AMP Financial Planning v Green

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

6489/03 AMP FINANCIAL PLANNING PTY LTD & ANOR v GARY SYDNEY GREEN & ANOR JUDGMENT - Ex Tempore 1 HIS HONOUR: This is an application which is made by AMP Financial Planning Pty Ltd ("AMPFP") and AMP Life Limited ("AMP") under section 8(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987. The application is neither consented to, nor opposed by, the defendants. It seeks the removal into this Court of proceedings which have been commenced in the Industrial Relations Commission of New South Wales. 2 Those proceedings were begun on 25 February 2002 by the defendants, who are Mr Green and a company through which he carried on business. Mr Green had been an agent of AMP, and had also been a representative of AMPFP. The agreement with AMP enabled him to sell insurance. The agreement with AMPFP enabled him to provide financial advice and sell investment products. AMP and AMPFP cancelled those agreements effective from 5 April 2002. They were cancelled pursuant to notice, and it was after that notice had been given that Mr Green and his company began the proceedings in the Industrial Relations Commission to which I have referred. 3 The agreement with AMPFP contains in it certain obligations on the part of Mr Green to comply with requirements set out in documents described as "the Compliance Manual", and "The AMP Code of Conduct current from time to time", as well as the Corporations Law, the various "Insurance Acts" and all other applicable laws. The agreement also contains an obligation on the part of, it seems, Mr Green and his company, to indemnify AMPFP against losses which it suffered as a direct or indirect consequence of, amongst other things: "(b) any breach of this agreement by You or the Agent; or (c) any breach of the Compliance Manual or the AMP Code of Conduct by You".

In this indemnity "the Agent" referred to Mr Green's company. 4 The indemnity was stated to apply only in certain circumstances, which included circumstances where the loss or liability of AMPFP resulted from the negligence, error or omission, or failure to comply with lawful instructions given by AMPFP, of either Mr Green or his company. 5 In the proceedings in the Industrial Relations Commission there have been various attempts to articulate a claim in a quasi-pleading document. The current form of the summons includes complaints by Mr Green and his company that in relevant respects he had not been provided with proper training, and that there never was any Compliance Manual issued to him. There are also complaints which cover a wide ground concerning the conduct of the various AMP companies in relation to Mr Green's business. There are two particular funds which were invested in by various of Mr Green's clients. These are funds known as "GTF" and "GGOF". Mr Green alleges that various of the AMP companies were selling down their holdings in these funds during a time when he was investing money himself in those funds, and when he was advising clients to invest in those funds. He claims that AMPFP changed the manner in which it did business while he was in a contractual relationship with it, by introducing an entity or manner of doing business referred to as AMP Direct, which enabled members of the public to purchase investments direct from AMP companies without the intervention of an advisor, and that this caused him loss of business, in a way which was unfair. He alleges that he sought information and advice about what to say to clients about investments in GTF and GGOF, and that, in substance, the advice he received was that his clients should stay in those funds. He complains that AMP and AMPFP, once they had cancelled his agreements, took over what was referred to as his "placing registers", without compensation - something which he alleges resulted in him losing a right to receive trailer commission and various other financial benefits in connection with business which he had already written. 6 He seeks to have removed from his contract with AMPFP the indemnity provision to which I have earlier referred, and he seeks the imposition on one or other of the AMP companies of an obligation to indemnify him, concerning various liabilities which he or his company have incurred to clients who invested in the GTF and GGOF companies and suffered loss. This summary of the Industrial Relations Commission proceedings is not intended to be exhaustive, merely to give some idea of their scope. 7 In this wide and complicated collection of allegations, there is a strand which relates to the affairs of two particular groups of clients. One of those groups of clients is the Gothmanns, comprising Mr and Mrs Gothmann. Another group of investors described in Mr Green's summons in the Industrial Relations Commission as clients to whom investment advice was provided, are a Don Whittaker and a Barry Whittaker. The case has not yet proceeded to the stage where it is possible to identify with precision the exact legal entity who might be connected with Don Whittaker or Barry Whittaker. A reply which has been filed by the AMP companies in the Industrial Relations Commission refers to investments which have been made by an entity referred to as the "Whittaker Family Trust". 