Attorney-General v Kowalski
[2015] SASC 123
•20 August 2015
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
ATTORNEY-GENERAL v KOWALSKI
[2015] SASC 123
Judgment of The Honourable Justice Blue
20 August 2015
PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS - VEXATIOUS LITIGANTS AND PROCEEDINGS
ESTOPPEL - ESTOPPEL BY JUDGMENT - RES JUDICATA OR CAUSE OF ACTION ESTOPPEL
ESTOPPEL - ESTOPPEL BY JUDGMENT - ANSHUN ESTOPPEL
SUPERANNUATION - BENEFITS - MATTERS AFFECTING ENTITLEMENT TO AND PAYMENT OF
Application under section 39 of Supreme Court Act 1935 for permission to institute action in District Court against superannuation trustees.
Mr Kowalski was employed by Mitsubishi Motors and a member of its Staff Superannuation Fund. In August 1991, he was certified unfit to work by his psychiatrist. He remained disabled from returning to work until March 1994 when Mitsubishi Motors wrote to him saying his inability to return to work had frustrated his contract of employment.
In February 1992, Mr Kowalski lodged with the trustee a total disablement claim which the trustee treated as a claim for monthly income benefit and for TPD benefit. Reports were provided to the trustee by Mr Kowalski’s psychiatrist in June 1992 and March 1993 confirming that he was unable to work but saying that to that point his condition could only be regarded as total and temporary disablement.
In March 1994, Mitsubishi wrote to Mr Kowalski saying his employment had been frustrated due to his inability to work. In August 1994, the trustee paid to Mr Kowalski an ordinary early retirement benefit. The trustee did not consider Mr Kowalski’s eligibility for sickness retirement benefit or TPD benefit.
In September 1997 and October 1998 Mr Kowalski claimed that he was entitled to a sickness retirement benefit and TPD benefit respectively.
On 27 October 1998, Mr Kowalski and Mitsubishi Motors entered into a Heads of Agreement under which Mitsubishi Motors paid to Mr Kowalski $200,000 and Mr Kowalski agreed, amongst other things, not to sue for any entitlements he may have to superannuation. The Heads of Agreement provided that approximately $65,000 of the total settlement sum was to be paid from the Fund by way of a sickness retirement benefit. The trustee was not a party to the Heads of Agreement. In November 1998, the Trustee paid to Mr Kowalski a sickness retirement benefit of approximately $65,000.
In June 1999, Mr Kowalski made a claim for a TPD benefit and the trustee responded saying that any additional medical conditions that had arisen since August 1992 were not relevant and the trustee was unable to pay a TPD benefit unless its insurer formed an opinion that he met the definition.
In July 1999, Mr Kowalski made a further claim for a TPD benefit. In August 2001, the trustee wrote to Mr Kowalski saying that insurance cover had ceased in August 1991 when Mr Kowalski ceased to be in gainful employment, Mr Kowalski was not permanently disabled at that time and he was not entitled to any further benefit.
Mr Kowalski made further applications for TPD benefit in November 2005, March 2010 and May 2014.
In 2007, Mr Kowalski instituted an action against the trustee and its successor in the Federal Court. In February 2009 Finn J summarily dismissed the action pursuant to section 31A of the Federal Court Act.
In April 2010, Mr Kowalski instituted a second action in the Federal Court against the trustee’s successor. In November 2010, Mansfield J summarily dismissed the action.
The trustees oppose Mr Kowalski’s application for permission to institute the proposed action relying upon res judicata, issue estoppel, “Anshun estoppel” and abuse of process.
Held:
1. The summary judgments granted by Finn J and Mansfield J were not final judgments on the merits and therefore did not give rise to res judicata or issue estoppel (at [135]-[137], [160]).
2. Mansfield J held that the Federal Court did not have jurisdiction to hear the second action and judgment therefore did not give rise to res judicata or issue estoppel (at [158]-[159]).
3. Mr Kowalski is not precluded by “Anshun estoppel” from prosecuting claims not made in the Federal Court actions (at [182]-[183]).
4. Mr Kowalski is not precluded by issue estoppel from contesting preclusion of his claims by the Heads of Agreement (at [190]-[191]).
5. The proposed action would not constitute an abuse of process on the ground that it is an impermissible attempt to re-litigate the claims the subject of the Federal Court actions (at [204]-[206]).
6. Mr Kowalski has sufficiently tenable claims of breach of fiduciary duty against the Trustee to justify grant of permission to institute the proposed action (at [216], [227], [244], [252]).
7. Permission to institute the proposed action granted (at [267]-[268]).
Federal Court of Australia Act 1976 (Cth) 31A, 21(1A), 51AC; Federal Court Rules 1979 (Cth); Insurance Contracts Act 1984 (Cth); Trade Practices Act 1974 (Cth), referred to.
Blair v Curran (1939) 62 CLR 464; Brewer v Brewer (1953) 88 CLR 1; Brisbane City Council v Attorney-General for Queensland [1979] AC 411; Greenhalgh v. Mallard [1947] 2 All ER 255; Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60; Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117; (2009) 178 FCR 401; Luck v University of Southern Queensland [2009] FCAFC 73; Macatangay v State of New South Wales (No 2) [2009] NSWCA 272; Manderson M & F Consulting (a firm) v Incitec Pivot Limited [2011] VSCA 444; Pham v Secretary, Department of Employment and Workplace Relations [2007] FCAFC 179; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; Re Luck (2003) 203 ALR 1; Rogers v Legal Services Commission (1995) 64 SASR 572; Sayseng v Kellog Superannuation P/L and Anor [2003] NSWSC 945; Simundic v University of Newcastle [2007] FCAFC 144; Thoday v Thoday [1964] P 181; Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28; Wills v Australian Broadcasting Corporation (2009) 173 FCR 284; Zoia v Commonwealth Ombudsman Department [2007] FCAFC 143, discussed.
Baines v State Bank of New South Wales (1985) 2 NSWLR 729; Beck v Spalla [2005] FCAFC; Birkett v James [1978] AC 297; Burden v Ainsworth [2004] NSWCA 3; Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212; Cameron v Cole (1944) 68 CLR 571; Carl Zeiss Stiftung & Rayner Keeler Ltd (No 2) [1967] 1 AC 853; Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502; Clack v Arthur’s Engineering Ltd [1959] 2 QB 211; Commonwealth Bank v Heinrich (No 2) [2003] SASC 436; DMW v CGW (1982) 151 CLR 491; Duchess of Kingston’s Case (1776) 20 Howell’s State Trials 355; Ex Parte Amalgamated Engineering Union (1937) 38 SR NSW 13; Henderson v Henderson (1843) 3 Hare 100 (67 ER 313); Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited Limited [2008] FCAFC 60; Kay v Attorney-General (Vic) (2000) 2 VR 436; Marginson v Blackburn Borough Council [1939] 2 KB 426; Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (in liq) (1999) 96 FCR 217; Nouvion v Freeman (1889) XV AC 1; O’Keefe v Williams (1907) 5 CLR 217; Ousley v the Queen (1997) 192 CLR 69; Pople v Evans [1968] 2 All ER 743; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; Re Macks; Ex parte Saint (2000) 204 CLR 158; Rogers v Legal Services Commission (1995) 64 SASR 572; Sanders v Sanders (1967) 116 CLR 366; Scaffidi v Perpetual Trustees Victoria Ltd [2011] WASCA 159; Shaw v Jim McGinty in his capacity as Attorney General [2006] WASCA 231; State of New South Wales v Kable [2013] HCA 26; Somadaj v Australian Iron and Steel Ltd (1963) 109 CLR 285; Turner v London Transport [1977] ICR 952; Unilan Holdings Pty Limited; Unilan (Australia) Pty Limited and Hamilton Wool Processing Pty Limited v the Honourable John Charles Keri (1993) 44 FCR 481, considered.
ATTORNEY-GENERAL v KOWALSKI
[2015] SASC 123BLUE J:
I previously made an order under section 39(1)(a) of the Supreme Court Act 1935 (SA) (the Act) prohibiting Kasimir Kowalski from instituting further proceedings without permission of the Court.
Mr Kowalski seeks permission under section 39(1)(a) of the Act to institute an action in the District Court against MMAL Staff Superannuation Pty Ltd (Mitsubishi Superannuation) and AMP Superannuation Ltd (AMP Superannuation).
Mr Kowalski filed several affidavits in support of his application exhibiting documents relevant to his proposed claim. He has provided a draft statement of claim representing the pleading that he would file if permission were granted.
Although applications for permission under section 39(1)(a) are ordinarily heard and determined ex parte, Mr Kowalski gave notice of the application to Mitsubishi Superannuation and AMP Superannuation (the respondents).
The respondents filed two affidavits by their solicitor in opposition to the application exhibiting pleadings, affidavits and written submissions filed in the two Federal Court actions referred to below.
The purpose of the requirement for a person subject to an order under section 39(1)(a) prohibiting the institution of proceedings without permission of the Court is to prevent his or her instituting future proceedings that are “vexatious” within the meaning of the Act. Effectively, this means that permission should be granted to institute a proceeding that is tenable as a matter of fact and law (not instituted without reasonable ground) and is not instituted for an ulterior purpose. There is no suggestion here that Mr Kowalski seeks to institute the proposed action for an ulterior purpose.
The respondents contend that the causes of action sought to be advanced in the proposed action are not tenable:
1.because they have a defence to which Mr Kowalski has no tenable answer that some causes of action are precluded by res judicata or alternatively issue estoppel as a result of summary judgment granted in the Federal Court by Finn J in Kowalski v MMAL Staff Superannuation Fund Pty Ltd and AMP Superannuation Ltd SAD11 of 2007 (the first Federal Court action) or by Mansfield J in Kowalski v AMP Superannuation Ltd SAD27 of 2010 (the second Federal Court action);
2.because they have a defence to which Mr Kowalski has no tenable answer that the other causes of action are precluded by “Anshun estoppel” by reason of the pursuit by Mr Kowalski of the two Federal Court actions without including them;
3.because they have a defence to which Mr Kowalski has no tenable answer that all causes of action are precluded by a Heads of Agreement between Mr Kowalski and Mitsubishi Motors Limited which preclusion Mr Kowalski is prevented from challenging by issue estoppel arising from the summary judgment in the first Federal Court action;
4because they are an abuse of process as an impermissible attempt to relitigate claims the subject of the first and second Federal Court actions; or
5.for the reasons given by Finn J and Mansfield J in the first and second Federal Court actions.
Background
The documents exhibited to the affidavits establish on a prima facie basis the following matters.
The Superannuation Fund
On 1 November 1967, the Mitsubishi Motors Australia Staff Superannuation Fund (the Fund) was established. The Fund is governed by a Trust Deed and Rules dated 30 November 1967, substituted on 16 December 1986 and amended thereafter (collectively the Trust Deed). The Rules contained in and forming part of the Trust Deed (the Rules) apply to and bind all members of the Fund.[1]
[1] Clauses A.1, A.2.
Up to 30 June 1994, six individuals were the trustees (the Trustee) of the Fund. On 1 July 1994, Mitsubishi Superannuation became trustee in their place and the Trust Deed was amended to provide that the directors of Mitsubishi Superannuation were to consist of persons selected from amongst the members of the Fund under procedures determined by the Trustee and an equal number of persons selected by Mitsubishi Motors.[2]
[2] Clause 2A.
The Trust Deed provides for full-time employees of Mitsubishi Motors Australia Ltd to be members (members) and for superannuation contributions to be paid into the Fund by members or on their behalf into the Fund.[3]
[3] Clauses A.1, A.2, A.5, A.6, B.1, B.2, B.4, C.1 and C.2.
Section C of the Rules applies to members (section C members) who joined the Fund before 1 August 1985 and did not elect to have their contributions and benefits determined under section B.[4] Contributions are payable by section C members to the Fund calculated as a percentage of a member’s salary depending on age.[5]
[4] Clause C.1.
[5] Clause C.2.
A male section C member is entitled upon retirement on or after his Normal Retirement Date (age 65) or death before that date while in the employment of Mitsubishi Motors to payment out of the Fund of a lump sum capital benefit (Normal Retirement benefit) of 12.5 percent of his or her Final Average Salary multiplied by his years of service while a member of the Fund.[6]
[6] Clauses C.1, C.3, C.6.
A male section C member is entitled to payment out of the Fund of a lump sum capital benefit (Early Retirement benefit) upon retirement before Normal Retirement Date (early retirement). The amount of the benefit depends on whether the early retirement is due to:
1.Total and Permanent Disablement, in which case the Early Retirement benefit is equal to the Normal Retirement benefit (TPD Retirement benefit); [7]
2.sickness, accident or retrenchment, in which case the Early Retirement benefit is equal to the Normal Retirement benefit discounted at three percent per annum compounded back from the Normal Retirement Date (Sickness Retirement benefit); [8] or
3.other reasons, in which case the Early Retirement benefit is equal to the member’s contributions together with interest at four percent per annum compounded (Basic Early Retirement benefit).[9]
[7] Clause C.7.
