Ealwin Pty Ltd v Master Builders Association of NSW
[2020] VCC 561
•21 April 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-19-01429
| EALWIN PTY LTD (ACN 089 846 604) and BLUE HELMET PTY LTD (ACN 107 033 509) | First Plaintiff Second Plaintiff |
| v | |
| MASTER BUILDERS ASSOCIATION OF NEW SOUTH WALES | Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 11-14 February, 17-19 February and 26 March 2020 | |
DATE OF JUDGMENT: | 21 April 2020 | |
CASE MAY BE CITED AS: | Ealwin Pty Ltd & Anor v Master Builders Association of NSW | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 561 | |
REASONS FOR JUDGMENT
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Subject: Alleged breach of contract - negligence
Catchwords: Contract for the supply of drafting services for enterprise bargaining agreements for submission and approval by Fair Work Australia/Fair Work Commission – alleged breach of implied contractual obligation to supply services with due care – alleged misdrafting of provisions as to treatment of loadings to hourly rates of pay for casual workers undertaking overtime or work on weekends or public holidays – breach of contract established – negligence – duty of care owed by defendant in drafting enterprise bargaining agreements – breach of duty of care – damages sought for resulting overpayment of casual employees – validity of transfer deed – whether proven that consideration for transfer had been paid – whether purported transfer void for champerty, maintenance, breach of public policy or abuse of process – Limitation of Actions Act, s27(c) – whether running of six year limitation period delayed – whether proceeding one for relief from the consequences of a mistake.
Legislation Cited: Fair Work (Registered Organisation) Act 2009; Workplace
Relations Act 1996; Limitation of Actions Act 1958; Evidence Act 2008; Wrongs Act 1936 (South Australia); Wrongs Act 1958 (Victoria); Corporations Act 2001; Limitation Act 1939 (UK); Real Property Act 1900
Cases Cited:The Insurance Company v Joyce (1948) 77 CLR 39; Henderson v Merritt Syndicates Ltd [1995] 2 AC 145; Astley v Austrust Ltd (1999) 197 CLR 1; BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; Froom v Butcher [1976] QB 286; Donoghue v Stevenson [1932] AC 562; Trendtex Trading Corporation v Credit Suisse [1982] AC 679; Taypar Pty Ltd v Santric (1989) 17 IPR 146; [1989] FCA 832 and Hazard Systems Pty Ltd v Car-Tech Services Pty Ltd (in liq) [2013] NSWCA 314; TS & V Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) [2007] FCA 151; Tosich v Tasman Investment Management Limited [2008] FCA 377; Project 28 Pty Ltd v Barr [2005] NSWCA 240; Insight SRC IP Holdings Pty Ltd v Australian Council for Education and Research Limited [2013] FCAFC 62; Deloitte Touch Tohmatsu v JP Morgan Portfolio Services Limited (2007) 158 FCR 417; Cavenett v The Commonwealth [2007] VSCA 88; Hawkins v Clayton (1988) 164 CLR 539; Stingel v Clark (2006) 226 CLR 442; Dowling v Bowie (1952) 86 CLR 136; Paciocco v ANZ Bank (2015) 236 FCR 199; Phillips-Higgins v Harper [1954] 1 QB 411; Sinclair v Registrar-General [2010] NSWS 173; Hillebrand v Penrith Council [2000] NSWSC 1058; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 352; Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349; Candibon Pty Ltd v The Minister for Planning [2011] 183 LGERA 10; Barton v Chibber (unreported Hampel J, 29 June 1989);
Judgment: (1) On or before 5 May 2020 the parties must bring in short Minutes to give effect to these reasons. (2) Costs reserved.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr B. J. Avallone | T J Mulvany & Co |
| For the Defendant | Mr T. Donaghey | Carter Newell |
HIS HONOUR:
Background
1 The defendant, Master Builders Association of New South Wales (“MBA”) is an organisation registered under the Commonwealth Fair Work (Registered Organisations) Act 2009 and had a similar status under the previous Commonwealth legislation. As such, it is a body corporate capable of suing and being sued in its corporate name. (Court Book (“CB”) 52).
2 Mr Lawrence Eales is the manager and director of Ealwin Pty Ltd, the first plaintiff (“Ealwin”). Mr Eales was educated to Year 10. He then went out to work as a heavy equipment operator, establishing his own enterprise in 1999 through the medium of the first plaintiff company, Ealwin. The business commenced with the supply by “Wet Hire” of heavy equipment in the Sydney area, with operations expanding to Victoria, and Mr Eales’ family moving to suburban Melbourne.
3 According to Mr Eales, his company’s equipment supply business now extends “throughout the east coast of Australia, supplying heavy hire equipment, mostly wet hire at the time when we started”. (T87, L23-25) According to this terminology, a hire is “wet” when an operator is supplied. The hire is designated as “dry” when the machine is supplied without an operator or fuel. (T97, L26 – T98, L8)
4 Mr Eales was also the principal of a company known as Shantfell Underground Pty Ltd (“Shantfell”), which provided equipment hire services to underground tunnelling companies. Mr Eales purchased a controlling interest in that company in 2006, continuing to trade it in the provision of wet hire of equipment and some labour hire for underground projects. The ownership of the company was held through a family trust company, Blue Helmet Pty Ltd, the second plaintiff (“Blue Helmet”). (T91, L27 – T92, L8)
5 According to Mr Eales, underground tunnelling works are done 24 hours a day, seven days a week. Shantfell’s business consisted of providing equipment and labour for 12 hour shifts, which necessarily entailed a lot of overtime and nightshift rates, typically, on the basis of a 60 hour week. (T88, L17-23) According to Mr Eales, 95 per cent of the employees of his companies were casual. (Ibid, L9-16)
6 Around the time 2008 to 2009, 80 per cent of Ealwin’s business was wet hire. (T91, L7-15) This had transformed by 2014 with Ealwin providing “predominantly dry hire” services. (T91, L7-16) This change occurred because of the “very tight margins” in the wet hire business. (Ibid, L18-23)
7 In 2008-2009, Shantfell provided predominantly wet hire business. By 2014, Shantfell continued to provide wet hire services but upon the basis that the labour was furnished by Ealwin under a labour hire arrangement between it and Shantfell. (T92, L20-29) The administration of the companies was located in the same office and undertaken by the same people. (T93, L2-5) In this arrangement, Ealwin had to provide the labour to Shantfell at cost. (T93, L13-16)
8 Mr Eales said that with a downturn in the mining industry, Shantfell became insolvent in 2017 and was placed initially in voluntary administration and eventually in liquidation. (T94, L2-17)
9 Blue Helmet is owned, according to Mr Eales, by himself and his wife. Mrs Eales is a director. (T95, L3-5) The major creditors in Shantfell’s liquidation were the Eales Family Superannuation Fund known as “WHOBEGOTYOU Super”, and the Commonwealth Commissioner of Taxation for PAYG tax and interest. (T95, L29 – T96, L3) The debt to the superannuation fund, Mr Eales said, represented an advance made to enable Shantfell to pay out its employee preferential creditors. The loan was approximately $80,000. (T96, L20-31)
10 In the early years of the millennium, the enterprise agreements between Ealwin and Shantfell, as employers, and those companies’ employees, were prepared on the instruction of the employer companies by a trade organisation and registered industrial organisation, CCF, that is, the Civil Contractors Federation. (T97, L1-14)
