Christopher Lionel Marks v Jones Lang LaSalle Australia Limited & Anor

APPLICANT: Mr RF Crow of counsel SOLICITORS: Henry Davis York LEGAL REPRESENTATIVES: RESPONDENTS: Mr AR Moses SOLICITORS: Phillips Fox

JUDGMENT: - 15 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

CHRISTOPHER LIONEL MARKS v JONES LANG LASALLE AUSTRALIA LIMITED AND ANOTHER Application under section 106 of the Industrial Relations Act 1996 INTERLOCUTORY JUDGMENT

1 By notice of motion filed on 14 June 2002, the respondents seek to have set aside the applicant's notice to produce of 15 May 2002. The proceedings were initiated by summons filed by the applicant under s106 of the Industrial Relations Act 1996 ('the Act') on 26 November 2001. The claim concerns the fairness of the applicant's contract of employment in the circumstances in which the applicant's employment came to be terminated on account of redundancy.

2 This judgment deals with the motion. It again raises for consideration the operation of Rule 18A of the Court's rules.

3 The parties in their discussions significantly narrowed the matters in dispute between them and the Court was thus required to rule only upon the production of the documents specified in paragraphs 5 and 6 of the notice. They provided: '5. the letter or other document indicating the potential on-target bonus for 2001 (and how such bonus would be calculated) for each international director and regional director of the Jones Lang LaSalle group of companies ("Group") based in Australia, New Zealand or the Asian region (including those persons whose names are listed in the attached schedule); 6. the letter or other document informing each international and regional director of the Group based in Australia, New Zealand or the Asian region (including those persons whose names are listed in the attached schedule), of their actual bonus payment for 2001;'

4 Even that request had been further narrowed in correspondence to: Items 5 and 6 Pressed. If any of the directors named in the schedule to the Notice ("Schedule") did not receive a bonus for 2001 because they had left your clients' employment, we are prepared to forego production of the relevant letters in respect of each of those directors. Further, we are instructed that the potential and actual bonuses for 2001 in respect of each international director and regional director named in the Schedule are likely to be contained in schedules in respect of each business group. If your clients will produce these schedules, we will not press our request for individual letters to directors. 5 (2 letters per director - 98 specific documents, OR approximately 10 - 12 schedules in total - 10 - 12 specific documents

6 The respondents' motion was advanced on the basis that the documents sought were not relevant to any issue in the proceedings, could not lead to any relevant line of enquiry, involved a fishing expedition and imposed an onerous and oppressive obligation upon the respondents. At the hearing Mr Moses of counsel abandoned the argument in relation to oppression. It appeared that while information was sought in relation to bonus payments made to some 49 employees, that information was contained in schedules comprising some 12 documents. Mr Moses, however, advanced submissions that the notice impermissibly sought discovery and imposed a burden on the respondents which would result in a subversion of the intent and purpose of the regime established for the conduct of conciliations required under s109 of the Act, pursuant to Rule 18A. Reliance was placed upon the judgment in Fish & Anor v Solution 6 Holdings Limited and Ors [2002] NSWIRComm 93.

7 The case advanced by Mr Crow of counsel for the applicant was that the documents were plainly relevant to the claims advanced in the summons. The argument as to oppression had been abandoned, so it would follow that the notice would not be set aside. It was submitted that the arguments advanced as to the operation of Rule 18A were not available, having not been relied upon in the motion, but in any event, the documents had been sought in accordance with Rule 86 and were thus properly available pursuant to Rule 18A. Reliance was also placed upon the decision of Peterson J in Cassino v National Australia Bank Ltd [2001] NSWIRComm 336.

8 Rule 18A provides: 18A. New procedure under section 106 (Unfair contracts)

(1) An application to the Commission to exercise the powers conferred on it by section 106 must be in Form 12A and must: (a) specify in summary the matters of fact and law which form the basis of the application, but not the evidence by which those facts are to be proved, and (b) contain sufficient information to allow the Commission to carry out its duty to conciliate under section 109 by a succinct summary. (2) Unless otherwise ordered by the Registrar the application must be served on the respondent.