[8] Clause C.9(2).
[9] Clause C.9(2).
Total and Permanent Disablement is prima facie defined (the prima facie Definition) to mean:
“disablement due to an illness or accident or injury as a result of which –
a) he has been continuously absent from employment with the Employer for a period of at least six months (or such lesser period as the Trustees may determine in any particular case); and
b) he is, in the opinion of the Trustees after consideration of medical evidence satisfactory to them, incapacitated to such an extent as to render him unlikely ever to engage or work for reward in any occupation for which he is reasonably suited by education, training and experience.” [10]
[10] Clause 1.
This definition is subject to the following proviso (the Proviso):
PROVIDED THAT if the Trustee pursuant to the relevant provisions of the Deed or the Rules have effected a policy or policies of insurance under which insurance is payable in the event of the disablement of any member and –
(i)disablement insurance is in force for the time being under any such policy in respect of the member… ; and
(ii)the circumstances in which the disablement insurance in respect of the member is all would have been payable under such policy are in the opinion of the trustee similar to Total and Permanent Disablement defined as aforesaid,
then the Trustee may (and shall if so, directed by the principal employer) determine that the aforesaid meaning of Total and Permanent Disablement shall in respect of the member be modified so as to be identical to the circumstances in which the disablement insurance is … payable under such policy.
If a section C member becomes Temporarily Totally Disabled while in the employ of Mitsubishi Motors before his or her Normal Retirement Date, he or she is entitled to be paid a monthly income benefit (Monthly Income benefit) equal to 1/12th of the lesser of:
(a)12.5 percent of the Normal Retirement Benefit; or
(b)75 percent of the member’s Annual Salary as at 1 July preceding his or her Date of Disablement.[11]
[11] Clause C.8(1)-(3).
Monthly Income benefit ceases if the Member returns to work or (in the Trustee’s opinion on medical evidence) ceases to be Temporarily Totally Disabled.[12] Otherwise, it continues until the earliest of:
· the Member reaching Normal Retirement Date or dying;[13]
· the Member becoming Totally and Permanently Disabled;[14] or
· the expiration of 24 months or such longer period as Mitsubishi Motors may direct if the Trustee does not then declare the member to be Totally and Permanently Disabled (the Period Limitation).[15]
[12] Clause C.8(4)(a).
[13] Clause C.8(4)(b) and (d).
[14] Clause C.8(4)(c).
[15] Clause C.8(4)(e) and (10).
If a Member becomes Totally and Permanently Disabled while in receipt of Monthly Income benefit or at the end of the Period Limitation, TPD Retirement benefit then becomes payable.[16]
[16] Clause C.8(7).
Up to 31 March 1992, the Trustee held a policy of insurance issued by the State Government Insurance Commission (SGIC) in respect of disablement benefits payable to members (the SGIC policy). Colonial Mutual Life Assurance Society Limited (Colonial) later acquired SGIC and/or its superannuation insurance business. The SGIC policy was not tendered on the application before me.
From 1 April 1992, the Trustee held a policy of insurance issued by National Mutual (National Mutual) in respect of disablement benefits payable to members (the National Mutual policy). The National Mutual policy was not tendered on the application before me.
Mercer Campbell Cook & Knight (Mercer) acted as agent for the Trustee in relation to superannuation benefits.
On 15 June 2006, Mitsubishi Superannuation and AMP Superannuation entered into a deed (the Transfer Deed) providing for the transfer of assets and liabilities of the Fund in respect of Consenting and Transferring Members from Mitsubishi Superannuation as trustee of the Fund to AMP Superannuation as trustee of the AMP Superannuation Savings Trust.
Mr Kowalski
Mr Kowalski was born in August 1947. He commenced employment with Mitsubishi Motors in January 1964.
In March 1970, Mr Kowalski joined the Fund. His contributions and benefits were governed by section C of the Rules.
On 16 August 1991, an incident occurred at Mr Kowalski’s workplace as a result of which he left work.
On 22 and 23 August 1991, Mr Kowalski consulted a psychiatrist, Dr Jagermann. On 23 August 1991, Dr Jagermann sent a report to Mr Kowalski’s general practitioner with a copy to Mitsubishi Motors. Dr Jagermann diagnosed Mr Kowalski as suffering from a pathologically intense state of anxiety and issued a medical certificate that he was unfit for work.
On 28 October 1991, Mr Kowalski consulted a psychiatrist, Dr Scanlon, at the request of Mitsubishi Motors’ solicitors. On 28 October 1991, Dr Scanlon wrote a report to Mitsubishi Motors’ solicitors. Dr Scanlon expressed the opinion that Mr Kowalski was suffering from depression, was not capable of working in his position at Mitsubishi Motors at that time and required continuing treatment.
Claim for Monthly Income benefit and TPD benefit
On 20 February 1992, Mr Kowalski lodged with the Trustee or SGIC as its agent a Total Disablement Claim – Employee’s Statement. He stated that he was not and had not been working in any capacity since 16 August 1991 and his treating doctor was Dr Jagermann. He quoted from Dr Scanlon’s report that he was suffering from depression and not capable of working. The claim was treated by the Trustee as a claim for Monthly Income benefit and for a TPD Retirement benefit.
On 3 March 1992, Mitsubishi Motors lodged with the Trustee or SGIC as its agent a Total Disablement Claim – Employer’s Statement. It stated that Mr Kowalski was suffering from emotional distress, was first unable to perform his normal duties on 19 August 1991, had been continuously unable to work since then and it was unknown whether the disablement was permanent.
On 28 April 1992, Mercer wrote to Mr Kowalski saying that the Trustee had decided to pay Monthly Income benefit from 19 February 1992. Mercer said that the Trustee was still reviewing his claim for TPD Retirement benefit.
Mr Kowalski was paid Monthly Income benefit as from 20 February 1992.
On 12 May 1992, SGIC wrote to Dr Jagermann requesting his opinion whether Mr Kowalski was Totally and Permanently Disabled. The letter was not tendered on the application before me. On 30 June 1992, Dr Jagermann wrote to SGIC saying that Mr Kowalski was still suffering a pathologically intense state of anxiety, had not made any improvement and remained unfit for work. He said inter alia:
Whilst Mr Kowalski’s stressed state of mind has remained unchanged over a sustained period. That is suggestive of an infringement of pathologically intense anxiety, I am moved to conclude that so far, Mr Kowalski’s condition can only be approximated with Total and Temporary Disablement. Chronicity of his condition is not implied.[17]
[17] (Emphasis in original).
On 18 August 1992, the Trustee declined Mr Kowalski’s claim for TPD Retirement benefit based on Dr Jagermann’s report. No challenge is made to this decision.
On 4 March 1993, SGIC wrote again to Dr Jagermann seeking a report about his current condition and the extent of his disability. On 10 March 1993, Dr Jagermann wrote to SGIC saying that Mr Kowalski remained disabled and his condition could still only be regarded as total and temporary disablement.
On 29 April 1993, a psychiatrist, Professor McFarlane, provided an oral report to Mitsubishi Motors’ solicitor Mr Fountain. Professor McFarlane expressed the opinion that it was fictitious to seriously suggest a return to work in a case like Mr Kowalski’s and he did not see rehabilitation back to his previous employment as an option with any significant chance of success. Professor McFarlane’s opinions were recorded in a detailed file note prepared by Mr Fountain.
In May and June 1993, evidence was given by Dr Jagermann, Mr Scanlon and Professor McFarlane concerning Mr Kowalski’s psychiatric condition before Review Officer Fender in the Workers Compensation Review Panel in proceedings brought by Mr Kowalski against Mitsubishi Motors. They agreed that Mr Kowalski suffered from dysthymia or depressive neurosis but disagreed about its causation. Dr Jagermann expressed the opinion that his condition was caused by the incident on 16 August 1991, whereas Mr Scanlon and Professor McFarlane expressed the opinion that his condition pre-dated 16 August 1991.
Mr Kowalski continued to receive Monthly Income benefit up to 19 February 1994.
March to August 1994
On 8 March 1994, Mercer wrote to Mr Kowalski enclosing his final cheque for Monthly Income benefit and noting that 19 February 1994 marked the end of the 24 month period in which he was able to receive Monthly Income benefit under the Trust Deed.
On 9 March 1994, Review Officer Fender dismissed Mr Kowalski’s application against Mitsubishi Motors. In her reasons for judgment, she summarised the evidence given by Dr Jagermann, Mr Scanlon and Professor McFarlane.
On 16 March 1994, Mr Beer on behalf of Mitsubishi Motors wrote to Mr Kowalski referring to the review hearing before and determination by Review Officer Fender and saying that, as Mr Kowalski continued to be unfit for his normal duties, the contract of employment was frustrated and now at an end.
On 9 May 1994, the Trustee’s Funds Secretary wrote to Mr Kowalski enclosing a termination statement stating that he was entitled to an Early Retirement benefit of $27,664.54.
On 23 May 1994, Mr Kowalski wrote to the Funds Secretary saying that his employment was terminated by Mr Beer on 16 March 1994 using a WorkCover ruling dated 9 March 1994. He said that his union had lodged an unfair dismissal claim and an appeal had been lodged against the WorkCover ruling and requested that the Funds Secretary stop processing his superannuation entitlements until those matters had been finalised.
In August 1994, Mr Kowalski asked Mr Smelt what was the interest rate on his benefit entitlement. Mr Smelt said that no interest was accruing. Mr Kowalski requested that the benefit therefore be paid immediately.
On 23 August 1994, Mitsubishi Superannuation paid to Mr Kowalski a Basic Early Retirement benefit of $27,664.54.
September 1997 to November 1998
On 26 September 1997, Mr Kowalski wrote to Mercer saying that he had not resigned from Mitsubishi Motors, Mr Beer had written to him on 16 March 1994 saying “As you continue to be unfit for your normal duties with us, your contract of employment with the company is frustrated” and Mitsubishi Motors claimed that he was unfit for his normal duties as at 16 March 1994. He inquired why he was not paid a Sickness Retirement benefit.
On 26 October 1998, Mr Kowalski and Mitsubishi Motors attended a mediation conducted by Stephen Walsh QC. Mitsubishi Superannuation was not a party to the mediation.
On 27 October 1998, Mr Kowalski spoke to Mr Smelt. Mr Kowalski told Mr Smelt that he believed that he was entitled to a TPD Retirement benefit; referred to a report by Professor McFarlane dated April 1993 suggesting that he should not return to work; and said that the Trustee had been derelict in its duties in considering his situation for the correct Early Retirement benefit. Mr Smelt said that, in respect of Mr Kowalski’s claim for a TPD Retirement benefit, he would contact SGIC and also discuss with Tony Breugem what further consideration his claim should receive. Mr Kowalski sent by facsimile to Mr Smelt a copy of Mr Fountain’s 29 April 1993 file note of his discussion with Professor McFarlane.
On 27 October 1998, Mr and Mrs Kowalski and Mitsubishi Motors signed a Heads of Agreement (the Heads of Agreement). Terms of the Heads of Agreement included:
1.Kowalski on behalf of himself and his dependants hereby agrees to accept the sum of $200,000 in full and final settlement of any entitlements he may have to superannuation, sick leave, compensation and damages arising out of or in the course of his employment with MMAL. In particular, the said sum to be paid with a denial of liability, includes payment in full and final settlement of:
…
1.3Any matters related to the termination of his employment with MMAL.
1.4Any superannuation payable by the MMAL Staff Superannuation Fund.
2.The said sum of $200,000 is to be paid to Kowalski as follows:
2.1The sum of $64,691.43 to be paid from the Superannuation Fund by way of an ill health benefit being the entitlement with respect to the period from 7 March 1970 to the date of cessation of his employment.
2.2The sum of $125,308.57 to be paid by MMAL as an ex gratia payment as compensation for permanent disability impairing his future earning capacity arising from the injuries and disabilities mentioned above.
2.3The sum of $10,000 to be paid by MMAL in consideration of Kowalski forgoing any claims or future claims in any way arising from his employment.
…
4.In consideration of the matters set out in paragraphs 1 and 2 above, Kowalski and his dependants agree:
4.1Not to institute any legal proceedings and or legal complaints with any Court, Tribunal or body in respect of the matters set out in paragraph 1 hereof …
Mitsubishi Superannuation was not a party to the Heads of Agreement.
On 3 November 1998, Mitsubishi Motors wrote to Mitsubishi Superannuation saying that Mr Kowalski’s termination had now been determined to be the result of ill-health and directing the Trustee to pay a benefit in accordance with the relevant terms of the Trust Deed.
On 17 November 1998, Mitsubishi Superannuation determined to pay a Sickness Retirement benefit to Mr Kowalski.