8 The Industrial Relations Commission proceedings allege that various particular investors, including the Gothmanns and the Whittaker clients that I have referred to, have sustained losses which the AMP companies ought be required to ensure Mr Green and his company do not meet. 9 There are two sets of proceedings on foot in the Supreme Court of Queensland. One of them is proceedings 1039/02 which has been brought by Mr and Mrs Gothmann against AMPFP and Mr Green. The other is a set of proceedings number 8387/02, which has been brought by J N Whittaker & Son Pty Ltd against AMPFP. Each of those proceedings in Queensland is one which AMPFP has settled with the plaintiff. There remains, in each of those sets of proceedings in Queensland, a claim by AMPFP against Mr Green for indemnity under the contractual provision which I have earlier referred to, and also for indemnity or contribution on the basis that the AMP company and Mr Green were joint tortfeasors in their actions in relation to the respective Queensland plaintiffs. 10 There are numerous issues which are common to the Industrial Relations Commission proceedings, and those parts of the Queensland proceedings which remain on foot. Those common questions have been summarised in submission by counsel for the AMP companies as follows. "(a) What is the proper construction of the representatives agreement, and in particular the indemnity provision in clause 6.1? (b) What were the dealings between Mr Green and each of the Gothmanns and Whittaker and where did they take place? (c) Was Mr Green's conduct during the course of those dealings negligent? (d) What lawful instructions did AMPFP give Mr Green that applied to his dealings with the Gothmanns and Whittaker? (e) Did Mr Green fail to comply with any such lawful instructions in his dealings with the Gothmanns and Whittaker? (f) On the application of clause 6.1 of the representatives agreement to the facts of the case, is AMPFP entitled to an indemnity from Mr Green in respect of the losses it has incurred in settlement of the claims brought by the Gothmanns and Whittaker? (g) Is AMPFP otherwise entitled to be indemnified by Mr Green in respect of those losses? (h) Did Mr Green breach the representatives agreement in the course of his dealings with the Gothmanns and Whittaker? (i) Was AMPFP obliged under the Corporations Act to supervise, train and monitor Mr Green in the manner alleged by Mr Green in the Commission Proceedings and the Gothmann proceedings? (j) Did AMPFP meet any such obligation? (k) If AMPFP did not meet such an obligation, what follows from such a finding? (l) What was the nature and extent of the compliance audit conducted by AMPFP in late 2000? (m) What were the results of that audit? (n) What information did AMPFP provide Mr Green in relation to the results of that audit? (o) Is the representatives agreement (properly construed) a harsh or unfair contract or contrary to public interest for the purposes of s 106 of the Industrial Relations Act ?" 11 I accept that there are those common questions in the various proceedings, although there are many additional questions in the Industrial Relations Commission proceedings. 12 Section 8(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 provides: "Where: (a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in: (i) a court, other than the Supreme Court, of a Territory; or (ii) a tribunal established by or under a law of a Territory; and (b) it appears to the Supreme Court of that Territory that: (i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Federal Court, the Family Court, the Supreme Court of a State or the Supreme Court of another Territory and, if an order is made under this subsection in relation to the relevant proceeding, there would be grounds on which that other proceeding could be transferred to the Supreme Court of that first-mentioned Territory; or (ii) an order should be made under this subsection in relation to the relevant proceeding so that consideration can be given to whether the relevant proceeding should be transferred to another court; the Supreme Court of that first-mentioned Territory may, on the application of a party to the relevant proceeding or of its own motion, make an order removing the relevant proceeding to that Supreme Court." 13 It is well established that this Court has power under section 8(1) to remove proceedings from the Industrial Relations Commission of New South Wales into this court: Resarta Pty Ltd v Finemore (2002) 55 NSWLR 320. 14 In my view, it is appropriate for the Industrial Relations Commission proceedings to be removed into this Court. If they are removed into this Court, that will provide a first stage in a two-stage (or possibly three-stage) procedure, whereby the proceedings begun in the Industrial Relations Commission will be able to be linked up with what remains of the proceedings in the Queensland Supreme Court. 15 It is very desirable, in my view, that there should not be the duplication of effort and waste of time which would be involved in litigating, in three separate sets of proceedings, questions which are common to all of them. As well, joining the various proceedings will avoid the potential for there to be conflicting findings in different sets of proceedings, and complicated questions of issue estoppel. Further, conciliation under section 109 Industrial Relations Act 1996 has already occurred, and failed, so removal is not for that reason premature (cf Deutche Australia Ltd v Johnstone [2002] NSWSC 1241; (2002) 44 ACSR 147). 