Winchester v Lend Lease Project Management and Construction (Australia) Limited - [2012] FMCA 1076

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WINCHESTER v LEND LEASE PROJECT MANAGEMENT & CONSTRUCTION (AUSTRALIA) LIMITED & ANOR

[2012] FMCA 1076

INDUSTRIAL LAW – Practice and procedure – application for discovery concerning redundancy payments to other employees – unclear relevance and utility for asserted contractual claim – no evidence yet filed by applicant – discovery refused.

Evidence Act 1995 (Cth), s.135
Fair Work Act 2009 (Cth)
Federal Magistrates Act 1999 (Cth), s.45

Abrahams v Qantas Airways Ltd (No.2) [2007] FMCA 639
Briggs-Smith v Moree Plains Shire Council [2012] FMCA 304
Byrne v Australian Airlines Ltd (1995) 185 CLR 410, [1995] HCA 24
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226, [1986] HCA 14
Lawrance v The Commonwealth of Australia & Ors (No.3) [2007] FMCA 806
Tibaldi Smallgoods (Australasia) Pty Ltd v Rinaldi [2008] VSC 112

Applicant:

GREG WINCHESTER

First Respondent:

LEND LEASE PROJECT MANAGEMENT & CONSTRUCTION (AUSTRALIA) LIMITED
ACN 000 098 162

Second Respondent:

MURRAY COLEMAN

File Number:

SYG 1468 of 2012

Judgment of:

Smith FM

Hearing date:

9 November 2012

Delivered at:

Sydney

Delivered on:

9 November 2012

REPRESENTATION

Counsel for the Applicant:

Mr S Meehan

Solicitors for the Applicant:

Haywards Solicitors

Counsel for the Respondents:

Mr Y Shariff

Solicitors for the Respondents:

Middletons

ORDERS

The applicant’s application for discovery filed on 18 September 2012 is refused.
All evidence in chief in the proceeding shall be given by way of affidavits, subject to the further directions of the Court arising from the privileges of the second respondent.
The applicant must file and serve all affidavits relied upon in relation to all issues in the proceedings on or before 1 March 2013.
The respondent must file and serve all affidavits relied upon in relation to all issues in the proceedings other than quantum of penalty on or before 3 May 2013.
The applicant must file and serve all affidavits in reply on or before 24 May 2013.
The parties have leave to request the issue of more than 5 subpoenas. All subpoenas and notices to produce documents shall be made returnable prior to the hearing at a listing before a Registrar at a time and place appointed by the Registry.
If any party is in default in relation to the above timetable for more than 4 working days, the other party must immediately request the Associate to Lloyd‑Jones FM to appoint a directions-hearing. Alternatively, the parties may forward to the Associate consent orders signed by all parties, which varies the timetable except in relation to listings.
Any party may request that the proceeding be listed for further directions or for the hearing of an interlocutory application on a date allowing 5 working days notice to the other parties. The appointment shall be obtained from the Associate to Lloyd‑Jones FM.
The application is listed for call-over and pre-hearing directions on 28 May 2013 at 9.30am at Level 6, John Maddison Tower, 88 Goulburn Street, Sydney, for the purposes of fixing a hearing date before Lloyd‑Jones FM.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 1468 of 2012

GREG WINCHESTER

Applicant

And

LEND LEASE PROJECT MANAGEMENT & CONSTRUCTION (AUSTRALIA) LIMITED ACN 000 098 162

First Respondent

MURRAY COLEMAN

Second Respondent

REASONS FOR JUDGMENT

(revised from transcript)

