Dibb v Avco Financial Services Ltd

Federal Court of Australia|2000-12-08|Before: Sackville J

REASONS FOR JUDGMENT 1 A number of motions are outstanding in this matter. I shall deal with each of them in turn. I should, however, first briefly explain the nature of the litigation.

the litigation 2 The applicant ("Mr Dibb") was employed by the first respondent ("Financial Services") between May 1977 and August 1996. He was also a member of the Avco Australia Superannuation Fund ("the Fund") of which the third respondent ("Superannuation Plan") was the trustee. The second respondent has never been served with any process and has played no part in the proceedings. 3 Mr Dibb, who is not legally represented, has pleaded his case in an amended statement of claim that is 78 pages in length. It is necessary only to outline in summary terms the nature of the case he wishes to make out against Financial Services and Superannuation Plan. 4 Mr Dibb alleges, inter alia, that Financial Services wrongfully terminated his employment as a District Manager in August 1996. The case is pleaded as one of breach of the express or implied terms of Mr Dibb's contract of employment. In addition, Mr Dibb pleads that officers of Financial Services in combination with lawyers employed by them "conspired with the purpose of injuring [Mr Dibb] by unlawful means by having planned to terminate the applicant (sic) without proper cause or warning." Financial Services is said to have done a large number of overt acts pursuant to the alleged conspiracy in breach of Commonwealth and State industrial laws. These acts are also said to have contravened the Trade Practices Act 1974 (Cth) and to have breached fiduciary duties owed by Financial Services to Mr Dibb. 5 Mr Dibb claims orders against Financial Services for payment of statutory entitlements and other benefits allegedly due to him, together with compensatory and exemplary damages. 6 Mr Dibb next says that Superannuation Plan is and was a regulated superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth) ("Superannuation Act"). He alleges that he was wrongfully prevented from standing for election as a member-elected director of the Fund. He also alleges that, despite the purported termination of his employment, he continued as a member of the Fund and that his membership was wrongfully terminated by Superannuation Plan in November 1998. 7 Mr Dibb alleges that Superannuation Plan acted in breach of its obligations under the Superannuation Act and of fiduciary duties owed to him. In addition, he claims that Superannuation Plan incorrectly calculated the benefit to which he was entitled, underestimating his entitlements by some $25,000. He seeks damages, exemplary damages and orders for the payment of the benefits to which he is entitled. 8 Financial Services and Superannuation Plan dispute the principal allegations made by Mr Dibb. Financial Services also pleads that Mr Dibb is estopped from raising a number of claims by reason of the determination of his unfair dismissal claim by the Queensland Industrial Relations Commission ("the Commission") in matter No. B1723 of 1996, decided on 14 May 1998. It further contends that Mr Dibb refused to accept substantial payments offered to him as compensation, including the sum of $44,837 ordered to be paid by the Commission, and thereby failed to mitigate any loss he may have sustained.

