FEDERAL COURT OF AUSTRALIA James v Leighton Holdings Limited [2014] FCA 756 Citation: James v Leighton Holdings Limited [2014] FCA 756 Parties: THOMAS JAMES v LEIGHTON HOLDINGS LIMITED (ACN 004 482 982) AND LEIGHTON SUPERANNUATION PTY LIMITED (ACN 001 002 035) AS TRUSTEE OF THE LEIGHTON SUPERANNUATION FUND File number: NSD 1688 of 2013 Judge: WIGNEY J Date of judgment: 18 June 2014 Catchwords: PRACTICE AND PROCEDURE – discovery – whether documents are "directly relevant" to the issues raised Legislation: Federal Court Rules 2011 (Cth) Date of hearing: 18 June 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 29 Counsel for the Applicant: LT Livingston Solicitor for the Applicant: Maurice Blackburn Lawyers Counsel for the Respondents: J Williams Solicitor for the Respondents: Herbert Smith Freehills IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1688 of 2013 BETWEEN: THOMAS JAMES Applicant AND: LEIGHTON HOLDINGS LIMITED (ACN 004 482 982) First Respondent LEIGHTON SUPERANNUATION PTY LIMITED (ACN 001 002 035) AS TRUSTEE OF THE LEIGHTON SUPERANNUATION FUND Second Respondent JUDGE: WIGNEY J DATE OF ORDER: 18 JUNE 2014 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicant's interlocutory application dated 9 May 2014 is dismissed. 2. The applicant pay the respondent's costs of, and occasioned by, the interlocutory application. 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 1688 of 2013 BETWEEN: THOMAS JAMES Applicant AND: LEIGHTON HOLDINGS LIMITED (ACN 004 482 982) First Respondent LEIGHTON SUPERANNUATION PTY LIMITED (ACN 001 002 035) AS TRUSTEE OF THE LEIGHTON SUPERANNUATION FUND Second Respondent JUDGE: WIGNEY J DATE: 18 JUNE 2014 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant, Mr Thomas James, is a former employee of the Leighton Group of companies. He has commenced proceedings against two companies in the Leighton Group, Leighton Holdings Limited and Leighton Superannuation Pty Limited (Leighton), concerning his entitlement to superannuation benefits following the cessation of his employment in July 2009. 2 In a nutshell, Mr James claims that in 1993 he was induced by Leighton to switch from one section of a Leighton Superannuation Fund (the defined benefits section) to a different section (the accumulation section). He contends in substance that Leighton guaranteed to him at the time that the benefit under the accumulation section would be no less than the benefit payable to him under the defined benefits section. Despite this, in December 2009 after he was retrenched, Mr James says that he was advised that Leighton would not honour that guarantee. He seeks to recover, in effect, the difference between the amount paid or payable to him on his retrenchment and the amount that would have been payable to him had he remained under the defined benefits section of the scheme. 3 In Mr James' amended statement of claim he pleads a number of causes of action arising from the alleged guarantee and Leighton's refusal to honour it. The causes of action include breach of contract, breach of trust, negligence, statutory misleading and deceptive conduct and, relevantly for presently purposes, equitable estoppel and a statutory claim of unconscionable conduct. 4 Mr James applies for an order that Leighton give discovery of documents falling within certain categories. The Court previously directed the parties to exchange and seek to agree upon categories of documents for discovery. Leighton does not agree to give discovery of documents within the categories which are the subject of this application. 5 Leighton contends that the documents within the disputed categories are not relevant to any fact in issue in these proceedings, let alone "directly relevant" to the issues raised by the pleadings or in the affidavits as required by rule 20.14(1)(a) of the Federal Court Rules 2011. 6 Mr James contends, on the other hand, that documents within the disputed categories are relevant to the pleaded issues. He relies, in particular, on issues that he says arise in the context of the equitable estoppel and unconscionable conduct claims. 7 Despite the helpful and persuasive arguments advanced by Mr Livingston, who appeared for Mr James on this application, in my opinion, the disputed categories of documents are not properly discoverable. The documents that are required to be produced under these disputed categories are not directly relevant to the pleaded issues. 8 To explain why, it is necessary to say something very briefly about the disputed categories and the pleaded causes of action in equitable estoppel and unconscionable conduct. 9 The elements of Mr James' equitable estoppel case, put in the simplest possible terms, are as follows: (1) The effect of certain documents Leighton sent to Mr James in September 1993 was to represent that the benefits payable to him as a member under the accumulated benefits section of his relevant superannuation fund on retrenchment would not be less than the amount that would be payable to him if he was a member under the defined benefits section (the representation). (2) Mr James assumed that the representation applied to him and his circumstances (the assumption). (3) It was not disclosed to Mr James by Leighton that the representation would not apply to him unless he was retrenched within a short period of time after the conversion date (the non-disclosure). (4) Leighton induced Mr James to arrive at the assumption, or it was an assumption commonly held by both Leighton and Mr James. (5) In reliance on the representation, and/or the assumption, and/or the non-disclosure, Mr James elected to transfer from the defined benefits section to the accumulated benefits section. (6) Leighton knew or intended that Mr James would so act in reliance on the representation, assumption and/or non-disclsoure. (7) Mr James will suffer detriment if the representation and/or assumption is not acted on or fulfilled by Leighton. (8) Leighton has failed to avoid that detriment because it has failed to act on or fulfil the representation or assumption; and (9) It is unconscionable for Leighton to deny or depart from the representation or assumption. 