June 1999
On 7 June 1999, Mr Kowalski wrote to Mitsubishi Superannuation saying, inter alia, that he had suffered a mental breakdown in 1991; as a result of his medical condition he had not been able to return to work; and he was unlikely ever to obtain work for reward in any occupation for which he was reasonably suited. He claimed that Mitsubishi Superannuation had a duty to pay him a TPD Retirement benefit.
On 22 June 1999, Mitsubishi Superannuation wrote to Mr Kowalski saying that in August 1992 the Trustee and SGIC reviewed medical information and it was the opinion of SGIC that Mr Kowalski did not meet the definition of Total and Permanent Disablement; any additional medical conditions that had arisen since then were not relevant to any claim for a benefit; and the Trustee was unable to pay a TPD Retirement benefit unless SGIC formed an opinion that Mr Kowalski met the definition for a TPD Retirement benefit. Mitsubishi Superannuation stated that it would not pay any additional monies to Mr Kowalski in relation to a TPD Retirement benefit as requested.
July 1999 to August 2001
On 19 and 24 July 1999, Mr Kowalski wrote to Mitsubishi Superannuation. He quoted from Mr Fountain’s notes the opinion provided by Professor McFarlane on 29 April 1993 that it was fictitious to seriously suggest a return to work with Mitsubishi Motors and Mr Beer’s letter dated 16 March 1994 saying that, as he continued to be unfit for normal duties, the contract of employment was frustrated and at an end. He formally requested that the Trustee determine that he was entitled to be paid a TPD Retirement benefit and in the alternative requested detailed reasons why he was not so entitled.
On 5 June 2001 the Funds Secretary of Mitsubishi Superannuation wrote to Mr Kowalski saying inter alia:
The Trustee is not able to authorise you to release a copy of the Heads of Agreement dated 27 October 1998 and it is not a party to the agreement. Only MMAL is able to authorise release of this document.
In addition, the Trustee has no involvement with this agreement and have therefore had no communication with any person involved with the agreement other than to be aware of its existence. Accordingly, any questions relating to this agreement should be directed to MMAL.
…
The Trustee provided information relating to your permanent disablement claim in this letter to you dated 22 June 1999. This letter provides a response to the matters raised in your latest letters relating to your entitlement to a permanent disablement claim. We also wish to advise that we have requested Colonial to review your case and have forwarded copies of correspondence to them.
On 28 August 2001, Mitsubishi Superannuation wrote to Mr Kowalski saying that on 1 April 1992 the Trustee changed insurers from SGIC to National Mutual, insurance cover under the SGIC policy ceased at the earliest of, inter alia, Mr Kowalski’s termination of service with his employer or cessation of gainful employment; SGIC’s liability ceased when Mr Kowalski ceased to be in gainful employment on 19 August 1991; SGIC had a duty to consider Mr Kowalski’s claim for TPD Retirement benefit for the illness that caused him to cease work and Mr Kowalski had advised Mr Smelt and Mr Cowdroy that he did not consider he was permanently disabled in 1991 when he last worked. The letter said that the Trustee was satisfied that Mr Kowalski had received his correct entitlements from the Fund and no further correspondence would be entered into.
November 2005 to February 2006
On 3 and 4 November 2005, Mr Kowalski wrote to Mitsubishi Superannuation attaching a copy of Mr Beer’s letter dated 16 March 1994 and formally applying for a TPD Retirement benefit from the Fund on the grounds found in Mr Beer’s letter.
On 24 February 2006, Mitsubishi Superannuation’s solicitors wrote to Mr Kowalski saying that the Trustee had previously considered and declined his claim for a TPD Retirement benefit, Mr Kowalski’s letter and its enclosures raised no new issues and no further correspondence would be entered into.
The first Federal Court action
On 25 January 2007, Mr Kowalski filed in the Federal Court an Application against Mitsubishi Superannuation seeking relief for breach of the relationship of potential beneficiary and trustee of the Fund on or about 3 November 2005 (SAD11 of 2007). The Application was supported by a statement of claim which pleaded inter alia that Mr Kowalski made a formal application to Mitsubishi Superannuation for a TPD Retirement benefit on 3 November 2005 and it refused to consider the application in breach of its trust obligations. It also pleaded that in so doing Mitsubishi Superannuation breached section 52 of the Trade Practices Act 1974 (Cth).
On 19 February 2007, Mitsubishi Superannuation filed a notice of motion seeking inter alia that Mr Kowalski’s originating process be set aside for want of jurisdiction. Mitsubishi Superannuation contended that the Trade Practices Act cause of action was colourable or trivial or insubstantial and the Federal Court therefore did not have accrued jurisdiction to address the non-federal causes of action.
On 24 July 2007, Finn J summarily dismissed the Trade Practices Act cause of action, but concluded that it was not colourable or trivial or insubstantial and the Court therefore retained accrued jurisdiction over the non-federal causes of action.[18]
[18] Kowalskiv MMAL Staff Superannuation Fund Pty Ltd [2007] FCA 1069; (2007) 242 ALR 370.
On 16 August 2007, Mr Kowalski filed a further amended application and statement of claim joining AMP Superannuation as an additional respondent.
On 30 August 2007 the respondents filed a notice of motion seeking that the proceeding be summarily dismissed pursuant to section 31A of the Federal Court of Australia Act 1976(Cth) (the Federal Court Act) or alternatively that the statement of claim be struck out under Order 11 rule 16 of the Federal Court Rules 1979 (the Federal Court Rules) as disclosing no reasonable cause of action.
On 20 May 2008, Finn J struck out Mr Kowalski’s amended statement of claim and gave Mr Kowalski leave to file and serve a further amended application and statement of claim.[19]
[19] Kowalski v MMAL Staff Superannuation Fund Pty Ltd (No. 2) [2008] FCA 691.
On 23 May 2008, Mr Kowalski filed a further amended application and statement of claim (the Statement of Claim in the first Federal Court action). The causes of action pleaded were breach of fiduciary duty and negligence in 1994 and 2005.
On 6 June 2008, the respondents filed a notice of motion seeking that the proceeding be summarily dismissed pursuant to section 31A of the Federal Court Act.
On 19 August 2008, Finn J heard the respondents’ summary judgment application. Mr Kowalski relied on affidavits sworn by him.[20] The respondents relied on affidavits sworn by Mr Smelt[21] and their solicitors.[22]
[20] Affidavits sworn on 22 November 2007 and 4 August 2008 were tendered on this application.
[21] Affidavits sworn on 15 November 2007 and 30 July 2008 were tendered on this application.
[22] Affidavits sworn by Steven Voss on 19 February 2007 and 2 March 2007 and by Rebecca Halkett sworn on 4 October 2007 were tendered on this application.
On 5 February 2009, Finn J summarily dismissed Mr Kowalski’s action pursuant to section 31A of the Federal Court Act.[23]
[23] Kowalskiv MMAL Staff Superannuation Fund Pty Ltd (No 3) [2009] FCA 53.
On 9 September 2009, a Full Court of the Federal Court dismissed Mr Kowalski’s application for leave to appeal against Finn J’s 5 February 2009 judgment.[24]
[24] Kowalskiv MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117; (2009) 259 ALR 319.
March to June 2010
On 17 March 2010, Mr Kowalski wrote to AMP Superannuation (care of its solicitors) providing a copy, inter alia, of Mr Fountain’s notes of his meeting with Professor McFarlane on 29 April 1993 and Mr Beer’s letter dated 16 March 1994 and requesting the Trustee to reconsider any former opinions in respect to his claim for a TPD Retirement benefit as a result of the 16 March 1994 frustration of his employment.
On 8 June 2010, AMP Superannuation by its solicitors replied saying that the Trustee had formed the view that the material provided by Mr Kowalski did not warrant reconsideration of his claim for a TPD Retirement benefit or indicate a reasonable possibility of a different result in respect of his claim.
The second Federal Court action
In the meantime, on 6 April 2010, Mr Kowalski filed in the Federal Court an Application against AMP Superannuation seeking relief for a breach of the relationship of fiduciary, potential beneficiary and trustee of the Fund on or about 17 March 2010 and related breaches of various duties (SAD 27 of 2010).
On 12 May 2010, AMP Superannuation filed a notice of motion seeking inter alia that the proceeding be summarily dismissed under section 31A of the Federal Court Act.
On 1 June 2010, Mr Kowalski filed an amended statement of claim (the Statement of Claim in the second Federal Court action). The causes of action pleaded were breach of a term implied by section 13 of the Insurance Contracts Act 1984 (Cth) to act in good faith and breach of fiduciary duty and negligence in 2010.
On 15 and 18 June 2010, Mr Kowalski applied for leave to amend his Statement of Claim to introduce other federal causes of action. He also applied for leave to introduce claims of breach of fiduciary duty, negligence and fraud in respect of an alleged failure to determine a claim for TPD Retirement benefit allegedly made on 26 October 1998.
On 4 November 2010, Mansfield J refused leave to amend his Statement of Claim. Mansfield J then summarily dismissed Mr Kowalski’s application pursuant to section 31A of the Federal Court Act.[25]
[25] Kowalskiv AMP Superannuation Ltd [2010] FCA 1170.
On 7 April 2011, Stone J made orders that Mr Kowalski not institute further proceedings in the Federal Court without permission of the Court (SAD75 and SAD96).[26] On 8 December 2011, a Full Court of the Federal Court dismissed Mr Kowalski’s application for leave to appeal against those orders.[27]
[26] Soden v Kowalski [2011] FCA 318.
[27] Kowalskiv Mitsubishi Motors Australia Ltd; Kowalski v Soden [2011] FCAFC 159; (2011) 198 FCR 193.
May 2014
On 6 May 2014, Mr Kowalski wrote to Mitsubishi Superannuation and AMP Superannuation by their solicitors formally requesting the Trustee to re-determine his claim for a TPD Retirement benefit as a result of the 16 March 1994 frustration of his employment.
Mitsubishi Superannuation and AMP Superannuation have not replied to Mr Kowalski’s letter.
The proposed action
The cause of action sought to be advanced by Mr Kowalski in the proposed action is breach of fiduciary duty.
In Sayseng v Kellogg Superannuation P/L and Anor[28], Bryson J observed that modern superannuation trust deeds are hybrids in conferring powers on and vesting discretions in the trustee in some respects analogous to discretionary powers conferred on trustees of discretionary trusts and in conferring entitlements upon contributing members in some respects analogous to absolute entitlements under contracts.[29]
[28] [2003] NSWSC 945 at [59]-[60].
[29] See also McPhail v Doulton; In re Baden’s Deed Trusts [1971] AC 424 at 452 per Lord Wilberforce (with whom Lord Reid and Viscount Dilhorne agreed); Telstra Super Pty Ltd v Flegeltaub [2000] VSCA 180; (2000) 2 VR 276 at [6] per Ormiston JA, [25] per Calloway JA and [33] per Batt JA; Hannover Life Re of Australasia Limited v Sayseng [2005] NSWCA 214 at [32] per Santow JA (with whom Spigelman P and Tobias JA agreed).
In Finch v Telstra Super Pty Ltd, [30] French CJ, Gummow, Heydon, Crennan and Bell JJ said:
In Dwyer v Calco Timbers Pty Ltd the Court emphasised that while the term "discretion" is used in the description or characterisation of varied acts or omissions in the law, the term may be an inadequate description of an inquiry which requires the identification and evaluation of factual matters. The present is not a case involving a "discretion". The Trustee had to consider whether to reach two opinions. One was whether a Member had ceased to be an Employee. That is scarcely a discretionary decision. It is no more discretionary than the decision of a judge in conventional litigation about whether a contract of employment has come to an end. The second opinion was whether the Member was unlikely ever to engage in "gainful Work". In the forming of an opinion on that subject there are no doubt factors to be examined which are difficult to weigh, impressions to be formed, and judgments to be made, but the field is quite different from fields in which the competing claims of potential candidates for bounty are compared.
The Trustee was trustee of a trust. It had a duty to distribute to those who fell within the definition of "Total and Permanent Invalidity" and a duty not to distribute to those who did not. That affected its role in relation to the forming of its opinion under limb (b). Forming that opinion was not a matter of discretionary power to think one thing or the other; it was an ingredient in the performance of a trust duty. That duty was owed to the Members, including the applicant. The applicant was not the object of a discretionary power of appointment. He was the beneficiary of a trust, and although the precise form and quantum of his beneficial interest was contingent on particular events, he did have a beneficial interest.
…
... Different criteria might be thought to apply to the operation of a superannuation fund from those which apply to discretionary decisions made by a trustee holding a power of appointment under a non-superannuation trust. Employer superannuation is part of the remuneration of employees. … Superannuation is not a matter of mere bounty, or potential enjoyment of another's benefaction. It is something for which, in large measure, employees have exchanged value – their work and their contributions.
…
Decisions like those which the Trustee made in this case are not discretionary decisions in the sense used in Karger v Paul.
...
