FEDERAL COURT OF AUSTRALIA Murphy v Westpac Banking Corporation (No 2) [2012] FCA 1007 Citation: Murphy v Westpac Banking Corporation (No 2) [2012] FCA 1007 Parties: LOUISE MURPHY v WESTPAC BANKING CORPORATION ACN 007 457 141 PAUL SMITH v WESTPAC BANKING CORPORATION ACN 007 457 141 LUCKY POULOS v WESTPAC BANKING CORPORATION ACN 007 457 141 WILLIAM LAWSON v WESTPAC BANKING CORPORATION ACN 007 457 141 STUART MOORE v WESTPAC BANKING CORPORATION ACN 007 457 141 DANIELLE LAVARS v WESTPAC BANKING CORPORATION ACN 007 457 141 COREY WITTENBERG v WESTPAC BANKING CORPORATION ACN 007 457 141 File number(s): NSD 1157 of 2009 NSD 1839 of 2011 NSD 1980 of 2011 NSD 690 of 2010 NSD 384 of 2010 NSD 31 of 2010 NSD 90 of 2010 Judge: GRIFFITHS J Date of judgment: 5 September 2012 Date of hearing: 5 September 2012 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 25 Counsel for the Applicants: Mr I Neil SC with Mr D P O'Dowd and Mr Y Shariff Solicitor for the Applicants: Gillis Delaney Lawyers Counsel for the Respondent: Mr N Hutley SC with Mr M J Steele and Ms J Seymour Solicitor for the Respondent: Allens IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1157 of 2009 BETWEEN: LOUISE MURPHY Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent JUDGE: GRIFFITHS J DATE OF ORDER: 5 SEPTEMBER 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicant's application that the respondent not be permitted to rely on two documents in cross-examination because they had not been discovered is dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1839 of 2011 BETWEEN: PAUL SMITH Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent JUDGE: GRIFFITHS J DATE OF ORDER: 5 SEPTEMBER 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicant's application that the respondent not be permitted to rely on two documents in cross-examination because they had not been discovered is dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1980 of 2011 BETWEEN: LUCKY POULOS Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent JUDGE: GRIFFITHS J DATE OF ORDER: 5 SEPTEMBER 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicant's application that the respondent not be permitted to rely on two documents in cross-examination because they had not been discovered is dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 690 of 2010 BETWEEN: WILLIAM LAWSON Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent JUDGE: GRIFFITHS J DATE OF ORDER: 5 SEPTEMBER 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicant's application that the respondent not be permitted to rely on two documents in cross-examination because they had not been discovered is dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 384 of 2010 BETWEEN: STUART MOORE Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent JUDGE: GRIFFITHS J DATE OF ORDER: 5 SEPTEMBER 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicant's application that the respondent not be permitted to rely on two documents in cross-examination because they had not been discovered is dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 31 of 2010 BETWEEN: DANIELLE LAVARS Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent JUDGE: GRIFFITHS J DATE OF ORDER: 5 SEPTEMBER 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicant's application that the respondent not be permitted to rely on two documents in cross-examination because they had not been discovered is dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 90 of 2010 BETWEEN: COREY WITTENBERG Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent JUDGE: GRIFFITHS J DATE OF ORDER: 5 SEPTEMBER 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicant's application that the respondent not be permitted to rely on two documents in cross-examination because they had not been discovered is dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1157 of 2009 BETWEEN: LOUISE MURPHY Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1839 of 2011 BETWEEN: PAUL SMITH Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1980 of 2011 BETWEEN: LUCKY POULOS Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 690 of 2010 BETWEEN: WILLIAM LAWSON Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 384 of 2010 BETWEEN: STUART MOORE Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 31 of 2010 BETWEEN: DANIELLE LAVARS Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 90 of 2010 BETWEEN: COREY WITTENBERG Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 Respondent JUDGE: GRIFFITHS J DATE: 5 SEPTEMBER 2012 PLACE: SYDNEY REASONS FOR JUDGMENT 1 An issue has arisen in the proceedings relating to three documents that were used by Mr Hutley, senior counsel for the respondent, in his cross-examination of Mr Scott Wilson. The applicants complain that the documents that were used by Mr Hutley were documents which ought to have been discovered and were not. I heard argument as to whether or not the documents fell within the agreed categories of discovery. There were two relevant agreed category sets. The first was a list of some 45 items of discovery in respect of all of the seven proceedings against Westpac. The second list of agreed categories, which numbered some 50 items, were categories which were agreed in respect only of the proceedings involving Mr Poulos and Mr Smith. 