Brewer v AAL Aviation Limited
[2016] FCA 93
•17 February 2016
FEDERAL COURT OF AUSTRALIA
Brewer v AAL Aviation Limited [2016] FCA 93
File number(s): ACD 87 of 2012
ACD 119 of 2013
ACD 17 of 2015Judge(s): BUCHANAN J Date of judgment: 17 February 2016 Catchwords: SUPERANNUATION – Commonwealth statutory arrangements for superannuation – applicants found to be temporary employees entitled to take up Commonwealth superannuation – applicants claimed to have been wrongfully denied entry to Commonwealth Superannuation scheme(s) – applicants’ claims not established on the facts
NEGLIGENCE – claims for negligent misrepresentation and negligence generally arising from representations about operation of superannuation schemes – claims not made out
LIMITATION OF ACTIONS – consideration of when claimed loss may have arisen – The Commonwealth of Australia v Cornwell (2007) 229 CLR 519 applied – Innes v Commonwealth [2015] ACTCA 33 distinguished on its facts
Legislation: Australian Airlines (Conversion to Public Company) Act 1988 (Cth)
Australian National Airlines Act 1945-1973 (Cth), ss 6, 17, 18, 31A, 42, 43, 63
Competition and Consumer Act 2010 (Cth), Sch 2—Australian Consumer Law, s 18
Superannuation Act 1922 (Cth)
Superannuation Act 1922-1973 (Cth), s 4
Superannuation Act 1976 (Cth), ss 3, 11, 12, 13, 16, 80, 137
Superannuation (Former Eligible Employees) Regulations (Amendment) (Cth), SR 1995 No. 236, reg 15B
Superannuation (Former Eligible Employees) Regulations (Amendment) (Cth), SR 1993 No. 262, reg 15, Sch 11
Superannuation (Eligible Employees) Regulations (Amendment) (Cth), SR 1980 No. 181
Trade Practices Act 1974 (Cth), s 52
Limitation Act 1935 (WA)
Limitation Act 2005 (WA), s 38
Limitation Act 1969 (NSW), s 55
Limitation of Actions Act 1958 (Vic), s 27
Cases cited: Alcan Gove Pty Ltd v Zabic [2015] HCA 33; (2015) 89 ALJR 845
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Briginshaw v Briginshaw (1938) 60 CLR 336
Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Commonwealth Bank of Australia v Barker (2014) 253 CLR 169
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1
Eljazzar v BHP Iron Ore Pty Ltd [1996] IRCA 134; (1996) 65 IR 40
Henry v Commonwealth of Australia [2012] ACTSC 94; (2012) 264 FLR 381
Innes v Commonwealth [2015] ACTCA 33
Martin v Tasmania Development & Resources [1999] FCA 593; (1999) 163 ALR 79
Meredith v Commonwealth of Australia (No 2) [2013] ACTSC 221; (2013) 280 FLR 385
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24
Mulcahy v Hydro-Electric Commission (1998) 85 FCR 170
Murphy v Westpac Banking Corporation [2014] FCA 1104
Mutual Life & Citizens’ Assurance Co Ltd v Evatt (1968) 122 CLR 556
R v Dunlop Rubber Australia Ltd; Ex parte Federated Miscellaneous Workers Union (1957) 97 CLR 71
Ramsay v Pigram (1968) 118 CLR 271
San Sebastian Pty Ltd v Minister Administering Environmental Planning & Assessment Act 1979 (1986) 162 CLR 340
L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225
Tepko Pty Ltd v Water Board (2001) 206 CLR 1
The Commonwealth of Australia v Cornwell (2007) 229 CLR 519
Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 89 ALJR 750
Watson v Foxman (1995) 49 NSWLR 315
Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515
Young v Public Service Board [1982] 2 NSWLR 456
Date of hearing: 31 August 2015 and 1, 2, 15, 16, 22, 23 September 2015 Date of last submissions: 8 October 2015 (Applicants)
27 October 2015 (Respondent)Registry: Australian Capital Territory Division: General Division National Practice Area: Employment and Industrial Relations Category: Catchwords Number of paragraphs: 306 Counsel for the Applicants: Mr R Douglas QC with Mr R Davis and Mr J Gordon Solicitor for the Applicants: Snedden Hall & Gallop Counsel for the Respondent: Mr J R J Lockhart SC with Mr C Colquhoun Solicitor for the Respondent: Johnson Winter & Slattery ORDERS
ACD 87 of 2012 BETWEEN: KEVIN JOHN BREWER
ApplicantAND: AAL AVIATION LIMITED (ACN 008 642 886)
Respondent
JUDGE:
BUCHANAN J
DATE OF ORDER:
17 FEBRUARY 2016
THE COURT ORDERS THAT:
1.The application be dismissed with costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
ACD 119 of 2013 BETWEEN: MALCOLM JAMES INNES
ApplicantAND: AAL AVIATION LIMITED (ACN 008 642 886)
Respondent
JUDGE:
BUCHANAN J
DATE OF ORDER:
17 FEBRUARY 2016
THE COURT ORDERS THAT:
1.The application be dismissed with costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
ACD 17 of 2015 BETWEEN: STUART ARTHUR HUNTER
ApplicantAND: AAL AVIATION LIMITED (ACN 008 642 886)
Respondent
JUDGE:
BUCHANAN J
DATE OF ORDER:
17 FEBRUARY 2016
THE COURT ORDERS THAT:
1.The application be dismissed with costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BUCHANAN J:
Introduction
These proceedings concern claims by three applicants who were employed by Trans‑Australia Airlines (“TAA”) from the 1970’s, and then by Qantas Airways Limited (“Qantas”). The applicants each claim that the respondent, as the legal successor to TAA, is liable for TAA’s conduct in effectively blocking their entry into particular superannuation schemes available to them. Various causes of action are relied upon. The relief available to each applicant, if they succeeded, would no doubt be very significant for them personally. Initially, there was a larger group of applicants, but settlements were reached in the other cases and the Court was told that each of those cases would be formally discontinued.
For the reasons which follow, I have concluded that none of the causes of action for any of the remaining applicants succeed and the applications must each be dismissed.
The two airlines policy
In the period when each of the applicants commenced his employment with TAA, the Australian Government applied what was known as the “two airlines policy”, under which competition between TAA and Ansett Australia Limited (“Ansett”) was fostered but, at least on interstate Australian routes, other airlines were excluded. Concern by TAA about the maintenance of a “level playing field” will be apparent in some of the correspondence to which I will refer in due course.
One operating cost which, over the period of the applicants’ employment, became very significant for TAA arose from the need to provide employer contributions to the superannuation scheme applicable to TAA salaried and wages staff. Ansett had its own scheme which was less costly to it than the TAA scheme became to TAA. Initially, TAA was covered by superannuation schemes applying to federal public servants: first, the Commonwealth Superannuation Fund (“CSF”) established under the Superannuation Act 1922 (Cth) (“the 1922 Act”) and; later, the Commonwealth Superannuation Scheme (“CSS”) established under the Superannuation Act 1976 (Cth) (“the 1976 Act”).
As a response to TAA’s expression of concern about the cost of its own contributions to those schemes on behalf of its employees (especially by contrast with the cost to Ansett of its own scheme), in 1980 the Government closed CSS to new entrants from TAA and, later that year, permitted TAA to establish the Australian Airlines General Superannuation Plan (“AAGSP”) which became available to its employees in 1981. TAA employees were encouraged, but not required, to transfer to AAGSP. Unlike CSF and CSS (which were defined benefit schemes) AAGSP was (like the Ansett scheme) an accumulation scheme where the primary benefit upon retirement was a lump sum benefit rather than a pension with a reversionary spouse benefit.
Those matters will require further elucidation. TAA’s concern about the cost of its contributions to CSF and CSS, and its desire to have its own (less costly) superannuation fund for its employees, caused it to adopt policies and practices designed to control and curtail entry to superannuation by its employees. With a combination of hindsight and a more contemporary approach to the protection of employee interests, it is impossible not to be critical of the decisions taken, which owe much to the existence and operation of Australia’s two airlines policy. However, criticism of those decisions will not suffice to establish any of the causes of action. Again, further elucidation will be necessary.
To set an appropriate context in which to explain the circumstances of each of the applicants, and the nature of their causes of action, it will first be necessary to explain the position of TAA, the public service arrangements for superannuation, superannuation arrangements applying specifically at TAA and the various decisions, policies and practices which TAA developed to address what it saw as a funding crisis with respect to its superannuation obligations.
The applicants
Mr Innes
Malcolm James Innes emigrated with his wife from New Zealand to Australia in 1974. They settled in Perth.
From 1 July 1974, Mr Innes became employed by TAA as a Traffic Officer Grade 1 at the TAA Perth Office. The position was a clerical one concerned with selling airline tickets. In 1981, he transferred to a position at Perth Airport as a Despatch Officer. In 1994 he became employed by Qantas, as part of the transition (from 1992 to 1995) of that company taking over the operations and staff of TAA. He became employed by Qantas as a Load Controller and was relocated in that position to Melbourne Tullamarine Airport in 1999. He was retrenched from Qantas on 18 April 2012.
Mr Innes gave evidence that shortly after joining TAA he made enquiries about joining “Commonwealth superannuation”.
I shall, in due course, deal with Mr Innes’ evidence about the first, and later, enquiries. They were made to a more senior officer in Perth who was in a managerial sales position. They were not made to the Personnel Officer, or anyone in the Personnel section, even though it was with the Personnel section that Mr Innes dealt with when he applied for employment and was engaged and with which he would consult with about issues as a union representative. Mr Innes’ evidence was that he was told by workmates that the person he spoke to was the person who dealt with superannuation.
Mr Innes’ evidence was that he was given various reasons why he could not enter the Commonwealth superannuation scheme over the succeeding few years. His case was that the information he was given was wrong and misleading, that he relied upon it and that otherwise he would have pursued efforts to enter Commonwealth superannuation and would have retained his membership and preserved his benefits thereafter until he left Qantas.
Mr Hunter
Stuart Arthur Hunter became employed by TAA on 28 July 1975 as an Airframe Fitter at Essendon Airport in Victoria. He had an initial probationary period of three months.
On 8 December 1976, he was reclassified as an Airframe Mechanic, having attained the necessary additional qualifications for that position. In 1980, he transferred, in grade, to Melbourne Tullamarine Airport. He was periodically promoted (on occasions as result of continued study). In around 1992, he transferred to Qantas, as part of the company’s takeover of TAA. He was retrenched by Qantas from his position of Aircraft Maintenance Engineer on 9 December 2005 at 51 years of age.
Mr Hunter’s evidence was that he enquired about the possibility of joining Commonwealth superannuation in August 1975. His evidence was that he, and others who were with him, were told that membership was “by invitation only”.
Mr Hunter also deposed to another conversation a few days later when he was told by a fellow employee that “everyone is eligible to join” but that what he had been told earlier was nevertheless correct.
