The Trade Practices Claim - strike out?
71 Given the conclusion that judgment should be entered in favour of Moody's Investors Service in respect to the trade practices claims, it is unnecessary to resolve the alternative submission advanced on its behalf. This alternative submission focussed attention upon the form of the pleadings and concluded with the submission that judgment should be entered in its favour by reason of deficiencies in the pleadings or that these pleadings should be struck out without liberty to re-plead.
72 Had it been necessary to resolve this alternative submission, it - too - would have been accepted.
73 The alternative submission started from the similarities between one or other of the four "representations" as now pleaded and the form of the pleadings which was previously struck out in 2010.
74 Counsel on behalf of Moody's Investors Service contends that the same deficiencies which occasioned the orders previously made remain. To resolve this submission it is regrettably necessary to trace through the various previous versions of the pleadings.
75 The first attempt to plead "representations" was set forth in a Statement of Claim filed in June 2009. Objection was taken to the form of that pleading and amendments were proposed. In April 2010 the pleading was struck out and leave refused to amend in the form then proposed on behalf of Mr Takemoto: Takemoto v Moody's Investors Service Pty Limited [2010] FCA 407. The form of the then pleading and that of the proposed amendments were as follows:
7. During discussion with Senior Executives of Moody's during his employment in Japan those executives made certain representations to the Applicant regarding employment benefits available to him.
Particulars of Representations
(i) At a meeting in Puerto Rico organised for executives by the Respondent in the year 2000 Mr Scott Douglas, Managing Director, Global Marketing told the Applicant that Moody's was planning to list on the share market and that the value of shares in the Company will increase very substantially. Consequently the value of stock options available to employees under the Moody's Corporation Key Employees' Stock Incentive Plan will also increase commensurately. The Applicant informed Mr Douglas that the share options were very important to him.
(ii) In about December 2002 Mr Thomas Keller, the executive in the Moody's Group responsible for the oversight of the Asian operations of the Group discussed with the Applicant the prospect of his moving to Australia. Mr Keller held out to the Applicant the prospect of spending more time with his family. Mr Keller further told the Applicant that in Australia the same programs that applied throughout the world would apply to him and that this included stock option programs and the Career Transition Program.
(iii) In the year 2000 the Respondent held a conference of Managing Directors within the Moody's Group of companies at the Dural Country Club in Miami, Florida. The conference was attended by Mr Paul Ramley, Director, Human Resources who told the Applicant that Moody's employment benefit programs applied to people worldwide because the Group would have to move people around a lot. Further, he said that if Moody's did not apply the programs throughout the world people would not be as willing to move around.
(iv) In the year 2000 the Respondent held a conference of Managing Directors within the Moody's Group of companies at the Dural Country Club in Miami, Florida. The conference was attended by Mr Paul Ramley, Director, Human Resources who told the Applicant that Moody's employment benefit programs applied to people worldwide because the Group would have to move people around a lot. Further, he said that if Moody's did not apply the programs throughout the world people would not be as willing to move around.The Applicant observed that policy documents relevant to the Career Transition Program were posted on the Group intranet and as such were promulgated as part of the employment policies of each part of the Moodys Group on a world-wide basis.
(v) Moody's Investors Service Pty Ltd and Moody's Australia Pty Ltd represent themselves through the internet as being part of one integrated group of companies known as Moodys.
Particulars
See:
http://www.moodys.com/australiamdcsPage.aspx?mdcsID=G&6template=about
(vi) In about 1999 or 2000 Mr Edward Young, the predecessor of Mr Thomas Keller, told the Applicant that he would be able to cash in his stock options if he retired at 55. The Applicant was then 45 years.
76 After setting forth some basic principles in respect to pleadings and particulars, the reasons for decision thereafter set forth in support of the orders then made included the following:
[14] In the present proceeding, the Statement of Claim seeks to set forth the material facts upon which reliance is to be placed primarily (if not exclusively) by way of "particulars". The "representations" that the Respondent is called upon to meet are not exposed even at the most basic level in any statement of material facts. This difficulty confronting the Respondent is only compounded when each of the "particulars", in both the Statement of Claim and the proposed Amended Statement of Claim, is examined. If reference is made, by way of example, to the first "particular" set forth in paragraph [7], that "particular" is susceptible of being construed as setting forth a representation that:
• "Moody's was planning to list on the share market";
• "the value of shares in the Company" would "increase very substantially"; and
• the "value of stock options available to employees under the Moody's Corporation Key Employees' Stock Incentive Plan" would also "increase commensurately".