2 It is convenient if I say something briefly about the contents of each of the three documents. The first is an email dated 19 July 2009, sent by Mr Wilson to a Mr Land with the subject "Ian Cassie – Next Step?". The email is a short email which appears to have been prompted by a proposal to engage Mr Cassie as a strategist within the Westpac strategic risk group ("SRG"). Mr Wilson headed the Westpac SRG and he reported to Mr Land. Mr Land, in turn, reported to Mr Russell Armstrong. It is evident that Mr Armstrong asked for a business case to be prepared, relating to the proposed SRG in order for him to be able to assess the proposal to engage Mr Cassie. 3 The email dated 19 July 2009 also contained a statement from Mr Land that, upon receipt of a business case from Mr Wilson regarding the proposed structure of the SRG, Mr Land would be in a position to discuss the business case. As events evolved, I understood the applicant not to contest that the document that I have just described did not fall within the agreed categories of discovery and I need say nothing more of it, other than what I have said above by way of background and introduction to the two other documents, which were contested. 4 The first of those other documents was an email dated 24 July 2009 from Mr Land back to Mr Wilson and attached to that email was a draft concept plan, which had been prepared by Mr Wilson, as requested by Mr Armstrong. 5 The draft concept plan was dated 21 July 2009. It is called a concept paper. It deals with various matters relating to the proposed structure of the SRG. It contains material relating to the features of this aspect of Westpac's operations, the remuneration structure which Mr Wilson had in mind for what he described as the short term incentive scheme and also contained various suggestions by him as to the remuneration structure for SRG traders. It also contained some comments in the nature of Mr Wilson's assessment of the performance of various individuals within the SRG leading up to the date of the paper. The comments were directed to the performance of people such as Mr William Lawson and Mr Paul Smith, both of whom are applicants in the proceedings. These comments were as follows: Will Lawson: +$1.5m. Will has displayed no risk appetite since joining SRG, average daily VaR usage is approximately $200k. Will displays little enthusiasm for trying to make money, this situation doesn't look like changing. Will's behaviours have also been poor, such as dealing outside of the agreed coverage bank list and trying to arbitrage the two banks bonus schemes by bringing $3.17m of St George p&1 across to Westpac. My recommendation is to move Will on. Paul Smith: +$1.8m. Paul appears to be in semi-retirement. I'm surprised at Paul's lack of risk appetite given that he spent 14 years at Merrill Lynch London as a bond trader, average daily VaR usage is approximately $200k. Paul has also dealt outside of the agreed coverage bank list on four occasions. My recommendation is to move Paul on. 6 The second document which was contested is a revised version of Mr Wilson's concept paper dated 27 July 2009. It is a document which was produced by him following receipt of Mr Land's comments. 7 It is appropriate if I now turn to deal with the various items in the two agreed lists of categories of documents and explain my reasons for determining whether or not either of the two documents is caught by any of those items. 8 It is convenient to deal first with the agreed discovery categories in the proceedings confined to Mr Poulos and Mr Smith. 9 Some reliance was placed on item 1 of that agreed category which reads: Documents that comprise the personnel file of the Applicant kept by St George and/or Westpac. 10 In my view, the documents in question could not be described as forming part of a personnel file of either Mr Poulos or Mr Smith. They were self-evidently documents that were created in an entirely different context, initiated by Mr Armstrong's request for a business plan. 11 Item 6 was also relied upon. It reads: Documents evidencing, recording or referring to the Applicant's eligibility to participate in, and the Applicant's participation in, any incentive, bonus and/or profit sharing scheme(s) operated by St George and/or Westpac. 12 In my opinion, neither of the documents could be regarded as falling within the category of documents evidencing, recording or referring to either Mr Poulos' or Mr Smith's eligibility to participate in and/or their participation in any incentive bonus or profit sharing scheme operated by St George and/or Westpac. The key phrase in this item, to my mind, relevantly, is the notion of a scheme being operated by St George or Westpac. The concept paper being advanced by Mr Wilson could not, on any view, be regarded as constituting a scheme operated by St George or Westpac. The documents in question were, as their titles suggests, concept plans embodying suggestions or recommendations that were made by Mr Wilson. 