Mr Hunter’s case was that those responses were ones for which TAA was responsible, that they did not reflect the true position, that they were wrong and misleading and that, if they were not made, he would have pursued the question of entry to Commonwealth superannuation. He said he would have thereafter retained his membership and preserved his benefits until he left Qantas, accessing those benefits only upon his later retirement.
Mr Brewer
Kevin John Brewer commenced employment with TAA as a Reservations Clerk at Mascot, Sydney on 28 March 1977. In November 1977, he transferred to Sydney Airport as a Traffic Officer and later became a Load Control Officer. He was transferred later to Qantas after the purchase of TAA and, on 21 December 2006, was made redundant.
Mr Brewer’s evidence was that he approached the New South Wales Personnel Manager for TAA in early 1978, after transferring to Sydney Airport, and in a chance conversation, asked him about joining “Commonwealth superannuation” but was told the scheme was closed. He made no further enquiries.
Mr Brewer’s case also was that he was given wrong and misleading information which he relied on, that he would otherwise have entered Commonwealth superannuation, and that he would have retained his membership and preserved his benefits when he transferred to Qantas until he left Qantas.
Australian National Airlines Commission
The respondent began its existence as the Australian National Airlines Commission (“the ANA Commission”). It was incorporated under the Australian National Airlines Act 1945 (Cth) (“the ANA Act”). Later, by the Australian Airlines (Conversion to Public Company) Act 1988 (Cth) the name of the respondent became Australian Airlines Limited and it has since changed its name to AAL Aviation Limited. At all times relevant to the present proceedings up to 1995, the respondent traded as Trans-Australia Airlines, and was generally referred to, as I have done, as TAA. TAA was the Commonwealth Government’s airline and effectively enjoyed a shared monopoly with Ansett of major parts of the Australian domestic airline market under the two airlines policy to which I have already referred.
Section 6(1) of the ANA Act established the ANA Commission consisting of five Commissioners, including a Chairman and Vice-Chairman, all of whom were appointed by the Governor-General. By 1973, the ANA Commission consisted of seven Commissioners.
Hereafter, reference to the ANA Act should be understood to be to the provisions of the Act as at 1973, shortly before the engagement of each of the applicants, unless otherwise indicated.
Sections 17 and 18 of the ANA Act made provision for, and a distinction between, officers and employees. That distinction, in large measure, reflected a distinction in the departmental public sector between “permanent” and “temporary” staff, but it was not identical to it. When it comes to superannuation arrangements it is important to focus on the particular statutory arrangements made for TAA staff (and staff of other agencies) rather than those for staff in the departmental public sector.
Sections 17(2), (3) and 18 provided:
Appointment of officers.
17. …
(2) The officers of the Commission shall constitute the Service of the Commission.
(3) A person shall not be admitted to the Service of the Commission unless–
(a) he is a natural-born or naturalized British subject;
(b) the Commission is satisfied, upon such medical examination as is prescribed, as to his health and physical fitness; and
(c) he makes and subscribes an oath or affirmation of allegiance in accordance with the prescribed form,
and shall not be appointed to a clerical office in that Service unless he has in open competition successfully passed the prescribed entrance examination:
…
Temporary and casual employees.
18. The Commission may appoint such temporary or casual employees as it thinks fit, on such terms and conditions as the Commission determines.
None of the applicants claimed to have satisfied the requirements of s 17(3). Other material indicated that persons had not been appointed to the “Service of the Commission” from the 1960’s. In a later part of the judgment, I find that each of the applicants was a “temporary” (but full-time) employee engaged under s 18 of the ANA Act.
Section 31A of the ANA Act was inserted in 1973. It has a particular significance to which it will be necessary to return. It provided:
Transfer of superannuation provisions.
Inserted by No. 92, 1973, s.14.
31A. The Commission shall not more than four weeks after this Act receives the Royal Assent and thereafter from time to time at intervals of not more than four weeks transfer the moneys representing provisions made by the Commission for staff superannuation from the accounts of the Commission to the Commonwealth Superannuation Board or to such other trustees as the Treasurer approves.Royal assent was given on 24 August 1973, and the commencement obligation accordingly arose not later than 21 September 1973.
Sections 42 and 43 of the ANA Act gave recognition to the two airlines policy, which was underpinned by a premise that Ansett and TAA, as competitors, would receive equal treatment from the Government. As will be seen, a powerful plank in TAA’s representations to the Government, after the introduction of s 31A and after it was foreshadowed that public sector superannuation arrangements would be altered (as discussed hereunder), was that the two airlines policy itself was in jeopardy unless TAA was released from its ongoing obligations under Commonwealth superannuation arrangements.
Commonwealth superannuation arrangements
TAA was, as a Government-owned airline in the 1970’s, an “approved authority” for the purposes of Commonwealth superannuation legislation.
Mr George Hayes is a retired public servant who worked for a long period of time at the Government agency which was, when he began there in 1969, called the Superannuation Board, was subsequently named the Australian Government Retirement Benefits Office and then, later, was called ComSuper. Mr Hayes has an extensive knowledge of the administrative arrangements in place in the period to which the proceedings relate. Although Mr Hayes had no specific knowledge of the arrangements within TAA, I found his evidence to be helpful to understand the general arrangements in place. Specifically, I accept Mr Hayes’ evidence that TAA used the forms and other material supplied by ComSuper and that co-ordination of superannuation arrangements in approved authorities, as in government departments, was achieved through local Personnel sections. The powers of the Commissioner for Superannuation were delegated under the relevant legislation so that the administrative arrangements of approving individual employees to join a Commonwealth superannuation fund were the responsibility of the approved authority, although ComSuper and its predecessors retained the central task of advice and information.
That advice and information was available to agencies and departments in various forms, but in the period with which the proceedings were concerned there was no organised facility to provide advice to individual employees. It was expected, I infer, that they would seek advice from their own Personnel department, which could contact Mr Hayes or one of his colleagues if necessary.
The three principal ways in which advice was made available to departments and agencies was through the Superannuation Manual, circulars and requests for advice or information of the kind just mentioned. Mr Hayes said, in his affidavit evidence:
Manual, Superannuation Board Circulars and application forms
26.The Manual was the ‘superannuation bible’. It provided detailed information about Commonwealth superannuation. Every personnel section would have had at least one copy of the Manual. We sent out updates to the Manual every 3 to 6 months. The updates covered things such as changes in the legislation, changes in the documentation we used and any changes in the ComSuper’s procedures. The updates were sent to the personnel sections and would include instructions telling the personnel section to take out pages x-y and replace with new pages x-y. We had an ‘address bank’ for the personnel sections, which was kept up to date. Although this was considered an important task, it was not one specific person’s job to keep the address bank up to date.
27.ComSuper circulars were also sent to the personnel sections of the various departments and agencies. The circulars were sent out in advance of the Manual being updated. They were the main means by which ComSuper communicated changes about Commonwealth superannuation to employees in the personnel sections.
28.The personnel sections also kept copies of application forms for temporary employees to join Commonwealth superannuation. …
Until 30 June 1976, Commonwealth superannuation was governed by the 1922 Act, mentioned earlier, and after 1 July 1976 it was governed by the 1976 Act. As I have already mentioned, the funds established by those Acts were known as CSF and CSS, respectively.
To become a contributing member of CSF, under the 1922 Act, and receive a pension on retirement, it was necessary to pass a medical examination. Failure to pass the medical examination resulted in refusal of pension benefits, although it remained possible to contribute to the “Provident Account” which provided a lump sum benefit upon withdrawal, including retirement.
Under the 1976 Act a medical examination was also required, but it had different consequences. Failure to fully satisfy the medical requirements did not result in exclusion from CSS, or the refusal of an eventual pension necessarily. Rather, the employee was issued with a “Benefit Classification Certificate” specifying any conditions that might affect the benefit upon invalidity or retirement or death, operative for 20 years.
Mr Hayes explained the difference between the two arrangements as follows:
MR DAVIS: For his Honour – would you just explain to his Honour at this point what a provident account is under the 1922 Act?---Yes. Under the Superannuation Act 1922, if you met the employment requirements – so it could be, say, you were a permanent employee of the public service or you met the requirements for an approved authority the necessary future employment requirements and you’re accepted as a member of the scheme, you then had a medical examination, and if you were, as they used to say in those days, in insurance terms, a first-class life, you entered the superannuation scheme without any restrictions. If the medical examination disclosed that you were unlikely to – because of existing medical conditions – unlikely to reach retirement at age 65, then you were put in what was called a provident account, which was a lump-sum scheme and not a pension scheme, which the other arrangement was.
…
MR DAVIS: Would you explain to the court what a benefit classification certificate is?---Right. Well, unlike the – under the Super Act 1922, where if you were not a first class life in superannuation – in insurance terms, you weren’t put into a separate account. You came into the overall superannuation scheme, but there are restrictions on your benefits if, as a result of your medical examination, conditions were found that made it unlikely you would be made an employee until retiring age. And these particular conditions were listed on a certificate and that certificate applied for 20 years. Now, if you retired or died because of conditions unrelated to anything on the certificate, then you got full benefits. Now, for example, if you were killed in a car accident, well, clearly there was no connection there. You got full benefits. If you were retired because of a condition on the certificate, then you received a lesser benefit depending on the number of years you had completed.
HIS HONOUR: Unless you got past 20 years?---Unless you got past 20 years, yes. Correct.
MR DAVIS: Now - - -?---In which case a certificate no longer applied. That’s correct.
Despite the difference in consequence, the medical examination was required as part of the arrangements for entry into either scheme, whether or not it had been necessary for employment. In the present case, none of the applicants had a medical examination for employment and so, in each case a medical examination would have been required to enter either CSF or CSS. The medical examinations were arranged by the relevant agency, but the results were sent to ComSuper or its predecessors.
Mr Hayes was asked about the administrative arrangements, to which I referred, including the Superannuation Manual and the circulars, and gave the following explanation:
MR DAVIS: … Now, these various documents and manuals, what was the function of them?---Manuals and circulars?
Yes?---Why did we have them at all?
Why was it necessary to send all this stuff to the employers?---Well, we, as the superannuation administrators, didn’t have any direct contact with either public servants or people in approved authorities or people in PMG directly. We – we needed a process whereby the employing agency, being the public service or an approved authority, identified people who were coming into the scheme, advised us who was coming into the scheme. We then set up records for them, and eventually paid benefits of some sort. We needed a process whereby if there was some information that had to get out to existing members or, indeed, potential members, it went through personnel sections and staff sections. We didn’t have a process for direct contact with – with people. I mean, today you would probably put it on the internet, for example, but in those days the process was we had to work through personnel sections and staff sections, because we simply didn’t know who was out there: who – who – who was potentially a member, who was becoming a member. And if someone was retiring we needed someone who got them to complete the correct form, checked it out and sent it into us. We didn’t know who was retiring. It was up to personnel sections to tell us.