11 Ealwin entered into a certified agreement under the Workplace Relations Act 1996 with the Construction, Forestry, Mining and Energy Union (“the CFMEU”) for the period 2002 to 2005. This document was prepared by the CFMEU. Shantfell entered into an enterprise agreement known as the “Shantfell Underground Pty Ltd Greenfield Agreement Queensland 2007-2010”, which was prepared by Mr Rick Knowles of the CCF. (T97, L26-31)
12 Shantfell entered into employee collective agreements covering New South Wales and Victoria for the years 2007 to 2010 (CB 270, 304), once again prepared by the CCF. (T98, L1-10) For the same years, Ealwin entered into a Greenfield Collective Agreement covering Queensland employees for the years 2007 to 2010. (CB 337)
13 Around 2007, Mr Eales switched his allegiance for industrial relations services from the CCF to the defendant, MBA. Mr Eales said that his companies were working on a project at Mayfield near Newcastle and had occasion to seek industrial relations advice from the MBA through a Mr Peter Glover. These services became available to Mr Eales because one of his companies had signed up for membership of the MBA. (T98, L23 – T99, L18, CB 2071)
14 Mr Glover is the “Director Construction” of the MBA and has worked with the association with one break since 1981. Amongst his specialities is providing advice and assistance to members of the association relative to enterprise agreements. During Mr Glover’s break in employment with the MBA, he had moved to Victoria, working for the Chamber of Manufacturers, and later back in Sydney for the Local Government Association. (T264)
15 Mr Glover did not recall having a discussion with Mr Eales in 2007, though did not deny that the conversation took place. (T330) In 2007, Mr Eales said that his knowledge of enterprise bargaining agreements was “very limited”. (T100, L8-10)
16 In 2008, Shantfell entered into an enterprise bargaining agreement with its employees. (CB 403) This document was drafted by the MBA. The liaison person for Shantfell was payroll officer, Ms Gayle Cachia. (T102, L2-19) According to Mr Eales’ understanding, Ms Cachia was referred by Mr Glover to senior industrial officer, Mr Matthew Skinner. (T103, L2-5) The intention was that this agreement would be “Federal” in the sense of covering Shantfell’s employees in all states where it operated. (Ibid, L6-9, 18-24)
17 Mr Eales said that Ms Cachia’s training and expertise in workplace relations was “nil”. (T104, L16-17) Describing the process and Ms Cachia’s involvement in drafting, Mr Eales said:
“Ah, basically, ah, a lot of it, ah, was checking for typo mistakes and correcting – ah, correcting them up on those. As for drafting the agreement, um, the only input we had, um, that was – she was directed to give was, um, 'Here's our previous rates for our permanent employees in our – in our old EBA. Um, obviously those rates in our EBA for our permanent employees will, um, need to continue, whether they get the two per cent or two and a half per cent increase, ah, annually', and then the additional to that was the, ah, allowances more specific to our, ah, business, with boot allowance, underground allowance and service allowance. (T104, L20-L31)
18 This was a clerical task of checking transcription rather than making any drafting judgements. (T105, L1-10)
19 Employee collective agreements were made by Shantfell in 2008 (CB 403), and for Ealwin in 2009 (CB 436), drawn by Mr Skinner of the MBA. Mr Eales said that he personally checked these agreements over “for the allowance … underground allowances”. (T105, L16-20) This Ealwin agreement covered its Victorian employees. A similar agreement dealing with its New South Wales’ employees was made in 2009 and drafted by Mr Skinner of the MBA. (CB 469) There was also an employee collective agreement for the Queensland employees of Ealwin. (CB 501) Lodgement and approval of these agreements was attended to by the MBA. (T106, L16-17)
20 Mr Eales said that his companies did not check these 2008-2009 agreements against the relevant industrial awards because “we relied on the experts for that”. (T108, L27)
21 Once the agreements came into force, according to Mr Eales, “they would have been entered into our payroll system”. (T109, L7-8) The payroll system was called “Meridian”, with the details of an employee’s identity and his or her work hours for a relevant period. The software package would calculate the appropriate wage payable. (T109, L21 – T110, L4)
22 With the 2008-2009 agreements expiring, Mr Eales’ companies approached the MBA to prepare further employee collective agreements in 2014. By then, the payroll arrangements were under the control of a Ms Melanie Dovaston, whose married name is now Cosgrove. (Ibid, L13-21)
23 According to Ms Cosgrove, as she now is, she was involved, on behalf of Ealwin and Shantfell, in the drafting of 2014 enterprise agreements. An enterprise agreement for the period 2014 to 2018 relative to Shantfell was approved by the Fair Work Commission on 3 April 2014 giving it an operational date of 10 April 2014 for a period of four years. (CB 534) A similar enterprise agreement for a period of four years was approved by the Commission on 17 June 2014 for a period expiring 17 June 2018. (CB 581)
24 According to Ms Cosgrove, these agreements were drafted by MBA and her contact point there was Mr Peter Glover. She spoke to him because Mr Skinner, the draftsman of the earlier expiring agreements, was no longer employed by the MBA. (T181, L1-11) According to her recollection, the instructions to Mr Glover were that the companies “required some new enterprise agreements written … to basically mirror the old agreements but just make them more current with the legislation”. (Ibid, L13-16) The agreements needed to reflect annual pay increments. (Ibid, L17-21)
25 Mr Eales recalls himself speaking to Mr Glover on this subject and telling him “I want a bare bones agreement … basically taking over from our … our other agreements.” (T106, L22-23)
26 Mr Glover did not disagree with Ms Cosgrove’s account of their conversation. (T373, L2-13) On Mr Glover’s account, however, he dealt solely with Ms Dovaston (as she then was) relative to the 2014 agreements. (T265, L4-8)
27 Amongst the documents required for submission to the Fair Work Commission to obtain approval of these agreements was a statutory declaration described as a “Form 17”. Mr Glover forwarded the “Form 17” relative to the Shantfell 2014 agreement to Ms Dovaston under cover of an email of 20 February 2014, stating that this was a document “which Laurence [sic] [viz Mr Eales] needs to complete”. He said that the document was complete other than section 4.3 in the signature page. (CB 2506)
28 In clause 3.4 of the declaration, under the heading “Improvements and Reductions”, the declarant – Mr Eales as the principal of Shantfell – was required to state if the proposed EBA contained “any terms or conditions of employment that are more beneficial than equivalent terms and conditions” in the award. The document, as prepared by Mr Glover, indicated the answer “yes” with the more beneficial features being shown as:
“Appendix 2 – Wage Rates
Clause 5.6 – Service Allowance
Clause 5.7 – Underground Allowance.” (CB 2515)
29 Clause 4.3, which remained for Mr Eales to complete, required provision of the numbers of employees broken down by “demographic group”. (CB 2517)