This judgment explains why I am refusing the applicant’s application for orders by way of discovery, and making other directions in the matter.
The case management of the matter has taken a course different than my usual and preferred course in employment matters in this court. My preferred course is to order at first court date a complete timetable allowing clarification of the issues by way of exchanges of pleadings and affidavits, the combination of which should provide not only full particulars of the causes of action relied on, and, better than that, full notice to each side of the evidence that they have to meet. In my experience, this course generally produces an efficient and sufficient focusing of the issues for a trial in a lower court, and allows the court to meet its objectives of expedition and minimising of costs to parties and the court. The usual, but not invariable, practice of also at the first court date appointing a hearing date on the best estimates for length of hearing, also assists the parties for focusing their preparation for the end of the litigation process. This court’s practices and resources are not suited for matters that will require protracted interlocutory fights and hearings of great and indeterminate length, and the usual directions at first court date usually work well in employment matters, particularly, since the inclusion of mediation in the course of the timetable is highly productive of early outcomes which mean that the parties do not ultimately have the cost of the hearings that have been appointed.
The present matter is an employment case of a type which is not uncommon in this court, in which a manager of a large corporate group has left his employment with grievances about what he was paid upon leaving his employment. The matter was commenced by application and statement of claim filed on 5 July 2012.
The proceeding was returnable before me at a first court date on 27 July 2012. On that occasion, the parties were represented by solicitors, who were in agreement that the parties would engage in informal discovery and a mediation, based upon pleadings which had already closed before the first court date by reason of the filing of a defence by the respondents before that date. They suggested that these procedures should be followed before any further directions were given to prepare the matter for trial.
Mr Winchester’s statement of claim refers to his being employed until 22 March 2012 as general manager infrastructure by the first respondent, Lend Lease Project Management and Construction (Australia) Limited, having been first employed in 1988 in a lower position, and achieving a promotion in 2008 to his last held position. Mr Winchester pleads that his employment ended because he was not given the duties of the position in which he was employed, but was directed to engage in other duties. It is pleaded that this amounted to repudiation by the first respondent of the contract of employment, justifying his acceptance of that repudiation and claiming damages. The damages include loss of salary and remuneration, superannuation benefits, and loss of chances for benefits under an incentive plan. It is also pleaded that Mr Winchester suffered losses by a refusal to pay a redundancy payment upon termination of his employment.
There are also allegations of breach of the national employment standards under the Fair Work Act 2009 (Cth), in so far as they require a written notice and a minimum payment. Involvement in these contraventions is also alleged against the second respondent, as a general manager who is said to be personally liable for penalty under the Fair Work Act. The proceedings therefore also involve quasi‑criminal claims for penalties, as well as including contractual claims for relief.
The present debate is whether Mr Winchester should be given extensive discovery in support of parts of his allegation in paragraph 8 of his statement of claim:
8.It was a term of the Applicant’s employment as General Manager, Infrastructure that he would be entitled to a redundancy payment of 2 weeks pay per year of completed service if his employment was terminated because his position had become redundant.
Particulars
The term was implied as a matter of fact by established custom and usage.
Manifestly, the particulars under paragraph 8 are insufficient at present for anyone to discern the factual or legal basis on which it is alleged that there is “established custom and usage”. It emerged in the submissions of counsel for Mr Winchester today, that it is not alleged that the suggested redundancy entitlement arises from a general custom or usage applicable throughout the industry in which Mr Winchester’s employment contract occurred, but by reason of an established ‘custom and usage’ within the employment practices of the particular employer and a group of related companies which includes the employer. The particulars supporting such a limited type of ‘custom and usage’ are not disclosed in the particulars, nor is any basis for such an allegation explained in the affidavit accompanying the present application for discovery.
The respondents’ defence made detailed responses to the statement of claim, including by raising additional factual issues which were not obviously raised by the statement of claim. It is unnecessary for me to describe those issues. In relation to the asserted right to a redundancy payment by reason of “established custom and usage”, the defence responded:
8.The Respondents deny the allegations in paragraph 8 and say further:
(a)the Contract did not contain an implied term that if the Applicant’s employment was terminated for redundancy reasons he would be entitled to redundancy pay, as alleged or at all;
(b)(to the extent it is pleaded against it) the First Respondent does not have an express redundancy policy;
(c)the Applicant’s entitlement to a redundancy payment (in the event his employment ended by reason of redundancy of his role, which is denied) is that set out under the National Employment Standards, namely, 6 weeks’ pay;
(d)the First Respondent does not have an established custom or usage in relation to redundancy, as alleged or at all;
(e)the First Respondent’s established custom or usage (which is denied) did not result in the alleged term being incorporated into the Contract;
(f)the Contract embodies the entire agreement between the Applicant and the First Respondent generally (as set out in clause 7(a) of the Contract), as well as the entire agreement specifically in relation to termination of the Applicant’s employment;
(g)(to the extent that it is pleaded against it) the alleged implied term:
(i)     was not reasonable and equitable;
(ii)    was not necessary to give business efficacy to the contract;
(iii)   is not such a term without which the contract is ineffective;
(iv)   was not so obvious that ‘it goes without saying’;
(v)     was not capable of clear expression;
(vi)   was contradictory to the express terms of the contract contained in the Contract; and
(vii) was not a term implied by legal incident of its particular class of contract.
As is apparent, this reflects considerable, and understandable, uncertainty as to the factual and legal basis upon which it is asserted a contractual right by “established custom and usage” gave Mr Winchester any right to redundancy payment.
On the present state of the pleadings, it will therefore be necessary at trial to explore the principles of contract law by which a contractual right to a redundancy payment might arise, if it has not been expressly recorded in a written contract of employment or in an industrial agreement or instrument or other document incorporated into such a contract. Presumably, this will require an exploration of the communications between the parties prior to the relevant point of contract, and any relevant matrix of facts which might have provided or evidenced a common understanding or other basis for identifying an actual or implied agreement by the parties for the existence of such a right.
At this stage, it is obvious that the pleading of the statement of claim and of the defence has not sufficiently focused the true nature of the allegations which are likely to be brought to trial by reason of the assertion in this paragraph 8 of the statement of claim. Neither party has sought directions requiring more particulars of these pleadings, and it appears to me that a need for this might well be avoided by the court following its usual practice, which would be now to require the applicant to file all his evidence in chief by way of affidavits, so as to flush out the factual basis for the asserted right to redundancy payments.
At the first court date, in view of the position taken by the parties, I did not explore the sufficiency of the present pleadings, nor press my usual procedures for bringing the matter to hearing. I noted the agreement for informal discovery, referred the matter to the Registrar for mediation, and adjourned the matter to a further directions hearing on 5 October 2012. Mediation was held before that date but was unsuccessful.
On 5 October 2012 the parties appeared before me in a situation where the applicant wished to move on an interlocutory motion seeking discovery, and resisted any directions for presenting his case by way of filing affidavits and a timetable for a hearing. I acceded to the applicant’s request that I should list the application for discovery, and today’s hearing has been listed for that purpose. There has been an exchange of submissions and the tender of some, but not all, of the relevant correspondence between the parties’ solicitors is in evidence.
It was common ground that some informal discovery has already been given by the respondents, and has included the provision of relevant documents relating specifically to Mr Winchester’s employment, the giving of assurances by the respondents’ solicitor as to the non‑existence of other documents, and the extraction by the respondent of some data in relation to the redundancies of other employees which was requested. However, Mr Winchester’s present position is that this informal process of informal discovery was insufficient to allow him fully to prepare his case, including by going into any evidence at this stage of the proceedings. For their part, the respondents opposed any orders by way of formal discovery, on grounds of relevance, form, appropriateness to the usual procedures and objectives of the Federal Magistrates Court, and prematurity.
Mr Winchester’s motion for discovery seeks discovery in the following terms:
Schedule