So if somebody wanted to – if an employee wished to join Commonwealth Superannuation or wished to make an inquiry about joining, then what would be their first point of contact insofar as your experience is concerned?---Well, if you’re a public servant it – A followed B, but it was done through personnel sections. If you were a temporary employee or an employee on approved authority we would expect your first port of call was your personnel section, and – I mean, some – some organisations probably had liaison officers between staff and personnel sections. That was their own local arrangements. A – the – the people who had the information on superannuation down at the coal face were personnel sections or staff sections. I mean, it’s possible someone might have rung us up and said, “You know, I’m – I’m Bill Smith. I’m working for Australia Post. Can I become a member of the scheme.” And we would have said, “Well, what’s your background?” You know, “Tell us.” But we would say, “Okay. Well, you need to now go to your personnel section and get a form X, Y, Z completed, and then that form will come back through your personnel section.” But - - -
Did you have people that took inquiries from not the public so much, but from potential contributors? Did you have that?---In the very early days, no. Essentially, we were working on personnel sections. In my final days at ComSuper, yes, we did have inquiry officers in ComSuper, but, once again, we still would direct that person through the personnel sections, because there was a – the personal sections had to be involved in the process to get them into the scheme.
What was the position in the 1970s and 1980s?---We didn’t have them. We were relying entirely on personnel sections.
And the sorts of things that – and correct me if this is incorrect, but the sorts of things that personnel sections would have done, would they have had applications to join?---Yes.
Would they have answered inquiries? I think you said they would?---Well, they – they probably wouldn’t have answered inquiries on actual benefit payments. They would have probably either referred that to ComSuper ourselves, or suggested to the person, “You write to ComSuper,” because they – they probably didn’t have the expertise to tell Joe Blow precisely what his benefit was going to be if he retired in six months time, but if Joe Blow was a staff member and wanted to become a member of the scheme, that’s the sort of question we would expect them to be able to answer and give him the appropriate form to fill in.
And, similarly, to the extent that there was a medical examination required as a result of that, would that be something that was up to the personnel departments?---We would – we would expect the personnel department to arrange it, and if the medical didn’t turn up, we would go back to the personnel department and say, “Where is it? You know, arrange for so and so to be medically examined.”
Yes. And, similarly, with respect to people who are members of the scheme, I take it that contributions would have to be remitted to Commonwealth Superannuation?---Correct.
And who would be responsible for doing that?---The personnel sections, through their processes. …
There was one area in which the statutory conditions of entry into CSF under the 1922 Act were different for non-permanent public servants and employees of approved authorities. Permanent public servants were entered into superannuation automatically, with the same medical examination serving for both purposes (i.e. gaining permanent employment and entry into CSF). By 1952, non-permanent public servants could be deemed to be “permanent” for superannuation purposes if employed full-time and continuously for not less than three years and the Public Service Board certified that the “person’s employment is likely to be continued for a period of at least seven years” (1922 Act, s 4(5)(c)).
Employees of approved authorities might also be deemed eligible if full‑time and “the approved authority certifies that the person’s employment is likely to be continued for a period of at least seven years” (1922 Act, s 4(6)(a)). There was no statutory requirement for three years prior continuous service. I shall refer later to an apparent practice or policy within TAA whereby such employees were invited to join CSF after a continuous two years of employment, although in practice the period seemed to have extended to three years.
It was argued in the proceedings by two of the applicants, Mr Innes and Mr Hunter, that they should be regarded as entitled to join CSF as early as the completion of any period of probation, without waiting for two or three years or to be invited, as none of those practices reflected any statutory condition.
However, I can see no reason, as a matter relevant to a certification that a person’s employment was likely to last at least seven years, why a practical qualifying period of this kind might not have been adopted. The certification related to the person, not the position which that person held. Some indication of stability in employment, and diligent application to required and assigned tasks, does not appear to me to be foreign or irrelevant to the certification which was required. None of the applicants had completed two years’ service with TAA before CSF closed.
Section 3(1) of the 1976 Act defined “eligible employee” to include:
“eligible employee” means–
…
(b)a person who is a permanent employee;
(c)a person who is a temporary employee and is specified in a direction given under section 11, 12 or 13;
“Permanent employee” was defined as follows by s 3(1):
“permanent employee” means–
(a)a person who is an officer for the purposes of the Public Service Act; and
(b)any other person employed by the Commonwealth or by an approved authority in a permanent capacity,
but does not include a part-time employee who is not an approved part-time employee;
Permanent employees were automatically entered into CSS. There is no evidence that any of the applicants was a permanent employee. For example, none was required to undergo a medical examination upon employment. They were certainly not persons “in the Service of the Commission” within the meaning of the ANA Act.
I am satisfied, therefore, that each of the applicants was a “temporary employee” within the definition in s 3(1) of the 1976 Act:
“temporary employee” means–
…
(b)any other person employed by the Commonwealth or by an approved authority otherwise than in a permanent capacity,
Sections 11, 12 and 13 of the 1976 Act made provision for temporary employees to be eligible employees in three circumstances, two of which are not relevant. Section 12 dealt with temporary employees who would be employed in a permanent capacity within 12 months and s 13 dealt with temporary employees employed under a term contract of not less than one year. Neither circumstance applied to any of the applicants.
Section 11(1) of the 1976 Act provided:
Temporary employees likely to be continued in employment.
11. (1) Where–
(a)a person who is a temporary employee has, for the immediately preceding period of 1 year (whether or not the period commenced before the commencement of this Act), been a temporary employee, or a temporary employee and a permanent employee;
(b)the person requests the Commissioner to direct, under this section, that he be treated as an eligible employee for the purposes of this Act; and
(c)the Commissioner is satisfied that the person is likely to continue to be a temporary employee for a further period of at least 3 years after the date of the request or that, during that period of 3 years, the person is likely to become an eligible employee otherwise than by virtue of a direction under this section,
the Commissioner may direct that the person is, as from the date of the direction, an eligible employee for the purposes of this Act.
The “Commissioner” was the Commissioner for Superannuation who, as a matter of practice, delegated his powers. Mr Hayes’ evidence was that the powers were delegated to identified positions at approved authorities, rather than to named persons. His evidence was:
HIS HONOUR: Do you know anything about who were the delegates in employee authorities?---The way it operated, sir, was that the employing authority would nominate positions within their organisation. And the superannuation board, originally – later, the Commissioner – would delegate the power, under either the Super Act ’22 or the Super Act ’76, to particular positions in – in approved authorities, not – not to individual people, but to positions.
No, I understand. To the occupants of positions from time to time?---Yes. And – and if – if they changed the name of the position or they restructured the organisation somehow they needed to tell us and we would issue a new delegation to whoever is the – whatever was the new description of the position in the organisation that had these responsibilities.
Some features of s 11 might be noted. A request was necessary. It was necessary that the Commissioner be satisfied of likely employment for at least three years and certified to that effect. In addition, a medical examination was necessary. Section 16(2) of the 1976 Act provided:
Medical examinations and benefit classification certificates.
16. …
(2) A person who proposes to become, or becomes, an eligible employee shall undergo such medical examination or examinations by an approved medical practitioner or practitioners as the Commissioner requires.
Mr Hayes identified the relevant form (Form S20) which was in use for temporary employees of approved authorities under the 1976 Act. It contained four parts A – D. Part A contained a request as follows:
I … hereby request that I be accepted as an eligible employee under the Superannuation Act 1976. I understand that if I do not meet the required medical standard, my acceptance may be subject to the issue of a Benefit Classification Certificate and that my benefit or reversionary benefit under the Act may be reduced on medical grounds in the event of invalidity retirement or death.
Part B (for s 11 and s 12 employees) provided for certification by a delegate of the Commissioner that the employee (in the case of s 11):
… has been employed in a temporary capacity for a continuous period of not less than 12 months and that his/her employment is likely to continue for a further period of a [sic] least three years from the date of the above application
Part C is not relevant here. It dealt with s 13 and s 14 employees.
Part D allowed for a record of a contributing member, when superannuation deductions commenced and when the medical examination was to occur.
This form was to be retained by the Personnel section of the approved authority in its records.
Mr Hayes also identified an example of a typical schedule from TAA’s records (there were a number in evidence) whereby employing authorities transmitted details of a number of new contributors at the one time to ComSuper or its predecessors. Form SB17 was used for that purpose.
Form SB17, whereby employing authorities transmitted details of new contributors to the Superannuation Board (the predecessor to ComSuper) was adopted in November 1971. It was, nominally, addressed to the Minister administering the Act under which the approved authority was constituted and contained certification by the approved authority about satisfaction of the eligibility requirements, a recommendation to the Minister about entry to superannuation and a direction by the Minister to make the identified employees eligible.
In 1974, in the case of TAA, the Minister delegated his power of direction to the Staff Officer of TAA.
It is apparent that the day-to-day arrangements both before and after 1976 were under the control of employing authorities. It is also apparent that, after 1976, the only legitimate barrier to entry to CSS, in the case of a temporary employee with more than 12 months’ service, was a requirement of likely continued employment. However, some regard must also be paid to the need for the process to be activated. If a temporary employee received an invitation to apply to contribute to CSS, no doubt that was one way the process might be activated. Equally, I can see no reason why a temporary employee could not, after 12 months, ask for an application form from the Personnel office and submit it. Any necessary certification should be readily obtainable, or refusable. Processing time should be minimal in such a case.
Nevertheless, that was not the experience in TAA.
Superannuation arrangements in TAA
I earlier set out s 18 of the ANA Act. The ANA Commission had power to determine the conditions of employment of temporary staff employed under s 18 and those of officers under s 17.
In 1954, the ANA Commission made Determination No. 1 under s 17 of the ANA Act. In 1965, the ANA Commission made Determination No. 2. It dealt with officers pursuant to s 17 and temporary and casual employees under s 18. Determination No. 2 included General Orders, Departmental Manuals and Instructions. One form of General Orders was the Personnel Manual, which had already been issued under Determination No. 1 but which was expanded.
It was made plain that applicable industrial awards and agreements prevailed. Part 1, Section 1-4 of the Personnel Manual provided:
4.Obligations under Industrial Awards and Agreements
Where the provisions of this Manual conflict with the provisions of any Industrial Award or Agreement affecting TAA staff, the provisions of the Industrial Award and Agreement shall, to the extent of the inconsistency, apply to these officers in lieu of the provisions of this Manual.
From 6 April 1970, the following arrangements were directed by the Personnel Manual with respect to superannuation:
1.INCIDENCE
The following are the instructions regarding superannuation applying to employees of Trans-Australia Airlines with the exception of Pilots and Air Hostesses.
2.SUPERANNUATION ACT OR MANUAL
Refer to Superannuation Act 1922/1965 or the Commonwealth of Australia Superannuation Manual for complete details.
3.QUALIFYING PERIOD
3.1Senior Staff
Those employees whose salaries are within the administrative salary ranges, the equivalent of, or above, will be eligible to apply to become contributors to the Superannuation Scheme after the completion of six months’ satisfactory service.
