In this regard, he noted that Victoria is the only jurisdiction in Australia with a specialist court which deals exclusively with costs, with those appointed to the position of costs registrars being highly experienced and specialised judicial officers.

H.3 The Cargill Parties' response to the First Linsdell Report

300 In response to the First Linsdell Report, the Cargill Parties filed written submissions on 16 March 2022 and observed that Linsdell had not been briefed by the Viterra Parties' solicitors to provide his opinion on the most appropriate method of assessment of costs. Rather, it was contended his opinion had been confined to whether the Cargill Parties' proposed method was appropriate, and whether the Viterra Parties should oppose that proposed method.

301 Amongst other things, the Cargill Parties also submitted that Linsdell had not provided his own opinion on the time and cost estimate of each step required in a taxation, but instead had simply disagreed with the estimates that had been provided in the McCudden Affidavit.

302 Further, at the hearing of this application the Cargill Parties submitted that the court should not accept what was stated in the First Linsdell Report about the lack of any need for the judicial officer engaged in any taxation to become familiar with the issues in the proceeding. They submitted that if put in contest, for an evaluation to occur of whether costs were reasonable and proportionate, the Costs Court would need to be familiar with each fact and issue the subject of the controversy.

303 On 28 March 2022, Linsdell provided a supplementary report ("the Second Linsdell Report"). Linsdell acknowledged that in the First Linsdell Report he did not state his opinion on the most appropriate method of assessment of costs in the proceeding. By the Second Linsdell Report, he "confirmed" that in his opinion the most appropriate method of assessment was a taxation of costs in the Costs Court. Further, based on his experience, Linsdell estimated that a taxation would take between 13½ and 22 months, and would cost the Cargill Parties in the order of $299,200 and the Viterra Parties approximately $176,918.

304 Each of the Third Party Individuals (including Hughes) adopted the Cargill Parties' position that it was appropriate for the court to assess costs payable by the Viterra Parties on a gross sum basis, with the assistance of a referee.

305 In Masters Home Improvement Pty Ltd v North East Solution Pty Ltd,[376] the Court of Appeal set out principles relevant to the court's assessment of expert evidence, namely:[377]

(1) The court's role is to evaluate expert evidence critically.

(2) Where the evidence is cogent, it should not be ignored.

(3) It is not part of the court's role "to bring a third set of opinions into the arena", and judges should not take on the role of an expert.[378]

(4) In some circumstances, it may be necessary for the court to make adjustments to, or disregard the conclusion reached by an expert if the expert's opinion is not cogent, or is shown to be flawed or based on an incorrect assumption.

306 Further, where an expert has not been cross-examined, prima facie there is limited scope for a judge to not accept unchallenged evidence.[379]

307 On the whole, I consider that Linsdell's largely unchallenged evidence was cogent.[380] He has significant experience as a costs lawyer and in the preparation of assessments of costs. There was no issue of his qualifications or his suitability to give expert evidence on costs. His evidence was that a gross sum costs application would not necessarily be more efficient, simpler or cheaper than taxation. Neither the First Linsdell Report nor the Second Linsdell Report carried an obvious flaw in reasoning or assumption. None was suggested (beyond those submissions raising what the First Linsdell Report did not address). The Second Linsdell Report directly addressed the alleged deficiencies.

308 Tellingly, the Cargill Parties chose not to put forward alternate expert evidence to cast doubt on any of Linsdell's reasoning, assumptions or conclusions. The fact that they had not done this was raised with them expressly during the course of argument. There was no application to adjourn the hearing so that contrary expert evidence might be led. Rather, the Cargill Parties expressly acknowledged they had not put on expert evidence, had decided not to cross-examine Linsdell and had chosen instead to rely on the McCudden Affidavit. It must be said at once that the McCudden Affidavit was sworn by a solicitor who, while very experienced in commercial litigation, is not a costs lawyer or an expert (relevantly), and who could only give limited evidence on the topic.[381] In short, the position they adopted was simply that, notwithstanding the Linsdell Reports, when all matters they had referred to in their submissions were considered the court ought to determine that the gross sum approach should be preferred.

309 In these circumstances, I do not propose to reject Linsdell's evidence. Based on the evidence before the court, I accept that the most appropriate method for the assessment of costs in this proceeding is by a taxation in the Costs Court.[382] In reaching this conclusion, I have not ignored the possibility that the judicial officer responsible for the taxation may have to become familiar with some of the issues in the case (as suggested by the Cargill Parties) in determining certain questions of reasonableness and proportionality in relation to costs. However, as explained by Linsdell, this will often not be necessary and, even if it is on occasions, it does not nullify the many other benefits identified by Linsdell that are derived from the Supreme Court uniquely having its own dedicated Costs Court.

310 Out of an abundance of caution, it is noted that nothing in these reasons is intended to fetter the manner in which the Costs Court determines the appropriate methods or steps to be taken in relation to the taxation to be conducted.

I. Observations relevant to the taxation of the Cargill Parties' costs

311 As part of the Cargill Parties' submissions in support of a gross sum assessment, they indicated that they would be seeking costs other than according to scale. They also provided the basis upon which they contended that the court should award costs above those based on the court's scale of costs.[383] When this was raised during argument, the Cargill Parties' senior counsel stated that no ruling was presently sought on this issue. The Cargill Parties' position was that the issue of whether or not they were entitled to costs greater than those that would be provided under the court's scale of costs ought to be determined as part of the gross sum assessment, or alternatively if a taxation were ordered then as part of the taxation. The Viterra Parties agreed with this approach. Also, belatedly in reply submissions, the Cargill Parties foreshadowed making further submissions on the issue.[384] As a result, I indicated that I would not make any binding determination on the issue.

312 However, in light of the fact that the question of costs is now to proceed by way of a taxation, as the judge who has had the management of this case from the outset, it is appropriate that some further observations are made to assist the Costs Court (although nothing said is intended to be determinative of any subsequent ruling in the Costs Court).

313 As part of the Principal Judgment, I observed that the key parties in this proceeding left no stone unturned.[385] In hearings since the Principal Judgment was delivered, this observation has been referred to with apparent approval by the parties. In any event, it may be said without controversy that the manner in which this case was conducted meant that the costs incurred collectively by the successful and unsuccessful parties were in the many tens of millions of dollars.[386]

314 Just a couple of examples will be given to show the steps the court took to try to curtail the costs incurred in this proceeding.[387]

315 On 5 October 2017, more than 8 months before the trial commenced, it was ordered that no further interlocutory applications could be made without leave of the court. On that day there were no fewer than 5 interlocutory applications returnable for adjudication. Further, with respect to discovery and related issues alone, the Cargill Parties had already spent approximately $3 million in costs and the Viterra Parties approximately $4.1 million in costs.[388] It was expressly stated at the time that the requirement of leave was being imposed as part of an attempt by the court to ensure compliance with the overarching obligations under the Civil Procedure Act by limiting the ongoing flurry of interlocutory applications in this proceeding.[389] Regrettably, this imposition of the requirement of leave did not have the desired effect as the key parties continued to engage in interlocutory disputes on an ongoing basis, and simply added the seeking of leave to the process.

