Larne-Jones v Human Synergistics Australia Limited
[2012] FMCA 1209
•13 December 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LARNE-JONES v HUMAN SYNERGISTICS AUSTRALIA LIMITED & ORS | [2012] FMCA 1209 |
| INDUSTRIAL LAW – Application under the Fair Work Act 2009 in relation to termination of applicant’s employment – whether solicitors should be restrained from acting for the respondents. |
| Anti-Discrimination Act 1977 (NSW) Fair Work Act 2009 (Cth), ss.44, 117, 123, 340, 342, 351, 361 Long Service Leave Act 1955 (NSW), s.4 Occupational Health and Safety Act 2000 (NSW) Sex Discrimination Act 1984 (Cth) Workplace Surveillance Act 2005 (NSW) |
| Bahonko v Nurses Board of Victoria (No 3) [2007] FCA 491 Black v Taylor [1993] 3 NZLR 403 |
| Applicant: | MARGHERITA LARNE-JONES |
| First Respondent: | HUMAN SYNERGISTICS AUSTRALIA LIMITED |
| Second Respondent: | SHAUN MCCARTHY |
| Third Respondent: | MICHAEL GOURLEY |
| File Number: | SYG 2736 of 2011 |
| Judgment of: | Barnes FM |
| Hearing date: | 30 August 2012 |
| Delivered at: | Sydney |
| Delivered on: | 13 December 2012 |
REPRESENTATION
| Counsel for the applicant: | Mr S. Meehan |
| Solicitors for the applicant: | Kemp Strang |
| Counsel for the Respondents: | Ms K. Nomchong |
| Solicitors for the Respondents: | FCB Workplace Law |
ORDERS
The application in a case filed on 25 June 2012 is dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 2736 of 2011
| MARGHERITA LARNE-JONES |
Applicant
And
| HUMAN SYNERGISTICS AUSTRALIA LIMITED |
First Respondent
| SHAUN MCCARTHY |
Second Respondent
| MICHAEL GOURLEY |
Third Respondent
REASONS FOR JUDGMENT
These proceedings
The applicant, Ms Larne-Jones, seeks interim orders restraining Fisher Cartwright Berriman Pty Limited trading as FCB Workplace Law (FCB) from acting as solicitors for the respondents in proceedings commenced under the Fair Work Act 2009 (Cth) (the FW Act).
Ms Larne-Jones alleges that she was dismissed from her employment as a Senior Consultant with Human Synergistics Australia Pty Limited (the Company) in contravention of the general protection provisions in the FW Act. She also alleges a contravention by the Company of ss.44 and 117 of the FW Act and a breach of contract. The second and third respondents are directors of the Company. It is alleged that they were involved in the contraventions.
In the substantive proceedings Ms Larne-Jones alleges that her employment as a Senior Consultant was suspended on 10 May 2011. Ms Larne-Jones’ employment was summarily terminated on 22 September 2011 following an investigation conducted into allegations made about her conduct by Ms Jessica Fisher, a partner of FCB. In addition, Mr Matthew Robinson, another partner of FCB, is said to have provided advice to the Company and to Ms Larne-Jones in her capacity as an employee as to how the performance of a number of employees could be disciplined or managed. Ms Larne-Jones understands that this advice related to complainants whose account of events was later investigated by Ms Fisher in her report. She has not been provided with a copy of Ms Fisher’s report. Mr Benjamin Gee, the solicitor acting for the respondents in these proceedings, is a partner of FCB.
Ms Larne-Jones relies on an affidavit of Stephen Mark Godding, solicitor, sworn on 25 June 2012. The respondents rely on two affidavits of Benjamin Josef Gee, solicitor, affirmed on 10 July 2012 and 30 July 2012.
Background
Ms Larne-Jones was employed by the Company between 1 March 2003 and 22 September 2011. Her employment was the subject of a written Employment Agreement dated 1 February 2003 which, among other things, provided in cl.12 for termination without notice in particular circumstances including, relevantly, “serious and wilful misconduct” and “serious breach” of the agreement. In the alternative it provided for termination by provision of a specified period of notice (up to four weeks) or payment in lieu thereof at the discretion of the Company.
It is not in dispute that the Company appointed Ms Fisher to conduct an investigation into allegations of bullying and harassment of current and ex-employees by Ms Larne-Jones and her husband, Mr Quentin Jones, the then managing director of the Company’s Sydney office.
On 10 May 2011 Ms Larne-Jones attended a meeting with Ms Fisher and the second and third respondents at which she was informed of allegations against her of bullying and harassment and that her employment was suspended pending the outcome of an investigation to be conducted by Ms Fisher.
The second respondent, Mr McCarthy, wrote to Ms Larne-Jones on 10 May 2011 as Chairman of the Company advising her that Ms Fisher had been appointed to conduct an investigation into allegations against her of bullying and harassment of several current and ex-employees of the Company and that Ms Fisher had the Company’s authority to contact and meet with Ms Larne-Jones for that purpose.
On 11 May 2011 Ms Larne-Jones’ solicitors wrote to Ms Fisher and Mr McCarthy requesting clarification of the allegations. The letter raised the issue of a possible conflict of interest and the appropriateness of FCB carrying out the investigation given that a previous retainer of FCB by the Company extended to the provision of advice in relation to disciplinary action against employees. In the absence of a response to this letter, Ms Larne-Jones’ solicitors raised further concerns about the investigative process in a letter of 19 May 2011.