3.2Sales Representatives
Sales Representatives will be eligible to apply to become contributors after the completion of six months’ satisfactory service.
3.3Females
In special circumstances, females may be admitted as members of the superannuation scheme after two years’ service. Recommendations to have such employees included in the scheme should be submitted to the Staff Manager for consideration.
3.4Junior Trainees
Junior Trainees will be eligible to apply to become contributors after the completion of six months’ satisfactory service.
3.5Apprentices
Apprentices will be eligible to apply to become contributors upon the signing of the prescribed apprenticeship indentures.
3.6Other Juniors (Male)
Juniors other than those nominated in 3.4 and 3.5. of this Section will be eligible to apply to become contributors after two years’ satisfactory service.
3.7Other employees
All other employees not included in Sub-Section 3.1, 3.2, 3.3, 3.4, 3.5 and 3.6 of this Section will be eligible to apply to become contributors after the completion of two years’ satisfactory service.
4.RECOMMENDATIONS
Once an employee is eligible to apply to become a contributor with the approval of the Branch Manager or Departmental Head, a recommendation may then be compiled. This will be on Form P.D. 48 “Superannuation Recommendation” and must be completed in detail.
5.PROCEDURE
The completed Form P.D. 48, together with –
5.1Medical report
5.2Chest X-Ray
5.3Evidence of age
5.4Election – retiring age
will be forwarded by Personnel Officers to the Staff Manager for processing.
6.MINISTER’S APPROVAL
Upon receipt of the Minister’s approval by the Staff Manager, advice will be given of:–
6.1Approval
6.2Effective date.
The Personnel Officer will then arrange for superannuation contributions to commence.
As earlier indicated, from 1974 the Minister’s power of direction was delegated back to the Staff Officer.
These instructions applied at the time to the 1922 Act. In a memorandum to the Personnel Director on 19 May 1975, the then current practice was recorded as follows:
PRESENT SUPERANNUATION ACT 1922-1974.
The existing Superannuation Act (1922-1974) provides that every employee shall be required to contribute to the fund from the date on which he becomes an employee (which relates to permanent public servants), or, in the case of a person who is deemed to be an employee within the meaning of Section 4 of the Superannuation Act, the date as from which he is deemed to be.
TAA employees fit into the second category, i.e., deemed employees within the meaning of the act, and the authorisation for the Staff Manager of TAA to direct that persons employed by the Commission shall be deemed to be employees is attached (Appendix “A”).
An over-riding requirement is that an employee shall not contribute to the fund (either Superannuation or Provident) until such time as he has undergone a medical examination and satisfied the health and physical fitness standards.
…
SERVICE OF THE COMMISSION.
Under Australian National Airlines Determination No. 1 there is provision for permanency of employees under the conditions of Service of the Commission. Service of the Commission is available to officers provided such appointment is within approved Service of the Commission establishment and the officer has as minimum of six months service with the Commission. At the time of acceptance into service of the Commission an officer also became eligible for superannuation.
CURRENT PRACTICE.
Entry into Service of the Commission has not been carried out since the early 1960’s. Superannuation eligibility has been on the basis of prescribed minimum service: –
Administrative and Management staff - 6 months Clerical and wages staff - 2 years Apprentices - 3 months
and a recommendation as to satisfactory service and likely further employment of at least 7 years. As a general rule superannuation processing is some 12 months behind so that the average employee would be with TAA for 3 years prior to being invited to join the superannuation scheme.
It is likely that the deliberate practice of restricting entry for at least two years for ground staff continued under the 1976 Act because, from 6 May 1980, the following instruction also referred to a two-year qualifying period:
2.1. Employees who commenced or [sic] or after 1 January 1976 shall be entitled to become members of the TAA Ground Staff Superannuation Scheme after a period of not less than 2 years’ continuous service, but subject to the rules of the TAA Ground Staff Superannuation Scheme.
2.Provided that employees who commenced employment between 1 January 1976 and 30 June 1980 and were deemed eligible employees under the Superannuation Act 1976 by the Delegate for the Commissioner of Superannuation shall continue to contribute to the Commonwealth Superannuation Scheme unless they elect to transfer to the TAA Ground Staff Superannuation Scheme.
In my view, at least after 1 July 1976, any instruction of this kind operated as a possible fetter upon entry to CSS. It does not reflect the statutory conditions for access to an important employment benefit. In my view, it was not legitimate to superimpose some further administrative requirement of this kind and, to the extent relevant when I come to discuss the circumstances of the three applicants, I propose to ignore it.
The introduction of the 1976 Act created a financial problem for TAA, which came under increasing obligations to make provision for the employer funded part of the superannuation accounts of its employees. In a paper prepared for the ANA Commission by the General Manager of TAA in August 1976, the position prior to 1973, and from 1973 to 1976, was described. The ANA Commission had decided in 1946 to adopt the superannuation scheme under the 1922 Act for its ground staff. Under the CSF, employee contributions formed 2/7ths of retirement benefits and the employer liability was 5/7ths. In 1973, the fund Actuary determined a multiple of employee contributions necessary to meet this liability as 1.9 times the employee contributions. However, the General Manager’s paper recorded:
Part 1. The TAA ground staff superannuation scheme up to 1976.
a)Operation Prior to 1973. …
… TAA’s contributions were not invested but were used in the business, whilst employees’ contributions were paid to the Superannuation Fund for investment.
In 1973, two important changes were made, described by the General Manager as follows:
b)Operation from 1973–76. In 1973 there were two significant changes made
i)TAA was required to divest its employer’s fund and this fund was passed to the Commonwealth Trading Bank as Investment Manager. TAA continued all administrative work connected with the Fund.
ii)The Superannuation Act was amended to provide for annual updating of pensions whereby the employer’s share of the pension (5–7ths) was raised at the 1st July each year by a factor 1.4 times the percentage increase in the C.P.I. or once times the rise in Average Weekly earnings, whichever is less.
To meet this new liability, the Actuary determined that TAA should increase its contributions to 3.5 times employees’ contributions and make an annual payment of $1.5m until the past liability (then $15m) was extinguished. The Actuary’s advice has not been followed and we have continued to pay into our Fund 1.9 times the employees’ contributions.
The introduction of the CSS, with the 1976 Act, made things worse. The General Manager said:
Part 2. New Commonwealth Superannuation Scheme from 1st July, 1976:
…
TAA’s contributions have been estimated by the Actuary to be 20% of salaries, if annual updating is not to be provided for or 30% of salary to provide for updating, i.e. 6 times the employees’ contributions. So far TAA has decided to contribute the 20% only.
The General Manager provided a contrast with TAA’s direct competitor, Ansett:
Part 3. Comparative Cost with Ansett Airlines of Australia:
It is not possible to determine accurately the annual cost of the superannuation scheme applying to ground staff in Ansett Airlines of Australia. It is known that the AAA scheme consists of an employee contribution of 5% of salary for a lump sum benefit of 13⅓% of average final salary (last five years) for each year of service. Actuarial advice is that the employer’s contribution would approximate 6.5% of salaries of contributors.
Of the total ATI staff in all its different enterprises 61% are members of the company’s scheme. For Ansett Airlines of Australia this figure is reported to be 70% of eligible staff.
Using these figures and TAA’s average salary per airline employee, the cost to Ansett of maintaining a fund for 70% of its eligible ground staff and flight engineers of Ansett Airlines of Australia for the year 1976–77 is estimated to be no more than $4m.
By contrast, only 45% of TAA’s eligible employees are members of TAA’s ground staff Superannuation Fund, because entry to the scheme has been restricted on the grounds of cost. The new Commonwealth Scheme, by permitting employees to join at a cost of no more than 5% of salary and eliminating the medical requirement, will be considerably more attractive and should TAA allow a freer entry to the scheme, some 70% of staff would most likely join.
The cost of $4m for Ansett Airlines of Australia for 1976–77 should therefore be compared with a TAA cost as follows:–
a)With 45% of staff contributing –
TAA contributions without annual updating $5,496,361 TAA contributions with annual updating $9,744,540
b)If 70% of staff contribute –
TAA contributions without annual updating $8,550,000 TAA contributions with annual updating $15,080,000
This highlights the major area of concern whereby the cost of ground staff superannuation to Ansett Airlines of Australia, covering 70% of its staff, is less than the very minimum contribution TAA must make under the Commonwealth Superannuation Scheme to cover less than half its ground staff.
(Emphasis added.)
The passage I have emphasised is disturbing. It appears to suggest that under the 1922 Act, employees had been denied an opportunity to make provision for their retirement which was available to them under Commonwealth legislation. The conduct was deliberate and calculated. It was done to save money. It was done to the future prejudice of employees.
A number of possible alternatives were proposed to address the problem. None were adopted, but central to the thinking at the time was the desirability of creating a new scheme, similar to Ansett’s and no more expensive, and persuading existing employees to transfer to it. New employees would have no other choice.
That scheme was established in 1980 (becoming available in 1981). The present proceedings are based on the contention that each of the applicants would have, and should have, joined CSS (or CSF) and that they would not have transferred to the new scheme for ground staff (AAGSP), as transfer was optional for those already in CSS.
On 2 February 1976, the Australian Government Retirement Benefits Office (a predecessor of ComSuper) advised that contribution levels in CSF were to be frozen at levels applying at 4 February 1976 to facilitate the change from CSF to CSS. This probably had the effect that new contributors were not admitted from that date. At least, that was how TAA applied the instruction. Indeed, TAA not only stopped entry into CSF in February 1976 but, despite the fact that CSS opened on 1 July 1976, entry into CSS was not permitted until February 1977 when, as TAA advised the Minister in that month, it conceded to staff pressure.
TAA advised the Minister on 26 August 1976 that:
ŸThe Commission has restricted entry to the scheme because of its high cost and this is causing friction with staff.
In February 1977, when it became impossible to block entry completely, the Personnel Manager of TAA instructed Personnel Officers in each State as follows:
To assist in the administration of Superannuation, it has been necessary to set a ceiling on the number of employees who will be accepted into the Scheme this calendar year, and an allocation is being made to each branch.
The allocation for [blank] is * for 1977.
In some branches this ceiling will be difficult to control because of the applications currently held and not processed which, in your case, according to information provided is ** . However, it is important that your allocation is not exceeded.
A suggested procedure for processing applications is outlined below:
1.Initially concentrate on those persons who have more than 10 years of service whether they have completed applications or not. In your case there are *** employees in this category.
2.Interview each of those persons outlining the details of the new Scheme and obtain an election from them as to their decision on joining or otherwise.
3.Keep a register of those persons interviewed and their decision (yes/No.)
4.Follow a similar procedure for all other applications currently held. Do not follow up those persons who merely indicated an interest but have not completed any documentation.
5.It is important to maintain a balance between acceptances of those persons who have long service and those who have already submitted applications to join the Scheme.
6.Whilst maintaining this balance you should ensure your allocation is not exceeded. If it is exceeded you will have to delay processing of some of your applications.
