Jensen v HFA Holdings Ltd [2008] FCA 1599 (17 October 2008)

Last Updated: 24 October 2008

FEDERAL COURT OF AUSTRALIA

Jensen v HFA Holdings Ltd [2008] FCA 1599

Federal Court Rules O 5 r 2(3)

Aveling v UBS Capital Markets Australia Holdings Ltd [2005] FCA 415
Gray v Associated Book Publishers (Aust) Pty Ltd (in liq) [2002] FCA 1045



PAUL JENSEN v HFA HOLDINGS LIMITED and HFA ADMIN PTY LTD
NSD 2166 OF 2007

PERRAM J
17 OCTOBER 2008
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2166 OF 2007

BETWEEN:

PAUL JENSEN Applicant

AND:	HFA HOLDINGS LIMITED First Respondent HFA ADMIN PTY LTD Second Respondent

JUDGE:	PERRAM J
DATE OF ORDER:	17 OCTOBER 2008
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The respondents/cross-claimants give discovery, by service of a list of documents verified by affidavit within 14 days of the date of these orders, of the following documents:

(a) minutes of all board meetings of the first respondent that occurred between 7 December 2006 and 18 September 2007;

(b) minutes of all board meetings of the second respondent that occurred between 7 December 2006 and 18 September 2007; and

(c) minutes of all board meetings of HFA Asset Management Limited that occurred between 7 December 2006 and 18 September 2007,

but limited in each instance to any minutes on which either respondent will rely, or which would support the applicant’s case or adversely affect any party’s case.

2. The respondents/cross-claimants be permitted to mask portions of any documents to be produced for inspection on discovery in accordance with order 1 on the basis of relevance.

3. The respondents/cross-claimants give discovery, by service of a list of documents verified by affidavit within 14 days of the date of these orders, of all documents coming within categories 15 and 16 as set out in the notice of motion filed on behalf of the applicant on 18 September 2008.

4. The applicant file and serve unsworn proofs of evidence from each proposed lay witness, and any expert’s report on which he proposes to rely, by 14 November 2008.

5. The respondents/cross-claimant file and serve unsworn proofs of evidence in reply and in support of the cross-claim from each proposed lay witness, and any expert reports on which they propose to rely, by 19 December 2008.

6. The applicant/cross-respondent file and serve unsworn proofs of evidence in reply by 13 February 2009.

7. The parties to serve a list of all documents which they propose to tender at the hearing by 27 February 2009.

8. The parties to provide copies of any documents on those lists requested by a party within seven days of the request.

9. The matter to be fixed for hearing with an estimate of five days at a date to be fixed.


Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2166 OF 2007

BETWEEN:

PAUL JENSEN Applicant

AND:	HFA HOLDINGS LIMITED First Respondent HFA ADMIN PTY LTD Second Respondent

JUDGE:	PERRAM J
DATE:	17 OCTOBER 2008
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 By a notice of motion dated 18 September 2008 the present applicant seeks the making of orders for discovery including orders for discovery of the minutes of certain board meetings of the first respondent, second respondent and another company called HFA Asset Management Limited between a date range of 7 December 2006 and 18 September 2007. It is said in all three of those cases that the discovery is to be limited "in each instance to any minutes on which either respondent will rely or which would support the applicant’s case or adversely affect any party’s case."

2 The proposed order then goes on to say, "including without limitation any minutes which refer to or assist in the resolution of the following matters" and there follow a list of various specific matters such as the entity which was the applicant’s employer. Order 15 of rule 2(3) of the Federal Court Rules provides:

(3) Without limiting rule 3 or 7, the documents required to be disclosed are any of the following documents of which the party giving discovery is, after a reasonable search, aware at the time discovery is given:

(a) documents on which the party relies; and

(b) documents that adversely affect the party's own case; and

(c) documents that adversely affect another party's case; and

(d) documents that support another party's case.

3 The operation of that rule was considered by Lindgren J in Aveling v UBS Capital Markets Australia Holdings Ltd [2005] FCA 415 at [9]- [11]. That passage contemplates that categories for discovery can be described in terms of the rule, but where they are not, the subrule should generally guide the formulation of the categories.

4 Here, the position of the Respondents is that the documents have been inspected and there is nothing in those documents which can be said to adversely affect or advance any party’s case. The respondents therefore resist discovery in the terms sought and resist the list of additional matters which are sought.

5 There is another issue between the parties which is whether masking by the Respondents of material which is irrelevant should be permitted. I was taken in that regard to a decision of Branson J in Gray v Associated Book Publishers (Aust) Pty Ltd (in liq) [2002] FCA 1045 at [14]- [16]. However, it seems to me that that judgment is directed to the question of how a particular discovery order is implemented and is not directed to the question of how a particular discovery order should be articulated. The Respondents are a listed company and there is nothing to suggest any reason why parts of those minutes which are irrelevant to the proceedings should be provided to the Applicant. More is that so when there may well be questions of confidentiality. Accordingly, the order I will make will permit masking for relevance by the Respondents.

6 So far as the question of discovery itself is concerned, it seems to me that the Applicant is effectively seeking to second guess the decision which is being made by the Respondents’ legal advisers. The way that O 15 r 2(3) operates leaves to the party who is providing the discovery or its legal advisers the determination of whether a document adversely affects or advances a party’s case. The consequence is that an opposing party generally has to accept that determination.

