Murphy v Westpac Banking Corporation

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 690 of 2010

AND: WESTPAC BANKING CORPORATION ACN 007 457 141

JUDGE: JAGOT J DATE: 29 MARCH 2011 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 These reasons for judgment relate to a notice of motion in each of proceedings NSD 1157 of 2009 (a proceeding in which Louise Murphy is the applicant) and NSD 690 of 2010 (a proceeding in which William Lawson is the applicant), by which the applicant in each proceeding seeks leave to amend their statement of claim.

Background 2 The respondent to each proceeding, Westpac Banking Corporation (Westpac), initially opposed the grant of leave on various grounds. After the motions were partially heard on 11 February 2011, and at the request of the applicants, I adjourned the motions for further hearing on 22 March 2011 to give the applicants an opportunity to address the substance of Westpac's objections by proposing further amendments to the statements of claim and, in Ms Murphy's case, to adduce evidence relevant to her application to withdraw certain admissions as part of the proposed amendments. I also ordered the applicant in each matter to pay Westpac's costs of and incidental to the notice of motion up to and including the hearing on 11 February 2011. By the conclusion of the hearing on 22 March 2011 it became apparent that, leaving aside its position on the withdrawal of admissions by Ms Murphy, many of Westpac's objections had been resolved by the applicants' further proposed amendments. It became further apparent that Westpac's remaining objections to the amendments are founded on its view that some of the proposed pleadings are insufficiently particularised, and thus that any grant of leave should be on terms that the applicants provide adequate particulars of those pleadings.

Ms Murphy - withdrawal of admissions 3 As many of the remaining objections are common to the two proceedings it is convenient to deal first with Ms Murphy's application to withdraw admissions. 4 The applicable principles may be summarised as follows: - (i) good cause must be shown to withdraw an admission, by way of a "sensible explanation… based on evidence of a solid and substantial character" (Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd (2000) 191 ALR 579; [2000] FCA 1732 (Murran Investments) at [45], citing Celestino v Celestino [1990] FCA 449 at 8-9), (ii) good cause may be established if, for example, the admission is contrary to the facts, was made by mistake or was made "without due consideration of material matters" (Drabsch v Switzerland General Insurance Co Ltd (unreported, Supreme Court of NSW, Santow J, 16 October 1996) cited in SLE Worldwide Australia Pty Ltd v Wyatt Gallagher Bassett Pty Ltd [2005] NSWSC 816 at [55]), and (iii) even if good cause is shown, the prejudice to the other party may be such as to warrant the refusal of leave to withdraw an admission (see Murran Investments). 5 Ms Murphy's statement of claim as filed pleaded that: - (i) at a meeting on 19 December 2008, Paul Harvey gave Ms Murphy a deed of release and told her she had to sign it to receive her redundancy entitlements (at [18]), (ii) Ms Murphy signed the deed of release (at [19]), and (iii) when Ms Murphy signed the deed of release Westpac was aware of a series of matters including, for example, that Ms Murphy was not required to sign the deed of release to obtain her redundancy entitlements, which made Westpac's conduct in demanding that she do so unconscionable (at [20]). Relief from the deed of release was sought on various grounds. In its defence, Westpac admitted that Ms Murphy was requested to sign a deed of release but otherwise denied or did not admit the allegations. 6 Ms Murphy's statement of claim as proposed to be amended deletes the paragraphs dealing with and the prayers for relief in respect of the deed of release. 7 The initial motion for amendment in Ms Murphy's case was not supported by any evidence. During the period of the adjournment of the motions, Ms Murphy swore an affidavit of 28 February 2011 in support of the application to withdraw the admissions. At the hearing on 22 March 2011 this affidavit was supplemented by oral evidence, particularly in cross-examination. The effect of Ms Murphy's evidence is as follows: - (i) at the time of the meeting on 19 December 2008, Ms Murphy was under enormous personal stress for a number of reasons (including, but not limited to, her redundancy), (ii) Ms Murphy's state of distress at that time was such that she recalled saying she did not want to read any of the documents except the spreadsheet showing her payouts; she also recalled signing the spreadsheet but did not recall signing anything else or much more about the meeting except for the fact that the meeting was only about 5 minutes long, (iii) because of her distressed state Ms Murphy asked Mr Harvey to keep her copies of the documents relating to her redundancy, (iv) when her statement of claim was being prepared, she asked Mr Harvey to send across to her the documents relating to her redundancy, (v) Mr Harvey emailed the deed of release with a copy of the signed spreadsheet attached to it, (vi) Ms Murphy trusted Mr Harvey and, insofar as she thought about it at all, assumed she must have signed the deed of release at the meeting on 19 December 2008, (vii) Ms Murphy did not appreciate the significance of the deed of release when her statement of claim was being prepared and, at most, the pleading should have asserted that she assumed she had signed the deed of release at the meeting on 19 December 2008 (rather than that she had done so), (viii) subsequently, when considering the entire circumstances of the meeting in a more logical state of mind, Ms Murphy took into consideration the facts that no signed copy of the deed of release could be found, none of her colleagues who had been made redundant at the same time as her had even been asked to sign such a document, and she herself recalled signing the spreadsheet but did not have (and had never had) a positive recollection of signing the deed, and (ix) in consequence, Ms Murphy had come to believe that her statement of claim was in error. 8 Despite this evidence, Westpac submitted that it was inherently extremely improbable that the pleadings would have been framed as they were unless Ms Murphy had recalled signing the deed of release when the statement of claim was being prepared. Westpac suggested that Ms Murphy's recollection had altered after she became aware that no signed copy of the deed of release could be found and that no similar request had been made of her colleagues. Westpac pointed to the lack of any evidence from the solicitor who had taken instructions from Ms Murphy in relation to the statement of claim as supporting this submission. Westpac continued to oppose the grant of leave for the withdrawal of the admissions in the statement of claim in respect of the deed of release on the basis that Ms Murphy's explanation of the circumstances relating to the making of the admissions was unsatisfactory. 9 I am satisfied that Ms Murphy should be granted leave to withdraw the admissions. Contrary to Westpac's submissions, I found Ms Murphy's explanation of the circumstances in which the pleadings were prepared, and those in which they are now sought to be amended, cogent and persuasive. In short, Ms Murphy trusted that Mr Harvey would send her copies of the documents relevant to her redundancy, being the documents which she had signed. He sent her the spreadsheet she had signed, apparently attached to the back of the deed of release. Ms Murphy (and, I infer, on her instructions her solicitors) assumed she had signed the deed. Given the length and detail of her statement of claim, as well as the fact that the events to which the pleading related occurred during a period of enormous personal distress for Ms Murphy, Ms Murphy did not appreciate that the pleading went further than her actual recollection. Considering the matter at a later time and from a more detached perspective, Ms Murphy realised that her assumption that she had signed the deed of release could not be reconciled with the lack of any signed copy or the experience of her colleagues, let alone her lack of recollection of doing so. Ms Murphy's evidence provides good, indeed compelling, cause to permit withdrawal of the admissions. Westpac did not point to any material prejudice it would suffer from the grant of leave. In these circumstances leave should and will be granted for Ms Murphy to withdraw the admissions as proposed.