Those reasons also suggest, though the contrary was apparently not put to it, that the Court of Appeal was wrong to approach the present controversy as if the principles stated in Karger v Paul, developed in and appropriate to other fields, were applicable in the present field without any qualification. [31]
[30] [2010] HCA 36, (2010) 242 CLR 254.
[31] At [29], [30], [33], [36], [37]. (Citations omitted).
In the case of discretionary powers conferred on trustees of discretionary trusts, an eligible beneficiary of a discretionary trust has no proprietary interest in the assets of the trust. However, trustees owe to eligible beneficiaries a fiduciary duty to perform the trust and this extends to a duty to consider whether or not to make a distribution to the eligible beneficiaries.[32] If a trustee of a discretionary trust does not give consideration to the question of a distribution to eligible beneficiaries at all, an eligible beneficiary can bring proceedings to compel the trustee to give such consideration. If a trustee of a discretionary trust does exercise its discretion in relation to making a distribution but the exercise of discretion is vitiated, the trustee is in breach of trust.[33]
[32] See for example Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (in liq(1999) 96 FCR 217 at [53]-[55] per Hill, Sackville & Finn JJ.
[33] Karger v Paul [1984] VR 161 at 163-166 per McGarvie J; Attorney General (Cth) v Breckler [1999] HCA 28, (1999) 197 CLR 83 at [7] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ
It is clearly established that a trustee of a superannuation fund acts in breach of trust and, where it exercises its discretion, that exercise of discretion may be vitiated at least when:
1.no consideration is given whether to exercise its discretion in circumstances in which it is required to address that question;
2.the discretion is not exercised upon real and genuine consideration (which includes consideration of the wrong question);[34]
3.when reasons for the exercise of the discretion have been disclosed, those reasons are not sound;[35]
4.the trustee does not seek relevant information to properly inform itself whether the eligibility criteria are satisfied.[36]
5.the discretion is not exercised in good faith [37]
6.the discretion is not exercised in accordance with the purposes for which it was conferred;[38] or
7.the decision is one that no reasonable person could come to on the evidence available to the trustee.[39]
[34] Sayseng v Kellogg Superannuation P/L and Anor [2003] NSWSC 945 at [55] per Bryson J; Hannover Life Re of Australasia Limited v Sayseng [2005] NSWCA 214 at [33] per Santow JA (with whom Spigelman P and Tobias JA agreed).
[35] Sayseng v Kellogg Superannuation P/L and Anor [2003] NSWSC 945 at [55] per Bryson J; Hannover Life Re of Australasia Limited v Sayseng [2005] NSWCA 214 at [33] per Santow JA (with whom Spigelman P and Tobias JA agreed).
[36] Finch v Telstra Super Pty Ltd [2010] HCA 36, (2010) 242 CLR 254 at [66] per French CJ, Gummow, Heydon, Crennan and Bell JJ.
[37] Sayseng v Kellogg Superannuation P/L and Anor [2003] NSWSC 945 at [55] per Bryson J; Hannover Life Re of Australasia Limited v Sayseng [2005] NSWCA 214 at [33] per Santow JA (with whom Spigelman P and Tobias JA agreed).
[38] Sayseng v Kellogg Superannuation P/L and Anor [2003] NSWSC 945 at [55] per Bryson J; Hannover Life Re of Australasia Limited v Sayseng [2005] NSWCA 214 at [33] per Santow JA (with whom Spigelman P and Tobias JA agreed).
[39] Sayseng v Kellogg Superannuation P/L and Anor [2003] NSWSC 945 at [61]-[63] per Bryson J; Hannover Life Re of Australasia Limited v Sayseng [2005] NSWCA 214 at [33] per Santow JA (with whom Spigelman P and Tobias JA agreed).
If the exercise of the discretion is vitiated, the normal remedy is that the court directs the trustee to exercise the discretion properly. A court does not usually exercise the discretion itself. It may do so if no reasonable person could decide otherwise or if is apparent that the Trustee will not properly exercise the discretion.[40]
[40] Rapa v Patience, unreported, (Supreme Court of New South Wales, McClelland J, 14 April 1985, unreported) BC8500888 at 14-15; Dillon v Burns Philp Finance Ltd (Supreme Court of New South Wales, Bryson J, 20 July 1988, unreported) BC8801719 at 15; Vidovic v Email Superannuation Pty Limited (Supreme Court of New South Wales, Bryson J, 3 March 1995, unreported) BC9504297; Minehan v AGL Employees Superannuation Pty Ltd [1998] ACTSC 114, (1998) 134 ACTR 1 at [65]-[68] per Gallop ACJ; Flegeltaub v Telstra Super Pty Ltd [2000] VSC 107 at [75] per Byrne J; Baker v Local Government Superannuation Scheme Pty Ltd [2007] NSWSC 1173 at [63]-[65] per McDougall J, Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2015] NSWCA 104 at [49] per Meagher JA (with whom Gleeson JA agreed).
Mr Kowalski in his proposed statement of claim seeks to plead each of the above bases to vitiate the exercise of discretion by the Trustee in:
1.February to August 1994;
2.September 1997 to November 1998;
3. June 1999;
4.July 1999 to August 2001;
5.November 2005 to February 2006;
6.March to June 2010;
7.May 2014.
The respondents contend that they have available the following defences to which Mr Kowalski has no tenable answer:
1.res judicata or alternatively issue estoppel in respect of the 1994, 1998, 2006 and 2010 claims;
2.“Anshun estoppel” in respect of the 1999, 2001 and 2014 claims;
3.all claims are precluded by the Heads of Agreement between Mr Kowalski and Mitsubishi Motors which preclusion Mr Kowalski is prevented from challenging by issue estoppel arising from the summary judgment in the first Federal Court action;
4all claims are an abuse of process as an impermissible attempt to relitigate the claims the subject of the first and second Federal Court actions.
Res judicata
The respondents contend that, by reason of Finn J’s judgment in the first Federal Court action, the defence of res judicata is available to them in respect of the 1994, 1998 and 2006 claims[41] and, by reason of Mansfield J’s judgment in the second Federal Court action, the defence of res judicata is available to them in respect of the 2010 claim.
[41] The respondents initially contended in their outline of submissions that Finn J heard and determined a claim in respect of 2001 but did not maintain that contention in oral submissions. In any event, I would have rejected such a contention. Finn J at [80] said “Mr Kowalski makes no claim in this proceeding in respect of the 2001 decisions of the insurer and the Trustee rejecting his application for a TPD Retirement benefit” and Finn J did not attempt to determine any hypothetical claim Mr Kowalski might have made but was not making.
In Thoday v Thoday,[42] Diplock LJ said that the doctrine of res judicata:
prevents a party to an action from asserting or denying, as against the other party, the existence of a particular cause of action, the non-existence or existence of which has been determined by a court of competent jurisdiction in previous litigation between the same parties. If the cause of action was determined to exist, ie, judgment was given upon it, it is said to be merged in the judgment, or, for those who prefer Latin, transit in rem judicatum. If it was determined not to exist, the unsuccessful plaintiff can no longer assert that it does; he is estopped per rem judicatum.[43]
[42] [1964] P 181.
[43] At 197-198 per Diplock J.
In Blair v Curran,[44] Dixon J said that under the doctrine of res judicata:
the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence...[45]
[44] (1939) 62 CLR 464.
[45] At 532. See also Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 597 per Gibbs CJ, Mason and Aickin JJ and 610-611 per Brennan J.
The doctrine of res judicata[46] applies only to judgments of a court or judicial tribunal of competent jurisdiction in the matter.[47]
[46] In Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28 at [20]-[22], French CJ, Bell, Gageler, and Keane JJ distinguished between res judicata in the strict sense and cause of action estoppel which are both informed by similar considerations of finality and fairness and which operate concurrently when the judgment is given in the exercise of judicial power. Given this concurrent operation and the fact that the Federal Court was exercising judicial power in the Federal Court actions, I do not refer further to cause of action estoppel as such.
[47] O'Keefe v Williams (1907) 5 CLR 217 at 227 per Griffiths CJ; Ex parte Amalgamated Engineering Union (1937) 38 SR NSW 13 at 19-20 per Jordan CJ; Rogers v Legal Services Commission (1995) 64 SASR 572 at 592 per Lander J (with whom Cox and Prior JJ agreed). It does not necessarily have to be exercising judicial power: Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28 at [20]-[21] per French CJ, Bell, Gageler, and Keane JJ.
The doctrine applies only to judgments that are final and conclusive and not to interlocutory judgments.[48] The doctrine applies only to judgments “on the merits”.[49]
[48] Nouvion v Freeman (1889) 15 AC 1 at 8-11 per Lord Herschell, 12-13 per Lord Watson, 14 per Lord Bramwell and 17 per Lord Ashbourne; Somodaj v Australian Iron and Steel Ltd (1963) 109 CLR 285 at 297-298 per Kitto, Taylor and Menzies JJ; Carl Zeiss Stiftung & Rayner Keeler Ltd (No 2) [1967] 1 AC 853 at 918-919 per Lord Reid, 926-927 per Lord Hobson, 935-936 per Lord Guest, 949 per Lord Upjohn and 969-970 per Lord Wilberforce; Rogers v Legal Services Commission (1995) 64 SASR 572 at 592 per Lander J (with whom Cox and Prior JJ agreed).
[49] Carl Zeiss Stiftung & Rayner Keeler Ltd (No 2) [1967] 1 AC 853 at 918 per Lord Reid, 927 per Lord Hobson, 948 per Lord Upjohn; Rogers v Legal Services Commission (1995) 64 SASR 572 at 592-597 per Lander J (with whom Cox and Prior JJ agreed).
The doctrine applies[50] only between the same parties to the subsequent action as were parties to the prior judgment and those claiming under them.[51] For this purpose, a party must be acting in the same capacity in both actions.[52]
[50] This rule obviously does not apply to judgments in rem, but this exception has no application in the present case.
[51] Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28 at [23] and [28]-[43] per French CJ, Bell, Gageler, and Keane JJ and [90]-[98] per Nettle J.
[52] Marginsonv Blackburn Borough Council [1939] 2 KB 426 at 438 per Slesser, Clauson and Du Parcq LJJ.
The doctrine applies only to subsequent actions for what is in substance the same cause of action as was the subject of the prior judgment.[53]
[53] Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 597 per Gibbs CJ, Mason and Aickin JJ; Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 507-508 and 511 per Deane, Toohey and Gaudron JJ (with whom Brennan J relevantly agreed) and Dawson J at 510.
A party is bound by a judgment regardless of whether it contested a particular element of the cause of action that it later wishes to contest or advance, or contested a particular defence that it later wishes to advance or contest.
The elements of res judicata can be summarised as:
1.a prior judgment of a court or tribunal;
2.the court or tribunal had jurisdiction to determine the matter;
3.the judgment is final and conclusive and “on the merits”;
4.identity of parties;
5.identity of causes of action.
The doctrine of issue estoppel is an extension of or analogue to res judicata.[54] Its subject matter is not a cause of action decided by or merged in the prior judgment but an issue necessarily decided as fundamental to the decision giving rise to the prior judgment.[55] Issue estoppel applies when the first four elements of res judicata summarised in the previous paragraph are established but the fifth element is not identity of causes of action but rather identity of an issue of fact or law necessarily decided as fundamental to the decision in the first action.[56]
[54] Thoday v Thoday [1964] P 181 at 197-198 per Lord Diplock.
[55] Blair v Curran (1939) 62 CLR 464 at 510 per Starke J and 531-533 per Dixon J; Thoday v Thoday [1964] P 181 at 197-198 per Lord Diplock; Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28 at [22] per French CJ, Bell, Gageler, and Keane JJ.
[56] Blair v Curran (1939) 62 CLR 464 at 510 per Starke J and 531-532 per Dixon J; Turner v London Transport [1977] ICR 952 at 966 per Lane LJ and 964 per Browne LJ.
The doctrine of issue estoppel was articulated by Dixon J in Blair v Curran[57] as follows:
A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. The distinction between res judicata and issue estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order.
Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order. In the phraseology of Coleridge J. in R. v. Inhabitants of the Township of Hartington Middle Quarter, the judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous.
In the phraseology of Lord Shaw, "a fact fundamental to the decision arrived at" in the former proceedings and "the legal quality of the fact" must be taken as finally and conclusively established (Hoysted v. Commissioner of Taxation). But matters of law or fact which are subsidiary or collateral are not covered by the estoppel. Findings, however deliberate and formal, which concern only evidentiary facts and not ultimate facts forming the very title to rights give rise to no preclusion. Decisions upon matters of law which amount to no more than steps in a process of reasoning tending to establish or support the proposition upon which the rights depend do not estop the parties if the same matters of law arise in subsequent litigation.
The difficulty in the actual application of these conceptions is to distinguish the matters fundamental or cardinal to the prior decision or judgment, decree or order or necessarily involved in it as its legal justification or foundation from matters which even though actually raised and decided as being in the circumstances of the case the determining considerations, yet are not in point of law the essential foundation or groundwork of the judgment, decree or order.[58]
[57] (1939) 62 CLR 464.