A similar dissection of the remaining "particulars" proposed to be set forth in the new paragraph [7] may be undertaken with ever increasing possible "representations" emerging. Left to one side are the difficulties which may be exposed by the correct identification of the corporation which conducted itself in the way alleged - be it one or other of the proposed two corporate Respondents or some other entity within the "Moody's Group". Also left to one side is any question as to whether any of the possible representations were false or misleading at the time they were made or whether they were a statement of facts which may not have later come to fruition. A question of more immediate concern is whether the draftsman seeks to elevate each of these possible "representations" contained within the "particulars" to the status of "representations" which are said to be "false or misleading".
[15] An identification of the "representations" to be relied upon self-evidently at a later stage also impacts upon the discovery that may be ordered and the evidence to be adduced.
[16] Of particular concern is the uncertainty forced upon the Respondent of having to discern for itself which of the possible "representations" proposed in the new paragraph [7] are likely to be advanced at the final hearing. Moreover, during oral submissions, Counsel for Mr Takemoto contended that no case was sought to be advanced in respect to the "Moody's Corporation Key Employees' Stock Incentive Plan" ("the Plan") but rather reliance was to be placed upon such entitlements as may be conferred by the "Career Transition Program". If sole reliance is to be placed on such entitlements possible representations that may have been made in respect to the Plan are either irrelevant or misleading. So much was also made apparent from the proposed amendment to the Application by the deletion of any order sought pursuant to s 87(b) of the Trade Practices Act in respect to the Plan. Counsel also contended that the justification for setting forth as "particulars" such facts as may be contained therein was to set forth the "course of conduct" which it was contended was of relevance.
77 A further attempt was made to plead the causes of action arising under the Trade Practices Act. In this further attempt, the "representations" sought to be pleaded were as follows:
Trade Practices Claim
23. Prior to the Applicant entering into the Employment Contract, the First and Second Respondent represented that all of the employee benefit programs available to employees in any Moody's Company anywhere in the world were available to the Applicant ("the first representation").
Particulars
(a) The representation was made in a conversation with the Applicant by Mr Paul Ramley Director Human Resources for Moody's United States at a Meeting of Executives from various Moody's companies in the year 2000.
24. Further, and prior to entering into the Employment Contract, the First and Second Respondents again represented to the Applicant that the same programs which applied to Moody's employees throughout the world applied to him ("the second representations").
Particulars
(a) The second representation was made by Mr Thomas Keller, the Executive in the Moody's group of companies with responsibility for the Asian operations of those companies, which included Moody's Japan KK in 2 conversations between the Applicant and Mr Keller, the first in the Applicant's office in Tokyo in about September 2003, the second in Mr Keller's office in Hong Kong.
25. On or about 2005, the First and/or the Second Respondent represented to the Applicant that the Career Transition Program applied throughout the world ("the third representation").
Particulars
(a) The Applicant observed that policy documents relevant to the Career Transition Program were posted on the Moody's group intranet, which was able to be accessed by employees of Moody's companies on a worldwide basis.
78 This version did not survive either. Leave to amend was refused in June 2010: Takemoto v Moody's Investors Service Pty Limited (No 2) [2012] FCA 622. In refusing leave, the following conclusions were then expressed:
[27] Paragraphs [23], [24] and [25] of the further revised form of the Amended Statement of Claim plead the making of three representations. The paragraphs that assume central importance for the Trade Practices claim are paras [25], [26] and [27] which are in the following terms:
25. On or about 2005, the First and/or the Second Respondent represented to the Applicant that the Career Transition Program applied throughout the world ("the third representation").
Particulars
(a) The Applicant observed that policy documents relevant to the Career Transition Program were posted on the Moody's group intranet, which was able to be accessed by employees of Moody's companies on a worldwide basis.
26. On the basis of the first, second and third representations, the Applicant concluded that the Career Transition Program relevant to Moody's Japan KK would apply to the Applicant regardless of the country in which the Applicant worked and would be available to him if and when he was terminated.
27. But for the conclusion referred to in paragraph 26, the Applicant would not have agreed to enter into service with the First and/or Second Respondent on 29 December 2003.
