District Court New South Wales Medium Neutral Citation: Smith v Ventia Pty Limited [2021] NSWDC 236 Hearing dates: 13 May 2021 Date of orders: 8 June 2021 Decision date: 08 June 2021 Jurisdiction: Civil Before: Scotting DCJ Decision: (1) The defendant is to give discovery of the documents described in the categories set out in paragraph 1 of the Summons, within 14 days of the date of this order. (2) The defendant is to produce the documents for inspection by the plaintiff within 28 days from the date of this order. (3) The defendant is to pay the plaintiff's costs of the application on the indemnity basis, as agreed or assessed. Catchwords: CIVIL PROCEDURE — Preliminary discovery — To identify potential cause of action — reasonable inquiries – claim for privilege Legislation Cited: Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Cases Cited: Bartlett v ANZ Banking Group Ltd [2016] NSWCA 30 Commonwealth Bank of Australia v Barker [2014] HCA 32 Gaynor King [2018] FWC 6006 Hatfield v TCN Channel Nine Pty Limited (2010) 77 NSWLR 506 O'Connor v O'Connor [2018] NSWCA 214 St George Bank Ltd v Rabo Australia Pty Ltd [2004] FCA 1360 Subasic v Hewlett-Packard Australia Pty Ltd [2020] ACTSC 2 Category: Procedural rulings Parties: Errol Smith (Plaintiff) Ventia Pty Limited (Defendant) Representation: Counsel: R Kumar (Plaintiff) Solicitors: Dowson Turco (Plaintiff) Kingston Reid (Defendant) File Number(s): 2021/51511 Publication restriction: None Judgment Introduction 1. Errol Smith (the plaintiff) seeks an order for preliminary discovery against Ventia Pty Ltd (Ventia), his former employer. 2. The plaintiff was employed by Ventia on 13 April 2018 as its Operations Manager. On 7 September 2020 the plaintiff's employment was terminated with immediate effect on the basis that, following an investigation conducted by a third party, he had been found to have breached Ventia's Code of Ethics by engaging in bullying and harassment. 3. The plaintiff believes that he may have a claim for breach of contract arising from Ventia's failure to carry out a proper and procedurally fair investigation and/or dismissal process, including its failure to keep the investigation process confidential. 4. The plaintiff seeks an order for preliminary discovery of documents in the following categories: 1. Records of communications sent between Ventia's employees relating to the plaintiff's termination of employment; 2. Records of communications sent between Ventia's employees relating to complaints received by Ventia concerning the plaintiff; 3. Records of communications to and from Workplace Law in relation to Workplace Law's investigation into the complaint(s) made by [the complainant] against the plaintiff; 4. The plaintiff's employment file. Evidence 1. The plaintiff read an affidavit of Errol John Smith affirmed 18 February 2021. 2. Ventia read an affidavit of Dean Steven Klepac, Employment General Counsel of Ventia, affirmed 29 March 2021. Facts 1. On or about 13 July 2020 the plaintiff became aware that a complaint had been made about him to Ventia by another employee (the complainant). 2. On 13 July 2020 the plaintiff was advised by Ventia that it had commenced an investigation into the complaint to be conducted by an external law firm, Workplace Law. 3. On 14 July 2020 the plaintiff was sent a document by email titled "Record of Allegations". That document set out the allegations made by the complainant and contained questions to be responded to by the plaintiff. 4. On 23 July 2020 the plaintiff sent an email to Ventia requesting a copy of the original complaint. Ventia responded to the effect that it would not provide the original complaint because it contained allegations against others which were confidential and because the allegations contained in the Record of Allegations had been refined after receiving further input from the complainant. 5. On 3 August 2020 the plaintiff sent a response to the Record of Allegations to Workplace Law. After this, the plaintiff's employment continued and he had no discussions with anyone from Ventia about the investigation. 6. On 4 September 2020 the plaintiff was asked to attend a meeting at Ventia's office on 7 September 2020. The plaintiff was told the meeting was to give him an update on the investigation. 7. On 7 September 2020 the plaintiff attended the meeting with Michael Lynch, the plaintiff's direct Manager and Gary Dring, Mr Lynch's Manager. At this meeting the plaintiff was told that his employment had been terminated, effective immediately because he had breached Ventia's Code of Ethics by engaging in bullying and harassment. The plaintiff was informed that he would receive five weeks' pay in lieu of notice. He was not provided with anything in writing and was asked to leave the premises immediately. 8. On 30 October 2020 the plaintiff's solicitors (Dowson Turco) sent a letter to Ventia requesting the following documents: 1. the plaintiff's employment file; 2. the original complaint by the complainant together with any file notes, memoranda or other document in which particulars of the complaint were recorded; 3. any complaints made by any other employee about the plaintiff's conduct in the work place; 4. the investigation report of Workplace Law in relation to the investigation; 5. records of communication between named employees of Ventia relating to the plaintiff's termination. 