FEDERAL COURT OF AUSTRALIA

Takemoto v Moody’s Investors Service Pty Limited [2014] FCA 1403

THE COURT ORDERS THAT:

1.    Leave be granted to the applicant to amend the interlocutory application for leave to appeal to include a prayer for leave to appeal from Order 3 of the Orders made on 28 October 2014.

2.    On or before 4:00 pm on 2 December 2014, the applicant file and serve

(a)    an amended application for leave to appeal; and

(b)    submissions of no more than four (4) pages (without incorporation of other submissions by reference) that deal with

(i)    any asserted error of the primary judge;

(ii)    identification with precision what material must be examined to assess that asserted error; and

(iii)    any other consideration as to why leave should be granted.

3.    On or before 4:00 pm on 8 December 2014, the respondent file and serve submissions of no more than four (4) pages as to why leave should be refused.     

4.    Leave to appeal against Orders 1 and 2 of the Orders made on 28 October 2014 be refused.

5.    The applicant pay the costs of the respondent of the interlocutory application to date.

6.    The hearing of the amended application for leave to appeal be stood over to a date to be fixed in consultation by the parties jointly with the Associate to Allsop CJ.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1        This is an application for leave to appeal from orders made by a judge of the court dismissing parts of a claim made by the applicant under s 31A of the Federal Court of Australia Act 1976 (Cth). Those orders were made on 28 October 2014 giving effect to reasons published on 10 October 2014. The two parts of the claim were a breach of contract claim, and a misleading and deceptive conduct claim. I will identify shortly some detail of the background to these, but the orders made encapsulate one of the fundamental difficulties which the applicant had, and which I will explain in a moment. The terms of those orders were as follows:

1.    Pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth), there be judgment for the Respondent in relation to the Applicant’s claim for damages for:

(a)    breach of contract arising out of the alleged failure of the Respondent to make a payment to the Applicant pursuant to the Career Transition Program (pleaded in paragraphs 4 to 11 (inclusive), 16, 17, 21, 22, 25, 28, 29, 29A and 29B of the Further Amended Statement of Claim filed 29 August 2014); and

misleading or deceptive conduct arising out of the alleged misrepresentations made to the Application in respect of the Career Transition Program (paragraphs 3 and 30 to 51 (inclusive) of the Further Amended Statement of Claim filed 29 August 2014).

2.    The Applicant pay the Respondent’s costs of and incidental to the Respondent’s Amended Interlocutory Application filed 3 September 2014.

3.    The Applicant’s Interlocutory Application signed 17 September 2014 be dismissed.

4.    The Applicant pay the Respondent’s costs of and incidental to the Applicant’s Interlocutory Application signed 17 September 2014.

5.    The Applicant file and serve a Second Further Amended Statement of Claim in the form annexed and marked “A” to these orders by 31 October 2014.

2        The primary judge also dismissed the applicant’s interlocutory application dated 17 September 2014. That interlocutory application was an application to further amend the statement of claim. The history of this matter is unfortunate. An earlier version of the complaints of the applicant was dealt with by the primary judge as docket judge when he struck out the proceeding in 2010. Leave to appeal from that strikeout was dismissed in 2010. The details of these proceedings are in the first few paragraphs of his Honour’s reasons below. The applicant then commenced proceedings in the Federal Magistrates Court as it was then known in 2012 and the matter was referred up to this court and docketed to the primary judge who had the familiarity with the matter. Thus, it should be understood on this leave application that the learned primary judge has an intimate knowledge of the procedural history of this matter, and the terms of its enunciation in the pleadings by successive dealings with the matter since 2009.

3        The reasons published on 10 October are 106 paragraphs and 39 pages. Length, of course, is not a question of or reflection of quality, nevertheless, his Honour’s careful reasons, if I may respectfully say, reveal a precise understanding of the issues in the case. The broad facts can be identified quite simply. The applicant, Mr Takemoto, was a senior officer of a company in what I will call the Moody’s stable, a company known as Moody’s Japan K.K. I will not seek to describe the business of Moody’s other than investment and advisory house of worldwide standing and reputation. Mr Takemoto was the managing director of an investor’s services group in Japan from June 1990. He came to Australia in 2003 to work for the local Moody’s company, once again, as a senior executive-styled Managing Director, but taking an equivalent position and responsibilities to that which he held in Japan.

4        In the middle of 2006 his services were terminated in Australia. The notice that he was given was under a month. Broadly, Mr Takemoto complains about the payout he was given and the basis for the payout. The essential or at the core of his complaint is that he was told by a superior in Moody’s, a Mr Keller, in 2003 before he moved that his terms and conditions would remain the same in Australia as they were in Japan, and that he would be entitled to all programs available to employees of Moody’s of a similar position and standing as he. That broad statement of the matter may lack a degree of precision, but it is reflected in material that has been put on and that was before the primary judge, first of all in [30]-[31] of Mr Takemoto’s affidavit of October 2009 that was annexure B to the affidavit of his solicitor of 19 February 2014.