[58] Ibid at 531-532.
The elements of issue estoppel can be summarised as:
1.a prior judgment of a court or tribunal;
2.the court or tribunal had jurisdiction to determine the matter;
3.the judgment is final and conclusive and “on the merits”;
4.identity of parties;
5.identity of an issue necessary and fundamental to the decision the subject of the prior judgment.
The can be no issue about the first and fourth elements of res judicata and issue estoppel in respect of Finn J’s judgment in the first Federal Court action and Mansfield J’s judgment in the second Federal Court action. The Federal Court is a superior court of record and the parties are relevantly identical. Different considerations arise in relation to the second, third and fifth elements as between the four claims now sought to be pleaded by Mr Kowalski the subject of the putative defences.
1994 claim
Mr Kowalski’s first claim is that Mitsubishi Superannuation was under a duty in 1994 to consider whether he was eligible for a Sickness or TPD Retirement benefit following the expiration of his two year Monthly Income benefit and the cessation of his employment in the February/March 1994, but it breached that duty by paying him a Basic Early Retirement benefit in August 1994 without considering the higher benefits. This claim falls into the first category identified at [84] above.
Mr Kowalski did not between February and August 1994 apply to Mitsubishi Superannuation for a TPD Retirement benefit or a Sickness Retirement benefit. However, Mr Kowalski contends that he had applied for a TPD Retirement benefit in February 1992, which application was still extant in February 1994 notwithstanding that the Trustee had (correctly) formed the view in August 1992 that he was not at that point totally and permanently disabled, and the combination of circumstances known to the Trustee between February and August 1994 required it to reconsider his earlier application in light of the changed circumstances. Those changed circumstances, he contends, included that to the knowledge of the Trustee by March 1994 he had been absent from work for two and a half years, the Monthly Income benefit only ceased because the two year maximum limit was reached and Mitsubishi Motors took the view that his prospects of returning to work were so small that the employment contract was frustrated.
In his Statement of Claim in the first Federal Court action, Mr Kowalski pleaded inter alia that Mitsubishi Superannuation did not in 1994 consider Professor MacFarlane’s April 1993 medical report or any other medical evidence which proved that he was totally and permanently disabled; it owed a fiduciary duty to provide him with his correct entitlement to superannuation in the form of a TPD Retirement benefit; and it refused to comply with its fiduciary obligations by refusing to provide him with his correct entitlement to superannuation in the form of a TPD Retirement benefit and failing to properly determine his right to a TPD Retirement benefit.[59]
[59] Further Amended Statement of Claim 23 June 2008 [16], [16.1], [20], [22], [22.1].
On its summary judgment application before Finn J, Mitsubishi Superannuation contended that Mr Kowalski did not have a tenable claim of breach of duty on this first occasion because, absent an application for a TPD Retirement benefit by him in 1994, it had no obligation to consider whether he was eligible for such a benefit and it did not do so. Finn J accepted this contention. In his 5 February 2009 reasons for judgment, Finn J said:
... As I will later indicate, there is no arguable basis at all for alleging a breach of fiduciary duty or breach of trust on the Trustee’s part at that time. The Trustee was not put on notice at the time that Mr Kowalski’s termination was other than by way of resignation and it acted accordingly.
…
… several matters seem indisputable. First, no formal application was made of the time of termination for a TPD benefit. Mr Kowalski does not suggest otherwise. Secondly, the Trustee was unaware that it should consider Mr Kowalski’s termination entitlements with such a benefit in mind. It did not inquire into whether there was medical evidence capable of supporting such an entitlement. It had no need, or obligation, to in the circumstances…
…
Mr Kowalski’s 1994 claim proceeds on two false assumptions. The first, is that the Trustee had, in the circumstances, a duty to consider whether he had an entitlement to a TPD benefit. I need not repeat what I have said above. The second is that the Trustee was obliged to consider Dr McFarlane’s “report” (as the 29 April 1993 interview notes are misdescribed). There is no evidence at all that the Trustee was informed of, or provided with the report, at any time relevant to the determination of Mr Kowalski’s 1994 retirement benefit. Mr Kowalski does not contend to the contrary.
Mr Kowalski’s 1994 claim, in consequence, has no reasonable prospects of success as formulated or at all...[60]
[60] Kowalskiv MMAL Staff Superannuation Fund Pty Ltd (No 3) [2009] FCA 53 at [39], [71]. [73]-[74]. (Citations omitted).
On Mr Kowalski’s application for leave to appeal, the Full Court upheld the judgment of Finn J in this respect. Spender, Graham and Gilmour JJ summarised Finn J’s reasoning as set out in the previous paragraph[61] and concluded:
…the decision of the primary judge to order summary dismissal was not attended with sufficient doubt to warrant its reconsideration by a Full Court.[62]
[61] Kowalskiv MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117 at [81].
[62] Kowalskiv MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117 at [62].
The respondents contend that Mr Kowalski’s rights in respect of a cause of action for breach of fiduciary duty in 1994 merged in the judgment in the first Federal Court action and he is precluded by the doctrine of res judicata from advancing that cause of action in a subsequent proceeding in the District Court.
Court of competent jurisdiction
Mr Kowalski contends that the Federal Court did not have jurisdiction in the first Federal Court action to hear and determine the issue whether the respondents breached their fiduciary duties because the only federal cause of action being breach of section 52 of the Trade Practices Act had been summarily dismissed.
On 24 July 2007, Finn J held that the Trade Practices Act cause of action had not been colourable or trivial or insubstantial and the Court therefore retained accrued jurisdiction over the non-federal causes of action notwithstanding the dismissal of the only federal cause of action.[63]
[63] Kowalskiv MMAL Staff Superannuation Fund Pty Ltd [2007] FCA 1069 at [53].
The principle that the Federal Court retains accrued jurisdiction over non-federal causes of action notwithstanding the dismissal of the only federal cause of action had been, and remains, established by Full Court authority.[64]
[64] Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 at 219-220 per Bowen CJ, Morling and Beaumont JJ; Unilan Holdings Pty Limited; Unilan (Australia) Pty Limited and Hamilton Wool Processing Pty Limited v the Honourable John Charles Kerin (1993) 44 FCR 481 at 481-482 per Neaves, Ryan and Gummow JJ; Beck v Spalla [2005] FCAFC 82; (2005) 142 FCR 555 at [25] per Hill, Finn and Kenny JJ.
In any event, the Federal Court is a superior court of record, albeit not a court of general jurisdiction.[65] A judicial order of a superior court is valid unless and until set aside on appeal to a higher court (where available), on application to the court itself to set aside the order (where available) or on judicial review by a higher court (where available), even if it is contended that it was made in excess of jurisdiction.[66] A judicial order of a superior court cannot therefore be the subject of collateral challenge.[67]
[65] Federal Court of Australia Act 1976 (Cth) s 5.
[66] Cameron v Cole (1944) 68 CLR 571 at 590-591 per Rich J (Latham CJ agreeing), 598 per McTiernan J and 605-607 per Williams J; Sanders v Sanders (1967) 116 CLR 366 at 376 per Barwick CJ (with whom McTiernan J and Windeyer J agreed; DMW v CGW (1982) 151 CLR 491 at 504-505 per Gibbs CJ and 507 per Mason, Murphy, Wilson, Brennan and Deane JJ; Re Macks; Ex parte Saint [2000] HCA 62; (2000) 204 CLR 158 at [20] per Gleeson CJ, [48]-[53] per Gaudron J, [216] per Gummow J, [257] per Kirby J and [328] per Hayne and Callinan JJ. See also State of New South Wales v Kable [2013] HCA 26; (2013) 252 CLR 118 at [32]-[40] per French CJ, Hayne, Crennan, Kiefel, Bell and Keane JJ.
[67] Cameron v Cole (1944) 68 CLR 571 at 590-591 per Rich J (Latham CJ agreeing), 598 per McTiernan J and 605 per Williams J; Sanders v Sanders (1967) 116 CLR 366 at 376 per Barwick CJ (with whom McTiernan J and Windeyer J agreed); DMW v CGW (1982) 151 CLR 491 at 504-505 per Gibbs CJ and 507 per Mason, Murphy, Wilson, Brennan and Deane JJ; Ousley v the Queen (1997) 192 CLR 69 at 98-99 per McHugh J.
The 5 February 2009 judgment of Finn J has not been set aside. The Federal Court to determine the first Federal Court action cannot be the subject of jurisdiction of the collateral challenge in the proposed action.
This element of the defence of res judicata is satisfied.
Judgment final and conclusive and “on the merits”
Mr Kowalski contends that Finn J’s 5 February 2009 judgment was not final and conclusive “on the merits” because it was not given after a trial but on a summary judgment application by the respondents pursuant to section 31A of the Federal Court Act.
Mr Kowalski points to the fact that the Full Court of the Federal Court held on his application for leave to appeal against Finn J’s 5 February 2009 judgment that leave to appeal was required because the judgment was interlocutory within the meaning of section 24(1A) of the Federal Court Act.[68] The respondents contend that a judgment may be interlocutory for the purpose of leave to appeal but final for the purpose of res judicata and Finn J’s 5 February 2009 judgment was interlocutory for the purpose of leave to appeal but is final for the purpose of res judicata.
[68] Kowalskiv MMAL Staff Superannuation Fund Pty Ltd (2009) 178 FCR 401.
In relation to the question whether a judgment is “on the merits”, there are several clearly established categories. On the one hand, a judgment after a trial is a judgment on the merits for the purpose of res judicata. The same applies to a judgment entered by consent.[69]
[69] Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 508 per Deane, Toohey and Gaudron JJ (with whom Brennan J relevantly agreed); Rogers v Legal Services Commission (1995) 64 SASR 572 at 595 per Lander J (with whom Cox and Prior JJ agreed). It has been held that it also applies to a judgment by default.
On the other hand, a judgment dismissing an action for want of prosecution[70] is not a judgment on the merits for the purpose of res judicata. The same applies to a judgment dismissing an action for failure to comply with a procedural order,[71] a judgment dismissing an action because no cause of action is disclosed by the statement of claim,[72] and a judgment dismissing of an action because the plaintiff does not wish to pursue it under the former non-suit procedure (now replaced by the discontinuance procedure).[73]
[70] Pople v Evans [1968] 2 All ER 743 at 752 per Ungoed Thomas J; Birkett v James [1978] AC 297 at 321-322 per Lord Diplock (with whom the Lords Simon of Glaisdale and Lord Russell of Killowen agreed), 328 per Lord Salmon 334 per Lord Edmund-Davies; Rogers v Legal Services Commission (1995) 64 SASR 572 at 594-595 per Lander J (with whom Cox and Prior JJ agreed).
[71] Baines v State Bank of New South Wales (1985) 2 NSWLR 729 at 738 per Powell J; Rogers v Legal Services Commission (1995) 64 SASR 572 at 595 per Lander J (with whom Cox and Prior JJ agreed).
[72] Rogers v Legal Services Commission (1995) 64 SASR 572 at 596-597 per Lander J (with whom Cox and Prior JJ agreeing).
[73] Clack v Arthur’s Engineering Ltd [1959] 2 QB 211 at 216, 221 per Hodson, Romer and Willmer LJJ; Rogers v Legal Services Commission (1995) 64 SASR 572 at 594 per Lander J (with whom Cox and Prior JJ agreed).
In Rogers v Legal Services Commission,[74] Rogers instituted an action in 1989 in the District Court against the Commission claiming damages for breach of duty of care. In 1992, at the commencement of trial, Acting Judge Thompson struck out the statement of claim on the basis that it did not disclose a cause of action and dismissed the action. In 1993, Rogers instituted a second action in the District Court against the Commission claiming damages for breach of duty of care, breach of statutory duty and misfeasance in public office. The Commission filed a defence pleading, inter alia, res judicata arising from the judgment of Acting Judge Thompson. In 1994, Master Kelly granted summary judgment on the ground of res judicata. Rogers appealed to this Court.
[74] (1995) 64 SASR 572.
The Full Court allowed the appeal and set aside the judgment, albeit striking out the statement of claim for failing to disclose a cause of action and giving leave to Rogers to file a further statement of claim. Lander J (with whom Cox and Prior JJ agreed) held that Acting Judge Thompson’s judgment was not a judgment on the merits and did not give rise to res judicata, saying:
In the ordinary course of events where a trial has taken place and a judgment entered, it is not difficult to determine whether the cause of action, the subject matter of a current set of proceedings, has been previously disposed of by a tribunal in circumstances which would give rise to a plea of res judicata.
More difficulty arises in circumstances where the matter has not gone to trial and has not been formally adjudicated upon by tribunal for reasons that there has been a withdrawal by one party before the matter has concluded, or the parties have agreed to a compromise, or judgment has been entered by reason of the default of another party, or because the action has simply been dismissed.
….