[28] Whatever may be the status of the representations in paras [22] and [23], para [26] makes clear the proposition that it was upon the basis of all three representations that the Applicant "concluded that the Career Transition Program" would apply to him. And, "[b]ut for th[at] conclusion", the Applicant maintains that he would not have "agreed to enter into service with the First and/or the Second Respondent on 29 December 2003". How a representation made in 2005 could have formed the basis (in whole or in part) for any action taken in 2003 remained unexplained. Nor can the date in para [25] be regarded as either an oversight or perhaps a date permitting some degree of latitude. An affidavit of Mr Takemoto filed on 14 October 2009 confirms the 2005 date and fixes that date as follows with a degree of certainty:
[35.] In or about 2005, I recall I read a Career Transition Program ("CTP") document on the company intranet. I recall that in or about the first half of 2005, I went for a business trip to Tokyo. It was there on the company intranet that I read the CTP.
While the present application is to be resolved by reference to the terms of the proposed pleading and not the affidavit, the affidavit has been referred to solely for the purpose of determining whether the date in para [25] was a typographical error. It was not.
[29] This is a sufficient basis upon which leave to amend should be refused. That decision is only supported by a recognition of the fact that para [23] particularises the representation there pleaded as having been made by the First and Second Respondent in a conversation "in the year 2000". But the proposed Second Respondent, Moody's Australia Pty Ltd, was only incorporated in January 2001.
[30] No leave should be granted to plead reliance upon the Trade Practices Act where there is such uncertainty.
79 With reference to the current Statement of Claim and that which was the subject of the proposed amendments resolved in June 2010, the following comparisons emerge, namely:
(i) paragraph [30] of the current Statement of Claim is in much the same terms as the former paragraph [23];
(ii) paragraph [31] (and possibly paragraph [32]) is in much the same terms as the former paragraph [24]); and
(iii) paragraph [33] is (perhaps) in much the same terms as the former paragraph [25].
It may further be noted that the current Statement of Claim seems to now abandon the preferable drafting style of identifying the "representation" sought to be pleaded and reverts to the more "conversational" style of pleading that previously attracted criticism: [2010] FCA 407 at [14] to [16].
80 Whatever may be the comparisons that can be made, the current Further Amended Statement of Claim in paragraphs [30] to [33] nevertheless do identify with some precision each of the four "representations" now relied upon. Paragraphs [30] to [33] do not contain the potentially irrelevant or misleading allegations that infected the proposed pleading, the subject of decision in 2010: [2010] FCA 407 at [14] to [16].
81 It may further be observed that the pleadings set forth in the current Further Amended Statement of Claim at paragraphs [30] to [33] seek to address the difficulty occasioned by paragraph [25] of the amendments the subject of the June 2010 judgment. That difficulty was the difficulty of pleading reliance upon a representation made in 2005 as a reason for entering into an employment agreement in 2003. It is paragraph [38] of the current Further Amended Statement of Claim which is the counterpart of the former ill-fated paragraph [25]. The former difficulty is now addressed by not now pleading any reliance upon any representation made in 2005.
82 It is thus the case that some of the former difficulties have been addressed.
83 But other difficulties remain. Two of these difficulties are:
(i) the fact that none of the four "representations" now sought to be pleaded in paragraphs [30] to [33] make any express reference to any representation as to any entitlement under the Career Transition Program; and
(ii) the fact that all that is pleaded is what Mr Takemoto "understood" to be the subject of what he was being told.
Paragraphs [30], [31], [32] and [33] studiously avoid any pleading as to any "representation" being made as to the applicability of the Career Transition Program. Indeed, the pleading that Mr Takemoto "understood" the statements made to be a reference "to programs such as the Career Transition Program" only serves to emphasise that no statement was in fact made that referred expressly to any entitlement conferred by that Program. In the absence of any "representation" being pleaded which correlates to the case sought to be advanced by Mr Takemoto - namely a "representation" that he was being told that the benefits conferred by the Career Transition Program would continue to be available to him if he moved to Australia - those parts of the current Statement of Claim should be struck out. Moreover, and to the extent that the repeated reference to "programs available to employees" is susceptible of being construed as a reference to the Career Transition Program, any such pleaded representation:
(i) is not confined to those benefits of the kind sought to be relied upon by Mr Takemoto, namely those benefits available to those employees "at the level of Vice President and above"; and
(ii) it remains unknown (and un-pleaded) what further benefits may be "available to employees" generally, whether at the level of Vice President or not.