5        The other material upon which that summary of mine is based is [21] of the outline of evidence in relation to the trade practices claim filed on 15 September 2014 before the primary judge. An important consideration in relation to any such statement of equivalence of conditions and programs and benefits was that in Japan labour law and conditions of employees was governed by a Japanese code which expressly included an obligation of good faith by the employer. I was not taken to it in detail today though the offer was made. It was unnecessary but there is expert evidence that has been filed in the proceedings as to Japanese law.

6        Mr Takemoto’s case, in essence, is that he was told by a representation something about how he would be treated by way of an equivalence when he came to Australia and that it would be relevantly the same as in Japan. The difficulty facing those seeking to defend the further amended statement of claim is that the contract claim and the trade practices claim when one looks at its totality were founded upon the assertion of the existence of a “Career Transition Program” in Japan that Mr Takemoto was denied the benefit of.

7        Before coming to the reasons of the primary judge in relation to the application under s 31A I should add that the application that was before his Honour was also one under r 16.21 of the Federal Court Rules 2011 for the strikeout of these parts of the statement of claim. The primary judge’s reasons indicate that he would otherwise have struck out the parts of the statement of claim but his Honour’s orders were based on the more foundational application of s 31A. The application of the applicant that was before his Honour, that is, the applicant’s interlocutory application signed 17 September 2014, was one to amend the further amended statement of claim. That application was dismissed.

8        Importantly for present purposes, as the primary judge noted, there was an abandonment in that amended pleading upon the Career Transition Program. That had come about because the evidence was led on the s 31A application on behalf of the respondent of the irrelevance of that program to Japanese executives at the time of the conversations with Mr Keller, and Mr Takemoto had apparently become aware of that program sometime after 2003. Thus, his Honour was faced with dealing with a contract that was founded upon contractual nature of – the asserted contractual nature of the program – Career Transition Program and the place of the career transition program in the trade practices claim.

9        It was submitted before me that the Career Transition Program was not central to the trade practices claim and references were made to [30]-[31] of the second further amended statement of claim the subject of the applicant’s application. However, when one looks at the totality of the pleading being the further amended statement of claim the subject of the respondent’s application and the crucial place of the Career Transition Program in [37], [37A], [38], [39] and [41] of the further amended statement of claim, the crucial place of the Career Transition Program is self-evident. The essence of the error of the primary judge was said to be found in [68]-[69] of his reasons. Before I set those out it is of utility to set out [21] of the outline of evidence of Mr Takemoto filed on 15 September 2014:

I would also like to make the following comments about that meeting

i)    I recall asking Mr Keller

“whether my working accountabilities and conditions including stock options and benefits would remain the same upon my move to Australia”.

ii)    Mr Keller said that

“all my accountabilities and benefits would remain the same and all programs available to the employees of Moody’s were available to me”.

iii)    I understood Mr Keller to be referring to programs available to senior employees upon retirement or termination.

iv)    Later on I found out the label for these programs namely the Career Transition Program, which I believe that Mr Takizawa and others in New York and London received.

v)    I discovered this label in 2005 when I saw the Career Transition Program on the company intranet (as referred of paragraph 38 of my Further Amended Statement of Claim and paragraph 38 of my affidavit sworn 12 October 2009). I have been using that label since to refer to the benefits payable me on the basis of what was received by Mr Takizawa and later by Mr Yamauchi and

10        In [68] and [69] the primary judge said the following:

Nor can the absence of any evidence supporting any of the four “representations” be filled by some “understanding” on the part of Mr Takemoto as to what he thought Mr Keller may have been referring to. The Outline of Evidence makes apparent the basis of Mr Takemoto’s “understanding”. And the basis of that “understanding” is not anything said by Mr Keller – but rather is founded upon a conversation between Mr Takemoto and Mr Takizawa. The Outline of Evidence thus refers to a conversation between Messrs Takemoto and Takizawa at some time in 2003 when Mr Takizawa is recorded as having said:

“I am going to leave Moody’s soon.”

“I will be paid an incentive to leave and to retire.”

“My pay is enough so I can spend 9 months in China studying its history.”

Mr Takizawa is also recorded as having said:

“Moody’s were starting to pay executives to leave.”