30 Matters then proceeded with the 2014 agreements in force.
31 In April 2016, Ms Dovaston was directed by Mr Eales to “go out to some labour-hire providers in Victoria with a view of them taking our employees over to their books”. (T189, L10-12)
32 Ms Dovaston spoke to an organisation known as “Tag Personnel”, whose principal was a Mr Glenn Smerdon, who asked Ms Dovaston how Mr Eales and Shantfell paid its current employees. She described the process. (T189, L13-16) She said Mr Smerdon told her that the method of calculation of overtime for casuals used by Ealwin and Shantfell was wrong “because we were paying loading on top of loading. So casual loading on top of already the loading.” (Ibid, L28-30)
33 Ms Dovaston reported these matters to Mr Eales and his wife, Prue, who was also a director. (T189, L31 – T190, L2)
34 Around the same time, Ms Dovaston had briefed the MBA to create a new enterprise bargaining agreement for another Eales’ company known as Ealwin Operations (presumably Pty Ltd). (T191, L24-31) Once again, with respect to this proposed 2016 enterprise bargaining agreement, Ms Dovaston was dealing with Mr Glover of the MBA. (T192, L7-9)
35 When Ms Dovaston reported Mr Smerdon’s concerns to Mrs Eales in April 2016, she telephoned Mr Glover of the MBA. (T205, L19-27) She recollects the first conversation being on 27 April. (T205, L31 – T206, L1) She said she told him, “I was very concerned that we had overpaid our overtime. I asked him if he could please explain his interpretation of how overtime should be paid for casuals”. (T206, L5-8)
36 According to Mrs Eales Mr Glover stated, “the full-time rate should be used for casuals. So you use the full-time right [scil rate], you times it by the penalty and then you add the 25 per cent onto … that”. (Ibid, L9-12) At that stage, Mrs Eales did not fully understand the issue and had not looked at the detail in the enterprise bargaining agreement, so she was unable to make an immediate and substantive response. (Ibid, L13-16)
37 Mr Glover, she said, told her that there was a clause in the agreement which might allow the recovery of overpaid money. (Ibid, L20-23) She said she had a further conversation by telephone with Mr Glover on 29 April. (Ibid, L30-31) Mrs Eales remembers Mr Glover suggesting that the companies obtain legal advice. (T207, L5-7)
38 In the second conversation, Mrs Eales said Mr Glover told her:
“'Listen, I've had a look. The EBA, the way it is written, it is not clear. I wish it had had been clearer. If I had my time again, I would reword it, and next time, next EBA we write we will get it right. We will make it clearer'.” (Ibid, L18-22)
39 According to Mr Glover’s account of these exchanges in 2016, in April he received a call from Ms Dovaston who told him, “Look, we’ve been looking over this draft of the 16 agreements [presumably the proposed agreement for Ealwin Operations] and it appears that the treatment of casual employees, when they’re working overtime is - … they were treated differently”, to which Mr Glover says he replied “Well, it’s been drafted slightly differently”. He continued, “So your 14 agreement, [presumably the Shantfell and Ealwin agreements of 2014] that I had drafted, also allowed you to apply the overtime to casuals in the same manner as the 16 draft that I’d sent you.” (T269, L21-30)
40 Ms Dovaston said, “I don’t think that’s the way we’ve been applying it”. (T270, L1-2)
41 On Mr Glover’s account, he then received a further call shortly afterwards, once again from Ms Dovaston, raising the same issues and then introducing one of the companies’ directors, Mrs Eales, who again stated that the companies had not been paying in the manner set out in the draft of the 2016 agreement. Mr Glover said he told her that the 2014 agreements had been drafted “with that same approach in mind”. (Ibid, L4-20)
42 Mr Glover then received a letter of demand by email of 23 June 2016 from TJ Mulvany and Co Lawyers, stating they acted for Ealwin and Shantfell. The letter referred to the enterprise bargaining agreements for the years 2009 to 2014 and 2014 to 2018. The letter stated that the treatment of the issue of payment of overtime to casual employees in the agreements created a liability “in excess of the statutory obligations” and no advice to that effect had been provided to the companies.
43 As a result, it was said, in the years 2009 to 2015, the two companies had made overpayment of overtime to casuals totalling $771,421.29. In addition to those direct losses, the companies had sustained “substantial indirect losses … as a result of WorkCover, payroll tax and other overpayments”. The letter stated that “the allegations are not complex and it would be relatively simple to assess the merits (if not the quantum) of the claims”. The letter stated, “The losses have seriously affected cash flow and the difficult industry times and economic conditions mean that our clients would be looking for a quick resolution”. (CB 2736-8)
44 When he received this letter, Mr Glover said that he was:
“very shocked and surprised. I have never received correspondence like this in all my time working in employer associations … So after I got over the surprise … I set about drafting a response”. (T272, L8-12)
45 Mr Glover’s response on MBA letterhead was by email of 24 June. The letter gave a short rundown of the proverbially complex history of industrial legislation in the first two decades of the new millennium and continued:
“MBA therefore maintains that the drafting of these Enterprise Agreements were, at all material times, lawful, consistent with industry standards and practice as well as being expressed clearly on their terms. If subsequently provisions of the Enterprise Agreements have been mis-applied, then regrettably, that is beyond MBA’s control.” (CB 2740)
46 The letter also stated:
“It is also pertinent to advise that the wording contained in all the Enterprise Agreements, relating to Casual Employees drafted for the Company is consistent with the hundreds of Enterprise Agreements drafted for other employers in the Building and Construction Industry by MBA. Moreover, at no time have MBA been accused of negligence in carrying out our retainers in the drafting of these many hundreds of Enterprise Agreements supplied over many years.” (Ibid)
47 As to the payment of overtime for casual staff, the letter concluded:
“As no questions were asked of MBA in this regard and given our experience with drafting Enterprise Agreements, the provisions relating to Casual Employees are unambiguous on their terms and any error experienced by your client is not of our making.” (CB 2741)