I appreciate that it will be difficult to control the enquiries that will result as a consequence of the above, but it is important that your allocation not be exceeded.
(The symbols (*, ** and ***) referred to information in a schedule at the end of the letter setting out numbers for each State.)
The then total permitted allocation was 251. There were 201 applications already held. In New South Wales and South Australia the existing applications exceeded the permitted allocation by a considerable margin. It might be noted that, as a matter of priority, attention was to be given first to employees with more than 10 years’ service, whether they had completed an application or not. There were 608 such employees.
However the stated priorities are considered, it was inevitable that many who had applied would be further deferred and those who had not yet completed an application faced a potentially extended delay. Like the policy and practice under the 1922 Act, this conduct was deliberate, calculated, motivated by financial self-interest on the part of TAA and its officers and likely to prejudice, perhaps severely, the interests of employees.
Eventually, pressure on the Government led to the establishment of the AAGSP, an accumulation fund rather than a pension scheme. At the same time, entry to CSS was closed completely. In a Minute prepared for the ANA Commission meeting on 25 February 1980, the General Manager set out the proposal about transfer of existing contributors to CSS:
Transfer of Existing Ground Staff –
For cost reasons, Department of Finance would like to see as many ground staff as possible transfer to a new scheme and th [sic] could be achieved by offering an incentive. On the other hand, transfers should be made at least cost to the Commonwealth scheme thereby reducing its deficiency.
The proposal cannot have been a secret. The Federated Clerks Union of Australia (“the FCU”) sent a number of S20 forms completed by persons wanting to enter CSS directly to the Commissioner for Superannuation, but it was told TAA would need to provide the necessary certification about likely future employment. On 11 June 1980, the FCU made a direct approach to the Personnel Manager, submitting a schedule of applicants. The letter referred to a further 85 applications lodged directly with “Branch Personnel Departments”. The letter was endorsed with a note that on 13 June 1980, the Secretary of the FCU was advised “verbally” that the Minister had instructed that no further applications were to be accepted. The FCU sought written confirmation of the advice, but that was withheld.
Effective on 1 July 1980, Statutory Rule No. 181 of 1980 closed the CSS scheme to employees of TAA (i.e. to new contributors) by adding to the classes of persons prescribed for the purpose of s 11 of the 1976 Act not to be eligible employees. However, the new scheme did not begin immediately. Its introduction was delayed by disputation and negotiations with the unions and the Australian Council of Trade Unions (“the ACTU”). The course of those negotiations verified TAA’s practice at that time of imposing a minimum two-year qualifying period for entry into a superannuation scheme. The new scheme was approved by the Minister on 8 December 1980. It was based on the Ansett scheme. Apparently, some incentives and entry benefits were negotiated with the ACTU in return for some form of undertaking that there would be no subsequent challenge to refusal of entry into CSS. No document directly evidencing an agreement of this kind, or representations to this effect, was put into evidence.
In the present proceedings, a submission was made that the suggested agreement raised an estoppel against the present individual applicants. The submission is untenable. I shall refer to it again later.
One thing which is clear from the history I have recounted is that TAA embarked on a deliberate course of conduct, over a period of some years at least from 1973 to 1980, designed to obstruct, frustrate and prevent entry into superannuation schemes established under Commonwealth statutes for the benefit of employees. The motivation was financial advantage for TAA. The result for employees was a financial prejudice, or potential prejudice, for them.
I see no way to excuse what happened. However, a lack of excuse for exploitative (and perhaps even odious) conduct does not equate to legal causes of action for individuals even where, as here, they assert that the prejudice suffered by them was financially very substantial.
Before I address the circumstances of the applicants I must, therefore, mention the causes of action on which they proceed.
Causes of action
In the cases of Mr Innes and Mr Hunter (who were employed on 1 July 1974 and 28 July 1975 respectively) it was pleaded that they were permanent employees within the meaning of s 4 of the 1922 Act and s 3 of the 1976 Act. The effect of the contention is that they were entitled to join CSF without the need for certification of likely employment for at least seven years, and without delay.
I have held that they were not permanent employees in the sense suggested. I am satisfied that only persons “in the Service of the Commission” were permanent employees of TAA and therefore entitled to automatic admission (subject to medical examination). Mr Brewer, who commenced employment on 28 March 1977 also claimed to have been a permanent employee but, for the same reasons, I am satisfied that he was not.
I will deal more fully with the circumstances of each applicant in due course but it is convenient to say at this point that I am not satisfied that it is more probable than not that, if they had each made an application to join CSF before 30 June 1976, either Mr Innes or Mr Hunter would have been entitled to certification of likely employment for at least seven years.
I have passed completely over an important matter to get to this point. The important matter is the need, as temporary employees, to have made an application of some kind to be recognised as eligible to contribute. However, on the assumption that such an application would have been made, neither Mr Innes or Mr Hunter had a particular claim at the outset of their employment to recognition of the likelihood that they would still be employed by TAA seven years thereafter. As I said earlier, the assessment required related to the person in question, not to the position or the presumed need for somebody to occupy it. Such judgments are not made in a vacuum. Although I am unsympathetic to the adoption of rigid procedures by TAA, such as a minimum waiting period or the need for an invitation, especially when (as here) they were procedures applied in company with an inexcusable denial of a legitimate right of access to superannuation, nevertheless it cannot be gainsaid that judgments were required and that such judgments might fairly and appropriately be based on past service and conduct to that point, as well as an estimate about the likelihood of the employee in question continuing to remain for seven years. That is to say, it would have been legitimate for TAA to form and act on its assessment of the likely stability and longevity of the employment relationship and to withhold certification unless really satisfied it was likely to last the required length of time.
It is not possible to be confident that in 1974 or 1975 that is a judgment which should then have been made in favour of either Mr Innes or Mr Hunter.
There are other matters to consider, but those conclusions are sufficient to defeat any claim based on the failure of either of them to enter CSF.
Attention may, for the most part therefore, be concentrated on the question of entry to CSS after 1 July 1976. Mr Innes had more than 12 months’ service at that point, and Mr Hunter did also shortly thereafter.
It would be sufficient to support a claim for damages (subject to limitation period arguments and other such obstacles) if I were to find that either of them, or Mr Brewer, was wrongly denied entry at any time before CSS closed – i.e. up to 30 June 1980. Calculation of damages would be affected by the imputed date of entry, which it would be necessary to find, but the basic case for each of the applicants is that they should have been admitted to CSS, and would have been if TAA had not breached its legal obligations to them.
Each of the applicants pursues a claim based on negligent misrepresentation, and negligence generally. Mr Innes and Mr Brewer claim misleading and deceptive conduct under s 52 of the Trade Practices Act 1974 (Cth) (“the TP Act”), now s 18 of the Australian Consumer Law (“ACL”) which is Schedule 2 to the Competition and Consumer Act 2010 (Cth). Mr Innes and Mr Hunter pleaded unconscionable conduct which they claimed gave rise to an estoppel to the effect that the respondent could not benefit from its conduct and Mr Innes and Mr Hunter were entitled to be relieved of the consequences of any failure to act in their own interests. The legal foundation for this claim and its suggested practical consequence was not explained. No submission was addressed to it by the applicants. Mr Innes and Mr Hunter also have claims for breach of their contracts of employment. Mr Brewer has a claim for breach of statutory duty. It was not suggested that any multiplicity of claims would affect the calculation of damages.
A pleaded cause of action in deceit was not pressed.
Negligent misrepresentation
The applicants’ cases in negligent misrepresentation do not rely upon the giving of advice or information by someone whose business or profession it was to do so. Rather, the applicants say that information was given to them by various officers of TAA, which deflected them from pursuing the question of entry into Commonwealth superannuation, which advice should be sheeted home to TAA and which advice falls within the categories of advice or information which have been recognised by the High Court as being actionable in the way claimed.
There has been substantial debate in the High Court (and the Privy Council) about the existence and extent of a duty of care in circumstances where the giver of advice did not profess special skill or expertise. In L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225 (“Shaddock”), Gibbs CJ said (at 230):
… It is now settled by the decisions in Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. and Mutual Life & Citizens’ Assurance Co. Ltd. v. Evatt (High Court) and (in the Judicial Committee) that a person can be liable for financial loss resulting from a negligent mis-statement of fact or opinion, although the mis-statement was honestly made, and there was no fiduciary or contractual relationship between the parties. The question that is not settled by those authorities is what is the principle by which the courts are to determine whether a duty of care exists.
(Footnotes omitted.)
His Honour went on to refer to the judgment of Barwick CJ in Mutual Life & Citizens’ Assurance Co Ltd v Evatt (1968) 122 CLR 556 (“MLC”) and said (at 233-234):
I respectfully agree with the opinion of Barwick C.J. that there is no valid ground on which to distinguish between information and advice for the purposes of the rule in Hedley Byrne. Although the giving of advice must always necessarily require an exercise of skill or judgment, and the giving of information may not necessarily do so, a person giving information may be so placed that others can reasonably rely on his ability carefully to ascertain and impart the information. Other authorities support this view. … I can see no reason in principle why a person who, being possessed of special knowledge or means of knowledge, undertakes to impart information to another, and is aware that the other will act in reliance on the information, should be in a different position from a person who, being possessed of special skill, undertakes to advise another, knowing that the other will act on his advice. …
(Emphasis added.)
The requirement, in the cause of action, which I have emphasised presents particular challenges for each of the applicants’ cases. They bear the persuasive burden of showing that the person(s) they have identified as giving them advice had some appreciation that they would be deflected by the advice from making or pursuing enquiries about a right to superannuation. In the circumstances of the present cases, that is a heavy onus to discharge on the skimpy and one-sided picture available from the evidence.
The present cases are ones, as the respondent’s counsel submitted, where the observations of McLelland CJ in Eq. in Watson v Foxman (1995) 49 NSWLR 315 (at 318-319) are pertinent:
Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as “misleading”) within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court “must feel an actual persuasion of its occurrence or existence”. Such satisfaction is “not … attained or established independently of the nature and consequence of the fact or facts to be proved” including the “seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding”: Helton v Allen (1940) 63 CLR 691 at 712.
Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration. That is the position in the present case. There is no contemporaneous document in evidence which supports the making of any such promise or representation as is relied on and no other satisfactory corroboration. …
So it is in the present cases. There is no objective record and no other satisfactory corroboration. That does not spell the end of the applicants’ cases, but it makes it difficult.
In Briginshaw v Briginshaw (1938) 60 CLR 336 (“Briginshaw”) (Dixon J emphasised (at 361):
… when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality.
I will do the best I can with the material at hand, but there are important elements of each of the causes of action which are not easily established by “inexact proofs” (cf. Briginshaw at 362).
In Shaddock, Mason J (with whom Aickin J agreed) also referred to the judgment of Barwick CJ in MLC and said (at 250 and 251):
According to the Chief Justice, whenever a person gives information or advice to another upon a serious matter in circumstances where the speaker realizes, or ought to realize, that he is being trusted to give the best of his information or advice as a basis for action on the part of the other party and it is reasonable in the circumstances for the other party to act on that information or advice, the speaker comes under a duty to exercise reasonable care in the provision of the information or advice he chooses to give.
