Deutche Australia v Johnstone

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

5459/02 DEUTCHE AUSTRALIA LIMITED v ROSS JOHNSTONE JUDGMENT 1 HIS HONOUR: Deutche Australia Limited was formerly the employer of Mr Johnstone. They ceased being in that relationship earlier in 2002. Mr Johnstone had occupied a senior position. Following his ceasing to be employed by Deutche Australia Limited he began proceedings in the Industrial Relations Commission of New South Wales. Those proceedings are ones in which he seeks an order declaring that the contract whereby he performed work was unfair, and that it be varied in numerous ways, which are set out in Schedule B to an amended summons for relief filed in the Industrial Relations Commission. 2 The contract was one which was formed by acceptance of a letter of offer. That letter of offer contained a clause 10, which in terms imposed various confidentiality obligations upon Mr Johnson. Another order which he seeks in the Industrial Relations Commission is an order declaring clause 10 of that letter of offer void ab initio or alternatively, seeking that it be varied that it refers to a narrower range of information that on its face it refers to. There is also an order sought in the Industrial Relations Commission requiring Deutche Bank to pay to Mr Johnstone any amount which might be ordered to be paid by Mr Johnstone to Deutche Bank, and any costs incurred by Mr Johnstone, as a result of Deutche Bank commencing any proceedings against Mr Johnstone which seek damages in respect of alleged breaches of clause 10 of the letter of offer. There was also an order seeking payment of such sums of money as the Commission thought just, and various incidental orders. 3 The order relating to Deutche Bank paying Mr Johnstone amounts ordered to be paid, and costs, and any proceedings relating to clause 10 was an order which was sought because there was a firm basis for concern that such an order might be made. That concern arose from the fact that on 30 August 2002 Deutche Australia Limited, and one of its related corporations, had begun proceedings in the Federal Court against Mr Johnstone, and against a female acquaintance of his, which alleged that there had been various breaches by Mr Johnstone of clause 10 of the contract of employment. Those breaches were alleged to be connected with making available to a new employer who Mr Johnstone had gone to work for, and who was a competitor of Deutche Australia Limited, certain confidential information. Relief sought in the Federal Court was based in part on breach of contract, in part under s 1317H of the Corporations Act 2001 in connection with the breaches of duties alleged to have occurred under ss 181, 182, 183 of the Corporations Act and breach of fiduciary duty. 4 The present proceedings are ones which were begun by a summons filed on 11 November 2002. The present proceedings are ones brought in a context where there had previously been no proceeding whatever in this Court between Deutche Australia Limited and Mr Johnstone. The proceedings seek an order under s 8(1) of the Jurisdiction of Courts (Cross Vesting) Act 1987, removing the proceedings from the Industrial Commission into this Court. The avowed purpose of the proceedings in this Court is, if such an order is made, to also seek an order from the Federal Court that it transfer the Federal Court proceedings to this Court. In that way, it is submitted, there will be one Court which is able to deal with all matters relating to the dispute between Mr Johnstone and Deutche. 5 The jurisdictional basis of the order sought is s 8(1)(a) and (b) of the Jurisdiction of Courts (Cross Vesting) Act 1987. 6 Under s 8(1)(a) the "relevant proceeding" is a proceeding which is pending in (relevantly) a Court, other than the Supreme Court, of the State. Under s 8(1)(b), if it appears to the Supreme Court that the relevant proceeding arises out of or is related to another proceeding pending in (inter alia) the Federal Court and if an order were made under this section in relation to relevant proceedings, there would be ground on which the other proceeding could be transferred to the Supreme Court, then the Supreme Court may make an order removing the relevant proceeding to the Supreme Court. 7 The jurisdiction is in terms unconfined, but it is a jurisdiction which would be exercised bearing in mind the objectives of the Jurisdiction of Courts (Cross Vesting) Act 1987 which includes, as stated in the preamble to that Act, it being desirable to structure the system in such a way provide for the determination by one court of Federal and State matters in appropriate cases. 8 The jurisdiction is sought to be used here bearing in mind the fact that there will be significant overlap between the evidence in the proceedings in the Industrial Commission and in the Federal Court. 9 There is evidence that it is likely that six or more witnesses will be called by Deutche to give affidavit evidence in the Industrial Relations proceedings, and that six of these individuals ordinarily work outside Australia, and that it is possible that every witness in the Industrial Relations proceedings may be required to give evidence in the Federal Court proceedings. 