316 On 21 August 2018, some 2 or so months into the trial, I made the observation that it was highly unusual in my previous experience as a barrister and as a judge to have discovery applications every week during a trial. On that occasion, I suggested it might be appropriate to require counsel to confer with a view to resolving any issues before an interlocutory application could be brought. I expressed my dissatisfaction with the practice of the solicitors for the Cargill Parties and the Viterra Parties engaging in extensive correspondence rather than seeking to facilitate a resolution of ongoing disputes. Also, after hearing the interlocutory dispute outside court hours (the application commenced at 4.00pm),[390] and then soon after giving the ruling on that application, I reserved the costs of the application. I indicated that I would not award costs to the successful party on such applications made during the course of the trial any longer as I wanted the parties to conduct such matters on the basis that they were not going to run things to win and get costs; rather they were to only run applications that were truly necessary, having regard to obligations of the parties to co-operate and seek to resolve things without troubling the court.[391]

317 Upon the continuation of the trial the following morning, I made reference to letters going back and forwards from the respective solicitors for the Cargill Parties and the Viterra Parties and suggested I wanted some means by which sensible communication could occur. These comments were borne out of a frustration with how things had transpired to that time. Senior counsel for both groups of parties endorsed the suggestion. Indeed, the Viterra Parties' senior counsel went so far as to say that, if the court's direction was an implied prohibition upon a flurry of solicitors' letters being exchanged, then it was fully supported. From that point in time, the issuing of any interlocutory application was also subject to counsel briefed on the application conferring before an application for leave could be made. Subsequent directions were also given about the solicitors refraining from sending written correspondence and the requirement of the parties' representatives to discuss matters directly with each other.

318 By way of further example, on 18 March 2019 (being the 77th day of the trial), during yet another discovery dispute, I again felt compelled to give directions to the parties to attempt to deal with matters in a more efficient and productive way. On that occasion, I expressed the view that the conduct of the parties was completely unacceptable.[392] I noted that I had had to read through the relevant correspondence, including all the pejorative language that had been used, and that it had to stop.[393] I also noted that I had asked the parties "so many times" to try and work together constructively consistent with their obligations under the Civil Procedure Act.[394]

319 I raise these matters again now because they help to provide the context in which any taxation of costs is to be conducted in this proceeding. And in this context, while accepting that the issues raised in this proceeding were complex, I can see no valid reason why there ought to be any departure from scale costs. The fact that the Cargill Parties (like the Viterra Parties) chose to conduct the litigation with a combative and an apparently no-expense-spared approach to nearly all the issues that were raised provides no good reason to depart from a regime which imposes some objective limit on what could be considered reasonable and justifiable in the circumstances. In my view, there would be a risk of incentivising lawyers (and litigants with deep pockets) to incur costs without regard to the obligation to focus on the real issues if it was thought that, upon success, those costs would be fully or substantially recoverable. Although it is ultimately a matter for the Costs Court, I thought it should be made clear that, as the trial judge who observed first-hand the manner in which the case was conducted, the mere fact that the case was lengthy and complex does not appear to be a good reason in itself to depart from scale.[395]

320 Further, given the way in which so many interlocutory issues were raised, the Costs Court will also need to look very carefully as to whether steps taken, including lengthy and self-serving pieces of correspondence, were reasonable. In many instances during the trial, I formed the strong view that much expense (and time, including the court's time) could have been saved if a more co-operative approach had been adopted.

321 For the reasons stated above, as between the Cargill Parties and the Viterra Parties, the Cargill Parties will be awarded 92.5 percent of their costs of and incidental to the proceeding (including reserved costs) on a standard basis, which costs are to be taxed in default of agreement.

322 And as between the Viterra Parties and the Third Party Individuals other than Hughes, each of Youil, Wicks, Stewart and Argent will be awarded costs on an indemnity basis for all their costs of and incidental to the proceeding (including reserved costs), to be taxed in default of agreement.

323 Accordingly orders will be made substantially as follows:

The Cargill Parties' costs

1. The Viterra Parties pay 92.5 percent of the Cargill Parties' costs of and incidental to this proceeding, comprising all reserved costs and:

(1) Cargill Australia's costs of its claim against the Viterra Parties.

(2) Cargill Australia's costs of the counterclaim brought by the Viterra Parties.

(3) Cargill, Inc's and Joe White's costs of the Viterra Parties' third party notice.

2. The costs referred to in order 1 are to be taxed on a standard basis in default of agreement.

The 4th, 5th, 6th and 7th third parties' costs

3. The Viterra Parties pay the costs of each of Youil, Wicks, Stewart and Argent of and incidental to this proceeding, including reserved costs, to be taxed on an indemnity basis in default of agreement.

4. The question of costs as between all parties to the proceeding be referred to mediation.[396]

[1] Luxmore Pty Ltd v Hydedale Pty Ltd [2008] VSCA 212; (2008) 20 VR 481, 484 [12] (Maxwell P and Kellam JA). See further par 31 below.

[2] For a more complete summary of the protracted history of this proceeding, see Cargill Australia Ltd v Viterra Malt Pty Ltd (No 25) [2020] VSC 172.

[3] Cargill Australia Ltd v Viterra Malt Pty Ltd (No 28) [2022] VSC 13. For convenience, the definitions contained in the Principal Judgment will also be used in this judgment.

[4] As to the full meaning of the Joe White Business, see Principal Judgment, fn 13. Glencore also had some limited involvement in the conduct of the Joe White Business after it acquired the Viterra Group in December 2012, with a number of Glencore executives replacing Viterra executives by becoming directors of Viterra Ltd, Viterra Operations, Viterra Malt and Joe White: Principal Judgment, [9], [47], [97]-[99], [108], [142], [366], [4800], fnn 123, 288, 298, 1793, 4195, 4196.

[5] Cargill Australia Ltd v Viterra Malt Pty Ltd (No 29) [2022] VSC 66. Further, interest on the judgment sum was awarded at $124,229,320.30: see Cargill Australia Ltd v Viterra Malt Pty Ltd (No 30) [2022] VSC 80.

[6] See Principal Judgment, [5268]; Cargill Australia Ltd v Viterra Malt Pty Ltd (No 31) [2022] VSC 164.