On 31 May 2011 Mr Godding, Ms Larne-Jones’ solicitor, attended a meeting with Ms Larne-Jones, her husband and Ms Fisher. Mr Godding has attested that Ms Fisher discussed the procedure to be adopted regarding the investigation and allegations against Ms Larne-Jones. Details of the allegations were provided in a letter of 31 May 2011 on FCB letterhead signed by Ms Fisher, as partner of the firm, to Ms Larne-Jones. Ms Fisher advised that the Company had instructed her as “an external investigator working for FCB Workplace Law” to investigate complaints about the conduct of Ms Larne-Jones and that serious allegations had been made concerning Ms Larne-Jones during the investigation. The letter provided details of the allegations and advised Ms Larne-Jones that she would be interviewed and given a further opportunity to respond after the interview. Ms Fisher advised that she would consider all the information and “reach findings on the Allegations” and that “[i]n the event that [she found] any Allegations proven, [the Company would] consider what, if any, disciplinary action to be taken”.
On 3 June 2011 Ms Fisher sent an amended copy of this letter to Ms Larne-Jones’ solicitor, Mr Godding, and also stated that as the interview with Ms Larne-Jones did not “substantively proceed” she sought certain information from Ms Larne-Jones as part of the response to the allegations.
It appears that Mr Godding requested further information from Ms Fisher, who by letter of 21 June 2011 advised that Ms Larne-Jones “should not expect to be provided with a copy of the investigation report prepared for our client” as it was prepared “by [FCB] for the purpose of providing legal advice to our client, and is legally privileged”.
On 22 September 2011 Ms Fisher sent an email to Mr Godding attaching a copy of a letter from the Company addressed to Ms Larne-Jones. The Company’s letter of 22 September 2011, under the signature of Mr McCarthy as Chairman of the Company, advised Ms Larne-Jones to detail the outcome of the investigation into her conduct. The letter stated that it was “to confirm the findings of allegations” against Ms Larne-Jones that had been the subject of the investigation and of the outcomes and actions that would be taken because of those findings. Mr McCarthy advised Ms Larne-Jones that detailed allegations had been found to be made out concerning her conduct in relation to 13 named past and present employees, including bullying and harassment of employees, unlawful surveillance of employees, unnecessary and unreasonable pressure being placed on employees, intimidation, pressure and frightening of employees, and certain other matters in circumstances where 17 out of 23 employees were said to have left the Sydney office of the Company in a 13 month period.
Mr McCarthy stated that the Company had determined that Ms Larne-Jones’ actions concerning the allegations and some of her denials amounted to gross misconduct. He also stated that the Company had formed the view that she deleted material from the Company email system to obstruct the investigation in breach of her employment obligations to the Company, and that she had “exposed the Company to considerable risk”. She was advised that the Company considered that she had breached her contractual and common law duties of good faith, trust and confidence and to refrain from serious misconduct and that she had breached the Occupational Health and Safety Act 2000 (NSW), the Sex Discrimination Act 1984 (Cth), the Anti-Discrimination Act 1977 (NSW), the FW Act and the Workplace Surveillance Act 2005 (NSW).
Mr McCarthy advised Ms Larne-Jones that she was being summarily terminated under cl.12(a) of her contract of employment dated 1 February 2003 for serious breach of the contract and gross misconduct.
These proceedings were commenced by Ms Larne-Jones on 30 November 2011 after termination of proceedings before Fair Work Australia. By application in a case filed on 25 June 2012 Ms Larne-Jones seeks to restrain FCB from acting for the respondents in these proceedings on the basis that the combination of circumstances in this case were such that the Court should so. Reliance was placed on the principle that a fair-minded, reasonably informed member of the public would conclude that “the proper administration of justice” required that FCB should be prevented from acting, “in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice” (Kallinicos and Another v Hunt and Others (2005) 64 NSWLR 561; [2005] NSWSC 1181 at [76] per Brereton J).
Counsel for Ms Larne-Jones advised that no reliance was placed on any suggestion that there was a dangerous misuse of confidential information or a breach of a fiduciary duty of loyalty not to act against a client or against a former client in the same matter or a closely related matter.
There is considerable authority in relation to the jurisdiction of courts to restrain solicitors from acting in a particular case, whether this arises as an incident of a state court’s inherent jurisdiction over its officers and to control its processes in aid of the administration of justice or within the implied incidental power of federal courts to make orders necessarily incidental to the carrying out of its jurisdiction pursuant to express statutory powers. It is not in dispute that this Court has jurisdiction to make orders of the nature sought by Ms Larne-Jones (see Temby & Anor v Chambers Investment Planners Pty Ltd & Anor [2010] FMCA 783 and Schueler & Anor v Smith & Ors [2010] FMCA 777 and see generally in relation to the power of the Federal Court Western Australia v Ward and Others (1997) 76 FCR 492 at 498; [1997] FCA 585 and Bahonko v Nurses Board of Victoria (No 3) [2007] FCA 491).
Ms Larne-Jones relied on Kallinicos in which Brereton J considered at length the principles applicable to the court’s jurisdiction to restrain solicitors from acting in a particular case (and see Yamaji and Another v Westpac Banking Corporation and Others (No 1) (1993) 42 FCR 431; [1993] FCA 253 at [6] and Geelong School Supplies Pty Ltd and Another v Dean and Others (2006) 237 ALR 612; [2006] FCA 1404 at [31]).
In relation to the need to protect the due administration of justice Brereton J relevantly concluded in Kallinicos (at [76]) that:
- The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice [Everingham v Ontario; Black v Taylor; Grimwade v Meagher; Holborow; Bowen v Stott; Asia Pacific Telecommunications].
- The jurisdiction is to be regarded as exceptional and is to be exercised with caution [Black v Taylor; Grimwade v Meagher; Bowen v Stott].
- Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause [Black v Taylor; Grimwade v Meagher; Williamson v Nilant; Bowen v Stott].
