FEDERAL COURT OF AUSTRALIA

Takemoto v Moody’s Investors Service Pty Limited [2010] FCA 1020  

THE COURT ORDERS THAT:

1.                  The application be dismissed with costs.

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                     These proceedings concern Mr Takemoto’s efforts to recover compensation for the termination of his employment by members of the international group of companies known as Moody’s.  Unfortunately, the proceedings have encountered procedural difficulties.  On 17 June 2010 Flick J refused to permit Mr Takemoto to amend his statement of claim, struck out his existing statement of claim but declined to give judgment against Mr Takemoto on a summary basis: Takemoto v Moody’s Investors Service Pty Limited (No 2) [2010] FCA 622.

2                     Mr Takemoto wishes now to appeal from one aspect of that decision, namely, his Honour’s determination that he would not permit an amended statement of claim to be filed.  Since that determination is interlocutory in nature Mr Takemoto must first obtain the leave of a judge of this Court before pursuing such an appeal: s 24(1A) Federal Court of Australia Act 1976 (Cth).

3                     The approach to be taken on such applications is that leave will usually only be granted when the applicant for leave is able to show that the order appealed from occasions substantial prejudice to him and that there is a reasonable argument that the order should be set aside: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399 per Sheppard, Burchett and Heerey JJ; applied Cement Australia Pty Ltd v Australian Competition and Consumer Commission [2010] FCAFC 101 at [20] per Keane CJ, Gilmour and Logan JJ.  As Décor shows those two questions are not necessarily to be compartmentalised.  The degree of prejudice required may fluctuate with the degree to which the point is arguable.  Further, the Décor test is not a rule of rigid application.  Neither of those principles, however, is presently pertinent. 

4                     The only orders under attack from Mr Takemoto are those relating to the primary Judge’s refusal to permit the filing of an amended statement of claim.  His Honour’s decision to strike out the current statement of claim is not challenged in the proposed appeal.  The power being exercised by the primary Judge was, therefore, the power to amend pleadings contained in O 13 r 2 of the Federal Court Rules: (“The Court may … order that any document … be amended”).   As such the power is discretionary and any appeal from it is necessarily circumscribed by the principles in House v The King (1936) 55 CLR 499 at 505 per Dixon, Evatt and McTiernan JJ.  This means that it must be shown that the judge exercised his discretion in an erroneous way by acting on a wrong principle, ignoring some material consideration, taking into account some extraneous or irrelevant material or mistaking the facts.  Each of those matters may also be demonstrated, in an appropriate case, if the decision is, on its face, plainly unjust or unreasonable. 

5                     The primary Judge’s reason for not granting leave to amend was that he regarded the proposed pleading as embarrassing in form.  There were two aspects to the proposed statement of claim.  First was a claim in contract, the second a claim under the Trade Practices Act 1974 (Cth).  I am not going to set forth the whole of the pleading but it is instructive, I think, to give four examples from the pleading to illustrate why the conclusions of the primary Judge are, with respect, plainly correct.  Paragraphs 1, 4, 9 and 10 of the proposed amended statement of claim are as follows:

1.         On 1 June 1990 the Applicant was engaged by Moody’s Japan KK, by way of a contract for service as Managing Director, Investors Service Group.

 …

4.         On or about 29 December 2003, by way of a letter dated 29 December 2003 (“The Employment Contract”) 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.

…       

9.         As 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.

10        In the alternative to paragraph 4 as a result of the mutually consensual transfer of the Applicant’s employment referred to in paragraph 6, the duties and obligations of Moody’s Japan KK were transferred to the Second Respondent including the same obligations in regard to the Career Transition Program. 

6                     Before me extensive written submissions were put on about the nature of the concept of transfer of employment in employment law, but these are beside the point.  The question is not whether the applicant has some conceivable case; rather it is whether the proposed pleading would be embarrassing.  Paragraph 4 makes no sense.  Worse, one is left in the dark as to whether what is involved is a Japanese contract of employment novated under Australian law (with all the implications that might carry in an industrial setting) or a fresh contract under Australian law.  Contrary to the submissions made, this is not some merely formal matter but goes to the heart of Mr Takemoto’s case.

7                     No error is disclosed therefore in the primary Judge’s approach to the contract claim.  The difficulty, if I may observe, is not some supposed underlying lack of merit in Mr Takemoto’s case.  It is, with respect, the manner in which the pleading put forward on his behalf has been drawn.  During the course of argument reference was made to the proposition that the standard of the adumbrated pleading would satisfy the requirements of the Industrial Relations Court of New South Wales.  I make no comment of whether that be so; it is sufficient to observe instead only that the pleading is not adequate in this Court.

8                     Mr Takemoto’s claim under s 52 Trade Practices Act 1974 is that he was told that he would have access to Moody’s euphemistically entitled Career Transition Program (which provided certain benefits to terminated employees); that he was not given access to that program when he was terminated; that his being told that statement was therefore misleading; and that, in these circumstances, he was entitled to be put in a position he would have been but for the making of the representation. 

9                     The mode of Mr Takemoto’s being told of his right to access the program was the principal difficulty that the primary Judge identified.  Mr Takemoto does not say that he was directly told as much.  Rather, he says that he was told three different things at three different times.  The first and second were said to him immediately prior to the transfer of employment in December 2003.  The first was that he would have access to all of the employee benefits programs available in any Moody’s company anywhere in the world; the second was that the programs which applied to Moody’s employees throughout the world applied to him.  The third matter was conveyed subsequent to his transfer in 2005. He alleges that he was told that the career transition program applied throughout the world.

10                  These three representations then lead to paragraphs 26 and 27 which are as follows:

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.

11                  The primary Judge reasoned that, as drawn, this allegation suggested that conduct in 2003 was caused by events occurring in 2005 and this was not logically sustainable.  I agree.  It may well have been possible to draw a claim based upon the first two representations but this is simply not what paragraph 26 does.  Near enough is not, in those circumstances, good enough.  No error is disclosed in the approach of the primary Judge.  For completeness, I reject the submission made in oral argument that it was not necessary for Mr Takemoto to know of the misleading and deceptive conduct.

12                  It 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.

13                  Contrary 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.

14                  The application is dismissed with costs. 

Associate:

Dated:         16 September 2010