1.Any Lend Lease policy document in place from time to time during the Applicant’s employment that refers to redundancy, including but not limited to, any Lend Lease rules, guidelines, calculations, matrices or prescribed formula on how the “Lend Lease HR Transaction, Estimate of Final Termination Payments” were calculated.
2.All documents recording or evidencing:
a)The name of any employee of Lend Lease whose position was made redundant and whose employment was terminated as a result, in the period 1 July 2003 to 22 March 2012;
b)The length of service of each employee who meets the description in paragraph (a) above;
c)The base remuneration of each employee who meets the description in paragraph (a) above, at the time when their employment was terminated;
d)The contractual notice period that the employees who meets the description in paragraph (a) above were entitled to on termination;
e)Any termination payments (excluding statutory entitlements) made to any employee who meets the description in paragraph (a) above;
f)The process by which termination payments that meet the description in paragraph (e) above were prepared or approved within Lend Lease;
g)The method of calculation of any termination payments that meet the description in paragraph (e) above.
3.All documents recording or evidencing any communications in which reference is made to the calculation, payment, or proposed payment of a severance or redundancy benefit to any of the employees identified in paragraph 2(a) above.
4.Any Lend Lease rules, guidelines, calculations, matrices or policies on how the “Lend Lease HR Transaction, Estimate of Final Termination Payments” were calculated for the following people:
a)Simon Ashcroft
b)Dominic Browne
c)Margit Connellan
d)Nicolas Johnston
e)Oliver Torkel
f)Wayne Wilson
5.Any Lend Lease policy document in place from time to time during the Applicant’s employment that refers to calculation of notice on termination, including but not limited to, any Lend Lease rules, guidelines, calculations, matrices or prescribed formula on how the “Lend Lease HR Transaction, Estimate of Final Termination Payments” were calculated.
6.All documents recording or evidencing communications between Lend Lease and the Applicant in relation to the alleged new contract pleaded in paragraph 7(a) of the Defence.
7.All documents recording or evidencing the creation or existence of the role entitled ‘General Manager, Telecommunications’ referred to in paragraph 11(c) of the Defence.
8.All documents recording or evidencing Lend Lease’s offer to the Applicant of the role entitled ‘General Manager, Telecommunications’ as referred to in paragraph 13(a) of the Defence.
9.All documents recording or evidencing the alleged commencement of work by the Applicant in the role of ‘General Manager, Telecommunications’ referred to in paragraph 11(c) of the Defence.
10.All documents recording or evidencing any communication by Mr Constantino on or after 14 November 2011 in which reference is made to:
a.the verbal commitment alleged to have been given by the Applicant to Lend Lease as pleaded in paragraph 12(c) of the Defence; and
b.the verbal undertaking alleged to have been given by the Applicant to Lend Lease as pleaded in paragraph 12(c) of the Defence.
11.All documents recording or evidencing any communication between Murray Coleman and any other Lend Lease employee on or after 22 March 2012 in which reference is made to entitlements due to the Applicant upon termination of his employment.
For the purpose of the categories for discovery above, a reference to ‘Lend Lease’ is to be taken to mean ‘Lend Lease Project Management & Construction (Australia) Limited’ and its predecessors and parent entities, including but not limited to ‘Lend Lease Corporation Pty Ltd’ and any related entities that manage HR functions such as processing payroll and Termination Payments.
The court’s powers in relation to discovery are confined by s.45 of the Federal Magistrates Act 1999 (Cth), which provides:
45 Interrogatories and discovery
(1)Interrogatories and discovery are not allowed in relation to proceedings in the Federal Magistrates Court unless the Federal Magistrates Court or a Federal Magistrate declares that it is appropriate, in the interests of the administration of justice, to allow the interrogatories or discovery.
(2)In deciding whether to make a declaration under subsection (1), the Federal Magistrates Court or a Federal Magistrate must have regard to:
(a)whether allowing the interrogatories or discovery would be likely to contribute to the fair and expeditious conduct of the proceedings; and
(b)such other matters (if any) as the Federal Magistrates Court or the Federal Magistrate considers relevant.
Judgments of this court which were cited before me, including those of Lucev FM in Abrahams v Qantas Airways Ltd (No.2) [2007] FMCA 639, and of myself in Lawrance v The Commonwealth of Australia & Ors (No.3) [2007] FMCA 806, and Briggs-Smith v Moree Plains Shire Council [2012] FMCA 304, have emphasised that orders for discovery are exceptional in the proceedings in this court, and that the court needs to be persuaded that it is indeed in the interests of the administration of justice for the party seeking discovery to be afforded discovery in the terms sought, and also that it would advance the “fair and expeditious conduct of the proceedings” in accordance with the procedural objectives of this court as the lowest court in the Commonwealth Court structure.