- The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief [Black v Taylor; Bowen v Stott].
In support of such propositions, Brereton J referred (at [43]) to the fact that in considering whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice required the removal of a solicitor, “the goal” was “to protect not just the interests of the individual litigant but more importantly public confidence in the administration of justice” (and see Geelong School Supplies Pty Ltd v Dean [2006] FCA 1404 at [24]-[35]). His Honour pointed out that what is in issue is not only what is necessary to ensure justice, but also the appearance of justice (at [44]).
Counsel for Ms Larne-Jones stressed that, as pointed out in Black v Taylor [1993] 3 NZLR 403 (which was referred to in Kallinicos at [44]), the removal of a solicitor “is not dependent on any finding of culpable conduct on the lawyer’s part”. Disqualification is not a punishment for misconduct, but rather is “a protection for the parties and for the wider interests of justice” (at 412). Hence it is relevant to have regard not only to whether solicitors have an actual conflict of interest, but also to whether there is a potential conflict of interest or whether, by reason of their relationship with the client, their professional independence might be doubted (also see Kooky Garments Ltd v Charlton [1994] ANZ ConvR 304; [1994] 1 NZLR 587 and Kallinicos at [45]).
In Kallinicos Brereton J (at [63] – [64]) referred to cases in which legal practitioners had been restrained from acting in circumstances where the legal practitioner might be a witness in the case or where the litigation “was likely to involve an evaluation of the conduct of the solicitor concerned and the efficacy of documents prepared by [the solicitor’s] firm”, as well as other circumstances (Holborow & Ors v Macdonald Rudder [2002] WASC 265 at [23]).
Thus it has been said that intervention by the court on the basis sought in a case such as the present depends on an “objective perception of a want of independence” (Kallinicos at [64]). Such want of independence may, however, be seen as arising in a number of ways, including association with the client or a close interest. What is in question is whether the particular circumstances give rise “to the fair and reasonable perception that the practitioner may not exercise the necessary independent judgment” (Holborow at [28])
Reliance was also placed on Bowen v Stott [2004] WASC 94 in which Hasluck J found that there were circumstances which might suggest to a fair-minded, reasonably informed member of the public that if evidence were given “of the kind which is likely to be given by the legal practitioners involved in the negotiations, a conflict of interest will arise which might interfere with the proper administration of justice”, because the practitioners might be unable “to conduct themselves with proper objectivity” and independence.
As Brereton J pointed out in Kallinicos (at [71]), in Bowen Hasluck J focussed the test on “the independence and objectivity of the solicitor” seen from the perspective of the fair-minded, reasonably informed member of the public (and see Mitchell v Burrell at [20]). It was said to be relevant to have regard not only to whether the solicitor had a “direct pecuniary interest in the outcome”, but also to whether the solicitor “might feel impelled to justify or defend his conduct in representing a client, notwithstanding that the solicitor did not have any specific pecuniary interest in the outcome other than the obtaining of his professional fees” (Bowen v Stott at [53]).
If the credibility of a practitioner was at stake as a witness so that his or her “personal integrity” was put in issue, “that may constitute a personal interest inconsistent” with his or her duty to the court or to the client (Kallinicos at [72]). As Brereton J stated in Kallinicos at [90]:
Although I do not think that fair-minded and reasonably informed members of the public conceive that legal representatives are entirely impartial, as most would see them as aligned with the parties whom they represent, and while it needs be borne in mind that the alternative to legal representation is self representation, in which case none of the controls which legal representation imposes on the conduct of litigation would apply, nonetheless, fair-minded and reasonably informed members of the public expect that lawyers will provide advice to their clients, and conduct litigation in which they act, free of and unaffected by any personal interest in the outcome.
However it is necessary to establish “a clear case” that the practitioner has an interest that conflicts with his or her duty to the court (see Kallinicos at [72]).
In Kallinicos a solicitor had acted on the sale of property in which the plaintiff and one of the defendants (who had been in a partnership) had an interest. The proceeds of sale had apparently been distributed in favour of the defendant’s interest in circumstances where the solicitor was prima facie on notice of dissolution of the partnership. It was conceded for the defendants that the solicitor might be a relevant witness in substantive proceedings in which the plaintiff sought the appointment of a receiver to the assets and the taking of accounts between the parties. It was in that context that Brereton J stated that he had to “make a judgment about the likelihood of [the solicitor] being a material witness or having an interest in the outcome” (at [78]). In the particular circumstances of that case, his Honour was satisfied not only that the solicitor was “almost certainly” a material witness, but also that, depending on how the evidence in a particular respect emerged, he might “be exposed to suit” and in that sense had an interest in how the evidence turned out.
Brereton J was of the opinion that the solicitor would be a material witness “on issues of substance which appear[ed] to be controversial and in respect of which questions of credibility and integrity (not necessarily his own) [were] likely to arise” (at [84]). There was also said to be “a high degree of probability” that the evidence and/or conduct of the solicitor would “come under scrutiny” (at [85]).
In that context his Honour expressed the view (at [87]) that:
It is generally undesirable for a practitioner who is aware that he is likely to be called as a witness, other than in relation to formal or non-contentious issues, to continue to act. If a practitioner’s credibility is at stake as a witness, his personal integrity may be put in issue and that may constitute a personal interest inconsistent with the practitioner’s duty to the court or to the client.
Other courts have also considered whether it is “likely” that practitioners will be called as material witnesses (see for example Chapman v Rogers, ex parte Chapman [1984] 1 Qd R 542 at 545; (1983) 1 MVR 329 and Yamaji v Westpac Banking Corporation at [6]).