the costs motion 9 By a motion filed as long ago as 15 September 1999, Mr Dibb seeks a variety of orders. All but one of the forms of relief sought in the motion are no longer pressed. By par 3 of the motion, Mr Dibb seeks an order "for a waiver of liability for costs to (sic) the applicant in this proceeding". Mr Dibb has filed extensive written submissions in support of the motion. In his written submissions, Mr Dibb says that he now seeks orders that (a) each party bear his or its own costs; or (b) in the alternative, the "combined exposure to costs" of each of the three parties is limited to $10,000. 10 Mr Dibb has not applied to amend his motion to conform to the orders he now seeks. Neither Mr Clark, who appeared for Financial Services, nor Mr Stevenson, who appeared for Superannuation Plan, have taken any point about this procedural omission. 11 In his lengthy written submissions, Mr Dibb does not refer to Federal Court Rules ("FCR"), O 62A. However, in his oral submissions, Mr Dibb made it clear that he was relying on O 62A to support his application. Order 62A provides as follows: "(1) The Court may: (a) by order made at a directions hearing; and (b) of its own motion or on the application of a party; specify the maximum costs that may be recovered on a party and party basis. (2) A maximum amount specified in an order under rule 1 shall not include an amount that a party is ordered to pay because the party: (a) has failed to comply with an order or with any of these Rules; or (b) has sought leave to amend its pleadings or particulars; or (c) has sought an extension of time for complying an order or with any of these Rules; or (d) has otherwise caused another party to incur costs that were not necessary for the economic and efficient: (i) progress of the proceedings to trial; or (ii) hearing of the action." 12 Although Mr Dibb has filed a number of affidavits in the proceedings, he did not read any affidavit in support of his application for a "cap" on the exposure of the parties to costs. There is therefore no evidence before me as to his financial position or the reasons why he is not legally represented in these proceedings. Nor is there any evidence suggesting that Mr Dibb will be prevented from pursuing his case if no order is made limiting his exposure to any adverse costs order. 13 In essence, Mr Dibb's argument is that he should not be exposed to a potentially substantial order for costs in the event that he fails in the litigation. He contends that he is confronted by two substantial corporations who can afford to contest the litigation. He also complains that the respondents have been unco-operative in the way they have conducted the proceedings. 14 In Hanisch v Strive Pty Ltd (1997) 74 FCR 384, at 387, Drummond J said that the "principal object of O 62A is to arm the Court with power to limit the exposure to costs of parties engaged in litigation in the Federal Court which involves less complex issues and is concerned with the recovery of moderate amounts of money, although it may be appropriate for an order to be made under O 62A in other cases, of which Woodland v Permanent Trustee Co Ltd (1995) 58 FCR 139, is an example". See also Sacks v Permanent Trustee Australia Ltd (1993) 45 FCR 509, at 511-512, per Beazley J. 15 There does not seem to me to be any feature of the present case that warrants an order being made under O 62A. The proceedings cannot be described as simple commercial litigation which should be subject to a "budget costs regime". Indeed, Mr Dibb has framed his case in such a way that a large number of factual and legal issues are likely to arise. Should it turn out that his case fails, there is a risk of injustice to the respondents if they are denied what otherwise would be their entitlement to apply for orders that Mr Dibb pay their costs. I bear in mind that they have already been required, inter alia, to undertake discovery of substantial numbers of documents and, for this purpose, to undertake extensive, time-consuming and doubtless expensive inquiries. 16 The litigation does not have a public interest component: cf Woodland v Permanent Trustee Co Ltd (1995) 58 FCR 139, at 146-148. There is nothing to suggest that Mr Dibb is being prevented or inhibited from conducting his case by the prospect of an adverse costs order. Doubtless he would prefer not to run the risk of such an order, but this is true of a very large proportion of applicants in this Court. The litigation does not have any of the unusual features that prompted Wilcox J to make orders under O 62A in Woodland v Permanent Trustee. 17 It is true that there have been some delays by the respondents in complying with certain orders of the Court. In the absence of evidence, however, I cannot conclude that these have been such as to indicate that the respondents have been "unco-operative" in the conduct of the proceedings. It must be borne in mind that they are faced with a claim that raises a large number of questions and is by no means easy to follow. Should the respondents fail to comply with orders of the Court or otherwise obstruct the proceedings, the Court has ample power to make costs orders at the appropriate time. 18 In the circumstances I have described, I do not think that any order should be made under O 62A. It is therefore not necessary to address the question of whether O 62A permits orders to be made in the terms sought by Mr Dibb. The motion should be dismissed. No order should be made as to the costs of the motion.

