FEDERAL COURT OF AUSTRALIA

Thompson v HFA Asset Management Ltd [2008] FCA 1926

PRACTICE AND PROCEDURE – application for proceedings to be consolidated or heard together with other proceedings

Held: notice of motion adjourned

Federal Court Rules

Trade Practices Act 1974 (Cth)

Bishop v Bridgelands Securities (1990) 25 FCR 311

ALASTAIR THOMPSON v HFA ASSET MANAGEMENT LTD and HFA ADMIN PTY LTD

NSD 1702/2008

PAUL JENSEN v HFA HOLDINGS LTD and HFA ADMIN PTY LTD

NSD 2166/2007

JAGOT J

12 DECEMBER 2008

SYDNEY

THE COURT ORDERS THAT:

1.                  The notice of motion is adjourned until 27 January 2009.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                     This is an application by the respondents that proceedings NSD1702 of 2008 (the Thompson proceedings) be consolidated or heard together with proceedings NSD2166 of 2007 (the Jensen proceedings).  Mr Jensen opposed the making of these orders whereas Mr Thompson was content to submit to any order of the Court.

2                     The Jensen proceedings involve a claim by Mr Jensen against HFA Holdings Limited and HFA Admin Pty Ltd for breach of an employment contract.  Mr Jensen was employed by the second respondent as its chief executive officer until termination of his contract of employment in September 2007.  Mr Jensen claims that the termination was unlawful and that he has suffered loss and damage as a result.  He makes alternative claims for damages under the Trade Practices Act 1974 (Cth).  The respondents in the Jensen proceedings claim that the termination was lawful by reason of Mr Jensen having engaged in serious misconduct.  There are five allegations of conduct in support of this claim two of which relate to aspects of the employment of Mr Thompson.  These aspects are an alleged failure to disclose to the Board a salary increase for Mr Thompson from a particular date and the making of a payment to Mr Thompson’s company for work not done or already paid for and that resulted in Mr Thompson’s salary exceeding the budgeted staff costs disclosed to the Board.  In a cross-claim in the Jensen proceedings the respondents also claim from Mr Jensen an indemnity against any liability to Mr Thompson arising from the termination of Mr Thompson’s employment.

3                     The Thomson proceedings involve a claim by Mr Thompson against HFA Asset Management Limited and HFA Admin Pty Ltd for breach of an employment contract by way of unlawful termination and associated claims for breach of the Trade Practices Act.  The statement of claim in the Thompson proceedings refers to a series of communications between Mr Jensen and Mr Thompson resulting in Mr Thomson being employed by HFA Admin Pty Ltd on 1 July 2007.  His employment was subsequently terminated on 19 September 2007.  No defences or cross-claims have been filed in the Thompson proceedings as a result of the notice of motion for consolidation being raised at the first directions hearing for that matter.

4                     Order 29 r 5 of the Federal Court Rules provides as follows:

Where several proceedings are pending in the Court, then, if it appears to the Court:

(a)     that some common question of law or fact arises in both or all of them;

(b)     that the rights to relief claimed therein are in respect of, or arise out of, the same transaction or series of transactions; or

(c)     that for some other reason it is desirable to make an order under this rule;

the Court may order those proceedings to be consolidated or may order them to be tried at the same time or one immediately after another or may order them to be stayed until after the determination of any of them.

5                     The respondents submitted that it would be in the interests of justice that the proceedings be consolidated or heard together as: - (i) both proceedings raised common questions of law and fact concerning Mr Jensen’s employment of Mr Thompson, (ii) the same issues arising in the defence and cross-claim in the Jensen proceedings would form part of a likely cross-claim against Mr Jensen in the Thompson proceedings, (iii) without orders being made the Court will have to determine the facts relating to Mr Jensen’s employment of Mr Thompson twice, raising the prospect of increased cost and delay and inconsistent findings, (iv) there is no evidence of actual or potential prejudice to Mr Jensen, there being no reason why the Thompson proceedings could not also be ready for hearing on the dates allocated for the hearing of the Jensen matter (27 April to 1 May 2009).  The respondent submitted that these factors gave rise to a compelling case for the making of the orders sought.  The respondent also said that the lack of a defence and cross-claim in the Thompson proceedings could not be put against the respondents as the docket judge for those proceedings had declined to make orders requiring the filing and service of the defence and cross-claim pending the resolution of the issue of consolidation or a joint hearing.  Consideration would have to be given to amending the defence and cross-claim in the Jensen proceedings to deal with the matters raised in the Thompson proceedings.