In Briggs‑Smith, I said:
34.Judgments in this Court have emphasised the rare circumstances in which processes of formal discovery will be directed. In this Court, it is usual for evidence to be presented in advance of hearings, by way of affidavit, including the foreshadowing of documentary tenders, and for any additional documents required to be tendered by a party to be procured by way of focused subpoenas and notices to produce. Those processes are far less expensive than processes of discovery, requiring the taking of detailed instructions, preparation of verified lists, and processes of inspection etc.
I maintain that opinion, and would apply it in the present proceeding at its present stage of preparation. To that extent I accept the submissions of counsel for the first respondent, that is, that it is premature in the present state of the presentation of the applicant’s case, for the court to be able to be satisfied that any processes of formal discovery should be ordered. In particular, in my opinion, it is necessary for Mr Winchester first to go into evidence to show whether there exists any foundation at all for the existence of the suggested redundancy payment policies of the employer and for them to have been incorporated as part of the contracts of employment of its employees including Mr Winchester, whether expressly or by implication of ‘custom’, before the court should contemplate making the orders for extensive discovery sought today.
I say this because it appears to me that the obtaining of the documents, particularly those covered by categories 1 through 5 to the extent that the relevant information has not already been provided informally by the solicitors for the first respondent, does not hold any obvious prospect of providing admissible or useful evidence to assist the proof of Mr Winchester’s case for the existence of a contractual right to redundancy payments in his own contract of employment. As was suggested by Coghlan J in Tibaldi Smallgoods (Australasia) Pty Ltd v Rinaldi [2008] VSC 112 at [54], there could be no logical inference as to the existence of a contractual term in a particular contract of employment, merely by reason of evidence that in fact the employer has made redundancy payments to other employees, absent any foundation of evidence suggesting that those employees received these payments in circumstances common to the formation of Mr Winchester’s own contract, and did so pursuant to a right implied from circumstances which also existed in the formation of Mr Winchester’s own contract. Moreover, if Mr Winchester can provide evidence of circumstances surrounding the formation of his own contract of employment, whether in the nature of a generally known or assumed employment policy or practice or otherwise, giving rise to an implied term in his contract on principles of contract law, then evidence that other employees also benefited from such a policy or practice as part of their terms of employment would be both unnecessary and irrelevant, or at least likely to be excluded under s.135 of the Evidence Act 1995 (Cth).
These considerations suggest to me that to require the present respondents to give discovery in the terms now sought by Mr Winchester would be of dubious benefit to the administration of justice in the present case and be oppressive, if required at this stage in the proceedings. I say that bearing in mind not only that these are quasi‑criminal proceedings against the first respondent and second respondent, but also accepting their submission pointing to the extended definition of the related entities whose records are sought to be discovered. As is apparent, the first respondent is but one member of a global corporate organisation, and manifestly the investigation of the employment records of all of the members of that corporate structure who have been made redundant between 2003 and 2012, even if the names of these employees can readily be located, would be expensive and possibly protracted.
I do not consider that this should be ordered unless, and until, Mr Winchester has at least raised some evidentiary foundation to show clear relevance for such discovery, and real prospects that it would enable him to establish his claimed right to redundancy payments under terms expressly or implicitly forming part of his own contract of employment. I am not today persuaded that Mr Winchester will be able to present any foundation supporting paragraph 8 of his statement of claim, and I am not persuaded that he has shown the prospect of any real forensic benefits justifying the orders for discovery now sought.
I consider that the present motion for discovery should be dismissed, but without prejudice to Mr Winchester’s ability to apply afresh after he has presented his case to the court to the best of his present ability by way of affidavits of himself and other witnesses.
My above conclusions mean that I do not need to enter into the interesting questions as to whether principles of contract law allow the implication of terms on the basis of ‘custom and usage’ in a situation where the suggested ‘custom and usage’ is not that of a general industry in which the contract was negotiated and entered into, but is found in employment practices of a single employer in relation to numerous employees. I would observe only that I doubt whether the principles of terms implied merely from general industry ‘custom and usage’, which were identified by the High Court in Con‑Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226, [1986] HCA 14 at page 236 to 237, would be applicable. Nor, it appears to me, where those principles were cited in the context of contracts of employment in Byrne v Australian Airlines Ltd (1995) 185 CLR 410, [1995] HCA 24 at pages 422 to 423, and 440.