(3) Where within the required period of time, an appearance has not been entered by a respondent, the applicant may proceed to have the matter determined in the absence of that respondent.

(4) Within 21 days after the date of expiry of the time limited for the respondent's appearance the respondent must file and serve its reply. Such reply must be in Form 12B and must: (a) answer each of the matters raised in the application, and (b) specify in summary any additional matters of fact and law upon which the respondent will rely in opposition to the application, but not the evidence by which those facts are to be proved, and (c) contain sufficient information to allow the Commission to carry out its duty to conciliate under section 109 by a succinct summary. (5) An applicant must within 14 days of the time of filing of the reply file and serve a response answering each of the matters specified in the reply pursuant to subrule (4). Such response must be in Form 12C.

(6) The applicant or respondent, as appropriate, must file and serve with the application, reply and response an affidavit verifying the matters of fact set out therein. If the relevant party is a corporation the affidavit may be sworn by an officer or employee of the corporation who is able to verify the matters of fact relied upon.

(7) Nothing in this Rule is to be taken to derogate from or otherwise limit the requirements of or the Commission's powers under Parts 9 and 13 of these Rules.

(8) The Registrar must, as soon as practicable after the filing or expiration of the time for filing of the response, whichever occurs first, refer the matter for allocation to a Member of the Commission for conciliation in accordance with section 109 or, if the Registrar considers it appropriate, for directions either before the Registrar or a Judge of the Commission.

(9) This Rule takes effect from 31 January 2000. An application to the Commission to exercise the powers conferred on it by section 106 may be commenced and proceeded with pursuant to either Rule 18 or Rule 18A until 6 October 2000 from which time all such applications are to be commenced and proceeded with in accordance with Rule 18A.

9 Part 13, referred to in Rule 18A(7) includes Rule 86, which provides: 86. Production of document on notice Where a party to any proceedings serves on another party a notice requiring the party served to produce at any proceedings a document or thing for the purpose of evidence and that document or thing is in the possession, custody or power to produce of the party served, the party must, unless the tribunal otherwise orders, produce the document or thing in accordance with the notice without the need for any summons for production.

10 Rule 18A(7) also refers to Part 9 particulars, which was dealt with in Solution 6 Holdings. It was the operation of Rule 161 in the context of Rule 18A, which was dealt with by Peterson J in Cassino.

11 Part 22, not referred to in Rule 18A(7), includes Rule 161, production and Rule 162, discovery. Rule 161 provides: 161. Notice to produce for inspection (1) A party (party A) may by notice served on another party (party B) require party B to produce for the inspection of party A: (a) any document (other than a privileged document) referred to in any originating process, pleading, affidavit or witness statement filed or served by party B, (b) any other specific document (other than a privileged document) clearly identified in the notice, relevant to a fact in issue. (2) The maximum number of documents which party A may require party B to produce in reliance on subrule (1) (b), whether by one or more notices, is 50. (3) Party B, upon being served with a notice under subrule (1), shall within a reasonable time: (a) produce for the inspection of party A such of the documents as are in the possession, custody or power of party B, (b) in respect of any document which is not produced, serve on party A a notice stating in whose possession the document is, to the best of the knowledge, information and belief of party B, or that party B has no knowledge, information or belief as to that matter. (4) A notice under subrule (1) may specify a time for production of all or any of the documents required to be produced. If the time specified is 14 days or longer after service of the notice it is to be taken to be a reasonable time for the purpose of subrule (3) unless the contrary is shown. If the time specified is less than 14 days after service of the notice it is to be taken to be less than a reasonable time unless the contrary is shown.