7 There may be some circumstances - and I say nothing about that now – in which such determinations may be challenged. However, nothing was said to me and nothing is contained in the affidavit of Mr Haywood which would suggest that the determinations by the Respondents’ advisers were inappropriate. In those circumstances, I propose to make an order that the minutes of all board meetings of the First Respondent that occurred between 7 December 2006 and 18 September 2007, the minutes of all board meetings of the Second Respondent that occurred between 7 December 2006 and 18 September 2007 and the minutes of all board meetings of HFA Asset Management Limited that occurred between 7 December 2006 and 18 September 2007 be discovered within 14 days of the date of this order, but in each case that obligation is limited to minutes on which either the Respondent would rely or which would support the Applicant’s case or adversely affect any other party’s case.

8 I specifically order that the Respondents in providing that discovery are entitled to mask documents on the basis of relevance.

9 By the same notice of motion, the Applicant seeks discovery of certain matters relating to a remuneration strategy which is described in paragraphs 15 and 16 of that motion as follows:

15. All correspondence sent or received by the Board of HFAH, or any officer thereof, between March 2007 and 18 September 2008 which concerned the approval or implementation of the HFAH Remuneration Strategy (or similar document) prepared by KPMG for employees of HFAH or HFAA, including where applicable the Strategy (or similar document) attached to such correspondence.

16. Minutes of, and any notes, memoranda or other documents evidencing discussions which occurred at, all meetings of the remuneration committee of the Board of HFAH at which the HFAH Remuneration Strategy (or similar document) prepared by KPMG for employees of HFAH or HFAA was discussed.

10 The issue to which these matters relate is the issue set forth in particular (b) to paragraph 15 of the statement of claim which says:

(b) The applicant has lost the opportunity to become entitled to the base salary, bonuses and other incentive payments and benefits that he would have become entitled to and received if:

(i) he had remained in employment for a further 12 months in accordance with the Reasonable Notice Term of the Group CEO Contract; or alternatively,

(ii) he had remained in employment for a further 12 months in accordance with the Express Notice and Restriction on Termination Terms of the Initial Contract.

11 Essentially, the Applicant contends that had he remained in employment in the 12 month period following September 2007, he would have had the opportunity to have received further remuneration and incentive payments in accordance with the terms of the HFAH remuneration strategy.

12 The Applicant does not allege in his statement of claim that he had a contractual entitlement to access that remuneration strategy. Mr Shields, who appeared for the Respondents, submitted that damages for breach of contract were to be assessed at the time of the breach and, therefore, that these matters could not be relevant unless there was an allegation of contractual entitlement. There being no such allegation, there could be no such claim.

13 That may or may not ultimately turn out to be correct. At the moment, the allegation is made. It is made in a way which, in my opinion, probably more appropriately deserves to be contained in a separate pleading rather than in a particular. Nevertheless it is there. In that circumstance, it seems to me that it is appropriate to order discovery in relation to that issue, and accordingly I order that, within 14 days of the date of this order, the Respondents give discovery by serving a list of documents and verifying affidavit of the discovery categories set out in paragraphs 15 and 16 of prayer 1 of the notice of motion filed 18 September 2008.

14 By the same notice of motion the Applicant seeks further discovery from the Respondents in relation to the salary paid and all other remuneration or benefits provided to Mr Spencer Young in the period from 1 July 2007 until 18 September 2008. Putting it somewhat broadly, it appears that Mr Young filled the office which the Applicant vacated. The argument for the Applicant is that if he had not been wrongfully dismissed from his office then he would have been present during the period from September 2007 to September 2008, that if he had been present during that period that he may well have received further benefits from his employment and that one way of measuring what those future benefits might well have been is to consider the position of the person who filled the position during the relevant period.

15 Mr Shields makes the point that the argument involves an assumption that the position of Mr Young and the position of Mr Jensen is sufficiently similar to allow that comparison to be made. The Applicant has alleged in subparagraph (b) of paragraph 15 that he has lost the opportunity to become entitled to a certain base salary, bonuses and other incentive payments during the period. I have already permitted discovery by the Applicant of the remuneration strategy which the respondents had in place in the relevant period. I have done that to allow an argument to be put that had the Applicant remained in office he would have been the beneficiary of such a strategy.

16 It may be that the applicant will be able at some stage to demonstrate the existence of other benefits which may have descended upon the Applicant had he been in office. It has done so in relation to the remuneration strategy. At this stage it seems to me that the comparisons between Mr Young and the Applicant are insufficiently clear to justify the proposition that everything which Mr Young received the Applicant would also have received. It may be that what is being sought to be proved through this category can be proved or attained through another category, namely through the identification of a particular benefit as in the case of the remuneration strategy.

17 However, the current request in relation to Mr Young is couched at a level of generality that seems to me to be just a little too exiguous to justify the making of an order, and I decline to make an order in the form of paragraph 17 contained in prayer 1 of the notice of motion dated 18 September 2008.

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.

Associate:

Dated: 24 October 2008

Counsel for the Applicant:	P Moorehouse
Solicitors for the Applicant:	Haywards Solicitors
Counsel for the Respondents:	B Shields
Solicitors for the Respondents:	Deacons

Date of Hearing:	17 October 2008
Date of Judgment:	17 October 2008