10 In the Industrial Relations Commission proceedings, there will be occasion to go into the reasons why it was that Mr Johnstone left his employment with Deutche. It is likely to be the contention of Deutche that Mr Johnstone was planning a departure from Deutche; it is likely to be the contention of Mr Johnstone that he was treated so badly that he had no alternative but to leave. These matters will be relevant to questions of whether there was any intention on his part to take confidential information to a new employer, which will be relevant to (at least) questions of what remedy would be appropriate in the Federal Court proceedings, if any breach by Mr Johnstone were established. 11 There is a likelihood, according to evidence of a Deutches' solicitor, that Deutche will seek to adduce expert evidence from computer experts in the course of the Federal Court proceedings and that such evidence might also be sought to be adduced in the Industrial Relations Commission proceedings. There will be some measure of overlap between the documents which are discoverable in the two sets of proceedings. If the two sets of proceedings remain on foot, then there will be the usual implied limitations on the use which can be made on discovered documents arising from Home Office v Harman [1981] 1 QB 534 which will create some duplication of work. 12 Further, if the proceedings remain separate, there could be some difficult questions arising depending on which proceedings went first. If the Federal Court proceeding were to go first, they would proceed on the basis that the contract was not varied in any way, which would give rise to a later argument about whether, having allowed the proceedings to go ahead on that basis, raised an issue estoppel against Mr Johnstone. Conversely, however, if the Industrial Relations Commission proceeding was to go first, there would be difficulties for Mr Johnstone in being able to provide an evidentiary basis for relief under the prayer for relief seeking damages and costs awarded against him for breach of the contract of employment. The Industrial Relations Commission proceedings are ones brought by a senior executive, and involve no industrial award, so they are not "close to the heartland of the traditional industrial jurisdiction of the Industrial Commission" (Resarta Pty Ltd v Finemore [2002] NSWCA 250 at [27] per Spigleman CJ). 13 In all these circumstances, it seems to me that the preferable course is for the proceedings to be heard in the one Court. 14 This possibility has previously been mentioned to Branson J, to whose list the Federal Court proceeding has been allocated. Her Honour, in a portion of transcript tendered in these proceedings, expressed the view that it would be desirable if one tribunal had a grasp of all the issues. 15 The proceedings in the Industrial Relations Commission will, pursuant to s 109 of the Industrial Relation Act 1996, need to be the subject of conciliation. That conciliation is presently set down to be heard in March of next year. It is necessary for an order to be framed in a way which both allows that conciliation process to be undertaken, and also in a way which both preserves to the Federal Court the discretion about whether it is appropriate to transfer the Federal Court proceedings to this Court, and takes account of the possibility that, when final submissions and evidence are put to the Federal Court on this matter, a Judge of that court might decline to order the transfer. A form of order has been proposed by Deutche, which takes those matters into account. 16 I had earlier mentioned that the Federal Court proceedings have one applicant who is not a party to the Industrial Relations proceedings, and one respondent who is not party to those proceedings. It will be possible for those people to make such submissions as they think appropriate to the Federal Court, about whether it is appropriate for the Federal Court to transfer the Federal Court proceedings to this Court. 17 I make the orders in paragraphs 1 and 2 of the summons, namely: "1. That the proceedings commenced by the defendant against the plaintiff before the Industrial Relations Commission of New South Wales in Court Session pursuant to section 106 of the Industrial Relations Act 1996 (NSW), being proceedings No. IRC 1830 of 2002, be removed to the Supreme Court of New South Wales pursuant to the provisions of section 8(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW). 2. That Order 1 be stayed until one week after: (a) the completion of conciliation under section 109 of the Industrial Relations Act 1996 (NSW) in the proceedings No. IRC 1830 of 2002; and (b) an order is made by the Federal Court of Australia transferring proceedings No. 3046 of 2002 from the Federal Court of Australia to the Supreme Court of New South Wales, whichever last occurs." 18 So far as costs is concerned, I order that the costs of the motion for transfer should be costs of the proceedings commenced in the Industrial Commission and which are transferred to this Court. 19 I decline to make any special orders concerning the costs of a mention of these proceedings last week. 20 I should record that Mr Johnstone was legally represented before me, and that while his counsel made some helpful submissions concerning matters which the Court needed to take into account in exercising its discretion under s 8(1)(b), his ultimate submission was that he neither supported nor opposed making of an order. **********

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