Similarly, as Middleton J stated in Bahonko (at [15]):
The court will need to determine whether there is a real likelihood of an evaluation of the conduct of the legal practitioner occurring in the proceedings, or whether there is a real likelihood that the legal practitioner will need to justify or defend himself or herself in the proceedings. (emphasis added)
However, in Mitchell v Burrell (at [20]) Brereton J did not accept that “the mere circumstance that a solicitor will be a material witness, even on a controversial matter, of itself justifies restraining the solicitor from continuing to act” in the absence of a personal stake in the conduct or outcome of the proceedings. As His Honour stated:
… the line is crossed only when the solicitor has a personal stake in the outcome of the proceedings or in their conduct, beyond the recovery of proper fees for acting, albeit that the relevant stake may not necessarily be financial, but involves the personal or reputational interest of the solicitor, as will be the case if his or her conduct and integrity come under attack and review in the proceedings. The presence of such circumstances will be a strong indication that the interests of justice – which in this field involve clients being represented by independent and objective lawyers unfettered by concerns about their own interests – require the lawyer to be restrained from continuing to act.
It was in that context that Brereton J referred to Kooky Garments Ltd v Charlton in which Thomas J had suggested that it was inappropriate that a solicitor act “where the acts or omissions of [the solicitor were] an integral part” of the complaint of the other party to the litigation or the client was sued in circumstances where he or she was acting on the advice of the solicitors and it was “effectively that advice which [was] in issue” (at 589).
The applicant acknowledged that in this case neither Ms Fisher nor Mr Robinson has carriage of the proceedings for the respondents. One of their partners, Mr Gee, has that role. However in Mitchell v Burrell Brereton J found (at [25]) that:
In principle, given the incidents of the relationship of partnership (involving utmost good faith and loyalty between the partners), and those of solicitor and client (requiring any partner in a firm to do all in his or her power and use all knowledge and information available to them, including to their partners, to assist the cause of the client), it is difficult to see how, where one partner is disqualified, it could be acceptable for another partner in the same firm to continue to act.
As Austin J stated in Oceanic Life Ltd v HIH Casualty and General Insurance Ltd (1999) 10 ANZ Insurance Cases 74,968 (61-438); [1999] NSWSC 292 (referred to in Kallinicos at [52]) the emphasis is on “the public interest in preserving confidence in the administration of justice, and therefore in the appearance as well as the reality of independence”. Thus the court is to take a practical approach in the exercise of its discretion.
It is notable that the authorities make the point that the jurisdiction is exceptional. It is to be exercised with caution or circumspection. It is a serious matter to prevent a party from retaining the solicitor of choice, particularly on the application of an adverse party (see Kallinicos at [55]; Geelong at [35]; and Bahonko at [3]). In Mitchell v Burrell [2008] NSWSC 772 (at [3]) Brereton J stated that “[d]ue weight must be given to the public interest in a litigant not being deprived of the lawyer of his or her choice”). As Middleton J stated in Bahonko (at [3]) “[t]he Court must be careful not to intervene unless it is absolutely required in the circumstances of the case”.
The court has a discretion which should be exercised having regard to all relevant matters, including the timing of the application, as the cost, inconvenience and practicality of requiring lawyers to cease to act “may provide strong reason” for refusing to grant the relief sought (Mitchell v Burrell at [3]).
In the course of considering the application in a case I have had regard to the nature of the substantive proceedings and the issues raised therein, insofar as they appear on the pleadings, in light of these principles.
In the Statement of Claim filed on 25 June 2012 Ms Larne-Jones alleges first that the Company breached her employment contract by failing to pay her a bonus in respect of the financial year ending 31 March 2011 and also by summarily terminating her employment on 22 September 2011 (without giving her reasonable notice of termination). She claims that there was an implied term in the employment contract that the Company could only terminate her employment by giving her reasonable notice of termination, except where there was a right to summary dismissal for serious and wilful misconduct. She claims in reliance on such reasonable notice term that by summarily terminating her employment the Company breached the employment contract. She seeks loss of salary, bonuses and other employment entitlements for the alleged breaches of conduct.
Ms Larne-Jones also alleges that her employment was terminated for a reason that included that she had a workplace right (to make a worker’s compensation claim), exercised that right by lodging a worker’s compensation claim on 27 June 2011, had a mental disability for the purposes of s.351 of the FW Act (which she was said to have suffered due to the Company’s treatment of her in relation to the allegations, the investigation and her suspension) and because she was married to Mr Jones, the Company’s former managing director. Ms Larne-Jones claims that this conduct constituted adverse action and contravened ss.340 and 351 of the FW Act. In addition, the applicant claims that by failing to give her five weeks written notice or payment in lieu thereof the Company contravened ss.44 and 117 of the FW Act. She seeks compensation for loss due to such alleged contraventions and the imposition of pecuniary penalties on each respondent. The second and third respondents are said to have been involved in the pleaded contraventions of the FW Act.
The applicant also claims that the company breached s.4 of the Long Service Leave Act 1955 (NSW) in failing to pay her in respect of accrued long service leave. She sought payment of the long service leave.
Relevant to the issue of whether Ms Fisher or Mr Robinson is likely to be a material witness or whether for any other reason FCB should be restrained from acting, it is also necessary to have regard to the Defence filed on 20 August 2012 (after the applicant sought the order restraining FCB from acting for the respondents).
The respondents plead that the Employment Agreement dated 1 February 2003 set out the terms and conditions of the applicant’s employment, deny that she was entitled to a bonus, state that any bonus payments made were at the “absolute discretion” of the Company and deny that there was a breach of contract in the failure to pay Ms Larne-Jones a bonus.