the motion to produce documents 19 By motion filed on 9 October 2000, Mr Dibb applies for an order that Financial Services produce all documents described in Mr Dibb's Notice of Discovery dated 12 June 2000. The order is said to be sought pursuant to FCR O 15 r 11. Order 15 r 11(1) provides as follows: "(1) Where: (a) …; (b) …; or (c) it appears to the Court from evidence or from the nature of circumstances of the case or from any document filed in the proceeding that there are grounds for a belief that any document relating to any matter in question in the proceeding is in the possession, custody or power of a party; the Court may, subject to any question of privilege which may arise, order the party: (d) to produce the document for inspection by any other party at a time and place specified in the order; or (e) …". 20 The sequence of events so far as discovery is concerned is as follows: (i) On 12 June 2000, Mr Dibb, pursuant to a direction of the Court, served a Notice of Discovery upon Financial Services' solicitors. The Notice identified fifty-five categories of documents to be discovered. (ii) On 14 August 2000, Financial Services served an unsworn list of documents. (iii) On the same day, Mr Dibb sent a six page letter to Financial Services' solicitors complaining about what he claimed were gaps in the list. (iv) On 28 August 2000, Financial Services' solicitors served an amended unsworn list of documents. (v) On 11 September 2000, Mr Dibb sent a letter to Financial Services' solicitors requesting that further discovery be made of certain categories of documents identified in the Notice for Discovery. (vi) On 5 October 2000, Financial Services filed a list of documents supported by an affidavit affirmed by Mr Cooper, the Managing Director, Consumer Finance of Financial Services. (vii) On 3 November 2000, a hearing took place at which Mr Dibb's complaints about the extent of discovery were aired. Particular reference was made to a number of categories of documents in respect of which Financial Services claimed to have no documents in its possession, custody or control. Directions were made for Financial Services to file a further affidavit setting out inquiries it had made in order to satisfy its obligations to form complete discovery. (viii) On 27 November 2000, Financial Services filed a further affidavit by Mr Cooper. In this affidavit, Mr Cooper confirmed that Financial Services had been fully informed of its obligations to discover all relevant documents enumerated in Mr Dibb's Notice for Discovery. The affidavit detailed the extensive searches undertaken in order to comply with the Notice for Discovery. The evidence makes it clear that very extensive searches indeed have been conducted. The affidavit also confirmed that Financial Services had no documents corresponding to four particular categories that had been the subject of discussion at the hearing on 3 November 2000. (ix) Mr Cooper's affidavit further stated, in somewhat clumsy language, that Financial Services was not claiming legal professional privilege in respect of any documents that had been discovered. At the hearing on 4 December 2000, a further direction was made requiring the filing of an additional affidavit clarifying that this is in fact the position. 21 Mr Dibb has filed further submissions complaining about Financial Services' discovery. Some of his complaints appear to be based on the erroneous assumption that Financial Services has claimed client legal privilege in respect of some documents included in the list. As is to be confirmed by the further affidavit, no such claim of privilege has been made. 22 Mr Dibb has made a number of other complaints about the extent of Financial Services' discovery. None of these complaints is supported by evidence. Mere assertions that Mr Dibb believes that certain categories of documents must exist cannot provide a foundation to attack the adequacy of discovery. Nor can assertions in submissions or from the bar table take the place of evidence which casts doubt on what seems to me an inherently credible affidavit by Mr Cooper: see Simpson, Bailey and Evans, Discovery and Interrogatories (2nd ed., 1990), at 92. 23 In my opinion, the motion for further production of documents should be dismissed. Having regard to delays by Financial Services in complying with certain directions of the Court, no order for costs should be made in respect of this motion.