1. On 11 November 2020 Mr Klepac responded to Dowson Turco on behalf of Ventia. Mr Klepac stated that the plaintiff had been provided with the Record of Allegations and a copy of his answers to that document, which were the documents on which the investigation concluded that he had breached Ventia's Code of Ethics. On the basis that those documents had been provided, Ventia did not understand the basis for the plaintiff seeking production of further documents. Mr Klepac alleged that the plaintiff had not identified a cause of action on which he may be entitled to seek preliminary discovery. Mr Klepac asserted legal professional privilege over the investigation report from Workplace Law, but did not state the basis on which that claim was made apart from the fact that it was prepared by a lawyer engaged by Ventia. 2. On 13 November 2020 Dowson Turco responded to Mr Klepac. The plaintiff advised that he sought to challenge the basis for the termination of his employment. At the meeting of 7 September 2020 he was told that he was being terminated immediately for serious misconduct, an allegation that was repeated by Mr Klepac in his original correspondence. In the letter dated 8 September 2020, no reason for the plaintiff's termination was given. In order to assess any available cause of action the plaintiff sought to understand what the findings of Workplace Law's investigation were, how the plaintiff was alleged to have breached Ventia's policies and why the alleged breaches were so serious to warrant immediate termination. The plaintiff disputed Ventia's claim for privilege over the Workplace Law investigation report. 3. On 18 November 2020 Mr Klepac responded to Dowson Turco. Mr Klepac stated that the plaintiff had still failed to identify his cause of action. 4. On 20 November 2020 Dowson Turco responded to Mr Klepac. The plaintiff's position was that he believed Ventia had breached its contract with him and terminated his employment without a proper basis for doing so and this was the possible cause of action that the plaintiff may be entitled to pursue. The plaintiff renewed his request for the documents sought, prior to commencing proceedings for preliminary discovery. 5. On 24 November 2020 Mr Klepac responded to Dowson Turco. Mr Klepac continued to dispute the identification of the relevant cause of action. Mr Klepac supplied documentation already in the plaintiff's possession. Mr Klepac continued to assert that the plaintiff's claims were speculative in respect of the documents sought and that there was no basis for a preliminary discovery order. 6. On 15 March 2021 Ventia's solicitors, Kingston Reid, sent a letter to Dowson Turco enclosing the following: 1. Ventia's Code of Conduct; 2. Ventia's Bullying and Harassment Policy; 3. Ventia's Workplace Behaviour Policy; and 4. contemporaneous notes taken during the termination meeting. Relevant principles 1. Rule 5.3(1) Uniform Civil Procedure Rules 2005 provides: (1) If it appears to the court that-- (a) the applicant may be entitled to make a claim for relief from the court against a person ("the prospective defendant" ) but, having made reasonable inquiries, is unable to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant, and (b) the prospective defendant may have or have had possession of a document or thing that can assist in determining whether or not the applicant is entitled to make such a claim for relief, and (c) inspection of such a document would assist the applicant to make the decision concerned, the court may order that the prospective defendant must give discovery to the applicant of all documents that are or have been in the person's possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief. 1. Claim for relief is defined in s 3 Civil Procedure Act 2005 broadly and inclusively to include: … (c) a claim for the recovery of damages or other money, and (d) a claim for a declaration of right, and (e) a claim for the determination of any question or matter that may be determined by the court, and (f) any other claim (whether legal, equitable or otherwise) that is justiciable in the court. 1. The applicant for preliminary discovery must establish that: 1. the applicant may be entitled to make a claim for relief against the prospective defendant; 2. the applicant has made reasonable enquiries to obtain sufficient information to decide whether or not to commence proceedings; 3. having made those enquiries, the applicant is unable to obtain sufficient information to make that decision; 4. the prospective defendant may have or have had in its possession, a document or thing that could assist in determining whether the applicant is entitled to make a claim for relief; 5. inspection of such a document or thing would assist the applicant to make the decision (whether or not to commence proceedings). 