In this appeal the only matter that was decided in the first proceedings was whether the statement of claim, on the face of it, disclosed a cause of action. No finding was made as to any fact, nor as to the availability of any cause of action. In those circumstances it seems to me it cannot be said that the cause of action in the first proceedings has merged into a judgment. The principle of res judicata does not have application in these circumstances.[75]
[75] At 593, 596-597.
In Re Luck,[76] McHugh ACJ, Gummow and Heydon JJ said in the context whether leave to appeal was required from a judgment:
An order is an interlocutory order, therefore, when it stays or dismisses an action or refuses leave to commence or proceed with an action because the action is frivolous, vexatious, an abuse of the process of the court or does not disclose a reasonable cause of action.[77]
[76] [2003] HCA 70; (2003) 203 ALR 1.
[77] At [9].
There are several cases in which Full Courts of the Federal Court have considered the nature of a summary judgment hearing and determination under section 31A of the Federal Court Act and whether it is a final or interlocutory judgment for the purpose of leave to appeal being required by section 24(1A).
Section 24(1A) relevantly[78] provides:
An appeal shall not be brought from a judgment referred to in subsection (1) that is an interlocutory judgment unless the Court or a Judge gives leave to appeal.
[78] From 1 January 2010, section 24(1D)(b) has provided that a decision granting or refusing summary judgment under section 31A is taken to be an interlocutory judgment for the purposes of subsection (1A) but that provision did not exist in the Federal Court authorities considered below.
Section 31A relevantly provides:
(2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
Section 31A enlarged the Federal Court’s historical power to grant summary judgment.[79] It involves a predictive function assessing the plaintiff’s prospects of successfully prosecuting the proceeding which requires value judgments to be made in the absence of a full and complete factual matrix and full argument thereon.[80]
[79] Kowalski v MMAL Staff Superannuation Fund Pty Ltd (2009) 178 FCR 401 at [25]-[28] per Spender, Graham and Gilmour JJ.
[80] Kowalski v MMAL Staff Superannuation Fund Pty Ltd (2009) 178 FCR 401 at [28] and [40] per Spender, Graham and Gilmour JJ. See also Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60 at [62] per Rares J and Luck v University of Southern Queensland [(2009) 176 FCR 268 at [101] per Rares J (with whom Graham J agreed).
In Zoia v Commonwealth Ombudsman Department,[81] Spender J (with whom Gilmour J agreed) expressed the view that a summary judgment under section 31A is interlocutory. The same view was subsequently expressed in Simundic v University of Newcastle[82] by Allsop, Lander and Siopis JJ and in Pham v Secretary, Department of Employment and Workplace Relations by French, Lindgren and Jacobson JJ.[83]
[81] [2007] FCAFC 143; (2007) 240 ALR 624 at [19].
[82] [2007] FCAFC 144 at [12] and [14].
[83] [2007] FCAFC 179 at [15].
In Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited,[84] Jefferson Ford cross claimed for, inter alia, unconscionable conduct in breach of section 51AC. Jessup J granted summary judgment under section 31A dismissing the cross claim insofar as it alleged unconscionable conduct. In the Full Court, there was a difference of view as to whether the judgment was final or interlocutory for the purpose of section 24(1A) of the Federal Court Act. Finkelstein J held that the judgment was final.[85] Rares J held that it was interlocutory.[86] Gordon J held that it was interlocutory because it did not dismiss the whole cross claim, but it would have been final if it had done so.[87] The approach of Rares J was upheld by a later Full Court in Kowalski v MMAL Staff Superannuation Fund Pty Ltd.[88] Rares J said:
The purpose of introducing s 31A into the Court’s armoury for dealing with litigation which ought not be allowed to go to trial, was to expand the capacity of the Court summarily to dismiss matters. I am of opinion that the legislative intention could not have been to create final, rather than interlocutory, judgments when s 31A is invoked to give a judgment.
…
… I am of opinion that an order under s 31A is an interlocutory order because it does not finally determine the rights of the parties. Rather, it determines that there is no reasonable prospect of either successfully defending or prosecuting a particular cause of action or pleaded case. In that respect the section broadens the Court’s power summarily to terminate proceedings without requiring it to proceed to a final adjudication on the merits of the case.[89]
[84] (2008) 167 FCR 372.
[85] At [1]-[14].
[86] At [54]-[63].
[87] At [161]-[173].
[88] (2009) 178 FCR 401.
[89] At [57], [62].
In Wills v Australian Broadcasting Corporation,[90] Wills sued the ABC for inter alia breach of copyright. Gilmour J granted summary judgment under section 31A dismissing the proceeding. On an application for leave to appeal, Rares J (with whom Emmett J agreed) held that the judgment was interlocutory.
[90] [2009] FCAFC 6; (2009) 173 FCR 284.
In Luck v University of Southern Queensland,[91] Tracey J granted summary judgment dismissing an appeal from the Administrative Appeals Tribunal pursuant to section 31A. A Full Court held that the summary judgment was interlocutory for the purpose of section 24(1A) of the Federal Court Act. Rares J (with whom Graham J agreed) held that it was interlocutory.[92] Rares J said:
In my opinion, a judgment or order under s 31A(2) that determines that an applicant has no reasonable prospect of successfully prosecuting a proceeding is interlocutory. I have held that s 31A requires a prediction of the outcome of a trial on the merits and is not an actual adjudication of those merits. I examined the nature of an order under s 31A in that judgment. I concluded that proceedings may still be dismissed or judgment given under s 31A on the ground that the claim or defence is hopeless or bound to fail, as well as on the express ground in the section that there is no reasonable prospect of successfully prosecuting or defending the proceeding.[93]
[91] (2009) FCR 268.
[92] At [99]-[109].
[93] At [101]. (Citations omitted).
In Macatangay v State of New South Wales (No 2),[94] Groves J summarily dismissed the action pursuant to rule 13.4 of the Uniform Civil Procedure Rules 2005 (NSW). The New South Wales Court of Appeal held that the judgment was interlocutory and leave to appeal was required.
The order of Grove J was interlocutory. This Court decided that in Wickstead v Browne in dealing with the relevantly indistinguishable provisions of Part 13 of the then Supreme Court Rules, citing relevant decisions of the High Court and Privy Council. The order for dismissal may be seen to have a degree of finality in practical effect, but the test is whether it was final in legal effect. It was not final in legal effect because there was no triable issue, and it did not finally determine the rights of the parties or create res judicata estoppels. Whatever jurisprudential complexities lie behind the analysis, as the Privy Council made clear in Tampion v Anderson, clarity and consistency in approach is vital. The courts have had a consistent approach to the status of orders for, or to the effect of, summary dismissal since the 19th century: they are interlocutory.[95]
[94] [2009] NSWCA 272.
[95] At [11]. (Citations omitted).
In Kowalski v MMAL Staff Superannuation Fund Pty Ltd,[96] the uncertainty engendered by the decision in Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited[97] was resolved when a Full Court adopted the view expressed by Rares J in preference to that expressed by Finkelstein J (with whom Gordon J relevantly agreed). Spender, Graham and Gilmour JJ held that a judgment summarily dismissing an action under section 31A is interlocutory. They said:
[96] (2009) 178 FCR 401.
[97] [2008] FCAFC 60.
The usual test for determining whether an order is final or interlocutory is whether the order, as made, finally determines the rights of the parties in a principal cause pending between them. That question is answered by determining whether the legal effect of the judgment is final or not…
…
An order is an interlocutory order when it stays or dismisses an action or refuses leave to commence or proceed with an action because the action is frivolous, vexatious, an abuse of the process of the Court or does not disclose a reasonable cause of action.
…
In our opinion, a case where summary judgment is given for a respondent in the absence of the full and complete factual matrix and full argument thereon, the Court being satisfied that the moving party has no reasonable prospect of successfully prosecuting the proceeding is no different from a case where an order is made dismissing an action because it is frivolous, vexatious, an abuse of the process of the Court or does not disclose a reasonable cause of action or one dismissing an appeal from an order of a Master refusing to set aside a default judgment.
We respectfully disagree with the views expressed by Finkelstein J in Jefferson Ford at [12] that ‘[i]n an application for summary judgment, the judge resolves the dispute on the merits’, and by Gordon J, by way of obiter dicta, at [164] that ‘an order granting summary judgment on all claims … is a final order because there are no further substantive rights in issue’.
What the judge does, when considering a summary judgment application, is make a determination, on the material then before the Court, as to the prospects of the moving party successfully prosecuting the proceeding. The legal effect of such a judgment is not final.
…
In the carefully reasoned judgment of Rares J in Luck v University of Southern Queensland his Honour expressed the opinion that a judgment or order under s 31A(2) that determines that an applicant has no reasonable prospect of successfully prosecuting a proceeding is interlocutory. His Honour carefully reviewed the recent authorities on the question ….
In Luck v University of Southern Queensland, Graham J expressed his complete agreement with the reasons for judgment of Rares J which he had had the advantage of reading in draft. We see no reason to doubt the correctness of the reasoning of Rares J. We consider that a judgment in the nature of summary dismissal under s 31A(2) of the Federal Court Act is interlocutory. Accordingly, an appeal from the judgment of the primary judge of 5 February 2009 in Kowalski No 3 was incompetent in the absence of a grant of leave to appeal.[98]
[98] At [33], [38], [40], [42]-[43]. (Citations omitted).
On 22 June 1999, Mitsubishi Superannuation’s Funds Secretary wrote to Mr Kowalski saying inter alia:
In regard to your Total and Permanent Disability claim in your letter dated seven and June 1999, I advise the following
· In 1991, the Trustee considered you to be temporarily disabled and paid you an income benefit for a period of 24 months.
· The Trustee and its insurer at the time (SGIC) reviewed medical information at various times between April 1992 and August 1992.
As a result of this information, it was the opinion of SGIC that you did not meet the definition of Total and Permanent Disablement (TPD) as detailed in the Trust Deed and policy document in force at the time.
· Any additional medical conditions that have arisen since you were declined for a TPD Retirement benefit are not of relevance to any claim for a benefit.
· The Trust Deed states that the definition for TPD essentially incorporates the definition of the Fund’s group life insurance policy that was held with SGIC at the time. In particular, this definition would require SGIC to form an opinion that you meet the definition for a TPD Retirement benefit.
Until SGIC forms that opinion, the Trustee is unable to pay a TPD Retirement benefit from the Fund.
· In view of the claims assessment process that was followed at the time you were considered for a TPD Retirement benefit, the Trustee does not consider it to be an appropriate use of the Fund’s assets to take any further action in relation to this matter.
In light of the above information, the Trustee advises that it will not pay any additional monies to you in relation to a TPD Retirement benefit, as requested.
On the face of the Trustee’s response, the Trustee addressed its attention exclusively to whether Mr Kowalski was totally and permanently disabled as at August 1992 and gave no consideration whether he was totally and permanently disabled as at March 1994 when his employment ceased.
On the face of the Trustee’s response, the Trustee declined to form any opinion of its own whether Mr Kowalski was incapacitated to such an extent as to render him unlikely ever to engage in any occupation for which he was reasonably suited by education, training or experience as required by the definition of Total and Permanent Disablement in the Trust Deed. Rather, the Trustee took the view that this was a matter for SGIC exclusively to form an opinion. No evidence has been adduced on the application before me that Mitsubishi Superannuation made a determination within the meaning of the Proviso that the meaning of Total and Permanent Disablement be modified so as to accord with the definition thereof in the SGIC policy. Even if Mitsubishi Superannuation made such a determination, it is reasonably arguable that the intent of the Proviso is to modify the objective criterion (incapacitated rendering him unlikely ever to engage in any occupation, etc) and not to transfer from Trustee to insurer the critical role of forming the opinion whether the criterion was satisfied. It is a prerequisite to a valid determination by the Trustee that the circumstances in which the disablement insurance is payable under the policy are (in the opinion of the Trustee) similar to the prima facie definition in the Trust Deed. It is difficult to see how the Trustee could form the opinion that this was the case if the Trustee no longer had any role in forming the requisite opinion and it was transferred to an insurer not owing fiduciary duties to the members. In addition, if (as SGIC was later to assert) the SGIC policy had no application to Total and Permanent Disablement sustained after March 1992, the definition in the SGIC policy and SGIC’s opinion would in any event have been irrelevant.
On the face of the Trustee’s response, the Trustee did not inform itself by seeking an opinion from one or more of the psychiatrists who had seen Mr Kowlaski on the question whether he was incapacitated by his psychiatric conditions so as to be unlikely to work in an occupation for which he was reasonably suited.
For the reasons in the previous three paragraphs, the letter gives rise to a prima facie case that Mitsubishi Superannuation considered the wrong question and thereby did not exercise the discretion upon real and genuine consideration (the second category referred to at [84] above), gave reasons for the exercise of its discretion that were not sound (the third category) and failed to seek relevant information to properly inform itself whether the eligibility criteria were satisfied (the fourth category). On the materials adduced on the application, Mr Kowalski has a tenable claim in respect of 1999. Whether that claim will ultimately succeed is a different question and one which cannot be determined at this stage.