12 I discussed the scheme of Rule 18A in Solution 6 Holdings by way of contrast to the scheme formerly operating under Rule 18. That discussion arose in relation to a request for particulars served by the respondent, before it put on its reply to the applicant's summons. At [29] to [35], I observed : 29 Under the Rule 18 procedures, the Court then issued directions to the parties to file their affidavit evidence, which also often involved discovery and inspection of documents, as a part of the preparation process. This was an expensive and time consuming process, in which parties incurred considerable costs and delay before any attempt was made to conduct the conciliation required by s109 of the Act. The new Rule 18A procedure was designed to alleviate some of this burden, so as to maximise the prospects which parties had to settle their differences, before significant legal fees had been incurred.

30 The applicants complained that the end result of the type of particulars here sought by the respondents, was to result in this streamlining and cost reduction being avoided. The result sought to be achieved was provision of information formerly provided in the applicant's affidavits and through the discovery process, at considerable cost to an applicant.

31 Given the voluminous nature of the particulars here sought, the application made in the motion and the limited further particulars actually pressed at the hearing, one must have some sympathy for that concern. The respondents, of course, asserted that this was not their aim, but rather to ensure that the allegations made by the applicants were properly understood, in order to identify from the outset, what truly was in issue between the parties. This would also facilitate the conciliation process. Those too are aims with which one must have sympathy.

32 It is obvious that there must be a balance between the two views. Indeed, that is what Rule 18A itself seeks to achieve, by the requirement that the matters of fact and law which form the basis of the claim must be specified in the summons by an applicant, but not the evidence - that having formerly been provided by affidavit sworn prior to the conciliation. Now these matters are to be provided in the summons by a 'succinct summary', so as to enable the Commission 'to carry out its duty to conciliate under s109 of the Act'. Likewise, a respondent is obliged to answer each matter raised, to specify additional matters of fact and law which it will rely upon in opposition to the claim, but not the evidence. Again, this is to be done by provision of a succinct summary, to enable the Commission 'to carry out its duty to conciliate under s109 of the Act'.

33 If the conciliation does not succeed, those succinct summaries of the facts will be fleshed out by the affidavits which will be filed by the parties prior to the hearing. In that process, the provisions of Rule 64 will also be available to the parties, if further particulars are required in relation to the matters contained in the pleadings or the affidavits.

34 Having this balance in mind, it must be accepted that at this point, the necessary particulars of a s106 claim, as required by Rule 57, are in fact those specified by Rule 18A. Thus it is that the details of alleged conversations and what is contained in documents are not required to be given in a summons, if the representations alleged have been sufficiently provided in summary form. Nor are copies of documents in which representations were made required to be provided. What is required is a statement of the matters of fact which form the basis of the claimed unfairness, sufficient to enable the Commission 'to carry out its duty to conciliate under s109 of the Act'.

35 In this case, I am satisfied that the particulars sought, which seek further details of conversations and documents in which alleged representations or concerns were expressed, need not be provided, either to enable the respondents to understand the matters which they are required to answer, or to enable the Commission 'to carry out its duty to conciliate under s109 of the Act'.'

13 In Cassino, the application under s106 was also proceeding pursuant to Rule 18A. The notice for production there in question had been issued prior to conciliation, but under Rule 161. It was advanced in a context where the applicant sought information in relation to payments made to other employees, the summons alleging unfavourable treatment of the applicant in comparison to other employees. The documents numbered more than the fifty provided for in Rule 161. Peterson J concluded that the applicant had established sufficient cause to justify an order under Rule 163, waiving the limit on the number of documents sought, it being plain that production would cause no difficulty for the respondent. At [12] to [14], his Honour noted: 12 It is plain that the production of the relevant personnel files together with the separate and identifiable documents will produce no difficulty for the respondent. I take into the account the fact that the matter is at a pre-conciliation stage and I consider the applicant is reasonably entitled to information properly relevant to his claim, for the purposes of conciliation. The appropriate course for the Court to take is that which achieves that result by the least complicated and least expensive process.