48 The letter therefore denied liability.
49 By an agreement made 10 August 2017, Shantfell agreed, in consideration of the payment to it of $10,000 by Blue Helmet, which, it will be recalled, is the Eales’ family trust company:
“to transfer absolutely all of its rights title and interest in all the claims Shantfell now has or may have arising out of or incidental to the preparation of Workplace Agreements by MBA for Shantfell”. (CB 2897)
50 These things were described as “the Claim”. (Ibid)
51 The document was executed on behalf of Shantfell by Mr Eales and on behalf of Blue Helmet by Mrs Eales. As will be recalled, Shantfell was successively placed in administration and then into liquidation. Subsequent to the date of this agreement, a statutory report to creditors of Shantfell dated 10 September 2017 showed the company as having $10,000 “cash at bank” and a zero balance for “debtors”. (Exhibit A, CB 2897-8)
52 Following Mr Glover’s denial of liability on behalf of MBA in June 2016, nothing happened until April 2019, when solicitors acting for Ealwin and Blue Helmet, as assignee of Shantfell, issued the Writ which commenced this proceeding. It sought damages against MBA for negligence and breach of contract. To understand the nature of the plaintiffs’ claim, it is necessary to have regard to a number of documents.
The awards
53 The enterprise agreements referred to operate against the background of awards under the Commonwealth Industrial Relations System governing the relationship between employers and employees in the industries in which Ealwin and Shantfell operated. The history of the changes and reformulations of the statutes governing these awards and their administration is complex and unnecessary to traverse in detail for the purposes of this proceeding.
54 In a general sense, agreements such as these enterprise agreements were sanctioned by the statutory rules as operating from their approval, or a short few days thereafter, until their nominal expiry date or until set aside or replaced. The agreements operated in lieu of the award. Whilst the test was differently formulated over time, in general terms, enterprise bargains would be approved by the Commission so long as the employees were either no worse off or better off over all under the terms of the enterprise agreements than they would have been if governed by the awards.
55 During the period 2007 to 2009, the relevant award was the “National Building and Construction Industry Award 2000”. (CB 952) The effect of that award upon the remuneration of the casual employees of Ealwin and Shantfell was summarised in the plaintiffs’ Statement of Claim (Clauses 12 and 13) as follows:
“At all material times before 1 January 2010, clause 41 of the Building and Construction Award relevantly provided as follows:
‘31.1Overtime work on Saturday shall be paid for at the rate of time and a half for the first two hours and double time thereafter, provided that all overtime worked after 12 noon on Saturday shall be paid for at the rate of double time.
…
31.3All work performed on the Saturday following Good Friday shall be paid for at the rate of double time and a half.
31.4An employee required to work on the Saturday following Good Friday shall be afforded at least four hours work or paid for four hours at the appropriate rate.
31.5All time worked on Sundays shall be paid for at the rate of double time. An employee required to work overtime on a Sunday shall be afforded at least four hours work or paid for four hours at the appropriate rate.’
Under the clauses of the 2000 Building and Construction Award referred to in paragraphs 10, 11 and 12 herein, a casual employee was at all material times before 1 January 2010 entitled under the 2000 Building and Construction Award to be paid:
(a)125% of the ordinary time hourly rate prescribed for the employee’s classification, in relation to ordinary hours;
(b)175% of the ordinary time hourly rate prescribed for the employee’s classification, in relation to:
i)the first two hours of overtime; and
ii)work performed on Saturday (other than the Saturday following Good Friday) before noon, for the first two hours worked;
(c)22.5% of the ordinary time hourly rate prescribed for the employee’s classification, in relation to:
i)overtime which occurred after the first two hours overtime;
ii)work performed on Saturday afternoon, or on Saturday before noon but after the first two hours worked, or on the Saturday following Good Friday; and
iii)work performed on a Sunday;
(d)275% of the ordinary time hourly rate prescribed for the employee’s classification, in relation to work performed on a public holiday.” (CB 7-8)
56 The effect of the provision of the 2010 award, relative to the entitlements of casual workers such as those employed by Ealwin and Shantfell, were summarised in the Statement of Claim at paragraphs 35-39 as follows:
“35. At all material times on and from 1 January 2010, clause 14 of the 2010 Building Award relevantly provided as follows:
’14.5A casual employee must be paid a casual loading of 25% for ordinary hours as provided for in this award. The casual loading is paid as compensation for annual leave, personal/carer’s leave, community service leave, notice of termination and redundancy benefits and public holidays not worked.
14.6A casual employee required to work overtime or weekend work will be entitled to the relevant penalty rates prescribed by clauses 36 – Overtime, and 37 – Penalty rates, provided that:
(a)where the relevant penalty rate is time and a half, the employee must be paid 175% of the ordinary time hourly rate prescribed for the employee’s classification; and
(b)where the relevant penalty rate is double time, the employee must be paid 225% of the ordinary time hourly rate prescribed for the employee’s classification.
14.7A casual employee required to work on a public holiday prescribed by the NES must be paid 275% of the ordinary time hourly rate prescribed for the employee’s classification.’
36. At all material times on and from 1 January 2010, clause 36 of the 2010 Building Award relevantly provided as follows:
’37.1 Overtime worked on Saturday must be paid for at the rate of time and a half for the first two hours and double time thereafter, provided that all overtime worked after 12 noon on Saturday must be paid for at the rate of double time.
…
37.3All work performed on the Saturday following Good Friday must be paid for at the rate of double time and a half.
37.4 An employee required to work on the Saturday following Good Friday must be afforded at least four hours’ work or be paid for four hours at the appropriate rate.
37.5 All time worked on Sundays must be paid for at the rate of double time. An employee required to work overtime on a Sunday must be afforded at least four hours’ work or be paid for four hours at the appropriate rate.