13 The third item which was relied upon is item 10, the terms of which are as follows: Documents evidencing or recording the practice(s) and policy (policies) of: (a) St George; and/or (b) Westpac for the period November 2008 to 29 January 2010, to the extent they pertain to Treasury or Finance Risk & Strategy employees relating to remuneration benefits including without limitation, salary, incentive, bonus, share or stock entitlement and any other form of remuneration (excluding superannuation). 14 As is evident from the terms of this item, the subject matter concerns the practices or policies of St George or Westpac during a particular period, appertaining to Treasury or Finance Risk and Strategy employees concerning their remuneration benefits. 15 As I have already emphasised, the two documents in question, both in form and in substance, are concept plans. The first is an early draft; the second is a revised draft which takes into account Mr Land's comments. It is evident from the first email to which I have made reference, dated 19 July 2009, that it was proposed that, on receipt of a proposal from Mr Wilson, Mr Land intended to engage in further discussions on what he described as the business case. In my opinion, on no view could the concept plan be regarded as a document which had progressed to such a stage as would warrant it being described as a practice or policy of St George or Westpac as formal institutions in their own right. 16 That deals with the items in the Poulos and Smith agreed categories of discovery. 17 I turn now to deal with the agreed categories in respect of all seven proceedings against Westpac. Item 4 of that document deals in general terms with documents constituting employment contracts and the like or which otherwise evidence the duties and remuneration of the applicant from the commencement of employment with the respondent. Item 4 states: All documents that constitute employment contracts, letters of appointment or promotion, notices of appointment or promotion, or which otherwise evidence the duties and remuneration of the Applicant from the commencement of employment with the Respondent. In my respectful opinion, it could not be concluded that either of the documents constituting the concept plan, either as a draft or as the final version, fit the description of documents which evidence the duties and remuneration of any applicant. Nor could they be regarded as constituting those duties and remuneration. In my view, item 4 can have no application to the two relevant documents. 18 Reliance was also placed on item 10, which is in the following terms: All documents that record, refer or relate to, or which otherwise evidence the Respondent's practice(s) and policy(policies) to the extent they pertain to the employees of the Treasury, Capital Markets and Risk & Compliance Divisions of St. George Institutional and Business Bank with regard to remuneration benefits to be offered by the respondent to prospective employees including, without limitation, salary levels, bonus payments and share or stock entitlements. It is again to be noted that item 10 focuses upon the respondent's practices and policies. I refer to and repeat the reasoning I have set out above in [15] in respect of item 10 of the other list of categories for concluding that item 10 has no application here. 19 Item 12 was also relied upon by the applicants. It states: All documents provided to the Applicant by the Respondent that record, refer or relate to the allocation by the Applicant of bonuses and salary increases to other Treasury employees of the Respondent. 20 It is to be noted that the category turns upon documents having been provided to an applicant by the respondent that record or refer to various matters, including bonuses and salary increases granted to other Treasury employees. 21 Simply no evidence has been placed before me to establish that either the draft concept plan or the later version of it is a document which was provided to any of the applicants in this case. Therefore item 12 can have no relevance. 22 The final item that was relied upon in this list was item 41, the terms of which are: All documents that record, refer or relate to the hiring by the Respondent of new employees to the Treasury division in Australia of Westpac Banking Corporation from 1 September 2008 until 1 March 2009 from sources external to St George Bank Limited and Westpac Banking Corporation. 23 In brief, the item deals with documents that record, refer or relate to the hiring by the respondent of new employees to the Treasury Division of Westpac Banking Corporation from 1 September 2008 until 1 March 2009. 24 In my view, the two versions of the concept paper do not fall within the ambit of this category for two primary reasons. First, in my respectful view, the documents do not record, refer or relate to the hiring by the respondent of new employees during the period 1 September 2008 until 1 March 2009, bearing in mind that the documents in question are both dated July 2009, i.e. some four months after the end date of the period specified in item 41. Secondly, they do not concern the hiring of persons during the specified period. 25 For all these reasons, I reject the applicants' complaint that the two versions of the concept paper ought to have been discovered and could not be relied upon by the respondent in cross-examination. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths. Associate: Dated: 17 September 2012