13 There is, as was submitted, apparently no authority for the proposition that discovery ought be resorted to where access is sought for more than fifty documents. My view is that to impose necessarily such a burden on the parties would be to allow the form of the rules to assume a priority over the adoption of a practical approach to a resolution of the problem at hand. In Western Sydney Area Health Service v Gibson [2001] NSWIRComm 290 Full Bench Wright J President ; Walton J Vice-President; Hungerford J dated 31 October 2001 in the course of reasons for judgment in an appeal from an interlocutory judgment, expressed the view that: "…the rules should not act so as to frustrate or otherwise limit the requirements of justice: see Harding v Bourke (2000) 48 NSWLR 598 at 603 (per Mason P, with whom Meagher and Heydon JJA agreed)"

14 In the circumstances of this case, I consider the Court should take the most convenient course and not regard the rules as imposing some form of principled strait-jacket.

14 It appears that in the arguments advanced to his Honour, no consideration was given to the scheme of Rule 18A, particularly the provisions of Rule18A(7). Rather, the arguments were concerned with whether the circumstances which had there arisen were appropriate for the discretion available under Rule 163 to be exercised in favour of the applicant.

15 Here, by way of contrast, the applicant had sought the production of the documents in question pursuant to Rule 86, which does not impose any limit upon the number of documents which a party may be required to produce, if they are sought 'for the purpose of evidence' and they are 'in the possession, custody or power" of the party served. While not raised in the motion, the proper operation of Rule 18A also arose for consideration at the hearing and was fully argued by counsel. In my view, that issue must now be dealt with, in order to properly dispose of the issues which have arisen between the parties and as a matter of justice between them.

16 I turn then firstly to the operation of Rule 18A. The rule is designed to ensure that the compulsory conciliation required by s109 of the Act, is conducted expeditiously and without the parties incurring avoidable costs. In my view, the way in which the Rule was intended to operate, was that parties are not now required to provide any evidence to each other at the time that the summons, the response and the reply are prepared and filed. (Rule 18A(1)(a) and (4)(b)). Formerly under Rule 18, the applicant was obliged to provide affidavit material at the time the summons was filed. Directions were then usually given by the Court as to the filing of all of the parties' affidavit material, prior to conciliation being conducted. Often, though not always, discovery and production of documents also occurred prior to conciliation. This process has been altered by Rule 18A.

17 Now, Rule 18A(7) cannot be overlooked when consideration is being given to the proper operation of the Rule, especially in relation to the provision of evidence. There is a distinction, which cannot be ignored, in Rule 18A(7) between production of documents under Rule 86, sought for the purpose of evidence and the wider class of documents which a party might be required to be produced under Rule 161. This distinction flows from the use of the words 'Nothing ….is to be taken to derogate from or otherwise limit the requirements of or the Commission's powers under Parts 9 and 13 … .' Rule 86 appears in Part 13 and Rule 161 in Part 22.

18 Rule 18A contemplates that relevant documents, which will become evidence in the proceedings if the matter does not settle, which are under the control of another party to the proceedings, may be required to be produced prior to the conciliation. (Rule 18A(7) and Rule 86). The rule does not, however, envisage that the wider production of the kind provided for in Rule 161, will generally be required prior to conciliation. (Rule 18A(7) and Rule 161). It must follow from the absence of any reference in Rule 18A(7) to Part 22, that the Rule was intended to 'derogate from or limit' the requirements of that Part and the exercise the Court's powers under that Part, prior to conciliation.

19 That view does not lead to the conclusion that the other parts of the Rules have no operation at all prior to conciliation. That possibility appears to be preserved by Rule 18A(8), which requires that once the applicant's reply has been filed, or the time for its filing has expired, the matter be referred to a Member of the Commission for conciliation or directions (or to the Registrar in the latter case). It appears that there is a discretion reserved to the Member to whom the matter is then allocated, as to other matters which might arise prior to conciliation.

20 The explanation for the approach adopted in the Rules would appear to lie in the balance which the Rule seeks to establish between streamlining and cost reduction prior to conciliation on the one hand and the identification of what is truly in issue between the parties, so as to increase the likelihood of a settlement at conciliation, on the other.