…
37.9 All work performed on public holidays, or substituted days, must be paid for at the rate of double time and a half, subject to a minimum payment for four hours’ work.’
38. Under the clauses of the 2010 Building Award referred to in paragraphs 35, 36 and 37 herein, a casual employee was at all material times on and from 1 January 2010 entitled under the 2010 Building Award to be paid:
(a)125% of the ordinary time hourly rate prescribed for the employee’s classification, in relation to ordinary hours;
(b)175% of the ordinary time hourly rate prescribed for the employee’s classification, in relation to:
i)the first two hours of overtime; and
ii)work performed on Saturday (other than the Saturday following Good Friday) before noon, for the first two hours worked;
(c)225% of the ordinary time hourly rate prescribed for the employee’s classification, in relation to:
i)overtime which occurred after the first two hours overtime;
ii)work performed on Saturday afternoon, or on Saturday before noon but after the first two hours worked, or on the Saturday following Good Friday; and
iii)work performed on a Sunday;
(d)275% of the ordinary time hourly rate prescribed for the employee’s classification, in relation to work performed on a public holiday.
39. The 2010 Building Award relevantly provided the following ordinary hourly rates of pay at the following times:
Classification Ordinary hourly rate from the first pay period commencing on or after
1/7/131/7/14 1/7/15 1/7/16 1/7/17
Level 9 (ECW 9) 22.31 22.97 23.55 24.11 24.91
Level 8 (CW/ECW 8) 21.92 22.58 23.14 23.69 24.48
Level 7 (CW/ECW 7) 21.40 22.04 22.59 23.14 23.90
Level 6 (CW/ECW 6) 20.81 21.43 21.97 22.49 23.23
Level 5 (CW/ECW 5) 20.27 20.87 21.39 21.91 22.63
Level 4 (CW/ECW 4) 19.67 20.26 20.76 21.26 21.29
Level 3 (CW/ECW 3) 19.07 19.64 20.13 20.61 21.29
Level 2 (CW/ECW 2) 18.53 19.08 19.56 20.03 20.69
Level 1 (CW/ECW 1) 18.14
CW/ECW 1 (level d) 17.81 18.69 19.16 19.62 20.27
CW/ECW 1 (level c) 17.57 18.35 18.81 19.26 19.89
CW/ECW 1 (level b) 17.21 18.09 18.54 18.99 19.62
CW/ECW 1 (level a) 22.31 17.73 18.17 18.61 19.22
(CB 12-15)
57 According to the plaintiff, application of the awards to the Ealwin and Shantfell casual employees at material times, relative to overtime or weekend work, would have entailed calculations based on the full-time rates of pay multiplied by 150 per cent, 200 per cent or 250 per cent, as the case might require, and then adding the 25 per cent casual loading.
58 The application of the enterprise bargaining agreements, the subject of this proceeding, however, according to the plaintiffs, had a different result.
59 The Shantfell Underground Employee Collective Agreement 2008, the first enterprise agreement drawn for the Ealwin Group by the MBA, provided, with respect to casual employees:
“7.4.2Casual Employees shall be paid at the appropriate rate of pay for their classification in accordance with this agreement plus a loading determined pursuant to the Australian Pay and Classification Scale as represented in the appropriate appendix 1 (B), of 25%. This loading shall be compensation for ordinary hours, public holidays not worked, annual leave, sick leave, redundancy pay and all other rates or allowances associated with the employee’s duties and to compensate for the nature of casual employment.
7.4.3A casual Employee required to work overtime or weekend work shall be entitled to the relevant overtime rates provided in this Agreement, provided that:
(a)where the relevant overtime rate is time and a half, the casual Employee shall be paid 150 percent of the hourly rate prescribed in Appendix 1(B) wage rates; and
(b)where the relevant overtime rate is double time, the casual Employee shall be paid 200 percent of the hourly rate prescribed in Appendix 1(B) wage rates;” (CB 417)
60 The document, as presented in the Court Book, includes one appendix, only, designated as “Appendix 1”, and another page designated “Attachment A”. There is no page or part of the document that is clearly identified, for instance, as “Appendix 1(B)”. It is tolerably clear, however, that “Appendix 1” includes some four parts: “A”, dealing with wage rates for full-time employees; “B”, dealing with wage rates for casual employees with the heading indicated that the rates are inclusive of a 25 per cent loading; “C”, dealing with apprentices’ pay rates; and “D”, dealing with classification structure. The reference to “Appendix 1(B)” therefore fairly clearly is to part “B” of Appendix 1, which sets out rates of pay for casual employees inclusive of a 25 per cent loading.
61 As one of the witnesses put it, the penalty multipliers are applied to an already “loaded up” rate, so that a casual employee, entitled to be paid at double time, would, upon the operation of this agreement, be paid 250 per cent of the ordinary full-time rate, being the result of multiplying 125 per cent of that rate by 200 per cent.
62 In contrast, rendering pay in accordance with the 2000 or 2010 award, the calculation would entail for payment of double time to a casual employee the ordinary full-time rate multiplied by 200 per cent plus 25 per cent, viz 225 per cent of the ordinary full-time rate of pay. (CB 417, 432-4)
63 The corresponding provisions in the Ealwin Pty Ltd t/as EA Hire Equipment (Victoria) Employee Collective Agreement 2009 are to the same effect. (CB 450) More confusingly, however, whilst the same tables apparently covering full-time employees’ rates of pay, casual workers’ rates of pay, apprentices’ rates of pay, and a fourth section dealing with classification appear at the end of the document, there is no heading “Appendix 1”, and there is no sub-heading about what are apparently the full-time rates of pay which were headed as such with “A” in the Shantfell agreement. Again, there is no heading above the fourth part of these pages designating that part as dealing with classification. (CB 450, 465-467)
64 As to the enterprise bargaining agreement designated Ealwin Pty Ltd t/as EA Hire Equipment (New South Wales) Employee Collective Agreement 2009, the clauses under the heading “Casual Employment” are in the same terms as in the Shantfell agreement, and the same apparent deficiency as to headings noted in the agreement for Victoria is also to be found. (CB 515, 530-532)
65 Turning next to the Shantfell Underground Pty Ltd Enterprise Agreement 2014-2018, clause 7.3.3 provides:
“All calculation of overtime payments including casual employees, shall use the applicable ordinary time rates set out in Appendix 2 Table 1 of this Agreement.” (CB 553)
66 The provisions as to weekend work and public holiday work are to be found in clause 7.4, which provides inter alia:
“7.4.1All work performed on a Saturday by Employees shall be paid at time and a half for the first 2 hours and at double time after that. Employees undertaking work on a Saturday shall be paid for a minimum attendance of four hours.
