FEDERAL COURT OF AUSTRALIA

Takemoto v Moody’s Investors Service Pty Limited (No. 2) [2010] FCA 622

THE COURT ORDERS THAT:

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.

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 Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1                     On 17 June 2009 the Applicant filed an Application and a Statement of Claim in this Court.

2                     The causes of action then relied upon were alleged breaches of s 52 or (in the alternative) s 53B of the Trade Practices Act 1974 (Cth) (“Trade Practices Act”) and breach of contract.

3                     A Notice of Motion filed on 8 February 2010 on behalf of the Respondent sought an order that various paragraphs of the Statement of Claim be struck out. There had also been, on 16 November 2009,a Notice of Motion filed on the Applicant’s behalf seeking leave to amend that Statement of Claim. Those Motions have been resolved: Takemoto v Moody’s Investors Service Pty Limited [2010] FCA 407.

4                     Now before the Court are:

·                    a further Notice of Motion filed on 14 May 2010 seeking leave to amend the existing Application and Statement of Claim in the form annexed to that Motion; and

·                    an application made orally during the course of a hearing on 11 June 2010 to amend the Statement of Claim in a yet further revised form as provided to the Respondent by way of a letter dated 8 June 2010.

The application made orally, it may be accepted, was but the product of tentative views expressed during the course of a Directions Hearing held on 7 June 2010.

5                     Counsel for the Respondent opposes either form of amendment and seeks an order that so much as remains of the original Statement of Claim be now struck out. The claim for breach of contract, it is contended, should be struck out pursuant to O 11 r 16 of the Federal Court Rules; the Trade Practices Act claim now advanced, it is contended, should be either struck out pursuant to O 11 r 16 or that summary judgment should be entered against the Applicant pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (“Federal Court of Australia Act”).

6                     Oral submissions entertained on 11 June 2010 focussed attention exclusively upon the most recent attempt to re-plead the causes of action. No submissions were directed on behalf of the Applicant to the merits of the form of pleading contemplated by his Notice of Motion filed on 14 May 2010.

7                     The principles to be applied have previously been canvassed in Takemoto v Moody’s Investors Service Pty Limited [2010] FCA 407 at [7] to [13]. They need not now be repeated.

8                     It is considered that both of the applications as made on behalf of the Applicant should be rejected and that the proceeding in its entirety should be struck out pursuant to O 11 r 16.

The Contract Claim

9                     The claim sought to be pleaded in respect to an alleged breach of contract is set forth in paragraphs [1] to [22] of the further revised form of theAmended Statement of Claim.

10                  Notwithstanding what has, from the outset, been understood to be a comparatively simple claim in contract, the form of proposed pleading still containsfundamental deficiencies.

11                  Those deficiencies are essentially two-fold, namely:

·                    the identification of the contract sought to be relied upon by the Applicant; and

·                    the identification of the terms of that contract, be they express or implied.

The essence of the claim sought to be advanced is understood to be a wrongful termination of a contract of employment and the failure to provide reasonable notice of termination. Understandably, the course the Applicant seeks to pursue is to establish any contract for as long a period of time as possible – the length of time, arguably, affecting the extent of notice that should be given.

12                  However, the Applicant has encountered considerable difficulty in doing so by reason of the lack of any precision in the pleading proposed to be relied upon.

13                  Paragraph [1] of the further revised Amended Statement of Claim refers to a “contract for service”, being a contract whereby, on 1 June 1990, the Applicant was engaged by Moody’s Japan KK. Paragraph [4] refers to an “Employment Contract” dated 29 December 2003 whereby “the Applicant’s contract was transferred from the position referred to in paragraph [1] to the position of Managing Director Investors Service Group Moody’s Australia Pty Ltd”. The manner in which the “contract was transferred” is not set forth. However, it is pleaded that the Applicant’s contract was transferred “by way of letter”. Although the June 1990 “contract for service” may have potentially conferred a contractual entitlement to “transfer” the Applicant from one position to another, the concept of the “contract” itself being transferred is elusive.

14                  Paragraph [2] of the proposed Amended Statement of Claim refers to Japan KK “ha[ving] in place a Career Transition Program”. Nowhere is it pleaded that the “Career Transition Program” is or was a term of either the “contract for service” or the “Employment Contract”. But it is pleaded in paragraph [9] that “[a]s a result of the mutually consensual transfer of the Applicant’s employment referred to in paragraph 4, the duties and obligations of Moody’s Japan KK were transferred to the First Respondent including the obligation to pay him benefits equivalent to the Career Transition Program on termination”. The manner in which those “duties and obligations” were “transferred” in some legally effective manner, again, is a matter that remains elusive.

15                  And, notwithstanding the absence of any allegation that the “Career Transition Program” was a term of either of the two contracts referred to in paragraphs [1] and [4] of the further revised Amended Statement of Claim, a further source of potential confusion isoccasioned by the allegation in paragraph [16] that it “was a further term of his contract embodied in the Career Transition Program” that the Applicant “would receive fifty two (52) weeks salary on termination”. Whether the “term” referred to in paragraph [16] was express or implied and how any such term was “embodied” in the Career Transition Program is also left unspecified.

16                  Presumably in recognition of the difficulties that may be encountered by reason of paragraph [4], paragraph [22] pleads an alternative claim. That proposed paragraph states as follows:

Alternatively, to what is claimed in paragraph 4 if it be the case that the movement of employment from Japan to Australia effected a termination of the Applicant’s employment contract and the commencement of a new employment contract with the First and/or the Second Respondent, then the Applicant says that the First and/or the Second Respondent impliedly undertook to meet any obligation of Japan KK pursuant to the Career Transition Program.