[7] The costs position of Hughes was the subject of the reasons delivered on 4 April 2022, and accordingly will not be considered here: ibid.

[9] Cargill Australia's statement of claim was amended in 2014, 2015, 2017, 2018 (twice) and 2019.

[10] In the interests of conciseness, some general language has been adopted in describing the causes of action pleaded.

[18] Orders made on 20 March 2015 provided for Cargill Australia to provide a draft further amended statement of claim by 4.00pm on 23 March 2015 and if the filing of the document was consented to by the Viterra Parties, then leave was granted to file it by 4.00pm on 6 April 2015. See further pars 57, 73 below.

[19] The previous statements of claim included schedules A, B and C. Schedule D was new and ran for more than 6 pages.

[20] These allegations were made in 11 new paragraphs which ran for more than 6 pages.

[21] In addition to referring to par 39 of the amended statement of claim (which did not contain any express allegations of fraud), the pleading stated further particulars "may" be provided after discovery or other interlocutory processes.

[22] In subsequent iterations of the reply and defence to counterclaim, Cargill Australia withdrew key paragraphs that had alleged fraud as originally pleaded on 4 February 2015.

[23] Principal Judgment, [459], [462], [585], [1022].

[25] See par 15 above. Presumably by reason of oversight, this had not been done previously.

[27] Schedule D was expanded from just over 6 pages to 23½ pages.

[28] Principal Judgment, [1849]. See further par 71 below for some of the amendments made earlier during the trial.

[31] Ibid, [1851]. In part, these replaced the particulars that had previously been the subject of schedule B (which was just over 2 pages long and did not provide nearly as much detail as these further particulars).

[32] Ibid, [2168]. Allegations based on the Management Presentation Statements had not previously been made.

[33] In part, these also replaced what had previously been the subject of schedule B.

[34] Principal Judgment, [1022], [3633]-[3674]. These particulars ran for 6 pages.

[35] See also par 111 below.

[37] Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164, 172 [24] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ); Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 96 [65] (McHugh J, dissenting), 120-121 [134] (Kirby J).

[38] Civil Procedure Act, s 7(1).

[39] Civil Procedure Act, s 65C(2A)(b).

[40] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 97 [67] (McHugh J, dissenting).

[41] Ibid, 75 [1] (Brennan CJ, dissenting), 89 [44] (Gaudron and Gummow JJ), 97 [67], 121 [134].

[42] [2008] VSCA 212; (2008) 20 VR 481.

[43] Ibid, 484 [12] (Maxwell P and Kellam JA).

[44] Ibid. In light of the extensive issues raised at trial and on this application, there is a commensurate level of detail in these somewhat "elaborate reasons". In the interests of efficiency and with this direction from the Court of Appeal in mind, they do not purport to be expressly exhaustive of all the matters raised.

[48] See Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, 439 [12] (Warren CJ, Maxwell P and Harper AJA).

[50] Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225, 233.5 (Sheppard J); Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, 400.8-401.2 (Woodward J) and the authorities there cited.

[51] Ragata Developments Pty Ltd v Westpac Banking Corporation (1993) 217 ALR 175, 177.8 (Davies J); Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225, 233.6.

[52] For a more extensive list: see Sunland Group Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237, [542]- [551] (Warren CJ, Osborn JA and Macaulay AJA).

[53] Sunland Group Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237, [546]; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7] (Harper J); Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, 401.3.

[54] Sunland Group Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237, [544], citing Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7]; Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225, 233.8; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, 401.4.

[55] Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225, 233.8, citing Ragata Developments Pty Ltd v Westpac Banking Corporation (1993) 217 ALR 175, 178.8.

[56] Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225, 233.9. See further par 44 below.

[57] [2009] VSCA 209; (2009) 170 LGERA 41.

[58] Ibid, 49 [15] (Redlich JA and Beach AJA).

[59] Ibid. See par 176 below for the relevant passage. See also Oversea-Chinese Banking Corporation v Richfield Investments Pty Ltd [2004] VSC 351, [34] (Redlich J).

[60] See, for example, Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [18] (Harper J).

[64] Grbavac v Hart [1996] VSC 37; [1997] 1 VR 154, 164.7-165.1 (Hayne JA, dissenting), citing Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721, 724E (Kirby P, Mahoney JA and Samuels AJA).

[65] Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, 441 [22] (Warren CJ, Maxwell P and Harper AJA), citing Oversea-Chinese Banking Corporation v Richfield Investments Pty Ltd [2004] VSC 351, [60] (Redlich J).

[66] Rule 63.16 provides that where an offer of compromise is served and the offer has not been accepted at the time of judgement, liability for costs shall be determined in accordance with rule 26.08.

[67] That is, not a claim for damages for or arising out of death or bodily injury.

[68] There was no submission made that any party who served an offer of compromise was other than willing and able to carry it out.

[69] This includes a third party who by definition is a defendant to a third party claim.

[70] PCCEF Pty Ltd v Geelong Football Club Ltd [2019] VSCA 191, [23]-[24] (McLeish and Emerton JJA, Whelan JA dissenting based on the facts of the case); Re Saric; Saric v Vukasovic (No 2) [2018] VSC 254, [16]-[17] (McMillan J).

[72] PCCEF Pty Ltd v Geelong Football Club Ltd [2019] VSCA 191, [25]; Grbavac v Hart [1996] VSC 37; [1997] 1 VR 154, 165.1 (Hayne JA, dissenting).

[73] Stevens v Spotless Management Services Pty Ltd (No 2) [2016] VSCA 311, [26]-[27] (Kyrou and McLeish JJA and Elliott AJA); Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, 441 [23] (Warren CJ, Maxwell P and Harper AJA). See also PCCEF Pty Ltd v Geelong Football Club Ltd [2019] VSCA 191, [25].

[74] Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, 442 [25]. See also Secretary to the Department of Transport v Provan's Timber Pty Ltd [2020] VSCA 258, [26] (Tate, Kyrou and McLeish JJA).

[75] A reference to an offer made without prejudice save as to costs, as explained in Calderbank v Calderbank [1976] Fam 93, 105H-106F (Cairns LJ, with whom Scarman LJ and Sir Gordon Willmer agreed).

[76] Secretary to the Department of Transport v Provan's Timber Pty Ltd (No 2) [2020] VSCA 258, [25] (Tate, Kyrou and McLeish JJA); Victorian Workcover Authority v O'Brien [2017] VSC 68, [6]-[7] (J Forrest J); Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, 441-442 [23]-[24], 443 [30] (Warren CJ, Maxwell P and Harper AJA).

[77] Secretary to the Department of Transport v Provan's Timber Pty Ltd [2020] VSCA 258, [25]; Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, 440 [19].

