IN THE SUPREME COURT OF VICTORIA	Not Restricted	
AT MELBOURNE
Commercial Court
S ECI 2014 00146

CARGILL AUSTRALIA LIMITED (ACN 004 684 173) 	Plaintiff	
		
v  		
		
VITERRA MALT PTY LTD (ACN 096 519 658) AND OTHERS	Defendants	
		
and		
		
CARGILL, INCORPORATED AND OTHERS	Third parties	

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JUDGE:	Elliott J	
WHERE HELD:	Melbourne	
DATE OF HEARING:	On the papers	
DATE OF RULING:	17 February 2022	
CASE MAY BE CITED AS:	Cargill Australia Ltd v Viterra Malt Pty Ltd (No 29)	
MEDIUM NEUTRAL CITATION:	[2022] VSC 66	

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QUANTUM – Loss – Expert Evidence – Valuation – Re-calculation of business valuation in accordance with findings – True value – Discounted cash flow – Agreement as to calculation of judgment sum.

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APPEARANCES:
	Counsel	Solicitors	
For the plaintiff and the 1st and 2nd third parties	N/A	Gilbert + Tobin	
			
For the defendants	N/A	Johnson Winter & Slattery	
			
For the 3rd third party	N/A	Maddocks	
			
For the 4th third party	N/A	Gilchrist Connell	
			
For the 5th third party	N/A	Gilchrist Connell	
			
For the 6th third party	N/A	HWL Ebsworth	
			
For the 7th third party	N/A	Gilchrist Connell	

HIS HONOUR:
A.	Introduction
1	Judgment was delivered in this proceeding on 28 January 2022 (“the Principal Judgment”).  Final orders are yet to be made.  The plaintiff, Cargill Australia Ltd (“Cargill Australia”), succeeded in a number of its claims against the defendants (“the Viterra Parties”).  As a result, it was found Cargill Australia is entitled to an award of damages.  Further, it was found that the third party claims of the Viterra Parties against the first third party, Cargill, Incorporated, and the second third party, Joe White Maltings Pty Ltd (“Joe White”) (together with Cargill Australia, “the Cargill Parties”), will be dismissed.  Accordingly, as between the Cargill Parties and the Viterra Parties, upon delivery of the Principal Judgment the only remaining task was for Cargill Australia’s loss to be calculated in accordance with the reasons of the Principal Judgment.
2	For reasons already explained, the key parties contended in substance that as there was some complexity with respect to the calculation of any loss, if the court were to determine any re-calculation needed to occur based on the findings made concerning loss, then it should refrain from making any such re-calculation without the assistance of the parties.
3	In the Principal Judgment, the correct basis for assessing Cargill Australia’s loss was determined to be the difference between the purchase price paid, being $420 million, and the true value of Joe White on the date of completion of the purchase, being 31 October 2013.  Subject to certain necessary adjustments, a valuation prepared by Gordon Klein (“Klein”), a loss expert called by the Cargill Parties, was found to be the appropriate method of establishing the true value.
4	The following was stated in the Principal Judgment regarding the adjustments that were required:
As a result of the findings made, the following adjustments are necessary to Klein’s strategic bidder valuation:
(1)	A reduction in dis-synergies by $7.2 million, resulting in $2.4 million of dis-synergies, being 25 percent of $9.6 million, as not all strategic bidders would have incurred dis-synergies at the same level as forecast for Cargill.
(2)	A lower discount rate of 13.7 percent.
(3)	Removal of the additional line item for integration costs, being $2.3 million in 2014 and $2.8 million per year thereafter.
(4)	Removal of $2.18 million on account of the dispute with Co-Operative Bulk.
5	Upon delivery of the Principal Judgment, the Cargill Parties and the Viterra Parties (and any of the remaining parties who chose to do so) were directed to file and serve any further materials upon which they intended to rely concerning the re-calculation to be made in light of these findings.
B.	Submissions
B.1 	The Cargill Parties’ submissions
6	The Cargill Parties provided Klein with a copy of the Principal Judgment and requested he make the necessary adjustments, and then re-calculate the true value of Joe White accordingly.  
7	Klein undertook this task, and provided evidence of the steps he took to give effect to the required adjustments by way of an affidavit sworn on 9 February 2022.  As detailed in Klein’s affidavit, the re-calculation was carried out by making each of the adjustments described in paragraph 4(1), (3) and (4) above to the strategic bidder valuation and synergies calculations.  In his affidavit, Klein also identified various other figures that were consequentially affected by making these adjustments, including: earnings before interest, tax, depreciation and amortisation; earnings before interest and tax; taxes on earnings before interest and tax; free cash flow; present value of free cash flows; terminal value; and present value of terminal value.
8	Annexed to Klein’s affidavit were copies of 2 exhibits sourced from Klein’s first valuation report as previously amended, setting out his strategic bidder valuation using a discount rate of 13.7% and his methodology for calculating common synergies among strategic bidders.  Also included as annexures were further amended versions of both of these exhibits, which reflected each of the required adjustments.  The  amended versions and further amended versions of these exhibits, as sourced from Klein’s affidavit, are attached as annexure A and annexure B to this ruling respectively.
9	As demonstrated by annexures A and B, Klein re-calculated the true value of Joe White as at 31 October 2013 as $251.1 million.  On this basis, the Cargill Parties submitted Cargill Australia’s loss should be quantified at $168.9 million, being the purchase price of $420 million less the revised true value of $251.1 million. 
B.2 	The Viterra Parties’ response
10	The Viterra Parties were invited to file submissions as to the re-calculation of Cargill Australia’s loss by 4.00 pm on 16 February 2022.  On 16 February 2022, the Viterra Parties’ solicitors informed the court by email that the Viterra Parties did not intend to file any submissions in response to the Cargill Parties’ submissions.  Instead, the Viterra Parties confirmed that they agreed Cargill Australia’s loss ought to be quantified as $168.9 million as re-calculated by Klein. 
B.3 	Other parties’ responses
11	A hearing was held at 9.00 am today, 17 February 2022.  During this hearing, each of the remaining third parties informed the court that he did not want to make any submission in opposition to the agreed position on quantum between the Cargill Parties and the Viterra Parties. 
C.	Analysis
12	As detailed above, determination of the quantum of Cargill Australia’s loss required making various adjustments to Klein’s valuation and re-calculating the true value of Joe White accordingly.  Klein’s affidavit and its exhibits contained amended versions of the relevant excerpts of Klein’s first report, incorporating each of the necessary adjustments set out in the Principal Judgment.  
13	Certain of the totals Klein identified as being consequentially affected by these adjustments were calculated using formulas contained in the relevant spreadsheet.  As already touched upon, this spreadsheet formed part of a joint report prepared by the loss experts called by the Cargill Parties and the Viterra Parties, which was the subject of evidence.  Naturally, as a consequence of Klein making the necessary adjustments, some of the inputs for this spreadsheet also changed.  Each of the changes made were recorded and reflected in the annexures to Klein’s affidavit, as replicated in annexures A and B to this ruling.
14	As such, and in circumstances where both the Cargill Parties and the Viterra Parties accepted (and none of the remaining third parties opposed) Klein’s revised assessment of true value, being $251.1 million as at 31 October 2013, and agreed that Cargill Australia’s loss ought to be quantified as $168.9 million, Klein’s re-calculation of true value in accordance with the findings in the Principal Judgment will be accepted.  Accordingly, the amount to be awarded to Cargill Australia is $168.9 million.
15	A further hearing in this proceeding to address other matters is to be held on 21 February 2022.  Orders made on the completion of that hearing will include orders to reflect these reasons.

ANNEXURE A

ANNEXURE B