There is no account of Mr Keller having said anything to like effect. If the case sought to be advanced is that a statement was made or a representation was made by Mr Keller as to Mr Takemoto being entitled to benefits under the Career Transition Program or an entitlement to a benefit commensurate with that paid to Mr Takizawa, there is no evidence to support such a contention. If the case sought to be advanced is in some manner dependent upon an “understanding” on the part of Mr Takemoto, there is no evidence of any statement made by Mr Keller (or anyone else with apparent authority) which would provide any support for any such “understanding”. A conversation between employees may assume passing interest – but no relevance.

11        What was said in relation to those was that his Honour did not take into account the possibility of a cogent cross-examination of Mr Keller; that Mr Keller knew what Mr Takemoto was talking about and that he did not clarify Mr Takemoto’s understanding. It was said that both were very experienced men in the field that Moody’s was engaged in and both were very experienced, Mr Takemoto, obviously, by birth and nationality, and Mr Keller by experience, in relevant Japanese business cultural considerations that may attend that type of conversation.

12        Given the centrality of the Career Transition Program to both the contract claim and the trade practices claim, I am not prepared to conclude that the primary judge in [68]-[69] has demonstrated any error and, therefore, in the application as it is presently framed, that is, an application for leave to appeal from the primary judge, deeply familiar with the conduct of this matter, from his assessment of the reasonable prospects of success of a claim as framed, I am not prepared to conclude that there is any error.

13        Late in the application, Mr Berwick, appearing for Mr Takemoto, sought orally to amend the application for leave to appeal - to incorporate a complaint and an application for leave to appeal from the refusal to allow Mr Takemoto to further amend his statement of claim. That question was dealt with by the primary judge towards the end of his Honour’s judgment at [46]-[56] and [97]-[103]. Mr Bova had no notice of this, and I will deal with questions of fairness and notice. This issue raises different considerations. Fundamental to it is the recognition by Mr Takemoto of the now irrelevance and lack of appropriateness of founding his claiming (after so many years) on the Career Transition Program. A question arises as to whether or not there is some legitimate case that might go to trial on a foundation which does not impermissibly link the claim to a so-called program of no relevance to Japanese employees of Moody’s. It is plainly unjust for this argument to take place today.

14        The respondent had no notice of this application and it is a quite different application. To avoid unnecessary difficulties with time, what I propose to do is to indicate that I will permit the amendment of the interlocutory application, to be filed and served no later than midday tomorrow, together with an outline of submissions, including an identification of all material relied upon in that amended application. It should be noted that the remaining part of the pleading, which presently is the only part of the pleading that will go to trial, is a claim based on inadequate notice for determination and the financial consequences that would flow from that. One would have thought that the totality of what had passed between Mr Takemoto and Moody’s Japan K.K including what Mr Keller said to him, including what he was paid out under his termination with the Japanese company, and including what the parties could reasonably anticipate Japanese law would provide him with would be relevant considerations to a movement from one Moody’s company to another in circumstances where it was said to him that there would be no financial disadvantage from his movement from Japan to Australia.

15        Nevertheless, I am not pleading the matter for Mr Takemoto, others are. The matter that concerns me is that if in the second further amended statement of claim there is a count, in particular, in relation to the Trade Practices Act 1974 (Cth), though, perhaps, also the contract claim, that can be seen to have some coherence to what is probably an otherwise straightforward commercial context then I may be concerned that Mr Takemoto has not been given that opportunity. That said, I do not in any way underestimate or fail to give weight to the likely knowledge and experience of a docket judge of five years who has come to the point where the submission of respondent’s counsel that enough is enough has the attraction that it seemed to have had.

16        I am not the docket judge, but I will conditionally permit the interlocutory application to be amended. The condition is that the amendment does not prejudice the respondent in any way putting argument that it would put in opposition to the application being amended. In other words, simply dealing with the question of time.

17        Thus, the orders I would make today are as follows:

a.    Leave be granted to the applicant to amend the interlocutory application for leave to appeal to include a prayer for leave to appeal from Order 3 of the Orders made on 28 October 2014.

b.    On or before 4:00 pm on 2 December 2014, the applicant file and serve

i.    an amended application for leave to appeal; and

ii.    submissions of no more than four (4) pages (without incorporation of other submissions by reference) that deal with

1.    any asserted error of the primary judge;

2.    identification with precision what material must be examined to assess that asserted error; and

3.    any other consideration as to why leave should be granted.

c.    On or before 4:00 pm on 8 December 2014, the respondent file and serve submissions of no more than four (4) pages as to why leave should be refused.     

d.    Leave to appeal against Orders 1 and 2 of the Orders made on 28 October 2014 be refused.

e.    The applicant pay the costs of the respondent of the interlocutory application to date.

f.    The hearing of the amended application for leave to appeal be stood over to a date to be fixed in consultation by the parties jointly with the Associate to Allsop CJ.

Associate:

Dated:    1 December 2014