7.4.2All work performed on a Sunday by Employees shall be paid at double time. A full time Employee undertaking work on a Sunday shall be paid for a minimum attendance of four hours.
7.4.3All work performed by Employees on a public holiday shall be paid at a rate of double time and a half, with a minimum payment for four hours.” (CB 554)
67 The rate to be used for the purpose of the calculations provided for in part 7.4 of the agreement are described in clause 7.3.3 as those set out in “Appendix 2 Table 1”. The agreement does include a page designated “Appendix 2 – Wage Rates” and is divided into two parts. The first is headed “Table 1A – Full-time Employees” and the second is headed “Table 1B – Casual Employees”. Despite what seems to have been supposed by clause 7.3.3, there is no “Table 1”.
68 In calculating an entitlement for a casual employee to overtime or penalty rates for weekend pay, the most obvious construction of the provisions is to treat 7.3.3 as referring one to Table 1B, because that is the table dealing with remuneration for casual employees. Once again, the penalty rate multipliers are applied to the “loaded up” casual rate rather than, as the award would have had it, to the full-time rate with the 25 per cent loading to be added at the end.
69 On this basis, a casual employee working in circumstances attracting an entitlement to double time, would be entitled to be paid for that double time at the rate of 250 per cent of the ordinary hourly rate, that is 200 per cent multiplied by 125 per cent. Both the 2000 and the 2010 awards, in similar circumstances, would require payment at the rate of 225 per cent of the full-time rate. (CB 579)
70 The Ealwin Pty Ltd Enterprise Agreement 2014 has provisions in the operative clauses and appendices to similar effect. (CB 597, 598, 623) A further anomaly to be found in this agreement is that the wage rates are located not in Appendix 1 but in Appendix 2, yet the tables retain the headings “Table 1A – Full-time Employees” and “Table 1B – Casual Employees”, where logic would suggest that the two tables should have been designated “2A” and “2B” respectively.
71 These provisions may be compared with the regime established under the “Ealwin Operations Pty Ltd Enterprise Agreement 2016-2020”. Casual employment is dealt with in that agreement at part 4.4, which provides inter alia:
“4.4.1A casual Employee is a person who is subject to a work pattern that is not regular and systematic, and that is not subject to any limit in terms of its duration.
4.4.2A casual Employee shall be paid a 25% loading on the applicable hourly rate in accordance with the calculation as prescribed in Table 2 in Appendix 2 of this Agreement for the Employee's classification, for each hour of ordinary duty worked. This rate shall not attract any premium or penalty.
4.4.3Where a casual Employee performs overtime work, weekend work or public holiday work, the penalty payment applicable shall be calculated using the rates set out in Table 1 of Appendix 2 of this Agreement and applying the following penalty rates in accordance with clause 7.3 and 7.4 of this Agreement as appropriate:
(a) Time and a half- 175% of the ordinary hourly rate;
(b) Double time - 225% of the ordinary hourly rate;
(c) Double time and a half- 275% of the ordinary hourly rate.” (CB 631)
72 Clause 7.3.3 provides:
“All calculation of overtime payments shall use the applicable ordinary time rates set out in Appendix 2 Table 1 of this Agreement.” (CB 639)
73 Appendix 2 deals with wage rates and it will be noted that clause 7.3.3 provides that overtime payments are to be calculated by reference to Table 1, which is the full-time rate. The provisions as to payment of overtime and weekend work for casual employees under this enterprise bargaining agreement appears to align with what is required by the 2010 awards.
74 The MBA drawn agreements in their operation as to overtime, weekend and public holiday pay to casual workers may also be compared with earlier enterprise bargaining agreements involving Shantfell and Ealwin. For instance, the Shantfell Underground Pty Ltd Greenfield Agreement Queensland 2007-2010, (CB 237) provided for casual employees and their payment of a 25 per cent loading on the ordinary hourly rate of pay. (CB 253-4, Clause 22)
75 Appendix C included hourly rates for the various employee grades, including annual increments. The Appendix also included hourly rates for time and a half and double time. It would seem therefore that the 25 per cent loading for casual labour would be applied to those hourly rates in Appendix C because no “loaded” up rates are included. (CB 263)
76 The Shantfell Underground Pty Ltd Employee Collective Agreement New South Wales 2007-2020 is similarly structured (CB 270), as is the Employee Collective Agreement Victoria 2007-2010 between Shantfell Underground Pty Ltd and employees. (CB 304) Likewise, the Employee Greenfield Collective Agreement Queensland 2007-2010 (CB 337) and the Employee Collective Agreement New South Wales (the Ealwin Agreement). (CB 369)
77 Mr Skinner said that he had at least three of these four earlier agreements available to him for review when he was considering the terms of the Shantfell and Ealwin Employee Collective Agreements for 2008 and 2009. (T549, L10-12) Exhibit F – which is a screen dump of the computerised material held by the MBA relative inter alia to that drafting operation would appear to indicate that all four were available to him.
78 In response to a call for production during trial, MBA’s counsel produced a document which was said to be the template employee collective agreement used by MBA as at 28 February 2008. It was marked Exhibit G. This document, as one might suppose, was a pro forma, including a number of extra provisions and options which might be used in a particular case. To put it another way, it was not in the form of an agreement which might have been adopted by a particular employer and group of employees. Usage for a particular purpose would have entailed adoption of certain options and exclusion of others. On the subject of overtime and holiday payments for casual employees, clause 7.4.3 provided:
“A casual Employee required to work overtime or weekend work shall be entitled to the relevant overtime rates provided in this Agreement, provided that :
(a) where the relevant overtime rate is time and a half, the casual Employee shall be paid 150 per cent of the hourly rate prescribed in Appendix 1(B) wage rates; and
(b) where the relevant overtime rate is double time, the casual Employee shall be paid 200 per cent of the hourly rate prescribed in Appendix 1(B) wage rates;”
79 Attached to the pro forma are a series of different forms of “Appendix 1” dealing with different types of employees. In each case, it would seem that Part B of the relevant appendix is constituted by a table of hourly rates for casual employees, including the relevant loading. In some cases, the loading is lower than the 25 per cent which is to be found in other agreements. The effect, however, is to have the penalty multiple applied to the “loaded up” rate, as would seem to be the result of application of the provisions of the MBA drafted agreements the subject of this proceeding.