The respondents also deny there was a reasonable notice term implied in the contract and plead that the termination provisions were expressly contained in cl.12 of the Employment Agreement. In response to Ms Larne-Jones’ claim that her employment was summarily terminated, the respondents state that on 16 August 2012, without admission of liability, and to avoid prolonged litigation, the Company determined to meet her claim by treating the termination as if conducted by payment in lieu of notice in accordance with the Employment Agreement. It does not appear to be disputed that the Company has paid Ms Larne-Jones in lieu of the four weeks notice provided for in cl.12 of the Employment Agreement and for an additional one week (said to be in satisfaction of its obligation under s.117 of the FW Act). It has also paid her accrued annual and long service leave with interest.
The Company denies that there was an implied reasonable notice term and says that, by reason of the Company treating the termination of the Employment Agreement in accordance with its express terms as to termination, Ms Larne-Jones has no entitlement to any other termination payment (including long service leave) or loss or damage.
The respondents also rely on those payments (which included payment in lieu of five weeks notice) in response to the claims under ss.44 and 117 of the FW Act and deny any contravention of those sections of the Act.
In relation to the adverse action claim, the respondents admit that Ms Larne-Jones was informed of allegations of misconduct on 10 May 2011 and that her employment was suspended that day, deny that there is a workplace right as pleaded, refer to payments in lieu of notice said to be in accordance with cl.12 of the Employment Agreement, and deny that her employment was terminated for a reason including the asserted reasons or that there was a contravention of ss.340 and 351 of the FW Act.
It is also relevant to have regard to the evidence of Mr Gee (the solicitor with carriage of the matter) to the effect that, based on the matters presently pleaded in the Statement of Claim and on instructions, the respondents did not intend to and would not call Ms Fisher or Mr Robinson as witnesses in the substantive proceedings. He conceded that he did not have instructions that would permit him to say that the respondents would not be calling Ms Fisher or Mr Robinson “come what may”.
In support of the application in a case Ms Larne-Jones submitted that the Company’s determination that she engaged in serious misconduct was apparently based on Ms Fisher’s investigation and findings. It was submitted that there was a real possibility that Ms Fisher and Mr Robinson, who had provided her and the Company with advice, would be witnesses and that there was also a real possibility that FCB had an interest in the outcome of the proceedings and in the Court’s evaluation of the conduct of Ms Fisher in that it was said to be apparent that the respondents relied on Ms Fisher’s investigation and report to dismiss Ms Larne-Jones. It was suggested that it was clear Ms Larne-Jones intended to challenge the veracity of the investigative process (in particular in relation to whether her responses to the allegations were taken into account) and Ms Fisher’s findings so there was said to be a real likelihood that the case would involve Ms Fisher’s personal interest or reputation. It was pointed out that Mr Gee’s evidence was not that Mr Fisher and Mr Robinson would not be called to give evidence.
It was also submitted that, as the applicant would seek production of Ms Fisher’s investigation report, these proceedings would require resolution of any claim by the Company that Ms Fisher’s report was the subject of client legal privilege. It was suggested that the applicant may seek to use the report to test whether any evidence given for the respondents by complainants was inconsistent with what Ms Fisher recorded she was told and suggested that the Company may seek to call Ms Fisher to give evidence as to what the complainants told her.
It was submitted generally that “in resolving the matters in dispute about the Applicant’s conduct towards other staff of [the Company] and how such conduct should be properly characterised and evaluated” the Court may admit evidence about advice given by Mr Robinson to the Company and the applicant about how it could discipline or manage the performance of the employees who were complainants.
Ms Larne-Jones contended that in all the circumstances a fair-minded, reasonably informed member of the public would entertain serious reservation as to whether decisions about the conduct of the respondents’ case would be made exclusively in their interests or having regard to the interests and reputation of Ms Fisher and/or Mr Robinson and FCB.
Counsel for Ms Larne-Jones submitted that Mr Gee, another partner of FCB, would be responsible for the conduct of the proceedings and for forensic judgments in circumstances where his partners, whether or not they gave evidence for the respondents, would potentially (in one way or another) come under the scrutiny of the Court. In particular, it was said that Ms Fisher’s inquiry, conclusions and the process relied on in her investigation would be criticised by Ms Larne-Jones and that such criticisms would have to be evaluated by the Court. It was suggested that Mr Gee would be called upon to make forensic evaluations and advise his clients about what evidence had to be called to deal with such matters. There was said to be a potential that it might be perceived by a fair-minded, reasonably informed member of the public that, quite unintentionally, Mr Gee would not have the objectivity or independence that his duty to the court required. Further, it was said that by reason of his status as a partner of FCB and the status of Ms Fisher and Mr Robinson, he may be perceived as having an interest in the outcome of the proceedings insofar as the firm would have an interest in the Court’s evaluation of Ms Fisher’s role in the investigation process, the report and the advice given by Mr Robinson.
Ms Larne-Jones submitted that the respondents’ solicitors should be restrained from acting to ensure the integrity of the proceedings was maintained. It was submitted that there was a potential for conflict or for it to appear that the respondents’ solicitors did not possess the objectivity and independence which their professional responsibilities and obligation to the court required of them.
The respondents pointed out that on the pleadings as they now stood there was no intention to call either Ms Fisher or Mr Robinson and submitted that there was otherwise no basis for restraining FCB from acting for the respondents arising out of the issues in the pleadings, the possibility of a claim of legal professional privilege over Ms Fisher’s investigation report or on the basis of any alleged personal interest in the outcome of the proceedings.
I have borne in mind that the discretion to restrain a solicitor from acting is to be exercised with “appropriate caution” and that “due weight must be given to the public interest in a litigant not being deprived of the solicitor of its choice without due cause” (Geelong at [35]). As Middleton J stated in Bahonko (at [3]) the Court “must be careful not to intervene unless it is absolutely required in the circumstances of the case”.
