GLEESON CJ, GUMMOW, KIRBY, HAYNE, CALLINAN, HEYDON AND CRENNAN JJ
COMMONWEALTH OF AUSTRALIA APPELLANT
AND
JOHN GRIFFITH CORNWELL RESPONDENT
Commonwealth of Australia v Cornwell [2007] HCA 16 20 April 2007 C10/2006
ORDER
Appeal dismissed with costs.
On appeal from the Supreme Court of the Australian Capital Territory
Representation
S P Estcourt QC with K L Bennett for the appellant (instructed by Australian Government Solicitor)
B W Walker SC with R J Davis and J R C Gordon for the respondent (instructed by Snedden Hall and Gallop)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Commonwealth of Australia v Cornwell
Limitation of actions – Negligence – Meaning of "first accrues" in s 11(1) of the Limitation Act 1985 (ACT) – The respondent was negligently advised in 1965 that he was ineligible for acceptance as a member of the fund established pursuant to the Superannuation Act 1922 (Cth) – The respondent did not institute proceedings against the appellant until 1999 – Whether the respondent's cause of action first accrued upon his retirement in 1994, or at some earlier time – Whether the respondent's cause of action was statute-barred.
Limitation of actions – Concealed fraud – Whether a consideration of s 33 of the Limitation Act 1985 (ACT) is required to resolve the respondent's case.
Negligence – Cause of action – Whether the respondent's cause of action accrued upon his retirement in 1994, or at some earlier time.
Negligence – Damage – Economic loss – Contingent loss – Superannuation entitlements – Statutory contingencies – Whether the respondent suffered damage when his superannuation entitlements accrued upon his retirement in 1994, or at some earlier time.
Superannuation – Defined benefits schemes – Statutory contingencies for the accrual of entitlements – Whether the respondent suffered any damage until the statutory contingencies contained in the Superannuation Act 1990 (Cth) were enlivened upon his retirement in 1994.
Superannuation – Membership – Transition between fund established pursuant to the Superannuation Act 1922 (Cth) and that established pursuant to the Superannuation Act 1976 (Cth) – Whether the respondent suffered loss in 1987 when he joined the fund established pursuant to the 1976 Act – Whether the respondent suffered loss when the 1976 Act commenced.
Words and phrases – "damage", "deliberately concealed", "entitlement", "first accrues".
GLEESON CJ, GUMMOW, KIRBY, HAYNE, HEYDON AND CRENNAN JJ.
The limitation statute
This appeal turns upon the operation of s 11 of the Limitation Act 1985 (ACT) ("the Limitation Act"). Section 11 is in a familiar form, deriving from s 3 of the Statute of Limitations 1623 (Eng) ("the 1623 Act")[1]. It states:
"(1) Subject to subsection (2), an action on any cause of action…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Commonwealth v Cornwell [2007] HCA 16
Case
[2007] HCA 16
Decision Date
CaseChat Overview and Summary
The Commonwealth of Australia appealed to the High Court of Australia against a decision concerning the respondent, Mr Cornwell, and his superannuation entitlements. Mr Cornwell had commenced employment with the Commonwealth in 1962 and, in 1965, was negligently advised by his superior that he was ineligible to join the superannuation fund established under the *Superannuation Act 1922* (Cth). He did not commence proceedings against the Commonwealth until 1999, alleging that this negligent advice caused him to receive a lesser superannuation benefit upon his retirement in 1994. The central dispute revolved around when Mr Cornwell's cause of action for negligence first accrued for the purposes of the *Limitation Act 1985* (ACT).
The High Court was required to determine whether Mr Cornwell's cause of action for negligence accrued at the time he received the negligent advice in 1965, or at a later date, such as upon his retirement in 1994, or when he joined a new superannuation fund in 1987. This determination was critical to establishing whether his claim was statute-barred under the relevant limitation legislation. The court also considered whether the concept of concealed fraud under section 33 of the *Limitation Act 1985* (ACT) was relevant to the resolution of the case.
A majority of the High Court held that Mr Cornwell's cause of action did not accrue in 1965, nor was it necessarily and irretrievably sustained when the *Superannuation Act 1976* (Cth) commenced. The court reasoned that prior to his retirement, Mr Cornwell's superannuation entitlements were prospective and contingent upon the satisfaction of statutory criteria. Therefore, he did not suffer damage in the legal sense until these contingencies were met upon his retirement in 1994. Consequently, his claim, commenced in 1999, was not statute-barred.
The appeal was dismissed with costs, with a majority of the court finding in favour of Mr Cornwell. Callinan J dissented.