16 There is considerable hesitation in this Court in removing from the Industrial Relations Commission proceedings which lie at, or close to, the heartland of its industrial jurisdiction: Resarta Pty Ltd v Finemore (2002) 55 NSWLR 320 at [27]. However, while the issues which are involved in this case are ones which include what are appropriate terms for a person employed as a, in effect, salesman of financial products to be remunerated on, which is a matter on which the Industrial Relations Commission has exercised its jurisdiction in the past (eg Lumby v Yorkshire-General Life Assurance Co Ltd [1978] 1 NSWLR 626), there are many issues in the Industrial Relations Commission proceedings which involve the existence of fiduciary duties, the existence of duties arising under the Corporations Law, and the existence of common law duties. It is certainly not as though the proceedings in the Industrial Relations Commission are simple proceedings about the fairness of terms of employment, judged only by industrial standards. Thus, though the present case is a little closer to the industrial heartland, than were the claims about remuneration of a senior executive which were involved in Resarta Pty Ltd v Finemore (2002) 55 NSWLR 320, there is not the strong industrial flavour which would induce the Court not to remove the proceedings at all. The overall convenience and economy of having all issues in all three sets of proceedings decided by the one court outweighs, in my view, the policy which is inherent in the Industrial legislation of ensuring that industrial questions are determined in the Industrial Relations Commission. 17 I can see no legitimate forensic advantage that the defendants would have had if the proceedings had remained in the Industrial Relations Commission, and which they will not have in either this Court or the Queensland Supreme Court. If there had been any such legitimate forensic advantage, I would have expected the defendants to rely on it as a ground for opposing this application - yet they do not oppose it. 18 In these circumstances, it is appropriate to remove the Industrial Relations Commission proceedings into this Court. 19 It is one of the fundamental principles underlying the cross-vesting scheme of legislation that a Supreme Court cannot require the transfer of proceedings from another Supreme Court. The only way there can be transfer of proceedings between Supreme Courts is by a Supreme Court deciding to transfer proceedings which it already has to another Supreme Court. Whether the proceedings begun in the Industrial Relations Commission, when amalgamated with the two sets of proceedings begun in Queensland, are ultimately heard in this Court, or in the Supreme Court of Queensland, is not a matter for me to decide today. The next step which will need to be taken, and which counsel for the AMP companies informs me will be taken, is for application to be made to the Supreme Court of Queensland for it to transfer the two Queensland proceedings to this Court. It is completely a matter for the Supreme Court of Queensland as to whether it thinks it appropriate to take that step or not. The issue which has been before me today has been, really, whether it is desirable for all the proceedings to be amalgamated at all. The Supreme Court of Queensland will need to consider questions, which have not been before me, about where the balance of convenience lies so far as witnesses, documentation, and the various other matters which are taken into account in deciding whether to transfer proceedings from one Supreme Court to another. If the Supreme Court of Queensland, when it has those considerations presented to it, decides that it is appropriate for the Queensland matters to stay in Queensland, then that is what will happen. That would result in a further application to this Court, for the proceedings which have been removed from the Industrial Relations Commission into this Court, to be sent to the Supreme Court of Queensland, so that the trial of all issues can occur there. 20 I make order 1 in the summons. 21 Mr West QC, for the AMP companies, asks for an order for costs. One of the bases upon which he seeks it is that, until Friday of last week, it appeared as though the present application would be opposed. 22 I do not see that the fact that the application once looked as though it would be opposed has increased the amount of work which has been involved in preparation or presentation of the case. It was still necessary for evidence to be prepared and read, and it was still necessary for there to be extensive exposition of that evidence, for the purpose of seeking to persuade me it was appropriate to make the order. 23 However, a costs order of a type is appropriate. The costs involved in the present application are costs which are an incident in the entire litigious contest which exists between the AMP companies and Mr Green and his company. It is not as though any of those litigants had any say in any proceedings being commenced in the Supreme Court of Queensland - the respective Queensland plaintiffs decided that that should happen. This is not a case where one can say that it is the fault of any of the present litigants that the present application needed to be brought. The appropriate order is that the costs of the present application should be costs in proceedings number 1028/02 in the Industrial Relations Commission, which has just been removed into this Court. I so order. **********

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