It may be that a terminated employee could establish a term of his or her employment which was not expressly referred to in written contract or other express communications at the time of formation, but is based on the employer’s generally known practices in relation to an employment benefit, on the basis that the employer’s acceptance of a contractual obligation to provide the benefit was “so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract” (c.f. Con‑Stan at page 241). However, it appears to me that the incorporation of a term of contract arising from such a practice would be based upon normal principles of formation of a contract with expressed and necessarily implied terms, by analysis of the mutually known and communicated circumstances under which the particular contract was negotiated. This would not be a situation in which contractual terms are implied without regard to the particular circumstances, by reason only of custom and usage of trade in a general industry under the principles considered in Con‑Stan.
However, it is unnecessary for me to explore those issues further, and they can be left for further examination once the basis for Mr Winchester’s allegations in paragraph 8 of his statement of claim is better shown. As I have indicated above, it merely appears to me at this stage that he should present his best case in support of that paragraph, before the court can assess whether discovery of the type now sought in relation to the circumstances of employment of other employees should be ordered.
In relation to other aspects of items 1 to 5 in the proposed discovery Schedule, where the first respondent has already provided documents, or given a response indicating the lack of documents, or a response providing some information extracted electronically but not actual employment records, it was submitted by counsel for Mr Winchester that there would still be a purpose in obtaining discovery to verify those responses. However, it does not appear to me that this court’s powers to order discovery should be invoked at this stage in the proceedings merely for the purpose, in effect, of enabling submissions and cross‑examination of witnesses called by the respondents concerning the denial of the existence of documents, or concerning documents informally produced or already available to Mr Winchester. It appears to me that these points can be better and more efficiently be prepared by serving a relevant notice to produce, later in the proceedings.
I take a similar view in relation to paragraphs 6, 7, 8, 9, 10 and 11 of the motion for discovery, in which I am informed that informal discovery has already proceeded between the parties. I am not shown any reason why at this stage Mr Winchester has grounds for doubting that these responses have not been honestly and bona fide been provided by the respondents’ solicitors. There again, it appears to me that if it is sought to establish that there is in existence other documents which have not been produced informally, or to obtain evidence as to the asserted non‑existence of any such documents, these elements of Mr Winchester’s case would be better pursued by way of notice to produce later in the proceedings in the run up to the hearing.
I have taken into account all the written and oral submissions that have been made to me today by Mr Winchester’s counsel, but I am not persuaded that this is a case where at this stage in the proceedings I can be satisfied in terms of s.45 that it is in the interests of the administration of justice to allow discovery. I consider that ordering discovery of the type sought at this stage is more likely to impede, rather than contribute to the fair and expeditious conduct of the proceedings.
Since this matter will now have to leave my docket and move to the docket of Lloyd‑Jones FM, it will be open to Mr Winchester to seek to persuade the new docket judge otherwise, later in the proceedings. However, I propose today to give directions for the completion of the filing of affidavits, and the full preparation of the matter by all parties for a hearing, which hopefully can be appointed by Lloyd‑Jones FM at the next listing.
I would urge upon the parties the benefits of focusing upon bringing the matter to an expeditious hearing with the objective of minimising costs on both sides, by focusing upon their claims and counter claims for which there is a real basis for expecting success, and discarding any peripheral or insubstantial claims and cross‑claims which might be theoretically available to them. This is not a court where litigants can expect the luxury of pursuing insignificant or insubstantial points, or engage in interlocutory skirmishes which merely put off the day when they will have to make practical decisions as to the issues to be pursued at trial.

I certify that the preceding thirty‑two (32) paragraphs are a true copy of the reasons for judgment of Smith FM

Date: 26 November 2012