Orders
Orders of the court
Appeal dismissed with costs (majority decision, Callinan J dissenting)
Background
Background to the litigation
Something more should be said respecting the nature of the respondent's action and of the facts.The facts On 7 May 1962, the respondent commenced employment by the Commonwealth as the only spray painter in the Transport Section of what was then the Department of the Interior ("the Department") at the bus depot at Kingston in the Territory. Although classified as a temporary employee, the respondent was employed full time. On 24 March 1987, the respondent's position was reclassified as a permanent public service position[14]. On that date, the respondent became a member of the Commonwealth Superannuation Fund ("the 1976 Fund") established by the Superannuation Act 1976 (Cth) ("the 1976 Act"). In 1994, the respondent's employment was transferred from the Commonwealth to that of the Territory but he remained within the Commonwealth superannuation system. Thereafter, the respondent chose to transfer to the scheme ("the 1990 Fund") which was established under the Superannuation Act 1990 (Cth) ("the 1990 Act"). The respondent retired on 31 December 1994 and was paid superannuation benefits referable to his combined membership of the 1976 Fund and the 1990 Fund.[14]Foreman Panel Beater, Grade 3. The respondent's contention, accepted by the primary judge, was that, although he had been classified as a "temporary employee", at a date earlier than 24 March 1987 he had been eligible for acceptance as a member of the fund ("the 1922 Fund") established by the Superannuation Act 1922 (Cth) ("the 1922 Act"), but that he had been dissuaded by misleading advice from applying. This had been proffered negligently to the respondent by his superior officer, Mr Nelson Simpson, at a meeting during July 1965 and he had reasonably relied upon that advice[15]. At the time, the respondent had recently married and was concerned to obtain security for his future. He had completed three years service on 7 May 1965. Mr Simpson was then Manager of the Transport Section of the Department. The respondent, whose evidence was accepted, had asked Mr Simpson:"I would like to know about the superannuation situation. I can't understand why we are not entitled to it."Mr Simpson had responded:"That's right. You're not entitled because you are an industrial and temporary employee, but I will see what I can do."However, Mr Simpson had not subsequently informed the respondent of any further developments.[15]See Tepko Pty Ltd v Water Board (2001) 206 CLR 1 at 16‑17 [47]-[48], 22‑24 [73]-[78]. The respondent pleaded that the Commonwealth was vicariously liable for the advice given to him by Mr Simpson and that, in reliance upon that advice, he had "lost the opportunity of joining the Commonwealth Superannuation Fund on and from 8 May 1965 and in consequence upon his retirement on 31 December 1994 received a lesser benefit than that which he would have received had he been admitted to the Fund on and from 8 May 1965". The Commonwealth Superannuation Fund there referred to was the 1922 Fund.
The second matter concerns the operation of the provision in s 51(xxxi) of the Constitution respecting "the acquisition of property on just terms". The respondent disavowed any reliance upon s 51(xxxi). His case is not that he was deprived by a federal law of rights with the constitutional character of property. The respondent complains that he acted upon advice, negligently given, that membership of the 1922 Fund was shut to him, with the result that what he eventually (after 1987) acquired was less valuable than would otherwise have been the case. Accordingly, it is unnecessary to enter here upon any questions respecting the operation of the mandate of just terms where any prejudicial alterations are made to the rights of subsisting members of federal statutory superannuation and pension schemes[27].[27]cf Theophanous v The Commonwealth (2006) 225 CLR 101.Conclusions respecting accrual of the cause of action The submission upon which the appellant placed great weight, that respecting the significance for the respondent's position of the commencement of the 1976 Act, should not be accepted. It is true that thereafter it was no longer open to the respondent to make up for his years of service since 1965 by paying more for units under the 1922 Fund arrangements so as to have his actual years of service count towards his "period of contributory service" for the purposes of the calculation of benefits under the 1976 Act. But his loss had not then been necessarily and irretrievably sustained, as the appellant would have it. Nor should the appellant's secondary contention in the grounds of appeal be accepted. This is that, until 24 March 1987 when he joined the 1976 Fund, the respondent "continued to accumulate loss and damage" but this then crystallised and the limitation period had closed on 23 March 1993. Even 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[28].[28]Section 51 of the 1922 Act was amended so as not to apply to persons who resigned, or were dismissed or discharged on or after 1 July 1976: 1976 Amendment Act, s 32. Provision was made in s 177 of the 1976 Act for amounts in the 1922 Fund to be paid to existing contributors, or to be deemed to be an amount of supplementary contributions paid by that person under the 1976 Act.
Ratio Decidendi
Legal Principle Established
Established by:
GLEESON CJ, GUMMOW, KIRBY, HAYNE, HEYDON AND CRENNAN JJ,
CALLINAN J