In this formulation there are several points to be noted. First, liability for negligent mis-statement is not confined to those who carry on, or profess to carry on, a profession, business or occupation involving the possession of skill and competence. The Chief Justice, like the minority in the Privy Council, was in disagreement with the majority in the Privy Council who drew a distinction between those who bring, or profess to bring, professional knowledge or skill into the preparation of their statements and those who do not do so and are not expected to do so, the latter being under no duty of care in relation to their statements.
…
… I prefer the wider view to that expressed by the majority of the Privy Council in the M.L.C. Case. I consider that this Court should now adopt Barwick C.J.’s statement of the conditions which give rise to a duty of care in the provision of advice or information. It will be noted that his Honour specifically equated the provision of information with the giving of advice, a conclusion which conformed to his Honour's view that liability is not confined to those who carry on a profession or business.
(Footnotes omitted.)
The issue in Shaddock was whether a local council was liable to a developer for incorrect information which seriously affected the value of a proposed investment, by way of purchase. The High Court unanimously concluded that (at 255):
… The measure of recoverable damages for negligent mis-statement is the amount of money necessary to restore the plaintiff to the position he was in before the statement, subject to the loss being foreseeable. …
This also provides some problems for the applicants’ cases, because it would be necessary to enquire about what the position would be if the statements had not been made. The applicants assert that they would have continued their efforts to enter Commonwealth superannuation but that is far from a sufficient foundation upon which to conclude that those efforts would have been successful. Indeed, rather more application to the task would have been required than the applicants demonstrated.
I will explain further my conclusion that each of the applicants failed, on their own evidence, to take the basic and most obvious step of making a formal or even focussed enquiry with their local Personnel Officer about a matter which was clearly, and obviously, in that domain. My earlier criticism of the policies and practices being adopted by TAA will not sustain an assumption in favour of the applicants that any enquiry would have been rebuffed, when no enquiry was attempted and no response was elicited.
In San Sebastian Pty Ltd v Minister Administering Environmental Planning & Assessment Act 1979 (1986) 162 CLR 340, the High Court considered a case where statements were made by a council in a planning scheme. Different considerations arose than in a case where a request was made for information. The majority said (at 353-354 and 354-355):
Since Hedley Byrne there has been a tendency, discernible in the judgments of the Court of Appeal in this case, to regard liability for negligent misstatement as standing apart from the general principles expressed in Donoghue v. Stevenson with respect to the duty of care. There is a special problem in defining the circumstances in which a duty of care arises in the context of statements. One facet of this problem is that it is more difficult to apply the standard of reasonable foreseeability to the consequences which flow from the making of a statement than it is to apply that standard to the consequences which flow from acts. This is because damage flows, not immediately from the defendant’s act in making the statement, but from the plaintiff’s reliance on the statement and his action or inaction which produces consequential loss. A second facet of the problem arises from the propensity of negligent statements to generate loss which is purely economic. The recovery of economic loss has traditionally excited an apprehension that it will give rise to indeterminate liability. And there is also an apprehension that the application of the standard of reasonable foreseeability may allow recovery of economic loss of such magnitude and in such circumstances as to provoke doubts about the justice of imposing liability for it on the defendant.
…
… The special complications which arise in connexion with the imposition of a duty of care on the author of a statement can only be unravelled in a variety of factual situations. Decisions such as Hedley Byrne, Mutual Life & Citizens’ Assurance Co. Ltd. v. Evatt and Shaddock & Associates Pty. Ltd. v. Parramatta City Council [No.1] are therefore to be seen as illustrations of the general duty of care in its application to particular instances of negligent misstatement.
(Footnotes omitted.)
The majority went on (at 356-357):
In Evatt and Shaddock the misstatement on which the plaintiff relied was made in response to a request — in the case of Evatt for information and advice, and in the case of Shaddock for information alone, although the distinction between information and advice is an unnecessary and often difficult one to draw: Evatt; Shaddock. But there is no convincing reason for confining the liability to instances of negligent misstatement made by way of response to a request by the plaintiff for information or advice. The existence of an antecedent request for information or advice certainly assists in demonstrating reliance, which is a cornerstone of liability for negligent misstatement. However, such a request is by no means essential, though it has been suggested that instances of liability for misstatement volunteered negligently will be “rare”: Evatt; Lambert v. Lewis. The maker of a statement may come under a duty to take care through a combination of circumstances or in various ways, in the absence of a request by the recipient. The author, though volunteering information or advice, may be known to possess, or profess to possess, skill and competence in the area which is the subject of the communication. He may warrant the correctness of what he says or assume responsibility for its correctness. He may invite the recipient to act on the basis of the information or advice, or intend to induce the recipient to act in a particular way. He may actually have an interest in the recipient so acting.
(Footnotes omitted.)
In the present cases, however, those considerations do not apply. The applicants’ evidence was that they asked for particular, and specific, information.
In Tepko Pty Ltd v Water Board (2001) 206 CLR 1, the High Court again considered a case where a request for information had been made of a statutory authority with particular responsibilities in relation to matters the subject of the request.
Gleeson CJ, Gummow and Hayne JJ referred to the statements by Barwick CJ in MLC in two particular respects. Their Honours said (at [47]-[48]):
47The statement of principle by Barwick CJ in Mutual Life & Citizens’ Assurance Co Ltd v Evatt regained vitality after the consideration in Shaddock of the reasoning of the majority in the Privy Council in the Evatt litigation. In his judgment, Barwick CJ referred to various features of the special relationship in which the law will import a duty of care in utterance by way of information or advice. They were restated by Brennan J in San Sebastian Pty Ltd v The Minister. Two of the points made by Barwick CJ are of immediate significance for this appeal. The first is the statement that:
“the speaker must realise or the circumstances be such that he ought to have realised that the recipient intends to act upon the information or advice in respect of his property or of himself in connection with some matter of business or serious consequence.”
The second is that:
“the circumstances must be such that it is reasonable in all the circumstances for the recipient to seek, or to accept, and to rely upon the utterance of the speaker. The nature of the subject matter, the occasion of the interchange, and the identity and relative position of the parties as regards knowledge actual or potential and relevant capacity to form or exercise judgment will all be included in the factors which will determine the reasonableness of the acceptance of, and of the reliance by the recipient upon, the words of the speaker.”
48The first statement emphasises the need for caution lest a duty of care be imposed upon a party who has no appreciation of, and could not be expected to appreciate, the implications of making an error. …
(Footnotes omitted.)
The statement at [48] poses yet another problem for the applicants. They have no way of establishing the requisite degree of knowledge or appreciation on the part of those persons whose statements they claim forestalled any further action on their part to pursue the question of entry into a Commonwealth superannuation scheme. I shall discuss the conversations and their circumstances. They do not yield conclusions of this sort.
The point may also be seen in the observations of Gleeson CJ, Gummow, Hayne and Heydon JJ in Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 (at [24]):
24… The negligent misstatement cases like Mutual Life & Citizens’ Assurance Co Ltd v Evatt and Shaddock & Associates Pty Ltd v Parramatta City Council [No 1] can be seen as cases in which a central plank in the plaintiff’s allegation that the defendant owed it a duty of care is the contention that the defendant knew that the plaintiff would rely on the accuracy of the information the defendant provided. …
(Footnotes omitted.)
I will return to address the causes of action in negligent misstatement further, by reference to the facts, after outlining the remaining causes of action.
Negligence generally
The applicants’ cases in negligence generally depend upon establishing a requisite duty of care on the part of TAA, through the persons relied upon as TAA’s agents. The case in negligence generally for each of the applicants is that he was relying on TAA to provide correct and timely information or advice about his eligibility for superannuation and that TAA owed him a duty of care to avoid causing foreseeable loss by failing to facilitate his entry into those superannuation arrangements.
Heerey J dealt with some similar issues in Mulcahy v Hydro-Electric Commission (1998) 85 FCR 170 (“Mulcahy”). Although the facts are different, there are a number of similarities with the present claims. The facts are conveniently disclosed in the headnote to the report as follows:
The applicants were former employees of the Hydro-Electric Commission (the Hydro). The Hydro maintained a Retirement Benefits Fund Scheme established by the Retirement Benefits Act 1970 (Tas) (the 1970 Act). Under the 1970 Act membership of the Fund was limited to persons employed in a permanent capacity. Casual or temporary employees were excluded. The 1970 Act was amended in 1974 so as to permit temporary employees under certain circumstances to become members of the Fund, and specific regulations were made in 1982 for responsible officers to give temporary employees written notification of eligibility to join the Fund. Amendments were made to the 1970 Act to protect from liability responsible officers who had failed to notify persons of their rights to elect to become contributors. During 1992 many currently employed temporary employees elected to become members of the Fund and to take advantage of generous provisions which permitted them to purchase periods of non-contributory service. Persons who had been previously employed on a temporary basis sought to obtain the benefit of these provisions by applying to the Retirement Benefit Funds Board under s 87 of the Retirement Benefits Act 1982 (Tas). The Board took the view that persons who were not currently employed as temporary employees were not entitled to the benefit of the provisions. None of the applicants were then currently employed by the Hydro.
The applicants made numerous claims against the Hydro for breach of statutory duty, breach of contract, negligence, breach of common law duties, misleading or deceptive conduct and unconscionable conduct. The loss claimed was the loss of opportunity to receive benefits upon termination of employment provided for by the 1982 legislation. In broad terms the claims were either that the applicants had been wrongly not treated as permanent employees or that they were temporary employees who had not been made aware of their rights to join the Fund. The Hydro claimed that no action was maintainable against it by reason of the 1982 amendments protecting responsible officers from liability, and raised limitation defences against the claims in tort, contract, breach of statutory duty, and under the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1990 (Tas). Fraud and mistake were relied upon in answer to the limitation defences.
The limitation argument which was really pressed, and to which the arguments about extension (if available) would be vital if it succeeded, was that each cause of action, if otherwise maintainable, would have occurred in 1995 when, on the counterfactual scenario relied on by the applicants, each would have been required to make an election about how to deal with CSS contributions, when they were required to transfer wholly to QSP.
The starting point for consideration of this argument is the judgment of the High Court in The Commonwealth of Australia v Cornwell (2007) 229 CLR 519 (“Cornwell”). In that case the plaintiff was negligently advised that he was not eligible to join CSF in 1965. He later joined CSS. When he retired his benefits from CSS were less than if he had joined CSF when eligible to do so. The majority judgment in the High Court held that the cause of action arose only on retirement, and not earlier. Passages where that appears are (at [18]-[19] and [37]):
18Here, the economic loss which the respondent sustained was alleged to be the lesser benefit which he obtained on his retirement, this being worth less than it would have been had he not relied upon the negligent advice given to him in 1965. But to speak simply of a “retirement benefit” and its value is to obscure the nature of the economic loss involved. This does not turn upon proprietary or other rights or obligations created and governed by the general law, such as the indemnity granted by the respondent in Wardley, or the continuing financial obligations undertaken by the lessees in Murphy v Overton Investments Pty Ltd. What the respondent stood to enjoy upon “retirement” was an “entitlement” conferred by federal statute law. This “entitlement” was his “interest” in the sense used in the above passage from Wardley.