Common issues 10 Most of the other classes of amendments (and the objections to them) are common to the statements of claim of both Ms Murphy and Mr Lawson. To the extent possible, I will deal with the common classes of amendments (and objections) together. 11 No or inconsistent evidence (Murphy 3(b)(ii), 3(c)(ii) and 39 and Lawson 3(b)(ii), 3(c)(ii) and 48): Westpac contends that there is no evidence to support the conversations detailed in the proposed amendments to Ms Murphy's statement of claim, and that there are inconsistencies between the pleadings in Mr Lawson's statement of claim and Mr Lawson's own affidavit evidence. Counsel for Ms Murphy and Mr Lawson identified the evidence relied upon to support the pleadings and submitted that this evidence was sufficient. 12 Westpac's contention is not a proper basis upon which to refuse or impose conditions on the grant of leave in relation to the proposed amendments. The evidence either will or will not sustain the pleaded case. Nothing in the circumstances of these proceedings provides a basis for refusing or conditioning the grant of leave on the basis of Westpac's objections on this basis. 13 No particulars of amounts claimed (Murphy 21, 25, 32 and 104 and Lawson 27, 35, 42, 97 and 124): Westpac contends that the pleadings are insufficient in that compensation for loss or damage is claimed without any identification of the amounts sought. According to Westpac, the fact that the amounts may have to be changed subsequently by reference to the evidence as it emerges is beside the point. The applicants are required to do their best to identify the amounts claimed in any amended pleading so Westpac can know the case it has to meet. Counsel for Ms Murphy and Mr Lawson submitted that the amounts claimed could not presently be quantified and would be able to be quantified only with the assistance of the Court. 14 The submissions for the applicants on this point are unpersuasive. The applicants allege that Westpac breached certain obligations to them by not paying certain amounts to which they were entitled, and that the breach of these obligations caused them loss or damage. Other than (perhaps) the claim for compensation for loss of reputation, nothing in the nature of the claims suggests they are incapable of precise calculation. The calculation may have to be amended or alternatives may have to be presented once the evidence emerges. But Westpac is entitled to know the amounts the applicants presently claim. Particulars of those amounts will need to be provided. 15 No particulars of remuneration (Murphy 3(c)(iii) and Lawson 3(c)(iii)): these particulars relate to a claim that certain terms were implied into the contracts of employment of Ms Murphy and Mr Lawson on the basis of custom and practice having regard to, amongst other things, the particularised fact that Westpac remunerated the applicant over a number of years by way of a fixed component and an annual incentive. Westpac seeks particulars of the amounts paid for each nominated year by way of fixed component and annual incentive. Counsel for Ms Murphy and Mr Lawson submitted that such particulars were not required, especially when it was recognised that Westpac paid the applicants and had all of the records relating to those payments. 16 I accept the submissions on behalf of Ms Murphy and Mr Lawson. The particular relates only to the fact of remuneration by way of two components (the fixed salary and the annual incentive). The amount paid in each component is not material to the claim as particularised. The claim as particularised is sufficient for Westpac to know the case it has to meet. If Westpac considers that the amount of each component is relevant to its defence, it is a matter for it to identify those amounts and the way in which they are said to be relevant. 17 Written term not sufficiently particularised (Murphy 11 and Lawson 10): the relevant paragraphs of the statements of claim allege that it was a term of employment contract that, if employment was terminated before 30 September 2009, the employee would be paid a pro rata amount of the annual incentive for the 2008/2009 financial year and a pro rata amount of the medium-term incentive (or MTIP) for the 2008/2009 financial year. The particulars of this claim are that the term is in writing and is set out in a letter dated 31 October 2008 from Westpac to Ms Murphy and Mr Lawson respectively. Westpac requests further particulars of the precise words in the letter said to constitute the express term. In submissions it became apparent that the key part of the letter was contained in the paragraph numbered "2" on the second page of the letter. However, it is also apparent that in order to construe that paragraph it is necessary to have regard to the whole of the letter (not the least because it refers to terms defined elsewhere in the letter). On this basis the particular as provided is adequate.