80 MBA templates at this time were prepared by senior industrial officer, Mr Geoff Thomas. (T157, L2-5)
81 Another of his template agreements, which was apparently current later in 2008 and into 2009, was included in the Court Book at pages 1286 and following. As reproduced in the Court Book, this document included all track changes. It made a somewhat different provision for casual employment than any of the other agreements which we have reviewed. Clause 8.4.2 provided that casual employees were entitled to a 25 per cent loading “on the applicable hourly rate prescribed in the table”. Clause 8.4.4, however, provided “no casual loading is payable for overtime, weekend or public holiday work”. (CB 1322)
82 This seems less advantageous than the provisions of the relevant award for 2010. On the face of it, it is difficult to see why this would not offend against the statutory principles applying over the relevant periods requiring that the collective agreements provide conditions that are either better than or, at any rate, overall no worse, than those provided for in the relevant award.
83 Nevertheless, both according to Mr Glover and to Mr Skinner, collective agreements in that form, using that template, and drafted by the MBA, were being approved by the Commission in 2008. (T577, L24-29)
Plaintiffs’ claim
84 By their Amended Statement of Claim, the plaintiffs allege that the Shantfell Enterprise Bargaining Agreements and the Ealwin Enterprise Bargaining Agreements were prepared pursuant to contracts between those companies and the MBA. After explaining the different effect which those enterprise agreements were said to have had in contrast to the lower employee liability for casual overtime which would have resulted in the application of the award, it was said that by reason of those matters both Ealwin and Shantfell paid higher loadings to their casual employees for overtime, weekend and public holiday work. These matters, it was said, occurred in circumstances where MBA had not advised or warned either Ealwin or Shantfell as to these outcomes.
85 Similar contracts were said to have been made for the preparation of the 2014 enterprise agreements. The drafting of these agreements was said to have had the same adverse effect as the drafting of the 2008/2009 agreement, and it was said that at no time did MBA advise or warn either of the companies about that outcome. As a result it was said that MBA was in breach of the relevant contracts in failing to exercise “due care and diligence” in preparing the agreement.
86 Further, it was said that in the circumstances, MBA owed a duty of care to each of the companies which it had breached by the manner in which it drafted the relevant enterprise bargaining agreements as to their operation on those companies’ obligations to pay overtime, weekend and holiday penalty rates to their casual workers. The companies had thereby suffered loss and damage.
87 Finally, it was said that the benefit of the claim held by Shantfell had been by an assignment made 10 August 2017 listed in Blue Helmet. (CB 51-70)
Defence
88 In its Further Amended Defence, the MBA made a number of admissions and non-admissions, stating in particular that it did not dictate to the plaintiffs what was paid to the casual workers and had no control over the plaintiffs’ payroll system or financial dealings. It was said that at no time did Ealwin seek advice about payments to be made to casual workers. It objected to what were said to be conclusions of law as to the operation of the 2009 enterprise agreement. It said that at no stage did Ms Cachia or Ealwin request or question the rates of pay for casual workers under the 2009 agreement, and the 2009 agreements had been provided to Ms Cachia in draft form “to ensure that [Ealwin] accepted the terms”.
89 It said likewise that it did not instruct or dictate to Shantfell what it paid its casual workers.
90 MBA denied owing a duty of care to Shantfell or Ealwin, but even if such duty of care existed and had been breached by MBA, Ealwin and Shantfell had contributed to their losses and could be regarded as having engaged in laches and acquiescence or contributory negligence. Had Shantfell or Ealwin “been diligent” any losses “would have been greatly reduced”. Any award of damages should be reduced on the basis of Ealwin’s or Shantfell’s laches, acquiescence or contributory negligence.
91 MBA denied the effectiveness of the assignment of a cause of action by Shantfell to Blue Helmet because “Blue Helmet possesses no genuine commercial interest” in the proceeding. The attempt by Blue Helmet to recover in the circumstances was an abuse of process or contrary to the common law rules of maintenance and champerty.
92 Finally, it was said that the claims were not within time and were not maintainable by the plaintiffs, or either of them, as the claim had been “brought after the expiration of the relevant limitation period in s5(1)(a) of the Limitation of Actions Act 1958”. (CB 82-96)
Amended reply
93 In their Amended Reply, apart from making a series of specific responses and references to Further and Better Particulars, the plaintiffs said that:
“Ealwin and Shantfell were each operating on the belief that the rates of pay required to be paid to casual employees under the Shantfell Agreement 2008 and each of the Ealwin 2009 Collective Agreements were consistent with the rates of pay required to satisfy the no disadvantage test when compared with the rates of pay contained in the 2000 Building and Construction Award.”
94 Similarly, it was said that under the 2014 agreements, the companies believed that the rates of pay were required to satisfy the “better off overall test” when compared with rates of payment under the 2010 Award. Likewise, it was said that Ealwin and Shantfell believed that the rates of pay provided for in the various agreements were “consistent with the rates of pay contained in the enterprise agreements applying to Ealwin and Shantfell’s competitors”, and that the methods of calculating the rates of pay of casual employees when overtime or other penalty rates applied under the 2008-2009 agreements and the 2014 agreements, were consistent with the methods of calculating the rates of pay for casual employees when overtime or other penalty rates applied, contained in the enterprise agreements of their competitors. Whereas, the fact was that the rates of pay were “significantly in excess of the rates of pay required to satisfy the no advantage test” under the 2008-2009 agreements and, under the 2014 agreements, were “significantly in excess of the rates of pay required to satisfy the “better offer overall test” when compared with the rates provided for in the 2010 Building Award.
95 The rates paid to casual employees under the relevant enterprise bargains were said to be “significantly in excess of the rates of pay required to be paid to casual employees by [three named employers]”, and these arrangements were “significantly less favourable to the employer” than the rates paid by the named competitors. As a result, it was said that Elwin and Shantfell were operating under mistakes of fact with respect to the agreement, which mistakes were not discovered until April 2016.
96 Accordingly, by reason of s27(c) of the Limitation of Actions Act, the limitation period did not begin to run until the mistakes were discovered in April 2016 and therefore the claims were not statute barred.
97 In any event, loss and damage sustained by Ealwin or Shantfell on and after 1 April 2013 was not barred by s5 of the Limitation of Actions Act, and loss and damage was suffered under the Shantfell Agreement 2008, both before and after 1 April 2013. Likewise in the case of Ealwin.