6                     Mr Jensen submitted that: - (i) as the pleadings currently stand there are no common issues of fact and law, (ii) the Court should not engage in speculation about the content of future pleadings, particularly given the lack of any draft defence or cross-claim in the Thompson proceedings or certainty about a cross-claim or its content, and (iii) Mr Jensen would be prejudiced by the making of the orders in a number of respects.  The claims of misconduct in the Jensen proceedings relating to the employment of Mr Thompson were but two of five matters.  Those two matters were put on a specific basis and did not relate generally to Mr Thompson’s employment.  Those two matters were far narrower than the representation case alleged by Mr Thompson.  If the orders are made Mr Jensen would be at risk of cross-examination on the claims made by Mr Thompson which have no relevance in his own proceedings whilst giving a collateral forensic advantage to the respondents (by avoiding the issue of whether to call Mr Jensen in the Thompson proceedings and Mr Thompson in the Jensen proceedings).  Mr Jensen wished to maintain the hearing date (some 19 months after his termination) and the making of the orders would lead to its vacation.  The respondents’ defence in the Thompson proceedings may raise claims of misconduct against Mr Thompson but that is not presently known.  The number of unrelated issues means that any order for consolidation or a joint hearing will have limited capacity to save time and expense for the Court and the respondents but will increase the time and expense for Mr Jensen including by reason of a need for regular rulings on the admissibility of evidence in one or the other or both proceedings.  An issue whether the applicants may be represented separately or not will also arise if the proceedings are consolidated.  The Court could not be “affirmatively satisfied” that the orders would not result in unfairness to Mr Jensen (Bishop v Bridgelands Securities (1990) 25 FCR 311 at 314).

7                     There is considerable force in the submission on behalf of Mr Jensen that neither he nor the Court should have to speculate about the nature and degree of the overlap between the issues in the Jensen and the Thompson proceedings in the final form they take.  Similarly I accept that there are issues in both sets of proceedings which are not common (including the terms of their respective contracts of employment, what might or might not amount to serious misconduct having regard to those contracts and claims about Mr Jensen’s conduct unrelated to the employment of Mr Thompson).  Nevertheless a central issue in the Jensen proceedings is whether the identified aspects of the employment of Mr Thompson constituted misconduct warranting summary dismissal.  The statement of claim in the Thompson proceedings refers to the same aspects of Mr Thompson’s employment albeit in the different context of his claims.  It would be unrealistic not to recognise that there is potential for overlapping issues and evidence in both proceedings.  The indemnity sought in the cross-claim in the Jensen proceedings for any liability the respondents may have to Mr Thompson indicates this potential.  This does not require consolidation of the proceedings but indicates that there are reasons why it might be in the interests of justice that the proceedings be heard together.

8                     I do not consider that the risk to the hearing date in the Jensen proceedings outweighs the potential for an overall saving in time and cost for the resolution of both proceedings (albeit accepting that hearing the matters together will be likely to result in a lengthier hearing than each individual matter, particularly for the Thompson proceedings).  If the hearing date cannot be preserved, the delay should not be inordinate.  Rulings on evidence would be required but this is not uncommon and will depend on the final form of the pleadings.  However, I am concerned about not being able fully to assess any potential unfairness to Mr Jensen by reason of not having the defence and any cross-claim in the Thompson proceedings and the foreshadowed possible amendment to the defence and cross-claim in the Jensen proceedings.  I consider that an order that the proceedings be heard together should not be made unless and until the pleadings and (perhaps) the primary evidence is complete so that a proper assessment of all relevant issues can be made.  To facilitate this occurring it seems to me that: - (i) directions should be made in the Thompson proceedings for the balance of the pleadings and evidence, (ii) any outstanding issues for directions in the Jensen proceedings should be resolved (including varying the timetable where there has been breach), (iii) the hearing dates in the Jensen proceedings should be maintained if possible at this stage but recognising that the dates may need to be varied to accommodate a hearing with the Thompson proceedings, and (iv) a common mention date for both proceedings should be fixed after the completion of the required steps with the notice of motion to be adjourned for any further hearing on that day.  I propose to make directions, in consultation with the parties, to this effect.

Associate:

Dated:         12 December 2008