Takemoto v Moody's Investors Service Pty Limited
[2012] FMCA 936
•5 October 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| TAKEMOTO v MOODY’S INVESTORS SERVICE PTY LIMITED & ANOR | [2012] FMCA 936 |
| INDUSTRIAL LAW – Practice and procedure – action for damages upon termination of employment – transfer to Federal Court – previous proceedings in Federal Court on the same claims – uncertainty whether finalised by striking out of statement of claim – prospect of interlocutory disputes and complex hearing – pending applications for security and stay for outstanding and future costs – matter transferred. |
| Federal Court Rules 2011 (Cth), r.26.15 Federal Magistrates Act 1999 (Cth), ss.39(1), 39(2)(a), 39(3) Federal Magistrates Court Rules 2001 (Cth), rr.1.05(2), 8.02, 8.02(4), 13.10 Trade Practices Act 1974 (Cth), s.82 |
| CEPU v Australian Postal Corporation (2010) 197 IR 85, [2010] FMCA 461 King v Office National Limited & Ors [2007] FMCA 1840 Sheikholeslami v University of New South Wales (No.2) (2007) 169 IR 22, [2007] FMCA 2020 Takemoto v Moody’s Investors Service Pty Limited [2010] FCA 1020 Takemoto v Moody’s Investors Service Pty Limited (No. 2) [2010] FCA 622 Takemoto v Moody’s Investors Service Pty Limited [2010] FCA 407 Vucina v Hewlett‑Packard Australia Pty Ltd [2011] FMCA 891 Wade v Reynolds & Co Pty Ltd [2011] NSWSC 1311 |
| Applicant: | KAZUMI TAKEMOTO |
| First Respondent: | MOODY’S INVESTORS SERVICE PTY LIMITED ACN 003 399 657 |
| Second Respondent: | MOODYS (AUST) PTY LIMITED ACN 095 571 510 |
| File Number: | SYG 1597 of 2012 |
| Judgment of: | Smith FM |
| Hearing date: | 5 October 2012 |
| Delivered at: | Sydney |
| Delivered on: | 5 October 2012 |
REPRESENTATION
| Counsel for the Applicant: | Dr J Berwick |
| Solicitors for the Applicant: | Craddock Murray Neumann |
| Counsel for the Respondents: | Mr C N Bova |
| Solicitors for the Respondents: | King & Wood Mallesons |
ORDERS
The proceeding be transferred to the Federal Court pursuant to s.39(2)(a) of the Federal Magistrates Act 1999 (Cth).
Order that the parties’ costs in relation to the application for transfer shall be their costs in the Federal Court proceeding.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1597 of 2012
| KAZUMI TAKEMOTO |
Applicant
And
| MOODY’S INVESTORS SERVICE PTY LIMITED ACN 003 399 657 |
First Respondent
| MOODYS (AUST) PTY LIMITED ACN 095 571 510 |
Second Respondent
REASONS FOR JUDGMENT
(revised from transcript)
This judgment explains why I have decided to transfer this matter to the Federal Court at the request of the respondents, and notwithstanding the opposition of the applicant.
The principal application was filed by Mr Takemoto on 23 July 2012, seeking compensation or damages under s.82 of the Trade Practices Act 1974 (Cth) and for breach of contract and interest, arising from the termination of his employment in 2006. The statement of claim accompanying the application pleads the employment of Mr Takemoto in Japan from 1990 as Managing Director by a company related to the respondent companies, and a contract of employment in December 2003 with the first respondent, Moody’s Investors Service Pty Limited, as a Managing Director. His duties required him to perform services for the second respondent, Moodys (Aust) Pty Limited.
The pleading alleges that the contract was “partly written, partly oral and partly implied”. It then pleads written terms, oral terms and implied terms. In broad effect, the terms which are sought to be found in the contract entitled Mr Takemoto to payments under a career transition plan whose termination benefits would take into account his previous employment in Japan. Alternatively, it is alleged that this was misrepresented to him. Precisely how the relevant term or representation is alleged to arise is not clear.
The pleading concludes:
37.The Applicant has suffered loss and damage as a consequence of his reliance upon the representations in paragraph 11 above and claims damages pursuant to s82 of the Trade Practices Act.
Particulars
(i)Twelve months’ pay pursuant to the Career Transition Program being AU$347,016.00.
38.Further, the Applicant has suffered loss and damage as a consequence of breach of contract by the First and Second Respondents.