19The significance attached to retirement on grounds of health, by retrenchment, for cause, upon death and for other reasons depended upon the terms of the particular legislation. What was only in prospect until the falling in of one or more of various contingencies, matured into actual loss only at the end of the respondent’s service and upon the falling in of one or more of the statutory contingencies which had to be met for the respondent to be entitled to a statutory benefit. Hence the submission by the respondent that it was only upon his retirement that the relevant statutory contingency fell in upon which the respondent became entitled to a benefit which was limited or diminished and his cause of action first accrued.
(Footnote omitted.)
and:
37Even if the respondent had joined the 1922 Fund in 1965, his pension entitlements thereunder would prior to the commencement of the 1976 Act still have been contingent upon meeting the statutory criteria set out earlier in these reasons. The respondent could have been assured that the amount of his actual contributions paid under the 1922 Act were secured to him by s 51(1) were he to resign or to be dismissed or discharged for any cause. But, beyond that, his entitlements were prospective and contingent upon the falling in at a future time of the statutory criteria. The same was true of the respondent’s position under the 1976 Act after 24 March 1987 and before his retirement seven years later, subject to the qualification that the amount of his actual contributions would no longer have been paid to him unless the conditions of s 80 were met.
(Footnote omitted.)
The respondent, however, relies on a case where Cornwell arose for consideration in the ACT Supreme Court and was distinguished: Innes v Commonwealth [2015] ACTCA 33 (“Innes”).
In Innes, the plaintiff claimed an entitlement to join CSF also, from which fund he would automatically have been transferred to CSS. In 1993, when he was 45 years old, the plaintiff accepted a voluntary redundancy. He claimed that he would, if a member of CSS at the time, have elected to defer payment of benefits under s 137 of the 1976 Act, have remained in the workforce until 60 years of age (2007) and only then would he have taken the CSS benefits to which he claimed he should have been entitled. He argued that his cause of action therefore arose in 2007 and not in 1993.
The Court of Appeal disagreed. Murrell CJ and Katzmann J (with whose reasons Penfold J also agreed) said (at [55]):
55.The critical difference between Cornwell and the present case is that, as at the dates the Commonwealth contended the limitation period began to run, Mr Cornwell was not entitled to receive anything. Accordingly, he had suffered no ascertainable loss. In Cornwell the date when actual loss occurred was when Mr Cornwell became entitled to a statutory benefit. The first point in time when he became entitled to any statutory benefit was upon his retirement. That was because the statutory source of Mr Cornwell’s entitlement was s 55 of the 1976 Act which related to “standard age retirement pension[s]”. In contrast, the statutory source of Mr Innes’s entitlement was (relevantly) s 59 of the Act which provided for early retirement benefits. The statutory criteria or conditions (the contingencies) for an entitlement to arise in each case are different. While Mr Cornwell had to achieve the statutory retirement age before he was entitled to receive anything, Mr Innes was entitled to receive a superannuation benefit when he was deemed to have retired involuntarily from the Commonwealth public service. That he would have chosen to defer payment or receipt is beside the point.
(Emphasis in original.)
and:
60.In summary, Mr Innes first suffered actual loss and damage when the statutory contingencies aligned so that, if he had been a CSS member, he would have been entitled to a (i.e. any) statutory benefit (Cornwell at [19]). Contrary to Mr Innes’s submission, the use of the indefinite article in Cornwell was no accident. Indeed, it is consistent with the position in Wardley. It is at the point at which actual damage is ascertainable that the cause of action will accrue, even if the loss would be greater at a later time. In this case actual damage is ascertainable as at 5 April 1993 because on that date Mr Innes would have had an entitlement to choose from certain options and, on the counterfactual, would have become entitled to superannuation benefits in accordance with s 59. His loss was the loss of the involuntary redundancy benefits which he would have received had he been a member of the CSS. It was not a negligible or minimal loss. The fact, assumed for present purposes, that Mr Innes, having chosen the benefits available under s 59, would have elected to defer payment of those benefits does not mean that his loss was only hypothetical or prospective. He had an entitlement. What he chose to do with it, including when he chose to be paid, is another matter. On 5 April 1993 all relevant statutory contingencies “fell in” and the cause of action was complete.
(Emphasis in original.)
In the present case, the respondent argued that in 1995 it was necessary for TAA employees, who remained members of CSS, to make a choice about their CSS entitlements. As a result, any loss occurred at that time, as in Innes.
On the evidence in the present case the choices in 1995 were:
(a)a Delayed Updated Pension (DUP) and become a member of Division 4 of the QSP;
(b)a Deferred Withdrawal Benefit (DWB) and become a member of Division 4 of the QSP; or
(c)an Immediate Withdrawal Benefit (IWB) and become a member of Division 3A of the QSP.
If no election was made then an IWB was payable under (c).
Those arrangements were implemented by the Superannuation (Former Eligible Employees) Regulations (Amendment) (Cth), Statutory Rules Nos. 262 of 1993 and 236 of 1995. SR 1993/262 inserted Schedule 11 into the 1976 Act, which provided for the DUP. Regulation 15 in SR 1993/262 then implemented Schedule 11, in stated circumstances. Regulation 15 was superseded by SR 1995/236 Regulation 15B. Regulation 15B provided:
Application of Act to eligible employees affected by Qantas sale
15B. (1) In this regulation:
‘Qantas’ means Qantas Airways Limited or a company that is a subsidiary of that company;
‘relevant day’ means the day on which the Commonwealth ceases to have a controlling interest in Qantas;
‘the Act’ means the Superannuation Act 1976.
(2)The Act is modified in accordance with Schedule 11 in its application to each person to whom this subregulation applies.
(3)Subject to subregulation (4), subregulation (2) applies to a person who:
(a)was employed by Qantas immediately before the relevant day; and
(b)was an eligible employee immediately before the relevant day; and
(c)ceased to be an eligible employee because the Commonwealth ceased to have a controlling interest in Qantas.
(4)Subregulation (2) does not apply to a person:
(a)who has made an election under section 137; and
(b)unless the person has requested, before the end of 21 days after section 126A of the Act begins to apply to the person, that subregulation (2) be applied to the person by the Commissioner.
(5)If a person makes a request under paragraph 4 (b) before the relevant day, subregulation (2) is taken to begin to apply to the person on the day after the person ceases to be an eligible employee.
(6)The Act is modified in accordance with Schedule 13 in its application to each person to whom this subregulation applies.
(7)Subregulation (6) applies to a person who:
(a)was employed by Qantas immediately before the relevant day; and
(b)was an eligible employee immediately before the relevant day; and
(c)ceased to be an eligible employee because the Commonwealth ceased to have a controlling interest in Qantas.
Section 137 of the 1976 Act permitted a person who ceased to be an eligible employee to elect to preserve benefits under Division 3 of Part IX. This would correspond to a DUP under option (a) referred to above.
It appears from reg 15B(4)(b) that a DUP (i.e. Sch 11 as implemented by reg 15(2)), would only apply to those who made that particular election. Otherwise, if no election had been made under s 137 of the 1976 Act, the provisions of s 80 of the 1976 Act would come into operation upon a Qantas employee ceasing to be an eligible employee under the 1976 Act.
The various changes to the statutory arrangements for employees of TAA, after CSS was closed to them as new contributing members, were fully explored in supplementary submissions filed by the respondent.
Based upon its own analysis of the statutory regime the respondent first submitted that the loss (if any) of each of the applicants necessarily crystallised as and from 30 July 1995 (noting the 21 day limit from this date, for an election or request to be made), when the Commonwealth would have become liable to pay (even if at some time in the future in some of the possible circumstances) a benefit arising from contributions to CSS. The respondent also submitted that, in any event, “all the statutory contingencies fell in” with regard to a benefit under s 80 of the 1976 Act at that time. As in Innes (see also Henry v Commonwealth of Australia [2012] ACTSC 94; (2012) 264 FLR 381), the respondent submitted, an election to defer benefits did not affect the position.
Other arguments were advanced, based on the speculative possibility that a DWB may have been selected, and it would have been open for the applicants to leave their employment at the age of 55. On this reasoning, each of the applicants was also said to be statute barred (Mr Hunter by two days). I find this additional part of the argument unconvincing. It depends on speculative assumptions. The task at hand does not involve identifying one speculative possibility which might defeat the claims.
The first argument (based on crystallisation of a definite Commonwealth obligation of some kind), in my view, does not lead to any different outcome from the second (based specifically on s 80 of the 1976 Act) in the present case because, at the heart of the examination required is the need to identify accrued loss. That question cannot be answered in a vacuum, or by identifying a crystallised obligation to make some payment, unless it can be concluded that the payment could have exceeded the outcome in the real world, so that not only an entitlement, but also a loss, crystallised at that time. It is sufficient, therefore, to concentrate on the possibility of an entitlement arising under s 80 of the 1976 Act on 30 July 1995.
Section 80 provided that when a person ceased to be an eligible employee (otherwise than by death) and was not entitled to another benefit (e.g. a retirement benefit) the person would be entitled to a lump sum benefit equal to accumulated contributions – i.e. basic contributions and supplementary contributions together with interest at the fund earning rate (see s 3 of the 1976 Act).
The respondent argued, therefore, that all the statutory contingencies fell in, at least at this point – i.e. a potential loss crystallised. To this point in the analysis, I accept the force of that argument.
I would be bound to follow the authority of Innes. Special leave to appeal was sought from the High Court but was refused. In 1995, on the counterfactual scenario upon which each of the applicants rely, an occasion would arise to direct what should happen to existing accounts in CSS. One option was to reclaim the balance of the account. That was a default position if no other election for a DUP or a DWB was taken up. If a loss would have crystallised at that point then, on the authority of Innes, the cause of action arose then.
However, the respondent’s argument depends on the occurrence of a loss being demonstrated on this scenario. As I shall discuss shortly, I am not satisfied that if s 80 applied in 1995, return of contributions would crystallise a loss in the sense that the value of those contributions would be assessed to be higher than the value of moneys which had not, over the same period, been paid as contributions. On the actuarial evidence, which I will discuss next, there would only have been a loss in the event that the DUP or DWB option was selected and that loss would have accrued later. Innes is therefore distinguishable on its facts and does not require the enforcement of the limitation period.
In the end, therefore, the limitation defences would not have succeeded.
Assessment of damages
On the findings I have made, no occasion arises to assess damages. However, I shall indicate the view I reached on a number of issues which were debated in the proceedings which, I hope, would have permitted the necessary calculations to be made if it were necessary.