[78] Defteros v Google Inc [2017] VSC 189, [6], [15] (John Dixon J); Love v State of Victoria (No 2) [2009] VSC 531, [27]-[29] (Cavanough J); Roads and Traffic Authority of New South Wales v Refrigerated Roadways Pty Ltd (No 2) [2009] NSWCA 336, [17] (Campbell JA, with whom McColl JA and Sackville AJA agreed).

[79] Gatto v Australian Broadcasting Corporation [2021] VSC 223, [14] (Keogh J); Re Akron Roads Pty Ltd (in liq) (No 4) [2016] VSC 778, [7]-[9] (Robson J); Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398, [17] (Buchanan and Tate JJA and Sifris AJA); Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65, [17] (Callaway JA).

[80] [2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA). See also Defteros v Google LLC [2020] VSC 324, [12] (Richards J); MA & J Tripodi Pty Ltd v Swan Hill Chemicals Pty Ltd [2019] VSCA 46, [152]-[154] (Kyrou, Kaye and Emerton JJA); Montclare v Metlife Insurance Ltd (No 2) [2015] VSC 574, [34] (Ginnane J).

[81] See Murphy v Westpac Banking Corporation (No 2) [2015] FCA 266, [31]-[32] (Griffiths J), cited in Hambleton v State Trustees Ltd [2016] VSC 215, [19] (Daly AsJ).

[82] [2016] VSCA 311.

[83] Ibid, [27] (Kyrou and McLeish JJA and Elliott AJA). See also PCCEF Pty Ltd v Geelong Football Club Ltd [2019] VSCA 191, [25] (McLeish and Emerton JJA, Whelan JA dissenting on the question of whether the court should otherwise order for the purposes of r 26.08).

[84] Grbavac v Hart [1996] VSC 37; [1997] 1 VR 154, 164.7-165.2 (Hayne JA, dissenting).

[85] The Viterra Parties referred to correspondence by which they complained to Cargill Australia about the lack of identification of the proposed amendments in the proposed further amended statement of claim, and the fact that in response Cargill Australia served an additional proposed further amended statement of claim at 4.25 pm on 25 March 2015 (being the afternoon before the Cargill Offer was served).

[87] See par 71 below.

[88] [1996] VSC 37; [1997] 1 VR 154, 164.7-165.2 (Hayne JA, dissenting), referring to Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721, 724.5 (Kirby P, Mahoney JA and Samuels AJA).

[89] Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, 441 [22] (Warren CJ, Maxwell P and Harper AJA), citing Oversea-Chinese Banking Corporation Ltd v Richfield Investments Pty Ltd [2004] VSC 351, [60] (Redlich J).

[90] [2016] VSC 215.

[92] [2006] NSWCA 2.

[93] Ibid, [84] (Hunt AJA, with whom Mason P and McColl JA agreed).

[94] See pars 19-22 above.

[95] Of course, by this time the Cargill Offer had already lapsed.

[96] Each of the Third Party Individuals, together with a large number of other employees engaged in the operations of the Joe White Business, were employed by Cargill immediately upon Completion occurring: Principal Judgment, fn 170.

[100] For completeness, there was also lay evidence of Laura McIntyre (Principal Judgment, [74]) and Julie Testi (Principal Judgment, [92]) on this topic, but the substance of this evidence was not available while the Cargill Offer was on foot.

[101] See, for example, Principal Judgment, [3170]-[3172].

[102] The deal model consisted of a spreadsheet of many pages, which contained a large amount of information based on, amongst other things, information provided to Cargill, Cargill's own information and assumptions and forecasts up to 2033 based upon such information.

[103] Principal Judgment, [4303], [4330]-[4339], [5343]; Cargill Australia Ltd v Viterra Malt Pty Ltd (No 29) [2022] VSC 66, [2], [6]-[9].

[104] Principal Judgment, [2146]. The additional Information Memorandum Statements are referred to at [2146(3)-(8), (14), (21)-(23), (25)].

[105] Ibid, [2826]. The additional Financial and Operational Performance Representations are referred to at [2826(13)-(15)]. To be clear, save for the particulars that had previously been provided with respect to the Information Memorandum Statements, the Operations Call Statements, the Commercial Call Statements and the Undisclosed Matters (which were alleged to have conveyed the Financial and Operational Performance Representations), there were no particulars of the Financial and Operational Performance Representations until the third further amended statement of claim introduced 10 paragraphs of particulars which identified with specificity for the first time which parts of the Information Memorandum Statements, the Operations Call Statements, the Commercial Call Statements and the Undisclosed Matters were relied upon as giving rise to the Financial and Operational Performance Representations.

[106] This was a reference to the new allegations in par 38AA of the third further amended statement of claim.

[107] See further par 75 below.

[108] The details of which are set out in par 72(1) below.

[109] Principal Judgment, [3633]-[3674].

[113] Ibid, [3948]-[3950]. Meredith's evidence was said to provide a basis for claiming Cargill Australia's loss in an amount which was substantially greater than the loss as assessed by Cargill's other loss expert. Meredith's valuations of the true value of Joe White were lower than those of the other experts.

[116] It is noted that this was not the only basis upon which Hughes' knowledge was also attributed: see, for example, Principal Judgment, [2660]-[2672], [3106]-[3108]. On the second day of hearing, lead senior counsel for the Viterra Parties correctly acknowledged that Hughes' knowledge at relevant times was the Viterra Parties' actual knowledge by reason that Hughes was an executive director of each of the relevant companies up until December 2012.

[117] By way of illustration, see Cargill Australia Ltd v Viterra Malt Pty Ltd (No 2) [2017] VSC 283, [11]-[19].

[118] Reference was made to a spreadsheet containing 242,236 rows of data provided in late 2014. Further, it was noted that different data was the subject of further and better particulars on 23 February 2017, which was then ultimately replaced during the course of the trial in 2018: see Principal Judgment, [2315]-[2318].

[120] The Viterra Parties provided a table containing paragraphs in the further amended statement of claim that were subject to further particulars being provided. Without descending to the detail, in total 24 paragraphs were the subject of allegations which included the pleading that further particulars either would or might be provided. These were promised after discovery or other interlocutory processes, or prior to trial.

[121] By quoting from Cargill Australia's particulars as then pleaded, they referred to the fact that at the time of the Cargill Offer, Cargill Australia's claim was based on its "present best assessment" of the non-compliance with customers' specifications, which assessment was that it "affected all customers and at least 50% of the total volume of malt produced".

[122] See further pars 71-72 above.

[123] The Viterra Parties referred to the Cargill Parties' written opening where it was claimed that Cargill Australia's loss was between $330 million and $373 million as at the date of the Acquisition Agreement and $327 million and $371 million as at the date of Completion. These figures were based on Meredith's assessment, which assessment was ultimately abandoned: see fn 113 above.