the clawback motion 24 Superannuation Plan filed a motion on 18 October 2000 seeking orders that Mr Dibb deliver up originals and copies of three documents (Nos 38, 40 and 46) in Financial Services' list of documents and that Mr Dibb be restrained from disclosing or using the documents or knowledge gained therefrom. The basis of the motion is that all three documents are confidential and subject to legal professional privilege and that copies of the documents were disclosed inadvertently to Mr Dibb by Financial Services in the course of its discovery. Mr Stevenson, who appeared for Superannuation Plan, indicated that Document 38 is the most important of the three documents. 25 It must be said that Superannuation Plan appears to have approached the question of the "clawback" of the confidential documents on a somewhat casual basis. The affidavit in support of the motion, sworn by the solicitor for Superannuation Plan, merely annexes correspondence. No attempt has been made to adduce evidence of the circumstances in which copies of documents came to be in the custody of Financial Services. Nor is there evidence of the circumstances in which the documents came to be disclosed by Financial Services to Mr Dibb. Indeed, Mr Dibb was not asked to return the documents until some two months after he received them from Financial Services. No explanation has been offered for the delay. In particular, there is no evidence that Superannuation Plan was unaware that Mr Dibb had copies of the documents during the two month period between the date he received them and the date Superannuation Plan demanded their return. 26 The casualness to which I have referred also applies to the legal submissions made by Superannuation Plan. The only authority referred to by Superannuation Plan in support of its motion was Director of Public Prosecutions (Cth) v Kane (1997) 140 FLR 468. While this case contains a careful review of the authorities, in important respects it has been overtaken by the decision of the High Court in Mann v Carnell (1999) 168 ALR 86. In the latter case, the Court held that the law relating to the existence and waiver of legal professional privilege prior to a hearing is governed by common law principles, not the provisions of ss 118 and 122 of the Evidence Act 1995 (Cth) (which are confined to rules governing the adducing of evidence). 27 The following can be gleaned from the scanty evidence: (i) On about 11 August 2000, in response to Mr Dibb's Notice for Discovery, Financial Services provided Mr Dibb with copies of the three documents in dispute. The documents are dated, respectively, 10 November 1998 (Document 38), 10 February 1999 (Document 40) and 8 July 1999 (Document 46). (ii) Documents 38 and 40 comprise confidential advice from Mr Banner, who is described as a Principal Legal Consultant at Sedgwick Noble Lowndes (which is not a legal firm). Although no evidence was tendered as to Mr Banner's status as a legal practitioner, I was informed from the bar table that he was and is a solicitor. Document 46 is a confidential advice from Ms Sullivan, Associate in the Legal Group at W M Mercer. It is not in dispute that the letters contain legal advice directed to Superannuation Plan. (iii) Document 38 is marked "private and confidential". The letter is addressed to: "Mr Paul McMahon Chairman Avco Superannuation Fund Avco Financial Services Ltd." It appears that at the time Mr McMahon was the Chairman of Superannuation Plan and Vice President/Treasurer of Financial Services. The other two documents are addressed differently, but nothing presently turns on the differences. (iv) On 11 October 2000, Superannuation Plan's solicitors wrote to Mr Dibb requesting delivery up of the documents. The letter asserts that the documents are subject to legal professional privilege and that privilege has not been waived. The letter also asserts that Financial Services was under an equitable obligation of confidentiality which it breached by its discovery and disclosure of the documents to Mr Dibb. It is said that Mr Dibb was likewise subject to an equitable obligation of confidentiality in relation to the documents. (v) On 11 October 2000, Superannuation Plan's solicitors wrote in similar terms to Financial Services' solicitors. The letter includes the following paragraph: "It appears that the three Documents have somehow come into the possession of the first respondent and then have been discovered. Any distribution of the documents to the first respondent has been inadvertent, mistaken and certainly not voluntary in a manner that would waive the privilege. This situation has most likely arisen because officers of the third respondent were at the same time employees of the first respondent. However, this does not mean that the third respondent has in any way waived its legal professional privilege over the Documents." (vi) Financial Services' solicitors replied on 18 October 2000. The reply includes the following paragraphs: "During the course of discovery given by our client in these proceedings, copies of the Documents were forwarded to the applicant. Our client is not able to require the applicant to return copies of the Documents. We note that you have written to the applicant seeking return of such copies in any event. It would appear that the Documents were inadvertently received by, and in the possession of, our client and our client acknowledges that it continues to be bound by an equitable obligation of confidentiality in respect to the Documents. Our client undertakes that it will not disclose or use the Documents or knowledge gained of the contents of the Documents in these proceedings, subject of course to any legal compulsion to do so." 28 In order to succeed in obtaining the relief sought in its motion, Superannuation Plan must establish certain facts. It must show that the documents in question were provided to Financial Services on terms or in circumstances that preserved the confidentiality of their contents. Superannuation Plan must also show that it did not consent, explicitly or implicitly, to copies being provided to Mr Dibb. These facts would lay the foundation for claims based on equitable principles of confidentiality or the rules governing legal professional privilege. Even then further questions might arise. For example, even if the documents had been released to Mr Dibb by mistake or inadvertence, a waiver of privilege might be imputed by operation of law if the contents of the documents are material to an issue in the proceedings: cf Meltend Pty Ltd v Restoration Clinics of Australia Pty Ltd (1997) 75 FCR 511, at 523-524, per Goldberg J. 29 In my opinion, the evidence adduced on behalf of Superannuation Plan does not establish either of the facts essential to establishing its claim for relief. There is no evidence as to how or on what terms the documents came into the hands of Financial Services. Nor is there evidence as to how they came to be released to Mr Dibb and, in particular, whether any officers of Superannuation Plan knew in advance, or at any time between their release and the letter of demand of 11 October 2000, that the documents were to be or had been released. Neither Mr McMahon nor any other person who might be expected to have knowledge of these matters gave evidence. 30 Superannuation Plan's letters of 11 and 18 October 2000 merely make assertions, in general terms, that the documents had been provided to Financial Services inadvertently or by mistake. There is no attempt to set out what actually occurred or indeed to indicate that any systematic inquiries had been undertaken. Financial Services, which of course is also resisting Mr Dibb's claims, merely says (through its solicitors) that "it would appear that the Documents were inadvertently received by, and in the possession of, our client". The letter says nothing about who gave instructions for the documents to be released and whether that person occupied positions with both Financial Services and Superannuation Plan. The fact that Financial Services acknowledges for its own reasons that it is under a continuing equitable obligation carries the matter no further as against Mr Dibb. 31 Mr Stevenson invited me to draw an inference from the fact that Document No 38 is addressed to Mr McMahon as an officer of both Superannuation Fund and Financial Services and that the document had been disclosed inadvertently by Superannuation Fund to Financial Services and then inadvertently disclosed by the latter to Mr Dibb. I am unable to discern why such an inference should be drawn. On the contrary, in the absence of any evidence from Mr McMahon, the form of the letter is consistent with Mr McMahon, or some other person holding an office in both companies, assenting to the document being discovered to Mr Dibb. 32 In these circumstances, I cannot be satisfied that the documents in question were released to Mr Dibb without the consent, express or implied, of Superannuation Plan. Its motion must therefore be dismissed. As Mr Dibb sought to raise a number of contentions on the motion that appear to have been irrelevant, I think that the appropriate course once again is to make no order as to the costs of this motion.

CONCLUSION 33 The end result is that all three motions must be dismissed. I make no orders as to costs in relation to any of the motions. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice SACKVILLE.

The Applicant was self-represented. Counsel for the First Respondent: Mr J R Clarke

Solicitor for the First Respondent: Mallesons Stephen Jaques Counsel for the Third Respondent: Mr J Stephenson Solicitor for the Third Respondent: Henry Davis York Date of Hearing: 4 December 2000

Date of Judgment: 8 December 2000

Trade Practices Act 1974(Cth)

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