84 Mr Takemoto's "understanding" is not to be taken as a "representation" as to what he was being told.
85 There remains a failure to comply with, in particular, r 16.02(1)(b) and (d) of the Federal Court Rules. There has certainly been a failure to "be as brief as the nature of the case permits" (r 16.02(1)(b)) and a failure to "state the material facts on which a party relies to give the opposing party fair notice of the case to be made against that party, but not the evidence…" (r 16.02(1)(d)). There may be a "footprint" in paragraphs [30], [31], [32] and [33] of the Further Amended Statement of Claim from which Mr Takemoto's claims may be tracked, but the form of those paragraphs is - at the very least - "ambiguous" (r 16.02(c)) and such that it occasions "prejudice, embarrassment or delay in the proceeding" (r 16.02(2)(d)).
86 Separate from the conclusion that summary judgment should be entered in favour of Moody's Investors Service in respect to these trade practices claims is the further conclusion that these paragraphs would, in any event, have been struck out pursuant to r 16.21 of the Federal Court Rules.
87 Of greater difficulty is the question as to whether Mr Takemoto would have been extended a yet further opportunity to plead his claims arising under the Trade Practices Act. The opportunity to re-plead is, perhaps, but a consequence of the need for caution to be exercised before striking out a pleading. Just as caution should be exercised before striking-out a pleading, even greater caution should be exercised before refusing a party an opportunity to re-plead. Ordinarily a party will be permitted an opportunity to re-plead: Thorpe v Commonwealth of Australia (No 3) (1997) 71 ALJR 767 at 774 to 775. Kirby J there observed:
Even if a party makes good its attack on another's pleading, a court will ordinarily permit the opponent to reframe the pleading so long as it is clear that there is point in doing so and that the further time and opportunity will have utility. The guiding principle is doing what is just. Courts, particularly today, strive to uphold efficiency and economy in the disposal of proceedings before them. But they also remember that pleadings are a means to the end of justice according to law. Pleadings are the servants, not the masters of the judicial process.
His Honour returned to the same proposition, albeit in dissent, in Channel Seven Adelaide Pty Ltd v Manock [2007] HCA 60 at [175], (2007) 232 CLR 245 at 311 where he stated that "[o]rdinarily, where there has been dispute about the admissibility of pleadings, a party is afforded the opportunity to reconsider its position in the light of the court's ruling on the applicable law. The party which fails is normally permitted to re-plead". Repeated criticism of a pleading without any concession that the pleading was deficient was, however, there relied upon as the reason for refusing the opportunity to re-plead: [2007] HCA 60 at [99], (2007) 232 CLR 245 at 292 per Gummow, Hayne and Heydon JJ. In some cases, however, an opportunity to re-plead has been refused where it has been concluded that "enough was enough": Dank v Cronulla Sutherland District Rugby League Football Club Ltd [2014] NSWCA 288 at [111] per Ward JA. Liberty to re-plead may be refused where it is concluded that there is not available any reasonable cause of action: e.g., Eagle v Civil Aviation Safety Authority [2014] FCA 1016 at [65] per Bennett J. But the exercise of the discretion to refuse liberty to re-plead is not confined to such situations.
88 If summary judgment were not to be entered in favour of Moody's Investors Service, and if leave to re-plead were to be refused, Mr Takemoto would be forced to commence a third proceeding with the ever increasing prospect - if not reality - of confronting limitation problems which are now more immediate than when he first sought to litigate his claims in 2009. The present proceeding may be taken to have been commenced possibly within the requisite six year period - the dismissal taking place on 26 July 2006 and the proceeding being commenced in the Federal Magistrates Court on 23 July 2012. Yet these are all difficulties largely - if not entirely - of his own making. Why there was a silence between 2010 and the filing in the current proceeding of an Application in 2014 remains unexplained.
89 Normally a party will be permitted to re-plead if the Court can discern the germ of a case concealed within inadequately drafted pleadings and which, if properly pleaded, can emerge for resolution. Perhaps greater liberty to re-plead should be extended where the perceived inadequacies occur in a pleading of some complexity and where it is necessary to identify with great specificity the allegation to be resolved. The difficulties in pleading a complex cause of action should not be ignored. Perhaps less liberty to re-plead should be extended where there emerges an inability - for whatever reason - to plead a comparatively simple case.