[126] See par 74 above.

[127] On 30 March 2017, the Cargill Parties' solicitors sent a letter providing further and better particulars relating to barley varieties, together with 2 annexures. The particulars related to in excess of 4,000 transactions of Joe White for the period from 1 January 2010 to 31 October 2013. The information included details of barley varieties alleged to have been specified, barley varieties alleged to have been used and barley varieties alleged to have been reported. An annexure consisting of 60 pages contained 11 columns of information in relation to each transaction.

[128] In May 2018, a witness statement prepared on behalf of Ryan was served. This witness statement was based on 5 spreadsheets, together with instructions given by the Cargill Parties' solicitors on 17 April 2018.

[129] See fn 118 above.

[131] See par 75 above.

[132] See par 71 above.

[133] See par 72 above.

[134] In addition to the matters in par 72 above, they submitted Cargill Australia accepted for the first time "the fact of analytical uncertainty". This issue has already been addressed in an earlier ruling and need not be discussed further here: Cargill Australia Ltd v Viterra Malt Pty Ltd (No 25) [2020] VSC 172, [42], [79]-[81].

[135] These persons were identified as Damian Fitzgerald (Principal Judgment, [114]), Jason Rees (Principal Judgment, [359]), Matthew Mann (Principal Judgment, [942]), Mattiske, King & Wood Mallesons, Youil, Stewart and Argent, as well as Hughes. See also par 73 above.

[136] Principal Judgment, [3351]-[3355].

[139] There was no attempt to quantify this.

[140] This was a reference to the Viterra Parties' general approach concerning the non-admission of the Viterra Practices, and then the limited admissions ultimately made: see also fn 210 below.

[141] See par 59 above.

[142] Stevens v Spotless Management Services Pty Ltd (No 2) [2016] VSCA 311, [29] (Kyrou and McLeish JJA and Elliott AJA).

[143] The table illustrated that the allegations concerning the Undisclosed Matters, the Financial and Operational Performance Representations, the Warranty Representations and the Pre-Completion Representations remained substantially in the form they were pleaded in the amended statement of claim in November 2014.

[144] See par 18 above.

[145] See par 20 above.

[146] See pars 71(6), 75 above.

[147] See par 15 above, which remained the position as pleaded in the amended statement of claim.

[148] See par 65 above.

[149] The solicitors acting for the Viterra Parties at the time of the Cargill Offer (and the trial) are no longer acting.

[150] In making this submission, reference was made to the Principal Judgment, [1305]-[1311], by way of illustration only. The Cargill Parties' senior counsel explained this was relied upon to show that the Viterra Parties knew, at least, what had been disclosed in October 2013.

[151] [2015] HCA 53; (2015) 327 ALR 192.

[152] Ibid, 193 [6] (French CJ, Kiefel, Nettle and Gordon JJ).

[153] See further par 110 below.

[154] See pars 81-88 above.

[155] Principal Judgment, [2320]-[2414], [2426]-[2543].

[157] The Cargill Parties referred to letters that were exchanged between their solicitors and the Viterra Parties' solicitors over an extended period from 2 November 2017 to 11 August 2018. The first of those letters referred to the fact that Viterra had retained a copy of the data and that it was no longer available to Cargill because of a "malware issue". Though by this letter it was not sought that the data be produced by Viterra, it was suggested Viterra could access the data for the purposes of considering a proposal to provide a certificate at trial pursuant to s 50 of the Evidence Act 2008 (Vic). In response, the Viterra Parties' solicitors objected to the proposed certificate and stated that the Viterra Parties had not retained "access" to the database. In a subsequent letter, the Viterra Parties' solicitors stated that the database had been "decommissioned". On that basis, they asserted that there had been no failure to comply with discovery obligations. They "expressly" rejected any suggestion that they were "somehow obligated" to provide the database to Cargill a second time. The letter then suggested Cargill had failed in its discovery obligations before the ransomware attack occurred and that as a result the Viterra Parties "and other parties have been deprived of the opportunity to inspect or copy the relevant data" before it was lost by the Cargill Parties. A response from the Cargill Parties' solicitors rejected any failure on the part of Cargill and sought confirmation the database had not been destroyed. In addition, they enquired as to what steps were required in order for the Viterra Parties to gain access to it. No response was provided by the Viterra Parties. The next letter in the chain was from the Cargill Parties' solicitors in serving a notice to produce which required production of the database. The letter noted the lack of response to the previous letter and the reasons set out suggested access to the database could be easily achieved in a short period of time. In a response 10 days later from the Viterra Parties' solicitors, they disputed that there was any obligation to produce the database. In this regard, the letter stated "[t]he decommissioning process involves removal of the [Laboratory Information System] production, test and development servers from our clients' IT systems. Accordingly, our clients are not in a position to produce the [Laboratory Information System] database because it is not capable of production." The letter also noted that the notice to produce was served at the end of the fourth week of trial and suggested any request to take steps to recover the data would be unreasonable. In short, the Viterra Parties refused to assist. After a further letter from the Cargill Parties' solicitors, the Viterra Parties' solicitors were again instructed in substance to refuse to assist in the production of the data. Further, it was stated recovery of the data would involve significant time and expense without any assurance the data could be restored in a usable form. After referring to authority on this point, it was stated the notice to produce had been served too late and was liable to be set aside. Ultimately, the data was produced during the trial at the direction of the court given on 27 August 2018. On the preceding hearing date (being Thursday 23 August 2018), the Viterra Parties were directed to get instructions on the production of backup tapes of the databases and a further direction was given on 24 August 2018 to facilitate production. On 27 August 2018, the court was informed that Viterra had provided the database to Cargill in April 2014 pursuant to the Acquisition Agreement. The court was also told that the Viterra Parties had not discovered the data because they were "excluded documents" under the discovery protocol that had been agreed, the documents that contained the data already being in the possession of the Cargill Parties. However, contrary to what had been stated over many months in previous correspondence about the time and difficulty of producing the data, the court was informed that the backup tapes could be made available the following day. However, the Viterra Parties maintained their objection to producing the data on the basis that the application was made so late. After some further administrative steps were attended to, on 29 August 2018 the court ordered that the Viterra Parties were required to produce the relevant files from the Laboratory Information System by 2.00pm on 29 August 2018, which duly occurred.

[159] See par 94 above.

[161] See par 71 above.

[163] See fn 134 above.

[164] Some allegations of breach were abandoned in the Cargill Parties' closing submissions: Principal Judgment, [3710].

[165] Principal Judgment, [5324]-[5325].