Particulars
(i)2 years pay in lieu of notice being AU$694,032.00.
(ii)12 months’ pay pursuant to the Career Transition Program being AU$347,016.00.
The principal application was listed in the docket of Barnes FM, and was listed before her Honour on 21 August 2012 at the first court date. Before her Honour on that occasion was also an interlocutory application filed by the respondents, seeking:
1.An order pursuant to s 39 of the Federal Magistrates Act 1999 (Cth) and/or Part 8 Rule 8.02 of the Federal Magistrates Court Rules 2001 (Cth) transferring the proceeding to the Federal Court of Australia.
2.In the event the proceeding is not transferred to the Federal Court of Australia, an order pursuant to s 15 of the Federal Magistrates Act 1999 (Cth), Part 10 Rule 10.01(3)(s) of the Federal Magistrates Court Rules 2001 (Cth) or the inherent jurisdiction of the Court, that the proceeding be stayed pending payment into court of $80,000 (or the provision of adequate security) in respect of the following orders of the Federal Court of Australia:
(a)order of Flick J in the Federal Court of Australia Proceeding No NSD 582 of 2009 of 30 April 2010 that the Applicant pay the First Respondent’s costs of and incidental to the notices of motions filed 16 November 2009 and 8 February 2012;
(b)order of Flick J in Federal Court of Australia Proceeding No NSD 582 of 2009 of 17 June 2010 that the Applicant pay the First Respondent’s costs of Federal Court of Australia Proceeding No NSD 582 of 2009; and
(c)order of Perram J in Federal Court of Australia Proceeding No NSD 753 of 2010 that the Applicant pay the First Respondent’s costs of Federal Court of Australia Proceeding No NSD 753 of 2010.
3.In the event the proceeding is not transferred to the Federal Court of Australia, an order pursuant to s 80 of the Federal Magistrates Act 1999 (Cth) and/or Part 21 Rule 21.01 of the Federal Magistrates Court Rules 2001 (Cth) that the Applicant provide security for the Respondents’ costs of the proceeding.
4.In the event the proceeding is not transferred to the Federal Court of Australia, an order pursuant to s 15 of the Federal Magistrates Act 1999 (Cth) or the inherent jurisdiction of the Court, that the proceeding be stayed until provision of the security referred to in order 3 above.
5.Costs.
6.Such further or other order as the Court thinks fit.
It appears that her Honour acceded to an application by the parties that there be a separate hearing of the question of transfer to the Federal Court, prior to the other issues raised in the interlocutory application and otherwise in the case management of the proceeding being addressed. Her Honour became unavailable to conduct the hearing today, and it has been argued before myself.
The interlocutory application is supported by an affidavit and a folder of documents recounting the history of previous proceedings brought in the Federal Court by Mr Takemoto against the two present respondents. Those proceedings sought similar relief, on similar but not identical allegations as to the content of a contract of employment and false or misleading misrepresentations as to a “career transition program”.
The statement of claim was filed in the Federal Court on 17 June 2009, and was case‑managed before Flick J. The proceedings encountered various difficulties which are recounted in an affidavit before me today. In short, there were disputes about discovery, delays for settlement negotiations, and then extensive disputes about the adequacy of the statement of claim.
On 30 April 2010, Flick J struck out significant paragraphs in the then statement of claim (see Takemoto v Moody’s Investors Service Pty Limited [2010] FCA 407). There were then a series of attempts by Mr Takemoto’s lawyers to re‑plead his case, but on 17 June 2010 his Honour refused leave to Mr Takemoto to further amend his statement of claim, refused an application to file an amended statement of claim, and struck out the initiating statement of claim (see Takemoto v Moody’s Investors Service Pty Limited (No. 2) [2010] FCA 622). His Honour’s judgment concluded:
CONCLUSION
31The proposed Amended Statement of Claim pleads the contract claim in no better manner than the Statement of Claim as it was filed on 17 June 2009. No leave should now be granted to plead the contract claim in the manner proposed in the further revised form of the Amended Statement of Claim.
32Nor should leave be granted to plead the proposed Trade Practices Act claim in the manner suggested.
33The Applicant has been extended repeated opportunities to properly plead the cause or causes of action upon which reliance is sought to be placed. No further opportunity should be extended in the present proceeding. The proceeding should be struck out.
34Although the Respondent sought summary judgment pursuant to s 31A of the Federal Court of Australia Act, it is not considered that such judgment should now be entered.