10 Mr James contends that in these circumstances Leighton should be estopped in equity from denying or departing from the representation or assumption. For the sake of simplicity, the representation or assumption can be referred to as a guarantee. Effectively, Mr James alleges that Leighton gave him a guarantee concerning his benefits, he acted on that guarantee, and Leighton has refused to honour the guarantee. 11 The gist of Mr James' claim is that, by reason of its words and conduct in 1993, Leighton should be estopped from denying that Mr James is entitled to benefits to which he would otherwise have been entitled had he not switched sections of his fund. That is, the benefits that would have been payable to him if he had remained in the defined benefits section. 12 Importantly, it is common ground that on 10 December 2009 Leighton wrote to Mr James and made it clear that any alleged guarantee did not apply to him. In the letter Leighton gave Mr James its reasons for having arrived at that position. Leighton has not changed its position since that time. Thus it is common ground that from 10 December 2009 Leighton has refused to act in accordance with any representation, or to fulfil any assumption, that may have arisen from its conduct in 1993. Mr James characterises this as a continuing course of conduct; a continuation of the refusal to honour the guarantee. 13 In his submissions on this application, Mr Livingston emphasises the element of unconscionability in this cause of action (element 9 in the above summary). To make out his case, Mr James must demonstrate that it is unconscionable for Leighton to refuse to honour the alleged guarantee. Mr Livingston submits that the alleged unconscionability involved in not honouring the guarantee continued beyond 10 December 2009, when Leighton's decision was first conveyed to Mr James. In effect, it continues up to today. 14 In Mr Livingston's submission, Leighton's reasons for refusing to honour the alleged guarantee, and more importantly, its continuing reasons for refusing to honour the guarantee, are relevant to this element of Mr James' action. It is on this basis that he submits that documents that record any consideration given to the refusal by Leighton are relevant, even if the consideration occurred after 10 December 2009 when the refusal was first conveyed to Mr James. 15 The unconscionable conduct claim as pleaded is in substance very similar to the equitable estoppel claim. The elements of this cause of action, again put in deliberately simple terms, are as follows: (1) Between September 1993 and December 1993 Leighton created or encouraged an understanding or assumption on the part of Mr James. (2) That understanding or assumption was that if Mr James transferred sections in his superannuation fund he would be no worse off; that is, he was guaranteed to receive as much under the accumulated benefits section, as under the defined benefits section. (3) In reliance on this understanding or assumption Mr James transferred sections;. (4) That action was ultimately to Mr James' detriment; and (5) Since either July 2009, when Mr James was retrenched, or alternatively 10 December 2009, Leighton has acted unconscionably because it has refused to honour or make good the understanding or assumption that it encouraged in Mr James. 16 Again, in Mr Livingston's submission Mr James' case alleges ongoing conduct on the part of Leighton. The unconscionable conduct in refusing to honour the understanding or assumption continues to this day. As a result, Mr Livingston submits that Leighton's subjective beliefs, knowledge and reasons for refusing and continuing to refuse to honour the alleged guarantee remain relevant, even after 10 December 2009 when Leighton first communicated its position. 17 The correctness of Mr Livingston's submission to this effect, both in relation to the equitable estoppel claim and the unconscionability claim, is critical to this discovery application. That is because most of the disputed categories of documents call for the discovery of documents which record Leighton's internal records of discussions that appear to have occurred between its officers and Mr James well after 10 December 2009. Mr Livingston submits that these internal documents are directly relevant to the pleaded issues because they will most likely reveal Leighton's consideration of the alleged guarantee, and its reasons or justifications for not honouring it, and for continuing not to honour it. These deliberations will, Mr Livingston submits, shed light on whether Leighton's continuing refusal to honour the guarantee is unconscionable. 18 In my opinion, the documents covered by the disputed categories are not directly relevant on this basis. In both cause of actions (equitable estoppel and unconscionability) the relevant unconscionability is Leighton's conduct in making or inducing, and then failing to act on or fulfil, the alleged guarantee. It is common ground that the conduct that allegedly gave rise to the guarantee occurred in 1993. Leighton made clear its intention to refuse to act on or fulfil the guarantee on 10 December 2009. 