The manner in which it is said that one or other of the Respondents “impliedly undertook to meet any obligation” is left unstated. To the extent that the Applicant in his written submissions sought to contend, in the alternative to assignment, that paragraph [22] is a pleading as to the novation of a contract, the paragraph simply does not plead any novation.

17                  There remains uncertainty – if not unexplained inconsistency – in the manner in which the Applicant seeks to advance his claim in contract.

18                  It is thus considered that leave to amend in the form sought to be set forth in paragraphs [1] to [22] of the further revised Amended Statement of Claim should be refused.

19                  The balance of the Statement of Claim as filed on 17 June 2009 should also be struck out.

The Trade Practices Claim 

20                  The trade practices claim was previously sought to be pleaded in paragraphs [6] to [12] of the Statement of Claim as filed on 17 June 2009. Those paragraphs have already been struck out: Takemoto, supra, [2010] FCA 407.

21                  The Notice of Motion filed on 14 May 2010 did not seek that leave to amendinclude any claim for contravention of the Trade Practices Act 1974 (Cth).

22                  Presumably as a matter of abundant caution, correspondence was exchanged on 10 and 12 May 2010 between the solicitors for the parties confirming that no objection would be taken by the Respondent to the continuing jurisdiction of this Court to hear and resolve a claim exclusively in contract.

23                  Despite that assurance, the most recent proposed Amended Statement of Claim again seeks to place reliance upon a contravention of the Trade Practices Act; the proposed amendments relying upon ss 51A and 53B of that Act.

24                  An explanation for the Applicant’s change of position may well have been expected in such circumstances: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27, 239 CLR 175. Gummow, Hayne, Crennan, Kiefel and Bell JJ there observed:

[103] The fact that an explanation had been offered for the delay in raising the defence was regarded as a relevant consideration in JL Holdings. Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court’s attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case. [footnotes omitted]

Rule 21 was a rule there directed to the “just resolution” of the real issues in civil proceedings. Their Honours further observed:

[111] An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. Statements in JL Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases. On the contrary, the statements are not consonant with this Court’s earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future. [footnotes omitted]

See also: Beck v Corrs Chambers Westgarth [2010] FCA 552 at [16] to [27] per Ryan J; Strong Wise Limited v Esso Australia Resources Pty Ltd (No 2) [2010] FCA 575 at [54] and [59] to [63] per Rares J.

25                  No explanation has been advanced as to why the Applicant has changed his course. The absence of any such explanation, however, remains but one consideration to be taken into account. The time that has elapsed since the commencement of this proceeding in June 2009 and the present, and the repeated attempts to satisfactorily plead a comparatively simple case are also mattersof concern.

26                  But the need for an explanation can be left to one side. The claim sought to be advanced remains so fundamentally flawed that no leave should be granted to plead the case in the manner proposed.

27                  Paragraphs [23], [24] and [25] of the further revised form of the Amended Statement of Claim plead the making of three representations. The paragraphs that assume central importance for the Trade Practices claim are paragraphs [25], [26] and [27] which are in the following terms:

25.                On or about 2005, the First and/or the Second Respondent represented to the Applicant that the Career Transition Program applied throughout the world (“the third representation”).

Particulars

(a)       The Applicant observed that policy documents relevant to the Career Transition Program were posted on the Moody’s group intranet, which was able to be accessed by employees of Moody’s companies on a worldwide basis.

26.                On the basis of the first, second and third representations, the Applicant concluded that the Career Transition Program relevant to Moody’s Japan KK would apply to the Applicant regardless of the country in which the Applicant worked and would be available to him if and when he was terminated.

27.                But for the conclusion referred to in paragraph 26, the Applicant would not have agreed to enter into service with the First and/or the Second Respondent on 29 December 2003.

28                  Whatever may be the status of the representations in paragraphs [22] and [23], paragraph [26] makes clear the proposition that it was upon the basis of all three representations that the Applicant “concluded that the Career Transition Program” would apply to him. And, “[b]ut for th[at] conclusion”, the Applicant maintains that he would not have “agreed to enter into service with the First and/or the Second Respondent on 29 December 2003”. How a representation made in 2005 could have formed the basis (in whole or in part) for any action taken in 2003 remained unexplained. Nor can the date in paragraph [25] be regarded as either an oversight or perhaps a date permitting some degree of latitude. An affidavit of Mr Takemoto filed on 14 October 2009 confirms the 2005 date and fixes that date as follows with a degree of certainty:

[35.]     In or about 2005, I recall I read a Career Transition Program (“CTP”) document on the company intranet. I recall that in or about the first half of 2005, I went for a business trip to Tokyo. It was there on the company intranet that I read the CTP.

While the present application is to be resolved by reference to the terms of the proposed pleading and not the affidavit, the affidavit has been referred to solely for the purpose of determining whether the date in paragraph [25] was a typographical error. It was not.

29                  This is a sufficient basis upon which leave to amend should be refused. That decision is only supported by a recognition of the fact that paragraph [23] particularises the representation there pleaded as having been made by the First and Second Respondent in a conversation “in the year 2000”. But the proposed Second Respondent, Moody’s Australia Pty Limited, was only incorporated in January 2001.

30                  No leave should be granted to plead reliance upon the Trade Practices Act where there is such uncertainty.

Conclusion

31                  The 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.

32                  Nor should leave be granted to plead the proposed Trade Practices Act claim in the manner suggested.

33                  The 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.

34                  Although 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

35                  The 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.

Associate:

Dated:         17 June 2010