ORDERS
35The Orders of the Court are:
1.The Notice of Motion as filed on 14 May 2010 is dismissed.
2.The application to further amend the Statement of Claim in the form sought to be filed in Court on 11 June 2010 is refused.
3.The existing Statement of Claim as filed on 17 June 2009 is struck out pursuant to O 11 r 16 of the Federal Court Rules.
4.The Applicant is to pay the costs of the Respondent.
It appears that the parties have regarded his Honour’s orders as bringing those proceedings to an end, although counsel for Mr Takemoto today did not concede this, and it is to be noted that there is no evidence of any order dismissing the application, nor evidence of discontinuance.
However, Mr Takemoto did seek leave to appeal from his Honour’s orders, which was refused by Perram J on 16 September 2010 (see Takemoto v Moody’s Investors Service Pty Limited [2010] FCA 1020). Perram J agreed with criticisms of the statement of claim which had been made by Flick J, and concluded:
12It follows that no error of the kind described in House v The King is disclosed. Consequently, the requirements of Décor are not met either. Even if there was, however, an arguable point (and there is not), Mr Takemoto is not yet statute barred and may recommence this action. I would not, therefore, regard the primary Judge’s decision as causing prejudice particularly in light of his Honour’s consistent indications to those representing Mr Takemoto that something had to be done about the pleading. I share his Honour’s evident sense of frustration with those representing Mr Takemoto in that regard.
13Contrary to the submissions made to me, this is not a complex case and pleading it properly is not a difficult task. It is unfortunate to see a case concluded in this fashion but it cannot be said that this has occurred without repeated warnings to Mr Takemoto’s representatives.
14The application is dismissed with costs.
The affidavit in support of the respondents’ interlocutory application in the present proceedings does not explain what has happened in relation to the dispute, in the period between the making of Perram J’s order and the filing of the new application in this Court. The affidavit suggests that no warning was given by Mr Takemoto of his intention to file the present proceeding, before the first respondent’s former solicitors were invited to accept service of the Court documents.
At present, the orders sought in paragraphs 2 to 4 of the respondents’ interlocutory application, seeking relief or security in relation to past or future costs orders, relies only upon the previous history in the Federal Court. It does not explain what has happened in relation to the assessment or taxation of the previous costs orders and their recovery from Mr Takemoto. Perhaps there is an implication that substantial costs remain outstanding, but this is not clearly stated. Nor has any other evidence bearing on the application for security for future costs been filed by either party.
Had I been case‑managing the matter myself, I might not have wished to address the question of transfer without first considering the issues concerning the past costs orders. Particularly, since the Order 2 sought in the respondents’ application invites this Court, or the Federal Court if the matter is transferred, to consider its discretion to stay the fresh proceedings absolutely, under the abuse of process principle which has been referred to as the “outstanding costs principle” (see Wade v Reynolds & Co Pty Ltd [2011] NSWSC 1311, and Sheikholeslami v University of New South Wales (No.2) (2007) 169 IR 22, [2007] FMCA 2020 at [10]‑[11] and [20], and cases cited therein).
This principle is recognised in the Federal Court Rules 2011 (Cth) in r.26.15:
26.15 Stay of proceeding until costs paid
An opposing party may apply to the Court for an order that a subsequent proceeding be stayed until the costs are paid if:
(a)a party (the first party) discontinues a proceeding, whether in relation to the whole, or a part, of a claim for relief; and
(b)the first party therefore becomes liable to pay the costs of an opposing party to the proceeding; and
(c)before paying those costs, the first party starts another proceeding against the opposing party on the basis of the same, or substantially the same, cause of action as the cause of action on which the discontinued proceeding was based.
The Rules of this Court do not contain a similar rule, but they would adopt it pursuant to r.1.05(2) of the Federal Magistrates Court Rules 2001 (Cth). Alternatively, if the Federal Court rule does not apply because Mr Takemoto has not ‘discontinued’ his Federal Court matter, both Courts could address the principle more broadly by reference to their powers to stay proceedings which are an abuse of process (in this Court, under r.13.10).
It might appear that if the new proceedings are to be stayed under the outstanding costs principle, then perhaps they should be stayed in the first court in which they have been brought. However, the Rules of our Court require applications for transfer to the Federal Court to be brought “on or before the first court date” (see r.8.02), and Barnes FM on that occasion has acceded to the parties’ request that the issue of transfer should be addressed before issues relating to security or stay for outstanding or future costs.