[166] Rule 26.02(3)-(4). See also Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, 438-439 [10] (Warren CJ, Maxwell P and Harper AJA).

[167] See, for example, pars 18, 55 above.

[168] Principal Judgment, [3915]-[3934].

[169] See further par 122 below.

[170] See fn 21 above.

[171] See fn 105 above.

[172] For completeness, the written submissions made on behalf of the Viterra Parties contended there were no particulars on the question of reliance as pleaded in par 29 (concerning the Financial and Operational Performance Representations and the Warranty Representations), par 36 (concerning the Pre-Completion Representations) or par 60 of the further amended statement of claim. Although it was correct to contend that no particulars were provided of pars 29 and 36, the allegations in par 60 were the subject of specific particulars, including particulars of reliance in relation to the Financial and Operational Performance Representations and the Warranty Representations.

[173] Principal Judgment, [1236], [1250]-[1262], [1276]-[1312], [1324], [1332]-[1334], [1337]-[1342], [1373]-[1375], [1390]-[1392], [1395]-[1404], [1429], [1457]-[1468], [1470]-[1489].

[174] Albeit the investigations resulted in a large amount of information being provided as to the existence of the Operational Practices, they were far less detailed than they might have been: Principal Judgment, [1246], [1248], [1253], [1337]-[1342], [1357], [1370], [1485], [1489], [1495]-[1496], [1531]-[1545].

[175] Principal Judgment, [1467], [1475]-[1477]. See also [1456].

[176] 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.

[177] See par 55 above.

[178] This was expressly stated to be without limiting the evidence that Cargill Australia might ultimately lead at trial.

[179] The document contained a large number of figures in a spreadsheet in excess of 20 pages.

[180] See par 117 above.

[181] See, for example, Principal Judgment, [3959].

[182] Not only was Cargill in control of Joe White at all relevant times in 2015 and therefore could make an informed assessment of how the Joe White Business was actually operating, but Cargill Australia was employing the relevant operational and financial employees who had previously been employed by Viterra Ltd.

[183] These circumstances are readily distinguishable from those in Stevens v Spotless Management Services Pty Ltd (No 2) [2016] VSCA 311 (Kyrou and McLeish JJA and Elliott AJA). In that case, there was no real issue about the amount payable if the plaintiff was successful (at [6]), it was "an all or nothing case", there was "nothing in the way the case was pleaded or in the materials subsequently discovered and served which should have made one party or the other especially confident or doubtful as to its prospects" (at [27]) or that the offer of compromise was made pre-emptively at a time when the opposing party was not in a position to meaningfully assess the offer (at [28]).

[184] It was contended the matter of subsequent changes was also relevant to the question of apportionment: see par 82 above.

[187] For completeness, Cargill Australia also alleged it relied on the Pre-Completion Representations. Despite the fact that no particulars of this allegation of reliance were ever provided, it was maintained at trial and was ultimately contrary to the findings in the Principal Judgment: [3351]-[3352].

[189] Subject 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.

[190] This was a reference to the issued shares in Joe White.

[191] See Principal Judgment, [3917], [3939]-[3944].

[192] On this issue see also fn 172 above.

[193] This is the paragraph quoted immediately above.

[200] It was acknowledged by the Viterra Parties' lead senior counsel on the second day of hearing of these applications that the no transaction case came as no surprise at the start of the trial, though it was still maintained it was not pleaded at that time.

[201] In fact, none of the paragraphs referred to made any submission to the effect that Cargill Australia had materially changed its case either in its opening or at any time after the proceeding commenced. Rather, generally speaking, they were directed to why it was contended that the evidence led by Cargill Australia on this point should not be accepted.

[202] See pars 131-139 above.

1. Cargill's loss case with respect to the claimed contraventions of section 18 of the [Australian Consumer Law], negligent misrepresentation, deceit and breach of contract now relies solely on a claim that Cargill Australia should be entitled to a measure of damages equal to the difference between the purchase price of $420 million and the true value of Joe White at the time of acquisition. It has run a "no transaction" case.

2. Cargill had previously claimed loss based on other measures, which have now all been abandoned. Specifically: (a) Cargill also pleaded in the alternative, for the purpose of its [Australian Consumer Law], negligent misrepresentation and deceit claims, that loss be: (i) measured as the difference between the Purchase Price and the price that Cargill Australia would have paid for Joe White if the representations had not been made; (ii) determined having regard to the value of Joe White at the date of judgment as assessed by expert evidence (albeit denying that this was the appropriate measure); (b) Cargill had also previously pleaded in the alternative, that Cargill had suffered loss relating to lost production and additional expenditure. However, those claims were withdrawn when it filed an amended pleading on 13 August 2018.

[204] See par 71 above.

[205] See par 109 above.

[206] Compare par 60 above. Also compare Simonovski v Bendigo Bank Ltd (No 2) [2003] VSC 139, [17]-[18] (Ashley J).

[207] The court agreed for the parties' convenience to have different hearings for the question of apportionment from some of the other issues to be determined. On reflection, I decided not to determine the issues raised on the first day's hearing until I had also heard the arguments raised (some of which overlapped) at the later hearing.

[208] The Cargill Parties draft orders referred to the costs of and incidental to the proceeding to include reserved costs. The Viterra Parties made no submissions on this issue. In my view, it is appropriate to include the reserved costs.

[209] Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; (2015) 327 ALR 192, 193 [6]: see par 99 above.

[210] During argument, the Cargill Parties raised other issues including the Viterra Parties' failed attempts to establish the existence of the Alleged Industry Practices (Principal Judgment, [1860]) and the consequential delays and costs: Principal Judgment, issue 13. It is unnecessary to address these submissions separately, beyond stating they have been taken into account in circumstances where the Cargill Parties were the successful parties and as a result of these reasons will have an award of costs in their favour.

[211] Principal Judgment, [5269], [5288].

[216] This is not to suggest that there were not other issues with this series of claims as identified in issues 61 to 68 of the Principal Judgment, but as there was no adjudication of them it is unnecessary to discuss them further: see [3907]. Further, as was observed by me during the hearing, there were some issues in relation to the Co-Operative Bulk Agreement that would have been raised in relation to other issues in any event.

[217] In making these and other observations concerning the manner in which some aspects of the case were pursued, no criticism is directed towards any particular individual or group of individuals as I have no evidence as to whether such decisions were made by the Cargill Parties themselves, their solicitors or their counsel.

[218] See also Principal Judgment, [3488].

[219] See, for example, ibid, [1406]-[1407], [1409]-[1412], [1416]-[1417], [1526]-[1528], [3351].

[220] Without being exhaustive, see Principal Judgment, [3948]-[3950].

