Marsh Pty Ltd v Vickery (No 2)
[2014] FCA 1100
•13 October 2014
FEDERAL COURT OF AUSTRALIA
Marsh Pty Ltd v Vickery (No 2) [2014] FCA 1100
Citation: Marsh Pty Ltd v Vickery (No 2) [2014] FCA 1100 Parties: MARSH PTY LTD v NOEL VICKERY File number: SAD 310 of 2012 Judge: BESANKO J Date of judgment: 13 October 2014 Catchwords: PRACTICE AND PROCEDURE – application for leave to amend pleadings – where applicant seeks to expand claims against respondent – where respondent alleges substantial delay in applying for leave to amend – where no evidence of prejudice to respondent.
PRACTICE AND PROCEDURE – application to cross-examine on interlocutory application.
Held: Application for leave to amend allowed.
Legislation: Corporations Act 2001 (Cth) s 183
Federal Court Rules 2011 (Cth) r 16.53Cases cited: AON Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 Dates of hearing: 11, 15, 24 September 2014 Place: Adelaide Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 21 Counsel for the Applicant: Ms N Charlesworth Solicitor for the Applicant: Ashurst Australia Counsel for the Respondent: Mr T Duggan Solicitor for the Respondent: Fox Tucker Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
SAD 310 of 2012
BETWEEN: MARSH PTY LTD
ApplicantAND: NOEL VICKERY
Respondent
JUDGE:
BESANKO J
DATE OF ORDER:
13 OCTOBER 2014
WHERE MADE:
ADELAIDE
THE COURT ORDERS THAT:
1.The applicant has leave to amend paragraph 43.1 of its Second Further Amended Statement of Claim in terms of the proposed Third Amended Statement of Claim, being exhibit JS‑29 to the affidavit of Julia Elizabeth Sutherland sworn on 10 September 2014.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
SAD 310 of 2012
BETWEEN: MARSH PTY LTD
ApplicantAND: NOEL VICKERY
Respondent
JUDGE:
BESANKO J
DATE:
13 OCTOBER 2014
PLACE:
ADELAIDE
REASONS FOR JUDGMENT
This is an application by the applicant to amend its Second Further Amended Statement of Claim in terms of a proposed Third Amended Statement of Claim. These reasons deal with the most significant of the proposed amendments, being an amendment to paragraph 43.1 of the existing statement of claim. That amendment is opposed by the respondent.
A brief description of the applicant’s claim is as follows. The applicant operates an insurance brokerage business and it employed the respondent in its business between March 2004 and February 2012. On 7 December 2011, the applicant gave the respondent notice that his employment with the applicant would come to an end by reason of redundancy on 29 February 2012. The applicant competes for business with other international insurance broking firms which operate in Australia, including Arthur J Gallagher (Aus.) Pty Ltd, trading as Gallagher Australia (“Gallagher Australia”).
The applicant’s case is that, on or before September 2012, the respondent commenced employment with Gallagher Australia. The applicant’s case is that, on a date not known to it but by no later than June 2012, the respondent entered into an arrangement with Gallagher Australia to the effect that he would commence employment with Gallagher Australia in about August or September 2012. The applicant’s case is that, in or about July 2012 and prior to the commencement of his employment with Gallagher Australia, the respondent was engaged by Gallagher Australia for the purpose of creating a series of documents and precedents for use by Gallagher Australia in the course of its business, including its business in competition with the applicant.
The applicant’s case is that the respondent obtained information about its business and clients and that he has used that information in breach of various obligations he owes to the applicant. It is not necessary for me to set out the details of those obligations. They include obligations, both express and implied, under the terms of the respondent’s contract of employment with the applicant, equitable obligations of confidence, and the obligations in s 183 of the Corporations Act 2001 (Cth). That section provides, relevantly, that a person who obtains information because they are or have been an employee of the corporation, must not improperly use the information to gain an advantage for themselves or for someone else, or to cause detriment to the corporation. The applicant also alleges a breach of copyright by the respondent with respect to certain questionnaires and other works identified in its Second Further Amended Statement of Claim.