21 As I have held, Rule 18A does not appear to entirely exclude the operation of Rule 161 in a particular case, prior to conciliation. Nevertheless, its operation prior to conciliation, in my view, must necessarily be limited.

22 I have found some support for these conclusions in the Supreme Court Rules. Rule 161 mirrors the provisions of Part 23 Rule 2 of the Supreme Court Rules. Part 23 forms a part of the process there established for the preparation of matters for hearing before the Supreme Court. At para [23.2.3] of Ritchie's Supreme Court Procedure, it is observed that: Relevant to a fact in issue A document is relevant to a fact in issue if its contents can rationally affect the assessment of the probability of the existence of that fact. This poses a similar test to that in s 55 of the Evidence Act 1995, except that it excludes documents relating only to the credibility of a witness. The concept of "relevance" for the purposes of discovery under Pt 23 must be applied to the contents of the document, rather than to the document itself. It therefore embraces not only documents that are admissible in evidence but also documents whose contents would otherwise tend to advance either party's case. Although the concept of relevance under the present rules is wide, it is narrower than the criterion that applied under the previous rules: National Australia Bank Limited v Idoport Pty Ltd BC200000274; [2000] NSWCA 8. It is more narrow because it does not require discovery of documents merely because they might reasonably be regarded as leading to a train of inquiry that might advance a party's case: Mulley v Manifold (1959) 103 CLR 341 at 345, and see further [23.3.14].

23 The distinction drawn in Rule 18A between production of documents for the purpose of evidence prior to conciliation under Rule 86 and the wider production permitted after conciliation pursuant to Rule 161, becomes clearer, when regard is had to this explanation. The line which appears to have been drawn in Rule 18A, is that documents to be tendered as evidence at a hearing (Rule 86), may be required to be produced prior to conciliation, but other documents, albeit relevant and including those which might not be admissible, but would tend to advance either party's case (Rule 161), are not. It would seem to follow that discovery, also provided for in Part 22 Rule 162, is also not generally to be available prior to conciliation. It is, however, unnecessary to decide that point in this case.

24 I also observe that it seems to follow on this approach, that any production required under Rule 86 would require a very precise identification of the documents required to be produced 'for the purpose of evidence'. In this case there were finally no difficulties of sufficient identification of the documents sought, although an argument as to relevance was advanced, to which I will return. The twelve or so documents here in issue have been sufficiently identified, with the result that the respondents' arguments as to oppression fell away.

25 I note that in Cassino, a similar situation prevailed. Peterson J did not advance his consideration of the matters which there arose before him in accordance with the conclusions I have reached in relation to the operation of Rule 18A. This plainly flowed from the way in which the matter was argued before his Honour, where there appears to have been no arguments about the operation of the rules. It does not follow however, that the result in that case would have been any different, if the views I have expressed, had there been pursued by the parties, given the nature of the claims advanced and the documents there sought to be produced prior to conciliation. As his judgment makes clear, Peterson J was seeking to arrive at a just and practical result in the particular circumstances before him, where the claim concerned differential treatment of the applicant and other employees. That is the balance which Rule 18A seeks to achieve.

26 I turn then to the documents here in question. The claims advanced in the summons go to bonus in a number of respects, including pro rata bonus for the year in which the termination occurred; claims for payment of bonus during the notice period and claims for redundancy pay, based in part on likely bonus payments. The factual matters relied upon included allegations that the applicant agreed to a reduction in his fixed base remuneration, when the respondents altered their bonus scheme in late 1999 or 2000; that in late 2000 or early 2001, there was a further reduction in base remuneration, when the respondents' Individual Performance Management Programme ('IPMP') was introduced; that under the IPMP in 2001 the applicant had a target bonus of $200,000, with a greater or lower amount payable according to various objectives; that no pro rata bonus was paid to the applicant when he was made redundant in November 2001 and that bonus was not otherwise taken into account in the payments made to the applicant upon termination.