[222] To be fair, senior counsel who conducted this aspect of the case was retained to appear at trial as late as March 2019, well after the manner in which loss was to be addressed had been put forward by others.

[223] See par 80 above.

[224] It was raised in the Viterra Parties closing submissions at trial, but obviously that did not equate to it being put to the relevant witnesses.

[225] The witness in question was Cargill, Inc's technical accounting director.

[226] The evidence was adduced during cross-examination.

[227] Principal Judgment, [4305]. It was essentially uncontested (see also the footnote immediately below) as Cargill led no other evidence to contradict it and did not invite the court to reject this witness's evidence in their closing submissions.

[228] In emails received from the Viterra Parties by the court after the hearing of this application, reference was made to Meredith's evidence where he was asked during cross-examination about a valuation based on the realisation of Joe White's assets. In this evidence, he rejected the evidence that had previously been given by Cargill, Inc's technical accounting director. However, it was never put to him (or Klein) that in light of this further valuation evidence his (or Klein's) valuations were unrealistic. Based on the evidence that I have been referred to on this point, it appears highly likely that if Meredith had been presented with that proposition he would have rejected it and (if given the opportunity) would have explained why. In the absence of this evidence or any opportunity for the topic to be fairly raised with them, it is not appropriate for the court to draw any conclusion about the valuations of Meredith or Klein being unrealistic to the extent that they countenanced a valuation below $238 million.

[229] Being the practice of reporting results in Certificates of Analysis in accordance with pencilled results to comply or substantially comply with specifications without disclosing the process to customers Principal Judgment, [37].

[230] Being the practice of using barley varieties other than barley varieties required by certain customers without disclosing the fact to the customer: Principal Judgment, [39].

[231] Principal Judgment, [2315]-[2316].

[232] See fn 157 above.

[233] It was expressly ordered that Cargill Australia was required to pay Viterra's costs thrown away in leave being granted to file and serve the amended statement of claim and the Viterra Parties' costs thrown away in leave being granted to file and serve the third further amended statement of claim, however, otherwise, the position was governed by rule 63.17.

[234] The fact that the Viterra Parties led no specific evidence on their costs in relation to this is not to the point. There would have undoubtedly been time taken to, at the very least, seek to understand what was being conveyed by in excess of 230,000 rows of data: see Principal Judgment, fn 1447. See also fn 118 above. In addition, there is still the issue of Cargill Australia's costs of going to the expense of putting such particulars forward and then withdrawing substantial parts of them but seeking to receive those costs.

[235] This being a reference to the No Reliance Representations: see Principal Judgment, [4545].

[236] Essentially, 5 issues were directed to this and Cargill Australia was unsuccessful with respect to 4 of them: Principal Judgment, [4545]-[4596].

[237] Principal Judgment, [1962]-[1974].

[239] See pars 147, 158 above.

[241] See par 48(4) above.

[242] See also pars 311-318 below.

[243] Civil Procedure Act, ss 3, 7, 8, 16-26.

[244] Civil Procedure Act, s 28(2).

[245] [2009] VSCA 209; (2009) 170 LGERA 41.

[246] Ibid, 49 [15] (Redlich JA and Beach AJA).

[248] See also, ibid, [465], [4967].

[249] Ibid, [1020], [1034], [4957].

[254] Macedon Ranges Shire Council v Thompson [2009] VSCA 209; (2009) 170 LGERA 41, 49 [15] (Redlich JA and Beach AJA).

[259] Ibid, [5128], [5175]. Relevantly, this finding was based on the fact that Wicks had no involvement in the relevant events leading up to the execution of the Acquisition Agreement on 4 August 2013 and did not make any representation that any Warranty was correct.

[261] See pars 176, 186 above.

[269] Cargill Australia Ltd v Viterra Malt Pty Ltd [2017] VSC 126 (Daly AsJ).

[270] Principal Judgment, [5038], in which it was stated: "In light of [the absence of certain definitions], it was bordering on fanciful to suggest that the Third Party Individuals could be held to have represented that Warranty 12 in its final form was true and correct, inferentially reasoning backwards from their purported verification of the originally proposed Warranty 12."

[271] Principal Judgment, [5195]-[5201].

[273] There were many more rulings that were not the subject of formal reasons in addition to those judgments.

[274] See par 238 below.

[275] [2001] VSC 189.

[276] See pars 176, 186, 198 above.

[277] [2009] VSCA 209; (2009) 170 LGERA 41, 49 [15] (Redlich JA and Beach AJA).

[283] Ibid, [5079], [5083]-[5085].

[286] Citing United Petroleum Australia Pty Ltd v Herbert Smith Freehills (No 2) [2018] VSC 501, [22].

[287] See par 10 above.

[288] Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7] (Harper J).

[289] (1988) 81 ALR 397, 401.4 (Woodward J).

[290] [2009] VSCA 209; (2009) 170 LGERA 41, 49 [15] (Redlich JA and Beach AJA).

[291] See par 176 above.

[292] (1988) 81 ALR 397, 401.4. They also contended that this case was "the source of the element" as cited by Harper J in Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7]; in fact in relation to this specific matter Harper J referred to another case of J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) [1993] FCA 70; (1993) 46 IR 301, but nothing turns on this.

[293] See Principal Judgment, [53]-[54], [4795].

[296] I stated to the Viterra Parties that these matters were being raised by me as examples, in order to prompt a response.

[297] See par 201 above; see also par 278 below.

[298] See par 229 above; see also par 284 below.

[299] Compare what was stated by Harper J in Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [11], concerning the difficulty in predicting how facts will be determined at trial. Such considerations are not relevant in circumstances where the facts as pleaded and particularised, even if established, do not provide a basis for a claim to succeed.

[300] [2009] VSCA 209; (2009) 170 LGERA 41, 49 [15] (Redlich JA and Beach AJA): see par 176 above.

[302] Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [9] (Harper J).

[303] Principal Judgment, [4891], [4896]-[4907].

[304] Ibid, [4908], [4951]-[5000], [5014]-[5015].

[306] Ibid, [4838], [4885], [4889]-[4890].

[309] Wilson-Smith's witness statement was dated 22 December 2017, nearly 6 months before the trial started.

[310] His witness statement merely recorded that in respect of each Warranty relevant to each Third Party Individual "I told them the substance of what the warranty provided and asked them whether this was correct ...". In other words, not only was Wilson-Smith's account of what he said not set out, he did not even purport to state the substance of what he said but simply referred to the substance of what each Warranty provided in seeking to convey what was said.

[311] Principal Judgment, [4966], [5002], [5015], [5016], [5025].

[313] See, for example, ibid, [4957], [4983]-[4990], [5038].