Two actuaries, David Heath of Cumpston Serjeant Pty Ltd and Tim Furlan of Russell Investments, gave expert evidence in the proceedings. I found their evidence to be most helpful. They co-operated in the preparation of a joint report after their own reports were filed and worked diligently to identify and narrow issues of disagreement. They provided additional calculations at my request. They gave their evidence concurrently and co-operatively. Their evidence was an example of the benefits of the practice often adopted in this Court of taking such evidence concurrently.
The calculations the experts were required to make were complicated by the varying possibilities which arose from the suggested scenarios raised by the contesting parties.
The applicants’ cases were that they would have taken up contributory membership of CSS (or CSF) at the first opportunity. Thereafter, in 1981 they would not have transferred to AAGSP. In 1995, they would have entered Division 4 of QSP and elected a DUP in CSS. Their benefits on retirement would have been taken from those two sources.
The respondent, on the other hand, submitted that I should find that each of the applicants would, if a contributing member of CSS, have transferred to the AAGSP accumulation fund in 1981 or, alternatively, in 1987. In addition, the respondent argued that each applicant had failed to mitigate his claimed loss, and had contributed to any such loss, by failing to take up the opportunity of membership in AAGSP in 1981, each being eligible to do so with three years’ backdated membership.
The actuaries accepted that all those variables were not matters for their own opinion and, in any event, were not able to produce useful final calculations taking into account all such matters.
When AAGSP was established, it was open to members of CSS to transfer to it under a number of alternatives, including taking an immediate withdrawal benefit (IWB) from CSS (accumulated and any supplementary contributions – i.e. with the CSS vesting rate applied) and joining AAGSP as a non-contributor or transferring basic contributions in CSS to AAGSP (with recognition of prior membership) and receiving a refund of accumulated supplementary contributions. These offers remained open until 31 May 1984.
In 1988, after the introduction of occupational superannuation throughout Australia, the offer was re-opened in an improved form. In a circular to members of CSS on 27 October 1988, the following points were made:
The options available to you now are:
(A)Remain in the CSS.
(B)Receive a refund or roll-over to an Approved Deposit Fund or Deferred Annuity Fund your accumulated contributions and supplementary contributions (if any) and join the AAGSP as a new contributor.
(C)Elect to take a deferred benefit in the CSS.
(D)Have your accumulated basic contributions transferred from the CSS into the AAGSP and receive recognition of your previous membership, together with a refund or roll-over of any accumulated supplementary contributions.
…
You should note the following points in particular:
(i)The AAGSP benefits incorporate “3% productivity” improvements backdated to 1 July 1981 for retirement, death and permanent disablement.
(ii)The resignation benefits under the AAGSP are considerably better than under the CSS applying this full “3% productivity” from 1 January 1987.
(iii)The AAGSP benefits are in lump sum form.
(iv)The AAGSP provides benefits in all the circumstances in which you would have received a benefit under the CSS.
(v)Lump sums are taxed at concessional rates.
(vi)The Airline currently contributes more than twice the amount you would contribute to the AAGSP.
Recipients were urged to respond by 31 January 1989 “at the very latest”. The option was to close on 31 October 1989, but was then extended to 30 April 1990.
Thus, there were two periods in which members of CSS were able, and encouraged, to give up their membership of CSS in favour of AAGSP – up to 31 May 1984 and from October 1988 to 30 April 1990.
If I accept any of the respondent’s arguments, therefore, it also becomes necessary to assign a date of effect to the imputed choice or action. That will necessarily be somewhat arbitrary.
Each of the applicants gave evidence that, at the time of the introduction of AAGSP, it was a “hot topic” of conversation as to which of CSS and AAGSP offered better benefits. The actuaries assessed CSS as ultimately more beneficial, although they observed that the added benefits may be more readily appreciated now than then. The respondent’s submission was also based on the premise that calculations based on AAGSP, as an alternative to QSP/CSS, would be less favourable to the applicants.
In my view, if damages were being assessed, some attempt would need to be made to discount, as a contingency, for any possibility of a transfer to AAGSP, whether in 1981-1984 or 1988-1990.
Figures were available from reports of the Australian Government Actuary about the outcomes of the two transfer offers. Those figures showed the acceptance rate at 30 June 1981 and 30 June 1990. That makes those two dates attractive ones at which to assess those possibilities. As at 30 June 1981, around 35% of then existing TAA members in CSS had transferred to AAGSP, but I have no information about the characteristics of the transferees or those who remained, or what their choices may have been based on. As at 30 June 1990, a little over 20% of those then affected transferred also.
In the case of the present applicants I propose to consider only the possibility of a transfer at the outset and to assume that any choice would be effective at 30 June 1981.
Mr Innes was in a relationship with dependents. I think the chance that he might have transferred to AAGSP was somewhat less than Mr Hunter and Mr Brewer, who were single with no dependents. If I was required to assess damages, and I had accepted the applicants’ suggested scenario of continuation in CSS by each of the applicants, I would nevertheless assess the chance of Mr Innes transferring to AAGSP on 30 June 1981 at 20%, and Mr Hunter and Mr Brewer each at 35%, to reflect the general picture at the time.
However, I think there is considerable force in the respondent’s argument that each of the applicants came under an active obligation to take appropriate steps to mitigate their loss and that, to the extent that they did not do so, they themselves contributed to any loss that might be assessed.
Each of the applicants professed an active desire to take up superannuation at the earliest opportunity. However, they did not do so, to the level they claimed to desire, when the opportunity was given to them to contribute at the same rate as applied to CSS. I do not regard their resort to life insurance (or assurance) policies or less expensive and tax attractive private superannuation to be an answer to the respondent’s argument.
Accordingly, if I was required to assess damages I would find that each of the applicants failed to mitigate their own loss, and had contributed to that loss, by not entering AAGSP as contributors as at 30 June 1981. Any damages should be reduced accordingly although credit should be allowed for any private superannuation policies (not simply life insurance (or assurance) policies) taken out before 1995. Mr Hunter should have credit for his entry into the contributory part of AAGSP in 1986.
The next major issue, which was not resolved by the actuaries themselves, was what rate of growth should be used to calculate a present day value to the applicants representing the contributions they were not required to make to CSS (or CSF).
Mr Heath suggested building society rates. For a time I was attracted to this possibility as it seemed to represent a convenient and practical proxy for small, regular amounts of disposable income in an accumulating balance which would grow over time, unlike other suggested alternatives such as the purchase of shares, government bonds or real estate. However, Mr Heath acknowledged that it would be more appropriate if possible to find a proxy in the “superannuation environment” if that reflected something which was available to the applicants.
That last requirement caused him to disagree with Mr Furlan’s preferred proxy. Mr Furlan preferred to use the vesting rates in CSS and then QSP as a proxy. That approach held the attraction for him of not distorting the calculations by introducing unnecessary variations to different parts of the calculations so that the final measure related as closely as possible to the issue being evaluated. For a time I shared Mr Heath’s opposition to this approach, because CSS and QSP vesting rates were the very things not available to the applicants. However, I have become persuaded that Mr Furlan was only trying to isolate, concentrate on and measure the things which the alleged wrongful conduct had really caused to be lost – the value at final retirement of defined benefits supported by an employer contribution.
During the course of the evidence, Mr Furlan was able to produce a report showing that over the whole of the relevant period vesting rates in private superannuation generally in Australia had grown by a little more than the rates in CSS/QSP. Use of those rates as a proxy would be slightly less advantageous to the applicants than building society rates, because they would result in a larger present day value for unpaid contributions to be offset against any calculations of loss.
Use of building society rates would be more advantageous to the applicants, but I have become convinced (as the actuaries agreed) that it would be better to use rates from the superannuation environment if they are available. The rate selected is a proxy. I am satisfied, on the evidence in the present case, that the CSS/QSP rates suggested by Mr Furlan are a suitable proxy, as reasonably representative of rates of return available in the superannuation environment at the time. They have the advantage of avoiding the introduction of unnecessary distortions in the calculations.
One consequence of this conclusion is that no loss can be seen as having occurred in 1995, whatever view is taken of the respondent’s arguments about mitigation and contributory negligence. That is to say, no cause of action accrued then because no loss (in a relative sense) would have been occasioned by a return of contributions under s 80 of the 1976 Act, in default of an election for DUP. The statutory contingencies on retirement would not, at that time, have fallen in to produce a loss or damage occasioned by wrongful conduct. The proceedings would, therefore, not be statute barred.
The next issue, applying to all the applicants, is whether any adjustment should be made for a possibility that each, or any, applicant would have elected, or defaulted to, an IWB in 1995, rather than DUP or DWB which were broadly equivalent. 94% of transferees chose the DUP. I am satisfied none of the applicants would have chosen, or defaulted to, an IWB. No adjustment is appropriate.
A number of matters concerning rates of salaries or shift allowances to be used in particular calculations were agreed between Mr Heath and Mr Furlan. I would not disturb that agreed approach in those cases. One matter not agreed was related to Mr Brewer’s salary between 1 July 1993 to 30 June 1995 when the records held by QSP differ from Mr Brewer’s group certificates issued by Qantas. I agree with Mr Heath that the QSP spreadsheet (which contained an unvarying amount over two years) seems less likely to be reliable than other records. In the absence of agreement between the experts I would have directed that Mr Heath’s assumptions be used for the particular two year period – “annual salary plus 30%”.
There was one further area of non-agreement, which concerned the application of growth or interest rates to amounts either actually paid to the applicants or alternatively retained within the superannuation environment. This concerns what actually happened, but the calculation is necessary to get a present day value.
Mr Furlan valued amounts paid, or available even if not taken out, by using Federal Court rates of interest. Mr Heath used those rates for amounts paid out, but used superannuation crediting rates for amounts retained within the superannuation environment, whether in fact or hypothetically.
I confess I do not understand why the rates for the superannuation environment (e.g. CSS/QSP rates) do not appropriately apply to all such matters, as they would to amounts of unpaid contributions if an assessment of damages was necessary. In the absence of agreement about that issue I would have directed the use of Mr Heath’s approach.
The parties agreed that it was not necessary for the calculations to be “grossed up” for tax, but that leave to apply should be granted in that respect if tax was levied on a judgment amount.
I have not attempted to calculate, or estimate, the outcome of the indicative rulings I have made in relation to those issues. On my primary findings, damages do not need to be assessed. If that had been required I would have asked the parties to have the calculations made, as they agreed would be the most efficient approach in such a circumstance, and granted leave to apply in the event of any difficulty.
Concluding remarks
I am most grateful to counsel, and to those instructing and assisting them, for their contribution to the proceedings, both in writing and orally. I found that contribution to be comprehensive and of high quality. It has certainly made my task less challenging than would have been the case without it.
Orders
To give effect to the conclusions earlier expressed, the appropriate order in each of the proceedings is that the application be dismissed with costs.
I certify that the preceding three hundred and six (306) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. Associate:
Dated: 17 February 2016
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