On the evidence before the Court I am not satisfied that the protection of the administration of justice requires that FCB be restrained from acting for the respondents in these proceedings.
First, insofar as the applicant placed emphasis on alleged procedural shortcomings in relation to the investigation report, these are not unfair dismissal proceedings. The decision to terminate Ms Larne-Jones’ employment was not made by Ms Fisher but by the directors of the Company. Ms Fisher undertook an investigation but was not the decision-maker. Insofar as an issue does arise as to whether Ms Larne-Jones in fact engaged in serious and wilful misconduct, that would fall to be determined not by a consideration of the adequacy of Ms Fisher’s procedures and report but rather whether the applicant in fact bullied and harassed former and current employees of the Company or otherwise engaged in misconduct. Moreover there is no suggestion that Mr Robinson was involved in the investigation, preparation of the investigation report, direct management or dismissal of the employees who complained about the applicant’s alleged conduct.
Beyond this, any initial concern as to the potential inappropriateness of representation of the respondents by the firm whose partners carried out the investigation and provided advice to the company is alleviated by a consideration of the issues likely to be ventilated in these proceedings having regard to the present state of the pleadings.
Ms Larne-Jones’ claim that there was a breach of contract by reason of the Company not paying her a bonus for the year ending 31 March 2011 relates to a decision of the Company (through the second and third respondents). This issue has not been shown to involve or to be likely to involve any of the matters raised by the applicant in relation to Ms Fisher, Mr Robinson or FCB.
Ms Larne-Jones also claims that there was a breach of an implied term of her contract consisting of a failure to give her reasonable notice of termination in the absence of a right to dismiss her summarily for serious and wilful misconduct, albeit she submitted that her claim to damages against the respondents was not confined to assessment by reference to reasonable notice.
However the question of whether Ms Larne-Jones engaged in misconduct would be a factual issue, not a question of an assessment of the conduct or findings of the investigation report. While any such claim would be dependent on Ms Larne-Jones establishing that she did not, in fact, engage in serious or wilful misconduct, as discussed further below in relation to the s.117 FW Act claim, this does not mean that the procedures adopted by Ms Fisher in her investigation and her findings or Mr Robinson’s advice would be a central part of the claim or that Ms Fisher or Mr Robinson would be likely to be a witness, or that there is a real likelihood that the subject matter of the litigation would involve an evaluation of Ms Fisher’s conduct or that of Mr Robinson.
Insofar as Ms Larne-Jones seeks damages for the alleged breach of contract in respect of her summary termination, the particulars of loss claimed refer only to loss of salary, bonuses and other employment entitlements. As counsel for the respondents submitted, given that the Company has now paid Ms Larne-Jones amounts in lieu of notice, the investigation report (and hence Ms Fisher’s involvement) would seem to be of little, if any, probative value in the determination of contractual issues in relation to the availability or measure of damages.
If no reasonable notice term is established then insofar as the measure of damages for any breach of contract would be equivalent to the amount by which the employment agreement could be terminated, it does not appear to be disputed that the moneys that would be required to be paid under the express terms of the contract and ss.44 and 117 of the FW Act have now been paid to Ms Larne-Jones, together with interest. The only live issue in that respect would be whether there was a reasonable notice term and, if so, whether the damages for breach of this term exceeded the amount already paid by the Company. This would be a matter of construction of the contract and would have no connection to the reasons for dismissal. Nor would the assessment of any damages on this basis be likely to involve a consideration of the advice, investigation or report by partners of FCB.
As the respondents contended it has not been established that Ms Fisher’s involvement in the internal investigation has the characteristics which would cause a fair-minded, reasonably informed member of the public to conclude that the proper administration of justice required FCB to be prevented from acting in these proceedings. Nor would Ms Fisher’s role (or Mr Robinson’s) have any bearing on whether damages would flow (over and above the amount already paid) from a finding that there was a breach of contract in relation to the termination of employment. The same may be said in relation to the claim under ss.44 and 117 of the FW Act (which the Company has met without admission of liability by payment in lieu of an additional week’s notice and payment of leave entitlements).
Ms Larne-Jones submitted that it would be claimed that her termination involved not only a breach of contract, but also a contravention of ss. 44 and 117 of the FW Act in that the requisite notice was not given and payments were not made at that time. It was indicated that penalties were still sought, despite the later payment in lieu of notice and in respect of leave entitlements. It was suggested that the only relevant basis on which to avoid providing the necessary notice was (by virtue of s.123(1)(b) of the FW Act) if there was serious misconduct.
It was submitted that in relation to the breach of contract claim and the claimed contravention of s.117 of the FW Act the Court would have to determine whether the conduct alleged against Ms Larne-Jones occurred and whether such conduct contravened the legislation Mr McCarthy identified in his letter of 21 September 2011. However, as indicated, this would be a factual inquiry. It would not require an evaluation of the conduct of the investigation or Ms Fisher’s conduct.
Ms Larne-Jones also submitted that it may be necessary for the Court, in resolving matters in dispute about her conduct towards other staff of the Company and how such conduct should be properly characterised and evaluated, to admit evidence about advice given by Mr Robinson to the Company and also to Ms Larne-Jones in her capacity as an employee, as to how the Company could discipline or manage the performance of a number of employees. It was said to be apparent that such employees were complainants whose account of events was considered by Ms Fisher in her investigation report. It was foreshadowed that Ms Larne-Jones intended to lead evidence that in the course of managing the performance of employees who were now complainants, the Company had obtained advice from FCB which she put into effect. While there may be questions about whether such advice was privileged, it was contended that Ms Larne-Jones would rely on the fact that she was putting into effect advice FCB gave to the Company specifically in relation to performance and management of the particular employees in question. In these circumstances, it was submitted that it was also possible that Mr Robinson might be called to give evidence in response to evidence Ms Larne-Jones intended to lead in these matters.