Claim in respect of 2001
On 19 July 1999, Mr Kowalski sent by facsimile a letter to Mitsubishi Superannuation saying inter alia:
3. Further to letter to you dated 7 June 1999, and in response to parts of Mr Lutz’s letter, dated 22 June 1999, you are reminded of the following: …
3.5 in 1991, I suffered a mental breakdown at Mitsubishi.
3.6 on 29 April 1993, Mitsubishi solicitor, Mr J Fountain, obtained an opinion about my medical condition from a Professor of Psychiatry named Dr A. C. McFarlane who said that:
3.6.1 “he believes it fictitious to seriously suggest a return to work in a case like this.”
3.6.2 “it has been demonstrated in patients with stress-related conditions that only 1/32 patients were effectively rehabilitated back to work. That was despite the fact that their rehabilitation was very carefully monitored...” In my case, Mitsubishi failed to make any attempt to rehabilitate me back to work, or even to seek a return to work with another employer.
3.7 on or about 16 June [sic] 1994, Mitsubishi stated that “As you (I) continued to be unfit for my normal duties with us, your contract of employment with the company is frustrated. On the ground, your contract of employment with the company is now at an end, and accordingly you are no longer required to report for work…
3.13 on or about 27 October 1998, in view of the above, the Trustees of the Fund deemed that I was entitled to an Ill-Health Benefit from the Fund, however, in view of the above, the fact that I have not been able to obtain and unlikely ever to obtain work for reward in any occupation for which I am reasonable suited by education, training or experience, and Professor A C McFarlane’s medical report, the 16th September 1998, the Trustees had a Fiduciary Duty to me to deem that I was entitled to be paid a Total and Permanent Disablement benefit by the Staff Fund.[164]
[164] (Emphasis in original).
On 9 August 1999, the Funds Secretary replied to Mr Kowalski. There were then intermittent communications between the parties until June 2001.
On 5 June 2001 the Funds Secretary of Mitsubishi Superannuation wrote to Mr Kowalski saying inter alia:
The Trustee provided information relating to your permanent disablement claim in this letter to you dated 22 June 1999. This letter provides a response to the matters raised in your latest letters relating to your entitlement to a permanent disablement claim. We also wish to advise that we have requested Colonial to review your case and have forwarded copies of correspondence to them.
On 13 June 2001, Mr Cowdroy on behalf of Colonial wrote to Mr Smelt on behalf of the Trustee saying inter alia:
A claim for Total and Permanent Disablement (“TPD”) benefit was made on 27 in 1999…
After considering the medical evidence made available to it, SGIC denied the claim for TPD Retirement benefits on 4 August, 1992 on the basis that the evidence showed that the Life Insured’s condition was not chronic.
We note that the above Group Life Policy was terminated with affect from February-March, 1992 and SGIC was not liable for any TPD which occurred after that date.
The Trustee and the Life Insured have asked Us to reconsider SGIC’s decision to deny the TPD claim. In order to do this, we have to consider the medical evidence, which was made available to SGIC in 1992. We are not required to consider any subsequent worsening of the Life Insured’s condition.
As requested, we have examined the medical evidence available at the time of the claim in 1992. We believe that a correct decision was made at that time to deny the TPD claim because the Life Insured did not satisfy the requirements of Total and Permanent Disablement as required by the Policy Document.
On 3 July 2001, Mr Smelt replied to Mr Cowdroy saying inter alia:
To consolidate and ensure that this TPD claim is properly considered and a decision reached based on all relevant factors, we reiterate that the original decision to decline Mr Kowalski’s TPD claim was made part way through the maximum 2 year benefit period applicable to the TTD benefit. Whilst the decision to decline may have been reasonable at that time, there is nothing on file from SGIC to indicate that the same decision was reasonable more than a year later, ie at 19 February 1994 when payment of temporary disablement benefits ceased.
SGIC’s liability in relation to Mr Kowalski’s TPD claim did not cease as a result of the policy termination in early 1992. The incident leading to the claim occurred whilst SGIC was the insurer on risk and total disability had been established. It remained to address the question of whether the disablement was temporary (as initially assessed) or in reality it was permanent.
For the TTD benefit to continue for the maximum benefit period of 2 years the medical information must have indicated that Mr Kowalski remained totally and temporarily disabled. The continuance of the TTD benefit would not have been dependent upon the permanency of his condition and accordingly it appears the question of permanency was not again considered. By virtue of the fact that Mr Kowalski had not recovered sufficiently to resume any work, without such reconsideration, it is not clear whether or not he was totally and permanently disabled.
Mr Kowalski continues to believe that the decision to decline is [sic] TPD claim is incorrect and he continues to provide further material in support of his TPD claim. Until the matter has been concluded one way or the other, it is incumbent upon the insurer and the Trustee to re-assess his TPD claim in its entirety.
Accordingly, to facilitate proper consideration by the Trustee we request that when you provide your decision based on review of all material … you provide:
a) Copy of the SGIC policy document, which you referred to in your letter of 13 June 2001 when stating that “the Life Insured did not satisfy the requirements of Total and Permanent Disablement as required by the Policy Document.”
b) Your opinion and reasons as to whether Mr Kowalski satisfied the requirements of TPD by 19 February 1994;
c) A list of all of the material that was considered in your original decision in 1992 annual subsequent decision, effective February 1994 and a copy of each document; and
d) Reasons for your latest decision.[165]
[165] (Emphasis in original).
In August 2001, Mr Cowdroy sent a response to Mr Smelt reiterating that the TPD claim was denied by Colonial. The response was not tendered on the application and it appears that neither Mr Cowdroy nor Mr Smelt could subsequently locate it. Its content might be inferred from the Trustee’s subsequent letter to Mr Kowalski.
On 28 August 2001, the Funds Secretary wrote to Mr Kowalski saying inter alia:
1.As advised in our previous letter, you were covered under the insurance policy the trustee had undertaken with SGIC. On 1 April 1992, the trustee changed insurers and moved the insurance cover to National Mutual.
Under the terms of the SGIC policy the trustee had in place when you last actively worked with Mitsubishi the insurance cover ceased at the earliest of the following events:
·Attainment of age 65
·Termination of service with the employer
·On acceptance by STIC of liability for a benefit for either death or total and permanent disablement
·Non-payment of the premium
·Cessation of gainful employment.
Accordingly, whilst SGIC have considered and decline due for a total and permanent disablement benefit. This relates to the period when you were absent from work in 1991. SGIC’s liability ceased when you ceased to be in gainful employment with Mitsubishi on 19 August 1991. They do, however, have a duty to consider your claim for a total and permanent disablement benefit for the illness/injury that caused you to cease work. You have also advised both Mr Smelt and Mr Cowdroy of Colonial that you do not consider you were permanently disabled in 1991 when you last worked.
…
5. The Trustee is satisfied that you have received your correct entitlements from the Fund given the circumstances and further that it has given full consideration to your claim and complaint in relation to your benefits. The Trustee therefore request that you cease contacting Mr Smelt in relation to your entitlements. Any contact you have with Mr Smelt is a cost to the Fund and thus indirectly, to the remaining members. We believe that your claim has been given due and proper consideration.
In addition, the Trustee is not prepared to enter into further correspondence with you in relation to your entitlements from the Fund and will correspond to respond to further correspondence you may forward.
On the face of the Trustee’s response, the Trustee addressed its attention exclusively to whether Mr Kowalski was Totally and Permanently Disabled as at August 1991 when he last worked and did not consider whether he was Totally and Permanently Disabled as at March 1994 when his employment ceased. This appearance is reinforced by the Trustee’s attitude in June 1999 referred to above in which it also gave no consideration of the question whether Mr Kowalski was Totally and Permanently Disabled as at March 1994.
It seems likely, given the Trustee’s attitude in June 1999 and the communications between Mr Smelt and Mr Cowdroy in June-July 2001 referred to above, that the Trustee declined to the form an opinion of its own but rather took the view that it was a matter for SGIC to form an opinion. This might be inferred on a prima facie basis but ultimately evidence from the Trustee and its agents would be relevant to a final conclusion being drawn.
On the face of the Trustee’s response, the Trustee did not inform itself by seeking an opinion from one or more of the psychiatrists who seen Mr Kowlaski on the question whether he was incapacitated by his psychiatric conditions so as to be unlikely to work in an occupation for which he was reasonably suited.
For the reasons in the previous three paragraphs, the letter gives rise to a prima facie case that Mitsubishi Superannuation considered the wrong question and thereby did not exercise the discretion upon real and genuine consideration (the second category referred to at [84] above), gave reasons for the exercise of its discretion that were not sound (the third category) and failed to seek relevant information to properly inform itself whether the eligibility criteria were satisfied (the fourth category). On the materials adduced on the application, Mr Kowalski has a tenable claim in respect of 2001. Whether that claim will ultimately succeed is a different question and one which cannot be determined at this stage.
Claim in respect of 1994
20 February 1994 marked the two year anniversary of the commencement of payment by the Trustee of Monthly Income benefit. Subclauses C.8(4), (7) and (10) of the Trust Deed provide:
(4)A Member shall cease to be Temporarily Totally Disabled with effect from which is the first to occur of the following events –
(a) in the opinion of the Trustee, after consideration of medical evidence satisfactory to the Trustee, he ceases to be disabled within the terms of the definition of Temporary Total Disablement or, in any event, he engages in all performs any occupation or work for reward;
(b) he becomes Totally and Permanently Disabled;
(c) he retains his normal retirement date;
(d) he dies; or
(e) the expiration of 24 months expiring since payment of the first instalment of the Monthly Income Benefit.
(7)If the Member becomes Totally and Permanently Disabled as aforesaid, the benefit specified in rule C.7 shall them become payable.
(10)If a member ceases to be Temporarily Totally Disabled because of the expiration of the period of 24 months referred to in paragraph (e) of sub-rule (4) of this Rule and the Member is not then declared by the Trustee to be Totally and Permanently Disabled the Principal Employer may direct the Trustee to continue the payment of the monthly income benefit for such further period or periods as the Principal Employer shall determine in which event the provisions of this rule shall apply to that member in all respects as if all references to the aforesaid period of 24 months were references to such further period or periods.
There is an interrelationship between each of these three subclauses. Clause C.8(10) contemplates that the Trustee will consider at the expiration of 24 months payment of Monthly Income benefit whether to declare the member to be Totally and Permanently Disabled. If the Trustee does not make such a declaration, then Mitsubishi Motors may extend the 24 month period. The Period Limitation for the payment of Monthly Income benefit specified in clause C.8(4)(e) is not 24 months but 24 months or such longer period as Mitsubishi Motors may fix if the Trustee does not declare total and permanent disablement.
It may be expected that after a worker has been continuously incapacitated from working for two years there is a reasonably high probability that the worker has been rendered unlikely ever to work in an occupation for which he or she is reasonably suited within the meaning of the definition of Total and Permanent Disablement.
The Trustee acted on the basis that Mr Kowalski applied for a TPD Retirement benefit in February 1992, that a report should be sought unilaterally from his treating psychiatrist Dr Jagermann in May 1992 and there should be a unilateral review one year later whether he had become Totally and Permanently Disabled by seeking a further report from Dr Jagermann.
The Trustee knew that Mr Kowalski had suffered from dysthymia for two and a half years, did not receive any information on or before 20 February 1994 that he had recovered from the condition and, on the contrary, only ceased making payments of Monthly Income benefit because of the expiration of two years. In these circumstances, the Trustee must have believed that Mr Kowalski continued to suffer from dysthymia rendering him unable to work.
The Trustee must have known that, of its nature, Mr Kowalski’s psychiatric condition was likely to render him unable to advance his own interests properly by, for example, making a fresh application for a TPD Retirement benefit.
The concatenation of the matters referred to above render it arguable that Mitsubishi Superannuation was obliged to review upon the expiration of the two year period on 20 February 1994 whether Mr Kowalski was Totally and Permanently Disabled notwithstanding that he did not make a fresh application for a TPD Retirement benefit on the expiration of the two year period on 19 February 1994.
Shortly after 16 March 1994, the Trustee was informed that Mr Kowalski’s employment by Mitsubishi Motors had ceased.
Subclauses C.7, C.9(2) and C.9(1) create a cascading hierarchy of Early Retirement benefit payments depending on the cause of the retirement. They relevantly provide:
C.7Upon the retirement of a Member from the employ of the Employer before his Normal Retirement Date due to his Total and Permanent Disablement there shall be payable to him from the fund a lump sum benefit of an amount equal to that which would have been payable in respect of him pursuant to Rule C.6 if he had died on his Date of Disablement.