19 Whether or not that refusal is unconscionable will turn on an objective consideration of Leighton's conduct in 1993 (when it made the representation or induced or encouraged the assumption) and its conduct on 10 December 2009 when it communicated its position in relation to Mr James' benefits. In simple terms, the issue is whether by its actions and words Leighton effectively guaranteed that Mr James would not suffer any detriment if he switched sections in his superannuation fund and whether in all the circumstances, considered objectively, it would be unconscionable to allow Leighton to refuse to honour the guarantee. There is no dispute that on 10 December 2009 Leighton made its position clear in relation to the alleged guarantee. If Leighton's words or actions amounted to a guarantee, or encouraged Mr James to act on the assumption or understanding that there was a guarantee, Leighton made it plain that it was refusing to honour any such guarantee. There is no issue about the terms or nature of this alleged refusal. 20 Whilst it is correct that the refusal continues, in my opinion, nothing turns on that fact, particularly having regard to the way the causes of action have been pleaded. It is not alleged in the pleading that any new fact or circumstance arose after 10 December 2009 that is relevant to Mr James' allegation that Leighton's refusal was, or is, unconscionable. 21 Likewise, nothing turns on the subjective reasons, views or opinions of officers of Leighton concerning the refusal. The refusal to honour the alleged guarantee is either unconscionable or it is not, having regard to the objective facts and circumstances. If Leighton is found, by its words or actions, to have induced Mr James to assume that his benefits would be guaranteed as alleged, Leighton's subjective views or reasons for seeking to deny or depart from the assumed guarantee are essentially irrelevant to whether its conduct is unconscionable. 22 Even if Leighton's subjective reasons for the refusal could be relevant, they are recorded in the letter of 10 December 2009. Even if it be the case that officers of Leighton subsequently gave further consideration to Mr James' circumstances and Leighton's refusal to honour the alleged guarantee, it is difficult to see how documentary records of those internal deliberations could be relevant to whether Leighton's refusal was or is unconscionable. Nothing in the pleading reveals how any post 10 December 2009 internal Leighton ruminations concerning Mr James' circumstances could be relevant to the pleaded causes of action. It is not alleged in the pleading that any different reasons were later communicated to Mr James. It is not alleged that Leighton's reasons were or are in fact different to those set out in the 10 December 2009 letter. 23 None of the communications between Mr James and officers of Leighton referred to in the disputed categories are pleaded in the amended statement of claim. It is not contended that anything turns on the content of those communications. Rather, Mr Livingston submits that those conversations may have prompted some internal consideration or reconsideration within Leighton in relation to the matter. In my opinion that is at best speculative. In any event, as I have said, in my opinion, such internal ruminations that occurred after December 2009 are not directly relevant to the pleaded issues. 24 At this stage I have largely focused on those disputed categories that call for the production of documents relating to communications that occurred after December 2009. A number of the disputed categories also call for documents that possibly record internal deliberations at Leighton prompted by communications between Mr James and officers of Leighton between his retrenchment in July 2009 and the communication of the relevant decision in December 2009. But again, none of the conversations that allegedly occurred between Mr James and officers of Leighton between July and December 2009 are pleaded. It is not suggested that anything in the pleaded case turns on the content of those communications. Mr Livingston's submission is, in effect, that those conversations might have produced internal consideration of the matter by officers of Leighton. 25 In my opinion, that is again at best speculative. Indeed, the circumstances are such that it is unlikely that any of those communications in the period July to December 2009 would have produced any relevant internal communications within Leighton. That is because it appears from the terms of the 10 December 2009 letter that the relevant decision by Leighton, insofar as it affected Mr James, was only arrived at shortly before the 10 December 2009 letter. It follows that any communications that occurred before that time are unlikely to have prompted any relevant reasoning or consideration by officers of Leighton. 26 The only other disputed category that requires some attention is category 19, which is the first of the disputed categories. That category calls for the discovery of documents, including drafts and instructions, recording or referring to the drafting or preparation of the 10 December 2009 letter. 27 The 10 December 2009 letter is not relevantly in dispute. It is not suggested that the letter does not faithfully or accurately record Leighton's reasons for advising Mr James that the alleged guarantee did not apply to his circumstances. It follows, in my opinion, that any drafts of the letter, or any instructions that may have been given in relation to its preparation, are not directly relevant to any pleaded issue. 28 It follows that none of the categories the subject of the discovery application are properly matters for discovery. Accordingly, I dismiss the application. 29 The orders of the Court are that the applicant's interlocutory application dated 9 May 2014 is dismissed and that the applicant pay the respondent's costs of, and occasioned by, the interlocutory application. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wigney. Associate: Dated: 20 August 2014