Of relevance on this application are the applicant’s pleas of loss and damage. In paragraph 43.1 of the existing statement of claim, the applicant claims that a number of its clients have terminated part or all of its services and have engaged the respondent, either on his own behalf or in his capacity as an employee or agent of Gallagher Australia, or those clients have otherwise engaged Gallagher Australia for the provision of insurance services. The applicant claims that the loss of those clients was caused by the respondent’s wrongful conduct and that that conduct has caused the applicant to suffer loss and damage.
The applicant commenced its proceeding against the respondent on 7 December 2012. In its Statement of Claim of the same date, the applicant alleged that it had lost seven clients as a result of the respondent’s conduct and it named those clients (“lost clients”). The applicant filed an Amended Statement of Claim on 14 December 2012, and the list of lost clients in that document was the same as it was in the Statement of Claim. The applicant filed a Further Amended Statement of Claim on 19 March 2013, and an eighth client was added to the list of lost clients. The applicant filed a Second Further Amended Statement of Claim on 16 December 2013, and the list of lost clients remained as it was in the Further Amended Statement of Claim.
In the proposed Third Amended Statement of Claim, the applicant seeks to add five clients to the list of lost clients in paragraph 43.1 as follows:
…
(i) Masters Builders Association of South Australia;
(j) Spendless Shoes Pty Ltd;
(k) Railroad Contractors Pty Ltd;
(l) E&A Limited; and
(m) Lonsdale Developments Pty Ltd.
The affidavit evidence before me establishes that the applicant was aware that it lost these clients on the following dates:
(1)Masters Builders Association of South Australia (“MBASA”): before the filing of the Statement of Claim on 7 December 2012;
(2)Spendless Shoes Pty Ltd: 18 March 2013;
(3)Railroad Contractors Pty Ltd: 22 March 2013;
(4)E&A Limited: 2 July 2013; and
(5)Lonsdale Developments Pty Ltd: approximately June 2013.
The applicant’s application to amend paragraph 43.1 to include these lost clients was made on 10 September 2014, which is up to two years after it became aware that it had lost MBASA as a client, and over a year after it became aware that it had lost Lonsdale Developments Pty Ltd as a client. The proceeding has not yet been listed for trial. The applicant has filed the evidence it intends to rely on at trial. The applicant’s expert report dealing with the loss it has allegedly suffered was filed in February 2014. That report addresses lost clients, and includes the five clients which the applicant seeks to add to paragraph 43.1. The respondent has not yet filed the evidence he intends to rely on at trial. The order requiring him to do so was suspended by order made on 26 August 2014.
The applicant’s interlocutory application was accompanied by an affidavit of a solicitor, Ms Julia Sutherland, sworn on 10 September 2014. That affidavit did not address the proposed amendments to add to the list of lost clients in paragraph 43.1. Ms Sutherland swore a second affidavit on 12 September 2014. She set out the dates upon which the applicant became aware of the fact that it had lost the clients. In relation to the MBASA, she said that, on 7 December 2012, the applicant determined not to include that entity in the list of lost clients “on the basis of its assessment of the information before it at that time”. She said that, since commencing the action:
… further information has come to the attention of the Applicant which, in conjunction with the information previously known to the Applicant, has informed its decision to plead MBASA as a lost client in the particulars to paragraph 43.1.
She said that an example of the further information that had come to the applicant’s attention was information obtained by the applicant in March 2014 during the third party subpoena process and she identified the relevant documents in her affidavit.
As to the other four lost clients, Ms Sutherland said that the applicant had decided that rather than seek the Court’s leave to amend the Statement of Claim on each occasion that the applicant lost a client:
… the Applicant decided to wait until discovery, the Applicant’s evidence and the third party subpoena processes had been completed, so that any final amendments which were required to regularise the pleadings could be made on a single application, rather than in a piecemeal fashion.
The applicant’s application came before the Court on three occasions, being 11 September 2014, 15 September 2014, and 24 September 2014.
On 11 September 2014, I indicated to counsel for the applicant that I considered that it was important that the applicant had not offered any explanation for the delay in seeking leave to amend paragraph 43.1 to add the five additional lost clients. That prompted counsel for the applicant to apply for an adjournment so that an affidavit could be filed, and Ms Sutherland’s affidavit sworn on 12 September 2014 was filed the following day.