C.9(2) Upon a Member leaving the employ of the Employer before his Normal Retirement Date otherwise than as provided in the rules C .5, C .6 and C.7 –
(a) on account of sickness or accident (proof of which is furnished to the satisfaction of the T trustee) not conduct constituting total and permanent disablement); or
(b) on account (in the opinion of the trustee) of retrenchment of staff,
there shall be paid to the member from fund a lump sum benefit of an amount determined in the manner specified …
C.9(1)Upon a Member leaving the employ of the Employer before his Normal Retirement Date otherwise than as provided in Rules C.5, C.6 and C.7 and subrule (2) of this Rule there shall be paid to him from the fund a lump sum benefit determined in the manner following …
A member is only to be paid a Sickness Retirement benefit if a TPD Retirement benefit is not payable. A member is only to be paid Basic Early Retirement benefit if neither a TPD Retirement benefit nor a Sickness Retirement benefit is payable.
Given the close proximity between the expiration of the two year period on 19 February 1994 and Mr Kowalski’s cessation of employment shortly thereafter, the Trustee must have known that it was likely that there was a link between those two events and that there was a reasonably high probability that it was Mr Kowalski’s ill health that led to the cessation of his employment.
The concatenation of the matters referred to above render it arguable that Mitsubishi Superannuation was obliged in the circumstances to review upon learning of Mr Kowalski’s cessation of employment shortly after the expiration of the two year period whether he was eligible for either a Sickness Retirement benefit or a TPD Retirement benefit notwithstanding that he did not make a fresh application for a TPD Retirement benefit on the expiration of the two year period on 19 February 1994.
On 23 May 1994, Mr Kowalski wrote to the Trustee’s Funds Secretary saying that his employment was terminated by Mr Beer on 16 March 1994 using a WorkCover ruling dated 9 March 1994. It is arguable that this letter put Mitsubishi Superannuation on enquiry as to the circumstances of the cessation of Mr Kowalski’s employment and that it may have been linked to his inability to work in the future. If inquiry had been made (it not being known whether it was in fact made), it would have disclosed that Mitsubishi Motors considered that Mr Kowalski’s inability to return to work was sufficiently serious as to frustrate the employment contract. Receipt of this letter by the Trustee in combination with the matters referred to in the previous paragraph render it arguable that Mitsubishi Superannuation was obliged in the circumstances to review whether Mr Kowalski was eligible for either a Sickness Retirement benefit or a TPD Retirement benefit notwithstanding that he did not make a fresh application for a TPD Retirement benefit on the expiration of the two year period on 19 February 1994.
The issue in the proposed action will not be whether Mr Kowalski objectively was Totally and Permanently Disabled as at February/March 1994 but rather whether the Trustee was in breach of duty by not considering that question. If it had considered that question, a medical opinion could have been sought from Dr Jagermann in the same manner as his opinion was sought in 1992 and 1993, and medical opinions could have been sought from Professor McFarlane and Dr Scanlon each of whom had given evidence before Review Officer Fender in 1993.
The above analysis is on the assumption that the Trustee did not have actual knowledge that Mr Kowalski’s employment had been terminated by Mitsubishi Motors because the employment contract was frustrated due to his continued unfitness for his normal duties. Given that there were three Mitsubishi Motors-nominated directors and three employee representative directors on the board of the Trustee and the unusual circumstances of Mr Kowalski’s case, it is possible that the Trustee had actual knowledge of the reason for termination. Given that Mr Kowalski referred to Mr Beer’s 16 March 1994 termination letter in his letter to the Funds Secretary dated 23 May 1994, it is possible that the Trustee had actual knowledge of the reason for the termination via Mr Beer’s letter. At this stage, it is not known of what matters the Trustee had actual knowledge and this will only be known when interlocutory processes such as disclosure are undertaken.
Some of the facts referred to above (such as the request made of Dr Jagermann in May 1993 for a review whether Mr Kowalski was Totally and Permanently Disabled) were not known to Finn J. Mr Kowalski did not articulate his case before Finn J in the manner now articulated.
On the materials adduced on the application, Mr Kowalski has a tenable claim in respect of 1994. Whether that claim will ultimately succeed is a different question and one which cannot be determined at this stage.
Claim in respect of 1998
On 26 September 1997, Mr Kowalski wrote to Mercer in which he quoted from Mr Beer’s 16 March 1994 letter “As you continue to be unfit for your normal duties with us, your contract of employment with the company is frustrated”. He contended that he was entitled to more than the Basic Early Retirement benefit he had received. He contended in particular that he was entitled to an Sickness Retirement benefit.
In November 1998, Mitsubishi Superannuation resolved to pay and did pay a Sickness Retirement benefit to Mr Kowalski.
Under clauses C.7 and C.9, a member is only to be paid a Sickness Retirement benefit if a TPD Retirement benefit is not payable.
The concatenation of the matters referred to above paragraphs in combination with the matters referred to in paragraphs [224] to [240] above render it arguable that Mitsubishi Superannuation was obliged in the circumstances to review whether Mr Kowalski was eligible for a TPD Retirement benefit.
On 27 October 1998, Mr Kowalski told Mr Smelt that he believed that he was entitled to a TPD Retirement benefit and referred to a report by Professor McFarlane dated April 1993 suggesting that he should not return to work. Mr Kowalski sent by facsimile to Mr Smelt a copy of Mr Fountain’s 29 April 1993 file note of his discussion with Professor McFarlane. Mr Smelt said that, in respect of Mr Kowalski’s claim for a TPD Retirement benefit, he would contact SGIC and also discuss with Tony Breugem what further consideration his claim should receive.
Mr Kowalski’s communications with Mr Smelt on 27 October 1998 might be characterised as an informal application for a TPD Retirement benefit. Those communications, in combination with the matters referred to above, render it arguable that Mitsubishi Superannuation was obliged in the circumstances to review whether Mr Kowalski was eligible for a TPD Retirement benefit.
Mr Kowalski did not articulate his case before Finn J in the manner now articulated.
On the materials adduced on the application, Mr Kowalski has a tenable claim in respect of 1998. Whether that claim will ultimately succeed is a different question and one which cannot be determined at this stage.
Claim in respect of 2006
On 3 and 4 November 2005, Mr Kowalski sent by facsimile letters to Mitsubishi Superannuation formally applying for a TPD Retirement benefit. He referred to and principally relied upon the fact that his employment contract was frustrated due to his inability to return to work in March 1994 as stated in Mr Beer’s 16 March 1994 letter.
On 24 February 2006, Mr Voss on behalf of Mitsubishi Superannuation sent a facsimile letter to Mr Kowalski saying:
We refer to recent letters to the Trustee in respect to your formal application for a TPD Retirement benefit from the Fund dated 3 November 2005.
We are instructed that the Trustee has previously considered and declined your claim for TPD Retirement benefit from the Fund arising from your employment to 16 March 1994 and including its cessation on that date. The Trustee is of the opinion that your letter of 3 November 2005 and its annexures raise no new issues.
We have again been instructed by the Trustee that it will not be responding to any matters that you have previously raised and which have been dealt with. The Trustee has made its position clear in respect to your entitlement to a TPD Retirement benefit from the Fund in previous correspondence and this position remains unchanged.
While Mr Kowalski enclosed some documents with his November 2005 letters, he had previously referred to them before the Trustee’s decision in August 2001. His claim in respect of 2006 is dependent upon his contentions in respect of 1999 and 2001. If those contentions ultimately fail on the merits, his claim in respect of 2006 may be expected to fail. If those contentions ultimately succeed on the merits, his claim in respect of 2006 may be expected to succeed on the merits.
The position in this respect is different to that considered by Finn J where there was no claim in respect of 1999 or 2001 and Finn J considered that the 2006 claim raised no new issue.
Claim in respect of 2010
On 17 March 2010, Mr Kowalski sent by facsimile a letter to AMP Superannuation enclosing a copy of Mr Fountain’s 28 April 1993 letter to, and 29 April 1993 notes of his meeting with, Professor McFarlane and Mr Beer’s letter dated 16 March 1994.[166] He said:
I provide the Trustee with a copy of the following material in order that the Trustee can reconsider any former opinion that the Trustee may have made in respect to my claim for a TPD Retirement benefit as a result of the 16 March 1994 frustration of my employment by operation of law.
[166] He also enclosed a copy of a letter from SGIC to Mercer dated 13 April 1992 saying that a final decision regarding Mr Kowalski's TPD status would be deferred until a progress report was obtained from Dr Jagermann and the outcome of the WorkCover hearing on 2 April 1992 was known.
On 8 June 2010, AMP Superannuation’s solicitors wrote to Mr Kowalski saying:
We are instructed to inform you that the Trustee has reviewed the material you have provided under cover of your letter of 17 March 2010 and has formed the view that the material does not warrant reconsideration of your claim for a total and permanent disablement benefit. We are instructed that the Trustee is of the opinion that the material provided by you does not indicate a reasonable possibility of a different result in respect of your claim.
While Mr Kowalski enclosed some documents with his March 2010 letter, he had previously referred to them before the Trustee’s decision in August 2001. His claim in respect of 2010 is dependent upon his contentions in respect of 1999 and 2001. If those contentions ultimately fail on the merits, his claim in respect of 2010 may be expected to fail. If those contentions ultimately succeed on the merits, his claim in respect of 2010 may be expected to succeed on the merits.
The position in this respect is different to that considered by Mansfield J where there was no claim in respect of 1999 or 2001 and Mansfield J considered that the 2010 claim raised no new issue.
Claim in respect of 2014
On 6 May 2014, Mr Kowalski sent by facsimile a letter to Mr Voss in his capacity as solicitor for Mitsubishi Superannuation and AMP Superannuation enclosing a copy of Mr Fountain’s 29 April 1993 notes of his meeting with Professor McFarlane, Mr Beer’s letter dated 16 March 1994, Mr Smelt’s 22 June 2001 email to Mr Cowdroy and the Funds Secretary’s 25 July 2001 letter to Mr Kowalski. He said inter alia:
I formally apply to you to re-determine my claim for a TPD Retirement benefit in the utmost good faith, properly, according to the Trust Deed and Rules, according to law…
You have a statutory and a legal obligation to determine my claim for a TPD Retirement benefit dated 3-11-2005 and 17-3-2010, immediately, in the utmost good faith and according to law.
Mr Kowalski received no reply to his letter.
While Mr Kowalski enclosed some documents with his May 2014 letter, he had previously referred to them before the Trustee’s decision in August 2001. His claim in respect of 2014 is dependent upon his contentions in respect of 1999 and 2001. If those contentions ultimately fail on the merits, his claim in respect of 2014 may be expected to fail. If those contentions ultimately succeed on the merits, his claim in respect of 2014 may be expected to succeed on the merits.
Draft statement of claim
Mr Kowalski in his draft statement of claim pleads breach of duty in respect of each of the seven periods referred to above. However, the draft pleading does not differentiate between the periods as to the nature of the breach, alleging the same matters and each of the different types of breach summarised at [84] above in respect of each period.
I have concluded that Mr Kowalski has a tenable claim of breach of the first type, namely no consideration being given whether to exercise the Trustee’s discretion in circumstances in which it was required to address that question and a consequential breach of the fourth type, namely failure to seek relevant information to properly inform itself whether the eligibility criteria were satisfied, in respect of 1994, 1998, 2005, 2010 and 2014. The draft statement of claim will need to be amended to plead those two types of breach, and only those types of breach, in respect of those five periods.
I have concluded that Mr Kowalski has a tenable claim of breach of the second, third and fourth types, namely the discretion was not exercised upon real and genuine consideration and the Trustee considered the wrong question, the reasons for the exercise of the discretion disclosed were not sound and the Trustee failed to seek relevant information to properly inform itself whether the eligibility criteria were satisfied in respect of 1999 and 2001. The draft statement of claim will need to be amended to plead those three types of breach, and only those types of breach, in respect of those two periods.
The relief sought by Mr Kowalski is payment of a TPD Benefit to him. However, if one of the causes of action is made out, the appropriate remedy is that the Trustee be directed to consider the question of eligibility for a TPD benefit according to law. While a court might exercise the discretion and determine eligibility itself if no reasonable person could decide otherwise or if is apparent that the Trustee will not properly exercise the discretion, those criteria are not satisfied on the material before me and in any event on the material before me a medical opinion on the relevant question has not been obtained. The draft statement of claim will need to be amended to seek as the first remedy a declaration that the Trustee breached its fiduciary duty, as the second remedy that the Trustee be directed to consider the question of eligibility for a TPD benefit according to law, and as the third remedy costs.
Conclusion
I am satisfied that Mr Kowalski has a tenable claim against Mitsubishi Superannuation and/or AMP Superannuation and that permission to institute the proposed action in the District Court should be granted. No suggestion was made that, if it is otherwise appropriate that permission be granted, a distinction should be drawn between Mitsubishi Superannuation and AMP Superannuation who have been jointly represented on this application and in the previous litigation. The relationship between the respondents depends upon the complex provisions of the June 2006 Transfer Deed which can be addressed in the District Court action.
I will direct Mr Kowalski to bring forward a draft statement of claim reflecting these reasons.
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