27 The unfairness claimed included that the contract in question made no provision for payments in lieu of notice to reflect bonus payments for the period of notice, having in mind the basis upon which the applicant's base salary was reduced and how bonus formed a part of his total remuneration. Further, it was claimed that it made no provision for payment of pro rata bonus, when the applicant was made redundant, despite the basis upon which the applicant had earlier accepted a reduced base salary.

28 The respondents' reply to the summons challenged the Court's jurisdiction to entertain the summons. The parties had, however, agreed that this challenge should not be dealt with prior to conciliation. The factual matters relied upon included that: 'The Second Respondent's bonus scheme in 2001 was a performance based incentive system and the actual bonus was determined on the degree to which the Applicant met or exceeded the targets set for him, together with the overall profitability level of the Group. The bonus scheme provided, inter alia, that in order for an employee to be eligible to receive a bonus, the employee must be employed for a full year, from 1 January 2001 to 31 December 2001, and must be employed as at 31 December 2001. In the event that the bonus scheme did provide for the payment of pro rate bonus, the Applicant's individual performance rating and Australian performance rating would not entitle the Applicant to receive a pro rata bonus.'

29 The applicant's response to this was: '(a) says that the amount of bonus to which the Applicant was entitled for 2001 was dependent on the degree to which he met or exceeded the targets set for him, together with the profitability of the Jones Lang LaSalle group of companies in the Australasian region (comprised of Australia and New Zealand); and (b) otherwise denies the remainder of the paragraph.'

30 The applicant moved on the affidavit of Mr Stephen Jauncey, his solicitor. The history of the notice to produce was recorded and it was contended that: 'Without prejudice discussions have already been held between myself and Phillips Fox, as well as between individual Applicants and officers of the Respondents. In my opinion, access to the documents described in paragraphs 5 and 6 of the Notice may affect the Applicant's assessment of his claim and is likely to significantly improve the prospects of settling these proceedings at conciliation.'

31 Mr Moses submitted that the appropriate test for determining relevance at the pre-trial stage was whether the material sought had an apparent or seeming relevance to the issues in the proceedings. (Cheah v Redlich & Ors [1996] NSWIRComm 142 (16 August 1996) at p7.) It was argued that the documents sought were not relevant to determining whether the applicant was entitled to the bonus payments claimed and the amount of such payments, if such an entitlement arose. The potential target bonus entitlements of other employees and the actual payments made to them were not relevant to the determination of the applicant's potential entitlements. This was not a case where it was claimed that the applicant had been treated differently to other employees.

32 Mr Crow argued that the documents were plainly relevant, given the claims in summary in relation to bonus and the basis upon which they were advanced. The respondents claimed that the bonus the applicant expected to have earned in 2001 and 2002 would not have been earned had he remained in employment. The bonus targets of other comparable employees and the payments made to them were the basis upon which that claim would be tested, particularly having regard to group performance, which formed an element of the basis upon which the bonus of the applicant and other employees was to be calculated. The importance of those documents at the conciliation phase was obvious. If the documents demonstrated that the facts were as the respondents asserted, it would follow that the applicant's claim would have to be ameliorated.

33 I am satisfied that the test of relevance described by Hungerford J in Cheah at p12 has been satisfied, so far as the documents now here in issue are concerned. Bonus paid to the other employees depended upon targets fixed and also had regard in part of group performance. This also applied to the applicant. The production of these documents was sought by the applicant under Rule 86, for the purpose of evidence. They are in the respondents' control and it appears that they will provide a part of the material upon which the factual contest between the parties as to bonus will be determined at any hearing. The notice for production does not appear to have been a device used simply to avoid the problems of a notice given under Rule 161, at this stage of the proceedings. The documents are not only relevant, but also appear to comprise material sensibly likely to enhance the prospect of a settlement of this claim at conciliation.

34 In those circumstances, I am satisfied that the production of the documents at this stage accords with the scheme established by Rule 18A, for conciliation of claims brought under s106 of the Act.

35 For all of these reasons, I decline to set aside the applicant's notice to produce and order that the respondents' motion be dismissed. ------------------------

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