90 Of relevance is the number of opportunities that have been previously extended to a party to adequately plead a case against an opponent. There remains a disturbing failure to plead in paragraphs [30], [31], [32] and [33] only those facts which are "material" to the claim sought to be advanced of misleading and deceptive conduct. Although the current form of the pleading, as it is now set forth in the Further Amended Statement of Claim, is the product of evolution which has shed some of its former deformities, the current form of the pleading has only evolved into a pleading with new deformities which only occasion impermissible uncertainty as to the case to be advanced.
91 Of relevance is also the fact that each of the former permutations of the pleadings since 2009 has attracted detailed submissions from Moody's Investors Service identifying each of the former deficiencies. Those appearing for Mr Takemoto have also had the benefit of judgments of this Court which have also identified those deficiencies. The present proceeding is not one in which Mr Takemoto has been "kept in the dark" as to why his pleadings have not met the requisite standard. But darkness and gloom remain.
92 Separate from such considerations which are confined to a review of the form of the pleadings, is the fact that the terms of the Career Transition Program are now known. It is now known that Section 1 of that Program limited those entitled to benefits to an "eligible employee". If each of the "representations" set forth in paragraphs [30], [31], [32] and [33] are to be construed as a representation that those who are "eligible employees" will remain eligible, such a "representation" would not be of any utility to Mr Takemoto. For any of the four "representations" to be of any forensic utility to Mr Takemoto, something more needs to have been said on one or other of the four occasions identified in those four paragraphs. For Mr Takemoto to be able to avail himself of a benefit to which he is otherwise not entitled, something needs to have been said that was reasonably capable of instilling in Mr Takemoto such a belief. A statement, for example, may suffice that if he moved to Australia, Moody's Investors Service would make available to him the benefits of an "eligible employee"; or a statement that he was in fact an "eligible employee". But no such statements are pleaded. And such "representations" as are pleaded fall short of setting forth a basis upon which Mr Takemoto would be entitled to any relief for misleading or deceptive conduct. Even after the service in June 2010 of Mr Gray's affidavit (which annexed the Career Transition Plan) no application was made to plead a representation that would potentially confer upon Mr Takemoto a benefit to which he was not otherwise entitled under the terms of that Plan.
93 There comes a time when the proper administration of justice shifts its attention from attempting to ensure that an applicant has proper access to the courts by (for example) granting repeated opportunities to amend pleadings and shifts its attention to the interests of a respondent (in particular) and the public (more generally). Although any person has an important and cherished right to seek access to the courts, repeated failures to comply with the Rules of Court inevitably expose an opponent to prejudice. Rules of Court, it must be accepted, "should never be allowed to be an instrument of tyranny": Outboard Marine Australia Pty Ltd v Byrnes [1974] 1 NSWLR 27 at 30 per Reynolds, Hutley and Bowen JJA. The Rules of Court are not the "master"; "they are servants for the better administration of justice": Fernance v Nominal Defendant (1989) 17 NSWLR 710 at 729 per Kirby P. But those Rules are an attempt to ensure that the competing interests of the parties are fairly and properly adjudicated. In that way the greater public interests in the orderly administration of justice are promoted.
94 Had summary judgment not been entered in favour of Moody's Investors Service, it would have been further concluded that Mr Takemoto would not have been granted liberty to re-plead his cause of action. But for the summary judgment, he would have been able to commence such future proceedings as may otherwise have been available to him. But the present claims founded upon the Trade Practices Act should come to an end. He has been given every opportunity, it is respectfully considered, to properly plead his case and he has failed to do so. Like Belshazzar, the current Statement of Claim has been found to be wanting. The Rules of Court set forth the content of pleadings generally and, of present relevance, is the failure to properly plead a "representation" to give effect to the case Mr Takemoto seeks to advance.
95 There comes a time when a Respondent should be freed from repeatedly facing a form of pleading which is repeatedly deficient. There comes a time when even indemnity costs orders in favour of a Respondent is not an adequate answer to the prejudice repeatedly being suffered.
96 Had it been necessary to resolve, no liberty would have been reserved unto Mr Takemoto to have yet a further opportunity to properly plead a case which was susceptible of being pleaded correctly from the outset.