1. If it appears to the court that all of those circumstances exist, the court may order the prospective defendant to give discovery to the applicant of all documents that are or have been in its possession and that relate to the question of the entitlement of the applicant to make a claim for relief. 2. The threshold set by the rule is low. The test is that the applicant may be entitled to make a claim for relief and that the prospective defendant may have or have had possession of relevant documents or things, and that inspection would assist the applicant to decide whether to commence proceedings: O'Connor v O'Connor [2018] NSWCA 214 at 23 (Simpson AJA). 3. The rule is to be beneficially construed, given the fullest scope that its language will reasonably allow, with the proper brake on any excesses lying in the discretion of the Court, exercised in the particular circumstances of each case: St George Bank Ltd v Rabo Australia Pty Ltd [2004] FCA 1360 at [26] (Hely J). 4. The question posed by the rule is not whether the applicant has sufficient information to decide if a cause of action is available against the prospective defendant, the question is whether the applicant has sufficient information to make a decision whether to commence proceedings in the court. Accordingly, an applicant for preliminary discovery may be entitled to discovery in order to determine what defences are available to the prospective defendant and the possible strength of those defences, or to determine the extent of the prospective defendant's breach and the likely quantum of any damage: St George Bank at [26]. 5. Whether an applicant has "sufficient information" for the purposes of the rule requires an objective assessment to be made. The sub-paragraph contemplates that the applicant is lacking a piece (or pieces) of information reasonably necessary to decide whether to commence proceedings: St George Bank at [26]. 6. It is no answer to an application under the rule to say that the proceeding is in the nature of a "fishing expedition". The rule expressly contemplates what once might have been castigated as "fishing": St George Bank at [26]. 7. It is not necessary that the applicant demonstrate a prima facie or pleadable case. The mere assertion of the case is insufficient, but it will be sufficient if there is reasonable cause to believe that the applicant may have a right of action against the respondent resting on some recognised legal ground: Hatfield v TCN Channel Nine Pty Limited (2010) 77 NSWLR 506 at [47]-[48] (McColl JA). 8. There is no requirement that an applicant for preliminary discovery establish a prima facie case for relief. Nor is it necessary that an applicant specify with precision the cause of action proposed, although it is necessary that the applicant provide some particularisation of the nature of the relief in contemplation so that the court can form a view about whether the applicant may be entitled to make a claim for relief and to determine which, if any documents, in the possession of the prospective defendant are to be discovered: O'Connor at [30]. Consideration 1. The plaintiff contends that he may be entitled to claim damages for breach of contract, through: 1. the breach of an implied term of good faith; and/or 2. the breach of the implied duty to co-operate. 1. The question of whether an implied term of good faith is implied in employment contracts was left open by the High Court in Commonwealth Bank of Australia v Barker [2014] HCA 32 at [42], [104]-[107]. 2. In Bartlett v ANZ Banking Group Ltd [2016] NSWCA 30 the Court of Appeal decided that the Bank, in forming its opinion on whether or not the plaintiff had engaged in serious misconduct, was obliged to act reasonably, at least in the Wednesbury sense, and at least in so far as the process it adopted to make the decision. 3. In Subasic v Hewlett-Packard Australia Pty Ltd [2020] ACTSC 2 McWilliams AJ recognised the implied duties of good faith and to co-operate in an employment agreement, deciding that a contractual discretion exercisable by the employer must be exercised reasonably and not capriciously or arbitrarily. 4. The plaintiff contends that the information not currently available to him is: 1. which allegations against him, if any, were substantiated; 2. on what basis and upon what evidence they were substantiated; 3. whether the finding that the plaintiff engaged in the substantiated conduct was reasonably made; 4. whether Ventia's view that the plaintiff had breached Ventia's Code of Ethics was reasonably held, based on the findings of the investigation; 5. whether Ventia's view that the plaintiff engaged in bullying and harassment was reasonably held, based on the findings of the investigation; and 6. whether Ventia took any or sufficient steps to maintain the confidentiality of the investigation. 1. Ventia contends that the plaintiff already has available to him sufficient information to make the decision to commence proceedings and that the information is being sought to bolster his claim. This submission is based on the plaintiff's deposed belief that he has a claim for breach of contract against Ventia. 