However, a mere “possibility” does not establish that Mr Robinson is likely to be called as a witness. I accept that as the pleadings stand the respondents do not intend to call Ms Fisher or Mr Robinson to give evidence. Mr Gee, the solicitor with conduct of the respondents’ case, has given evidence that based on the matters pleaded in the statement of claim and instructions received he anticipated at this time that the respondents did not intend to and would not call Ms Fisher or Mr Robinson as witnesses. While he would not say that the respondents would not be calling Ms Fisher or Mr Robinson “come what may” in the applicant’s case, I am not satisfied on the material before the court that it is likely (see Kallinicos at [78]) that either Ms Fisher or Mr Robinson would be a material witness. As indicated, insofar as misconduct is in issue, that would involve a factual inquiry not an assessment of Ms Fisher’s report or Mr Robinson’s advice.
Seen from the appropriate perspective and bearing in mind the caution to be exercised in restraining a solicitor from acting it has not been established that the subject matter of the issues relevant to the breach of contract claim or the claim in relation to penalties for alleged breach of ss.44 and 117 of the FW Act is likely to involve an evaluation of the conduct of Ms Fisher or Mr Robinson in such a way that FCB should be restrained from acting. Nor are the issues in this respect such that either solicitor may be likely to be seen from the perspective of a fair-minded, reasonably informed member of the public as feeling impelled to justify or defend his or her conduct, integrity or reputation such as to undermine the administration of justice.
Insofar as Ms Larne-Jones submitted that she wished to challenge the veracity of the investigation report and that this would lead to Ms Fisher being called to give evidence, even if the content of the report was relevant to any of the matters in issue, it would speak for itself and the manner in which its veracity would be tested, if necessary, would be to substantiate its factual basis by evidence from the complainants, rather than by hearsay evidence from Ms Fisher.
If Ms Larne-Jones seeks to assert that she acted on the advice of Mr Robinson, that is a matter for her to prove. In the context of the matters in dispute, such a prospect is not sufficient to satisfy me that Mr Robinson is either likely to be called as a witness or that the subject matter of the litigation is likely to involve an evaluation of his conduct or to compel him to justify or defend his conduct or give him a direct pecuniary interest in the outcome of the case such as to warrant removal of FCB as solicitors for the respondents.
Insofar as Ms Larne-Jones raised the issue that the respondents may claim client legal privilege over Ms Fisher’s investigation report, a possible claim of legal professional privilege over the investigation report is not a sufficient basis to restrain FCB from acting for the respondents.
Moreover, as the pleadings now stand, the respondents have responded to Ms Larne-Jones’ claim by making payments in lieu of five weeks notice and accrued annual leave in accordance with the express provision in cl.12 of the Employment Agreement for the period of notice required on termination other than in circumstances of serious misconduct as well as an additional week in accordance with s.117 of the FW Act and a payment in respect of accrued long service leave.
It is the case that Ms Larne-Jones maintains an action for a penalty and submits that the Company may seek to rely on s.123(1)(b) of the FW Act, which provides that Division 11 of Part 2.2 of the FW Act does not apply to an employee where employment is terminated because of serious misconduct.
However, as indicated, insofar as the applicant submitted that it was possible that Ms Fisher and Mr Robinson may be called as witnesses for the respondents in relation to this aspect of the applicant’s claims, I accept Mr Gee’s evidence that he anticipated that based on the matters pleaded in the statement of claim, the respondents would not call either Ms Fisher or Mr Robinson as witnesses in these proceedings. It has not been established that it is likely or even that there is a real prospect of this occurring.
It was not Ms Fisher who made the decision to dismiss Ms Larne-Jones. Rather that decision was made by the second and third respondents on behalf of the Company. As indicated, any inquiry as to the reason for the Company’s decision would be directed to whether Ms Larne-Jones had bullied and harassed former and current employees, not to whether Ms Fisher’s investigation report was of a good quality.
The circumstances are not such as to raise a real concern that Ms Fisher may have an interest in these proceedings in her professional assessment in the investigation report being upheld that would impede the proper administration of justice were FCB to act. Mr Robinson was not involved in the investigation, the preparation of the report, the direct management of the complainants or the dismissal. It has not been established that Ms Fisher, Mr Robinson or any other solicitor at FCB may have an improper personal interest in the proceedings in this respect.
In circumstances where the Company has (albeit belatedly) met the applicant’s claim under s.117 of the FW Act to an additional week’s payment in lieu of notice and her claim to long service leave and any potential annual leave claim (see s.44 of the FW Act and the Long Service Leave Act), I am not satisfied either that Ms Fisher or Mr Robinson would be likely to be a material witness or that Ms Larne-Jones has established that, viewed from the perspective of the informed, reasonable observer, that there is a real likelihood that their integrity or the conduct of the investigation would be in issue or that there may be a conflict of interest such as to warrant restraining FCB from acting for the respondents.
In addition to the claim based on ss.44 and 117 of the FW Act, Ms Larne-Jones claims that her employment was terminated by the Company in contravention of s.340 of the FW Act because she had and/or had exercised a workplace right (being a right to claim and receive worker’s compensation) and also in contravention of s.351 because she had a mental disability and because of her marital status as the wife of Mr Jones (against whom similar allegations of misconduct were made). She seeks compensation and pecuniary penalties in respect of such alleged contravention by the Company (and contends that the second and third respondents were involved in the contravention).