Having heard both parties’ counsel today on the issue of transfer, I can understand why they have taken that position. It is apparent that the issues as to security for costs or stay for payment of outstanding costs could not be addressed briefly or by consent. These issues themselves provide components of complexity in the proceedings which the respondents point to in favour of transfer.
Balancing all the circumstances in which the application has come before me today, I have concluded that it is appropriate for the Court to address the question of transfer at the present time, and in the light of the present early stage of the proceedings.
The Court’s power to transfer is conferred by s.39(1) of the Federal Magistrates Act 1999 (Cth). Under s.39(2)(a) it may make this order on the application of a party to the proceeding. Under s.39(3):
(3)In deciding whether to transfer a proceeding to the Federal Court under subsection (1), the Federal Magistrates Court must have regard to:
(a)any Rules of Court made for the purposes of subsection 40(2); and
(b)whether proceedings in respect of an associated matter are pending in the Federal Court; and
(c)whether the resources of the Federal Magistrates Court are sufficient to hear and determine the proceeding; and
(d)the interests of the administration of justice.
Under r.8.02(4) of the Federal Magistrates Court Rules 2001 (Cth):
8.02 Transfer to Federal Court or Family Court
…
(4)In addition to the factors required to be considered by the Court under subsections 39 (3) and (4) of the Act for transfer of proceedings to the Federal Court or the Family Court, the following factors are relevant:
(a)whether the proceeding is likely to involve questions of general importance, such that it would be desirable for there to be a decision of the Federal Court or the Family Court on one or more of the points in issue;
(b)whether, if the proceeding is transferred, it is likely to be heard and determined at less cost and more convenience to the parties than if the proceeding is not transferred;
(c)whether the proceeding will be heard earlier in the Federal Magistrates Court;
(d)the availability of particular procedures appropriate for the class of proceeding;
(e)the wishes of the parties.
(Notes omitted)
Looking at the mandatory considerations under s.39(3)(c) and (d), questions of the resources of the Court and the interests of the administration of justice overlap in the present case. They concern an assessment of the likely complexity of the matter in its case management and hearing. They are best dealt with, in my opinion, by looking at the particular submissions made by the parties which I shall address below.
Whether there is an “associated matter” pending in the Federal Court was not explored in the evidence and submissions of the parties. The respondents’ submissions proceeded on an assumption that Mr Takemoto’s Federal Court proceeding was no longer pending. However, as I have noted this may not be clear, and some ambiguity in the position of Mr Takemoto’s counsel in this respect emerged in an interruption while I was giving this judgment. As I shall explain, the history of the previous proceedings, whether finalised or not, points towards transferring the present proceedings to Mr Takemoto’s previously chosen venue.
In relation to the “relevant” considerations under r.8.02(4), although counsel for the respondents sought to persuade me that Mr Takemoto’s pleading did raise issues of “general importance”, this is by no means apparent to me. It appears to me that the proceeding is an employment dispute of a general type commonly brought in this Court. It raises issues as to contract law, industrial law, and trade practices law which are probably addressed by established principles and authorities. I am not persuaded that there is any particular legal point of general importance which has been focused in the submissions before me and which provides, in itself, a justification for transfer of the proceedings to the Federal Court.
Consideration of the resources of this Court, and whether they should be directed to managing and resolving the present litigation, concern issues of ‘complexity’, which became the focus of the submissions before me. It requires a predictive assessment of the likely future course of the litigation, made in the light of the parties’ past and current conduct of their dispute. In general terms, this Court’s resources are designed to achieve relatively quick, efficient, and less costly resolution of disputes. The administration of justice is not assisted if the Court’s resources become occupied by time‑consuming and complex disputes, which are better suited for the procedures and resources of the Federal Court.
The present case is an employment dispute which, like many employment disputes that are brought in both Courts in their concurrent jurisdictions, might in the hands of some litigants, and through the mutual efforts of some legal representatives, be dealt with expeditiously with a limited amount of interlocutory contest, and a focusing by the parties to achieving a final hearing on concise issues, concisely litigated.
Alternatively, as experience has shown, potentially similar proceedings can display a different character, for a variety of reasons. In these cases, the case presented by one or both parties shows clear prospects of extensive interlocutory disputation, a need for intensive case management, and the possibility of a complex and protracted hearing and judgment. The present resources of this Court in Sydney are not designed to accommodate such a proceeding, and the manner in which the dispute is likely to proceed makes it appropriately considered for transfer to the Federal Court, whose resources and procedural practices are better suited to such matters (cf. CEPU v Australian Postal Corporation (2010) 197 IR 85, [2010] FMCA 461, King v Office National Limited & Ors [2007] FMCA 1840, and Vucina v Hewlett‑Packard Australia Pty Ltd [2011] FMCA 891).