Other issues 18 The other proposed amendments (and objections) relate to Mr Lawson's statement of claim. 19 No particulars of ostensible authority (Lawson 5B): paragraph 5B of Mr Lawson's statement of claim pleads a term of Mr Lawson's employment contract particularised as a term in writing set out in two emails between James Land and Mr Lawson, where it is said that Mr Land had actual or ostensible authority to alter the terms and conditions of Mr Lawson's employment. As Westpac pointed out, there are no particulars provided of the facts, matters or circumstances by which it is said that Mr Land had ostensible authority to alter the terms and conditions of Mr Lawson's employment. 20 Although counsel for Mr Lawson submitted that such particulars were unnecessary as Mr Land was Mr Lawson's "direct boss", this submission tends to support Westpac's position. There are no particulars given about Mr Land's position with Westpac or his relationship with Mr Lawson. The claim as particularised provides no clue about the source of his alleged ostensible authority. These particulars are necessary so Westpac knows the case it must meet. 21 No particulars of policies (Lawson 21A(a)): this objection was resolved during oral submissions. Counsel for Mr Lawson agreed that the reference in this paragraph of the proposed amended statement of claim to "the policies (including the Secondment Policy)" would be amended to read "the Secondment Policy" in the version of the statement of claim to be filed pursuant to any grant of leave.

Conclusion 22 As should be apparent from the above discussion, no matter arises which would make it appropriate to deny Ms Murphy or Mr Lawson the opportunity to amend their statements of claim. While some paragraphs require further particulars to be provided, that is not a proper basis on which to deny leave to amend. While Westpac submitted that the grant of leave should be conditional on the provision of the required particulars, I am not persuaded that this is necessary. Leave should be granted pursuant to O 13 r 2 of the Federal Court Rules for the applicants to amend their statements of claim, including by the withdrawal of admissions in Ms Murphy's case, and directions made for the provision of particulars. The details of those directions will need to be worked out after hearing from the parties, as will the issue of costs in respect of the hearing on 22 March 2011. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.