Ms Larne-Jones submitted that it would be necessary for the Court to determine in the substantive proceedings whether the Company’s treatment of her in relation to the allegations against her, including the investigation conducted by Ms Fisher and her suspension, caused her to suffer from psychological injury constituting a mental disability; whether, if she was suffering from such a psychological injury, that was the reason for her dismissal; and also whether a reason for her dismissal was that she was married to Mr Jones.
Ms Larne-Jones submitted that it was likely that she would give evidence about how the manner of the investigation contributed to such psychological injury and mental disability and proceeded on what was said to be an improper basis that she was acting in concert with, or took advantage of, her personal relationship with her husband. It was suggested that there was a possibility the Company may wish to lead evidence from Ms Fisher in this respect. If so she would be subject to cross-examination, including in relation to her credit.
In light of the Defence and the payments made to Ms Larne-Jones, counsel for Ms Larne-Jones also pointed to the fact that in their Amended Response of 20 August 2012 in response to the adverse action claim the respondents rejected her claim that she had not engaged in misconduct and (in answer to the adverse action claim under s.340 and s.351 of the FW Act), stated that the second and third respondents had decided that the Company would summarily dismiss Ms Larne-Jones as they had formed the view that she had engaged in serious misconduct, thereby committed a serious breach of her contract of employment and that she had also breached legislative obligations.
It was contended for Ms Larne-Jones that in these circumstances the reason for her dismissal was put directly in issue by her claim invoking s.351 of the FW Act and the respondents’ denial in that respect and that it would be a matter of importance in these proceedings. It was submitted that it was for the Company to prove that the dismissal was not for one of the prescribed reasons (under s.361) and that this put the reason for dismissal directly in issue.
However, as counsel for the respondents submitted, an adverse action claim would not involve an opportunity for Ms Larne-Jones to ventilate or challenge the validity of the steps taken in relation to her termination in particular the conduct of the investigation. The reason why she suffered from any mental disability would not be in issue. Rather the issue would be whether any of the claimed “grounds” existed and whether there was a causal connection between the dismissal and such grounds (assuming, for present purposes, that being married to Mr Jones is a prohibited reason) (see Khiani v Australian Bureau of Statistics [2011] FCAFC 109). As the Full Court of the Federal Court stated in Khiani (at [31]), “[t]he issue is whether the person who has taken the adverse action has done so because the person against whom the adverse action had been taken has one or more of the relevant characteristics or has done one or more of the relevant acts”. Resolution of such issue of itself would not involve an inquiry into the validity of the steps taken before the dismissal, such as Ms Fisher’s investigative procedure and report or Mr Robinson’s advice.
Speculation as to the possibility that Ms Fisher and/or Mr Robinson may given evidence for the respondents is not a sufficient basis on which to restrain FCB from acting for the respondents. As stated in Khiani (at [33]), for the purposes of s.361 of the FW Act “the respondent carrie[s] the onus of proving, on the balance of probabilities, of (sic) the absence of a causal connection between adverse action” and the asserted factors in issue. However this would not oblige the respondents to establish the veracity of Ms Fisher’s report or procedures or be such as to necessarily involve the Court in a consideration of such matters. Rather, the reasons of the second and third respondents (as decision-makers for the Company) would be in issue. In all the circumstances it has not shown to be likely that Ms Fisher (or Mr Robinson) would be called as a material witness by the respondents in relation to this aspect of the claim. While it would be for the Company to establish that the dismissal was not undertaken for one of the asserted prohibited reasons, this is not an unfair dismissal claim. It would not be for the Company to justify the reason for dismissal of the applicant (see Cugura v Frankston City Council (No.2) [2012] FMCA 530; Ratnayake v Greenwood Manor Pty Ltd [2012] FMCA 350; Stevenson v Airservices Australia [2012] FMCA 55; and George v Northern Health (No.3) [2011] FMCA 894).
On balance, the issues raised by Ms Larne-Jones are not such as to satisfy me that it is likely that either Ms Fisher or Mr Robinson would be a material witness who was likely to be called to give evidence, let alone such that their credibility as witnesses would be at stake. Insofar as the reason for the decision to terminate Ms Larne-Jones’ employment is in issue, any inquiry would be directed to the decision of the Company and as to whether the applicant in fact engaged in misconduct, not the quality of Ms Fisher’s report or investigation. The proceedings are not directed at an evaluation of Ms Fisher’s conduct or that of Mr Robinson.
A possible claim of legal professional privilege over the investigation report (as Ms Larne-Jones contended may arise based on an assumption as to how the respondents may defend the proceedings) is not a proper basis to restrain FCB from acting for the respondents.
This is not a case in which there is evidence of a real likelihood of a personal interest in the results of the proceedings such as potential personal gain. In particular, given the central issues in this case, I am not satisfied that Ms Fisher (and hence FCB) would have an interest in these proceedings in her professional assessment in the investigation report or her conduct of the investigation being upheld or that Mr Robinson would have such an interest in relation to his advice that would impede the proper administration of justice.
I have borne in mind that the timing of an application of this nature may be relevant to the exercise of the discretion, having regard to issues of cost, inconvenience and impracticality of requiring lawyers to cease to act (Li v Wu [2012] FCA 164 at [7] and Kallinicos at [78]). As this application was brought at a relatively early stage in the proceedings, the inconvenience that would be occasioned were the order sought to be made would be relatively minor. However, the Court should not intervene lightly, but should act with caution and circumspection. In all the circumstances it has not been established that a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that FCB should be prevented from acting for the respondents in the interests of the administration of justice, including the appearance of justice.
The applicant’s application in a case should be dismissed.
I certify that the preceding ninety three (93) paragraphs are a true copy of the reasons for judgment of Barnes FM.
Date: 13 December 2012
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