In my opinion, this is such a case, and I accept the submissions of the respondents in this respect.
The past history of the matter reveals continuing difficulty facing the applicant and his legal advisers in formulating his case in a manner which, in the opinion of Flick and Perram JJ, would meet basic principles of pleading. Although this Court is at times less demanding as to the niceties of pleading, it still must ensure that respondents are afforded the basic requirements of procedural fairness, so as to be properly informed as to the case which they are expected to meet. This is the purpose of pleadings in this Court, as much as pleadings in the Federal Court.
Neither counsel before me today embarked on a close comparison of the present statement of claim with the previous statements of claim filed or sought to be filed by Mr Takemoto in the Federal Court. There are some apparent differences, and some of the difficulties previously encountered have been omitted. However, I am not satisfied that the present pleading will not give rise to the need for further interlocutory examination as to the adequacy of the pleading, in particular as to the claimed misrepresentations and oral and implied terms of the contract of employment. This is a case where the past history suggests that interlocutory skirmishing in relation to pleading points is likely or even probable to continue.
Counsel for Mr Takemoto urged the Court to exercise the jurisdiction which his client had now chosen to invoke, in preference to the Federal Court. He criticised the respondents’ lawyers for appearing to be pursuing tactics of “dragging out the matter over days and days of interlocutory disputes”. He assumed that this Court would be able to prevent this being repeated, without explaining how it would do so.
I can perhaps understand how Mr Takemoto might have thought this at times. However, the fact is that the points taken by the respondents were upheld by judges of the Federal Court on generally applicable principles of pleading. I therefore would not characterise the approach of the respondents to the past litigation in the terms used by counsel for Mr Takemoto. I am not prepared to assume that the respondents would embark on interlocutory issues which should not appropriately be permitted to be raised in the litigation brought by Mr Takemoto.
The appropriateness of insisting upon clear pleadings in the present case is underlined in my mind by the quantum of the claims made by Mr Takemoto. I accept the submissions of counsel for the respondents that this is a matter which, in terms of outcomes sought by an applicant, is within the area where the proceeding could appropriately have been pursued in either Court. This Court does have jurisdiction to award compensation in trade practices matters up to $750,000, and otherwise has unlimited and concurrent jurisdiction with the Federal Court in relation to other heads of relief. However, the amount which is sought by Mr Takemoto, and the obscurity of the basis upon which he seeks to recover it, indicates that if the matter continued in this Court, it would deserve and require a level of case management and thoroughness in preparation comparable to that which it would receive and deserve if conducted in the Federal Court. This is not a case concerning a small or insubstantial claim, where a judge of this Court might override genuine concerns by the respondents to enjoy their full procedural rights as litigants in any court.
Taking into account all of the above, I am persuaded that the damages in issue, and the prospects of complexity of procedure and hearing in the matter, warrant the matter being transferred to the Federal Court, and that a transfer should occur at this early stage in the proceedings. There is added appropriateness in that course, by reason of the previous litigation in the Federal Court, the possibility that there may be arguments as to whether in fact it has been concluded, and the pending issues arising as to the enforcement of the previous Federal Court costs orders. On balance, I consider that, if there is to be an application invoking Federal Court r.26.15 or its abuse of process rule, it would be more appropriately dealt with by that Court.
I therefore propose to make the usual order for transfer.
In relation to costs of the application for transfer, in my opinion, it is appropriate for me to order that these costs should be the parties’ costs in the transferred proceeding. I do not accept the submissions by either side that they should have costs on the motion awarded today separately. The issue of transfer was, it appears, raised at the first court date in the application in the context of the respondents’ interlocutory application which encompassed issues of costs also. It appears that the issue of transfer was listed today by consent for separate preliminary determination. Inevitably some sort of hearing was needed to address that question of transfer, before the Court could be satisfied as to how to exercise the relevant discretion. Although the application for transfer was appropriately brought and I have upheld it, I am not persuaded at this point that, if Mr Takemoto eventually wins the case, he should not also have his costs in relation to opposing the application for transfer. I consider that the better order is to give both parties their costs in the cause.
I certify that the preceding thirty‑six (36) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate:
Date: 16 October 2012
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