On 15 September 2014, counsel for the respondent applied to cross‑examine Ms Sutherland on what he contended were deficiencies in her explanation for the delay. Rather than accede to that request, I gave the applicant leave to file a further affidavit should it be advised to do so.
Ms Sutherland swore a third affidavit on 16 September 2014. In that affidavit, Ms Sutherland deposes to the fact that she had taken instructions from the applicant, and that, with respect to the omission of MBASA, the applicant took into account the information that was available to the applicant as at 7 December 2012 about the respondent’s conduct and formed the view that there was an insufficient evidentiary basis at that time to claim that the loss of MBASA as a client was caused by the respondent’s conduct, and that no other factors were taken into account. She also deposes to the fact that the information that she had identified in her second affidavit was decisive in the applicant’s decision to include MBASA in the list of lost clients.
On 24 September 2014, the respondent renewed his application to cross‑examine Ms Sutherland. I refused the application. Cross‑examination on an affidavit used on an interlocutory application of the nature before me would not ordinarily be allowed. Ms Sutherland had sworn two affidavits attempting to provide the applicant’s explanation for the delay, and that explanation was either good or it was not. Either way, I did not consider it appropriate to allow cross‑examination.
The applicant’s application for leave to amend is brought pursuant to r 16.53 of the Federal Court Rules 2011 (Cth). The Court has a discretion to allow or refuse an application to amend, and the relevant considerations were identified by the High Court in AON Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 at 182, [5], 192, [30], per French CJ; at 214‑215, [102], 217, [111], 217‑218, [114], per Gummow, Hayne, Crennan, Kiefel and Bell JJ. I will identify those considerations in a general way. First, the Court considers the nature and importance of the amendment to the applicant. Secondly, where there has been delay in applying for an amendment, the Court considers whether the party applying for an amendment has put forward an explanation for the delay and, if so, the adequacy of the explanation. Thirdly, the Court considers whether allowing the amendment will lead to delay and costs and the prejudice which is assumed to follow, and the prejudice which is shown. That prejudice may include not only the financial consequences of allowing an amendment, but also a consideration of the strain and anxiety to a party resulting from litigation.
I am satisfied that in this case the applicant will suffer fairly substantial prejudice if the amendment is not allowed. As I understand it, the five lost clients which the applicant seeks to add to paragraph 43.1 accounts for about one third of its alleged losses as a result of the respondent’s wrongful conduct.
The applicant has now proffered an explanation for the delay. In view of the authorities, it is surprising that it did not proffer an explanation at the very outset. The explanation is not a full explanation in that it does not address all of the issues which arise. For example, the applicant has not explained the reason that it instructed its expert on loss and damage to consider the loss and damage flowing from the loss of MBASA as a client before it received documents identified as “further information” by Ms Sutherland which was said to be “decisive” in the applicant’s decision to plead the loss of MBASA. As to the other four lost clients, there is no explanation as to why they were not part of the Second Further Amended Statement of Claim filed on 16 December 2013 (or at least an application to amend at that time), and why the applicant did not expressly advise the respondent and the Court of the approach it was taking, particularly on occasions where that approach would or may have been relevant to the orders which were being considered. A notable example of one such occasion is the directions hearing on 19 September 2013 when an order was made that the respondent file the affidavit material upon which he intends to rely at trial. It is difficult to resist the conclusion that someone on the applicant’s side overlooked what needed to be done. However, I am satisfied that there is nothing sinister or overreaching in the applicant’s conduct.
Despite being given an opportunity to do so, the respondent has not filed an affidavit outlining any prejudice he will suffer if the amendment is allowed. That is highly significant in the circumstances of this case where the applicant’s evidence is in, but the respondent has not filed his evidence and a trial date has not yet been fixed. The only prejudice to the respondent which might conceivably be inferred is he may require some additional time to file his evidence.
In my opinion, this is a case where the relevant factors favour a grant of leave to amend. I will allow the amendment to paragraph 43.1 of the Second Further Amended Statement of Claim.
I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. Associate:
Dated: 13 October 2014
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