[315] Bickmore and Wilson-Smith gave evidence at trial. A witness statement was filed on behalf of Fitzgerald, though he was not called to give evidence.

[316] See, for example, Principal Judgment, [5006]-[5013].

[318] For a more detailed account of the relevant facts, see ibid, [4996], [5035]-[5039].

[320] Ibid, [4418]. See also at [4463].

[321] With the exception of Stewart, none of the Third Party Individuals gave evidence. Stewart was called as a witness by the Viterra Parties, but was not asked any questions about any matters relating to the Warranty verification process.

[324] This was a process that was conducted on a strictly confidential basis and Youil had not been given access to the documents disseminated as part of the sale process.

[325] Principal Judgment, [943], [4894].

[328] Ibid. Obviously, Youil was involved in the Operations Call.

[329] For the purposes of the Australian Consumer Law, s 2(1).

[335] See pars 266-267 above.

[336] See par 268 above.

[337] See par 270 above.

[338] See pars 256-264 above.

[339] Principal Judgment, [5110]. There was no case pleaded based on a subset of these matters.

[344] Ibid, [1990], [4973], [5023].

[346] See par 270 above.

[347] Stewart submitted indemnity costs should run from 18 June 2018, but as 15 June 2018 was a Friday, the Stewart Offer could not have the relevant effect until 19 June 2018: rr 3.01(2) and (3), 26.08(4)(a).

[352] Ibid. See also [4948], [5176].

[355] Ibid, [5121], fn 4513. The fact that these 2 documents did not disclose the Operational Practices was part of the Viterra Parties' case.

[360] See pars 256-264 above.

[361] See par 270 above.

[362] These opening submissions had already been served at the time the Argent Offer was served.

[363] Principal Judgment, [4933]-[4935].

[369] See par 229 above.

[370] It is not necessary to seek to divine what motives might have underlined this implacable approach.

[371] Compare Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [18] (Harper J).

[372] Cargill Australia Ltd v Viterra Malt Pty Ltd (No 17) [2018] VSC 750, [53], [58], [63], [66]-[69], [82], [93]-[95], [100]-[115], [144], [216], [223], [236], [238]-[239]. See also: Cargill Australia Ltd v Viterra Malt Pty Ltd (No 25) [2020] VSC 172, [40]-[45], [74], [95]-[96] for examples of the level of involvement by this in-house lawyer; and the Principal Judgment, [3005] where the Viterra Parties themselves acknowledged that they are sophisticated corporate entities who are well-resourced internally.

[373] This was done in April 2020 when submissions were made on costs upon the delivery of Cargill Australia Ltd v Viterra Malt Pty Ltd (No 25) [2020] VSC 172.

[374] For a discussion on the gross sum approach, see ACN 074 971 109 (as trustee for the Argot Unit Trust) v National Mutual Life Association of Australasia Ltd [2013] VSC 137, [5] (Wood AsJ) and the cases there cited. See also r 63.07.

[375] Though McCudden also noted that the final determination of the 2 gross sum cost applications took approximately 2 years after the gross sum assessment was ordered. This was because of the time taken by the costs experts and the availability of hearing dates in the Costs Court.

[376] [2017] VSCA 88; (2017) 372 ALR 440.

[377] Ibid, 549 [420]-[421] (Santamaria, Ferguson and Kaye JJA).

[378] See also Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541, 544.9-545.4 (Wells J).

[379] M & EM Hull Pty Ltd v Thompson [2001] NSWCA 359, [21] (Rolfe AJA, with whom Sheller JA and Davies AJA agreed).

[380] There was no application by the Cargill Parties to cross-examine Linsdell. His evidence was only challenged to the extent that the McCudden Affidavit might be said to contradict it and that the Cargill Parties made submissions contrary to it.

[381] Without being critical, it should also be noted that McCudden's recollection of her experiences on some issues was a little sketchy.

[382] Pursuant to r 63.05(a), unless the court otherwise orders, costs are to be taxed in the Costs Court by a costs judge. A costs judge may direct the costs be taxed by, amongst others, a judicial registrar or a costs registrar: r 63.05(b).

[383] The Cargill Parties referred to the fact that they were represented by large commercial law firms, as were the Viterra Parties. They noted that none of the legal practitioners representing the Cargill Parties charged according to scale. They also referred to publications indicating that the scale of costs does not reflect current market practices. They further submitted that as both sets of parties were equally represented by large experienced teams of lawyers, an assessment by hourly rate was unlikely to result in any unfairness between the key parties. In light of the complexity of the proceeding, including the number of issues, its length and size, they submitted that scale costs were not an appropriate measure by which an assessment of costs should be made.

[384] At an earlier point, the Cargill Parties stated that if I saw it as efficient to determine whether the scale of costs should apply, then I should do so. They also made the subsequent observation that as the trial judge I was the "best person" to make a determination about whether scale or some other approach should apply.

[386] The Cargill Parties informed the court that their costs were in the order of $32 million. In relation to the costs up to February 2022: for Youil, Wicks and Argent collectively, they had exceeded $8.2 million; for Stewart they had exceeded $2 million. The remaining parties did not give such information to the court.

[387] See also Cargill Australia Ltd v Viterra Malt Pty Ltd (No 25) [2020] VSC 172.

[388] The costs that had been incurred in this regard by the third parties were not available at that time.

[389] Cargill Australia Ltd v Viterra Malt Pty Ltd (No 5) [2017] VSC 798, [10].

[390] Most of the interlocutory applications were being dealt with outside court hours, usually by different teams of lawyers to those that were appearing and attending at trial.

[391] During the hearing of this application, I expressly referred to the fact that this had been the approach taken. No party sought to deal with the costs of any particular interlocutory application separately.

[392] This comment was directed to the Cargill Parties and the Viterra Parties only.

[393] This did not transmogrify the manner in which counsel dealt with each other, which remained appropriate throughout despite the obvious challenges of a long-running and onerous trial.

[394] See also Principal Judgment, fn 4826.

[395] It has been publicised that the council of judges of this court have approved a proposal from the legal costs committee of the court for a limited review concerning the use and utility of the scale of costs in Victorian courts. The outcome of that review is yet to be announced. However, in light of approval of the proposal there is a real prospect that the scale of costs will be replaced by another form of costs taxation or assessment. If that were to occur, it may or may not apply to this proceeding depending upon whether any new regime is to be introduced to all proceedings or only proceedings commencing after its introduction. Whatever be the position, any taxation ruling or assessment of the costs in this proceeding ought to be informed by the matters that have been raised above.

[396] A standard form of mediation will be made after hearing submissions from the parties as to its precise form. The parties previously agreed that the matter should be referred to mediation once these reasons were delivered.