2. I do not accept Ventia's submission for the following reasons. First, the plaintiff's subjective belief that Ventia has breached the employment contract by dealing with him in the manner it did is irrelevant to whether or not the plaintiff should commence proceedings. The assessment of whether or not Ventia was in breach by conducting the investigation in the manner that it did must be undertaken objectively. The content of the investigation report and the reasoning underlying its conclusions are essential matters to be considered in that assessment. The plaintiff had been denied access to the investigation report and accordingly he does not have the necessary information. Second, the content of the investigation report may be relevant to any defence mounted by Ventia to the effect that it acted reasonably in commissioning the investigation report. The plaintiff is entitled to assess the content of the investigation report to consider any possible defences available to Ventia. Third, the other documents sought may also reflect on the reasonableness of Ventia's conduct and the extent to which the investigation process was kept confidential. For example, Ventia's internal communications relating to the plaintiff's termination are like to disclose the extent to which Ventia relied on the investigation report to come to the decision to terminate the plaintiff's employment. 3. I am satisfied that the inspection of the documents sought by the plaintiff will provide him with the necessary information. 4. I am also satisfied that the documents sought by the plaintiff are documents that Ventia has or has had in its control. 5. The plaintiff contends that he requires this information to determine: 1. if Ventia had breached its contractual obligations and if so, to what extent; 2. if the claims would be worthwhile in yielding an award of damages or other order sufficient to justify the commencement of proceedings; 3. the quantum of relief that might be claimed. 1. I am satisfied on the evidence, that the plaintiff has made reasonable enquiries to obtain the necessary information. Ventia has refused to engage with the plaintiff's request on a misconception of the requirement to identify a cause of action. On my reading of the correspondence, it was always apparent that the plaintiff's cause of action was for breach of contract. 2. The defendant contends that the plaintiff should commence proceedings against it and then seek production of relevant documents through the issue of notices to produce, subpoenas or discovery. I do not accept that submission because it would defeat any application for preliminary discovery. 3. For the sake of completeness I will address Ventia's alternative submissions. First, Ventia contended that the internal communications category was so broad as to be oppressive. There was no evidence relied on by Ventia as to how long it might take to locate or produce the relevant documents, being internal communications between named employees of Ventia in a defined period. Simply put, there is no evidentiary basis for the submission and I do not accept it. 4. Second, Ventia contended that the investigation report is privileged. The investigation report may be privileged but there is presently insufficient evidence before the Court to make that finding. Mr Klepac's evidence rose no higher than an assertion that the investigation report and the associated documents were created for the purpose of Ventia seeking legal advice and/or in contemplation of litigation. The proper course is for Ventia to produce the documents and to make a claim for privilege over them supported by the necessary evidence. The Court will then be in a position to hear argument from the parties on the privilege issue, including whether or not, in the circumstances of the plaintiff's dismissal, that privilege has been waived. I also note that there is recent authority to the effect that an investigation report of the kind that is the subject of these proceedings is not privileged: Gaynor King [2018] FWC 6006. 5. All of the requirements of rule 5.3 are made out and I am satisfied that I should exercise my discretion to make the order for preliminary discovery sought by the plaintiff. 6. The plaintiff seeks indemnity costs of the application on the basis that Ventia unreasonably refused to provide the documents sought following extended correspondence. I am satisfied that Ventia did unreasonably resist the production of the documents sought by the plaintiff and that its conduct warrants the making of the costs order on an indemnity basis. Orders 1. The orders I make are: 1. The defendant is to give discovery of the documents described in the categories set out in paragraph 1 of the Summons, within 14 days of the date of this order. 2. The defendant is to produce the documents for inspection by the plaintiff within 28 days from the date of this order. 3. The defendant is to pay the plaintiff's costs of the application on the indemnity basis, as agreed or assessed. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 June 2021