98 The 2014 Ealwin Enterprise Agreement was said to have led to loss and damage by Ealwin “on and from 24 June 2014”. Likewise for the Shantfell Enterprise Agreement 2014, which had Shantfell suffer loss and damage “on and from 10 April 2014”.
Conclusions
Miscellaneous points
99 I turn first to consider a number of miscellaneous points arising out of the parties’ final submissions.
100 The first of those issues to which I turn relates to the issue of quantum of damage. Assuming that the plaintiffs are successful on the question of liability. Mr Donaghey said that the damages sought of $648,000 were, according to the plaintiffs’ counsel’s opening, “the `price differential’ between what Shantfell and Ealwin actually paid and what they `could have paid’ under the awards, being the awards applicable to their construction work at the applicable time”. (T63, L1-4, Defendant’s Submissions paragraph 118)
101 Mr Eales, the principal of those companies, conceded in cross-examination that it was rare for companies in the construction industry to pay simply in accordance with an industry award. Rather, the typical pattern was that their relations with their employees would be governed by EBAs. Government codes required construction companies, in compliance with their terms, to be parties to enterprise bargaining agreements rather than merely paying in accordance with the industry award.
102 The evidence of this establishes this proposition and the plaintiffs did not dispute it. Mr Donaghey said:
“Given that it is the awards upon which the Plaintiffs’ Claim is based, and no application to amend the Claim has been made … this relief sought is not causative on the basis that it does not flow from the alleged breach nor is it proximate to the negligence alleged; and so should be denied to the Plaintiffs.” (Defendant’s Submissions paragraph 125)
103 In my view, this contention on behalf of MBA misconceives the plaintiffs’ claim. A consideration of the document which is said to summarise and explain the calculation of the damages sought by the plaintiffs indicates that it is based upon the ordinary full-time rates of pay appearing in the relevant enterprise bargaining agreements rather than upon the hourly rates appearing in the award or awards.
104 The plaintiffs’ contention is that had the enterprise bargaining agreements been drawn as they should have been, the treatment of the 25 per cent casual loading would have been in line with the treatment of that 25 per cent loading in the relevant award or awards. The agreements drawn by the MBA provided for the multiples for overtime, being time and a half and double time, to be applied not to the ordinary full-time but to the “loaded up” rate.
105 I reject this attack upon the plaintiffs’ claim.
106 I turn next to the issue of the standard of care to be required on the MBA should it be found to owe a duty of care as alleged by the plaintiffs.
107 Mr Donaghey contended that it would be wrong to apply the same standard of care to the MBA as courts had applied, for instance, to legal practitioners. Mr Donaghey cited no authority and postulated no alternative standard of care. This submission brought to my mind the dictum of Latham CJ in The Insurance Company v Joyce (1948) 77 CLR 39, 46. The court was considering a damages claim by “a gratuitous passenger” sustained as the result of the driving of an intoxicated driver. Latham CJ said:
“If a person deliberately agrees to allow a blacksmith to mend his watch, it may well be said that he agrees to accept a low standard of skill. But even in such a case, the blacksmith is bound to act sensibly, though he is not subject to the responsibilities of a skilled watchmaker. In the case of the drunken driver, all standards of care are ignored.
The drunken driver cannot even be expected to act sensibly. The other person simply ‘chances it’. Accordingly, the case may be described as involving a dispensation from all standards of care …”
108 Mr Donaghey did not wish his client to be seen as the equivalent of a blacksmith purporting to repair a watch. His Honour’s analogy did not appeal to him.
109 The plaintiffs led a lot of evidence about the charges levied for the preparation of the relevant agreement both on Ealwin as a member of the defendant organisation and Shantfell as a non-member, together with evidence as to MBA’s membership revenue. If an obligation to draw those agreements with reasonable care as an implied contractual term be established, and if that term is shown to have been breached, I know of no legal doctrine in the law of contract which would exonerate a person providing drafting services from the usual legal liability based upon the service being provided at a low price, unless there were some express or implied terms of the contract to the effect that the service supplier could discharge its liability by providing a service of less than the usual quality.
110 No such express or implied term has been alleged here. The issue of standard of care relative to any obligation to provide the drafting service with reasonable care stands unaffected by reference to the issue of price. Again, if a duty of care is found to be owed by the MBA to Shantfell and Ealwin, despite its pricing policy, I cannot see how the price charged for the services can affect the standard of care in the law of tort. Finally, no particular lesser standard of care was identified by Mr Donaghey as appropriate.
111 In closing submissions for the MBA, Mr Donaghey contended that the document styled “Transfer Deed” which purported to vest a cause of action Shantfell asserted against the MBA in the second plaintiff, Blue Helmet, was ineffective for lack of consideration. The document which appears at CB 2897-2898 is not, despite its description, in the form of a deed.
112 Mr Avallone on behalf of the plaintiffs did not contend otherwise.
113 Mr Donaghey noted that paragraph 1 of the deed described the consideration for the transfer as “the payment of $10,000 by Blue Helmet to Shantfell”. He said neither Mr nor Mrs Eales could say that this $10,000 consideration had been paid. Mr Donaghey said the consideration for the transfer or proposed transfer was the payment of the $10,000, not the promise to pay it. This, he said, was evident from the words quoted above.
114 It is unnecessary, in the circumstances, to determine whether the consideration should be regarded as actual payment or the promise of payment because, in my view, the evidence establishes that the payment has in fact been made.
115 The liquidators’ statutory report to credit (Exhibit A) discloses a “cash at bank” balance for Shantfell of $10,000 and debtors as being nil. (See [51] supra) This establishes that the $10,000 payment was in fact made and does not remain outstanding. I will consider further attacks on the validity of the “deed” on behalf of the MBA based on the public policy relative to champerty and maintenance presently.
116 I turn next to the MBA’s challenge as to the admissibility of the document from which the plaintiffs’ calculation of its quantum of damages derives. This lengthy document commences at CB 2921. According to Mrs Eales, who was, as at the date of the trial, in charge of payroll at the Ealwin group of companies, (T204, L8-9) the document was “a spreadsheet that has come out of our payroll system”. (T212, L16-17)
117 According to Mrs Eales, this document was produced by an expert from “Meridian Micropay” (presumably a software consultancy providing software services to the Ealwin group of companies at her request, Ibid L17-19). She said the process of production entailed first obtaining the data and particulars as to “everything that everyone had been paid”. [scil all wages and payments made to employees and casual workers by the relevant companies] (Ibid L28-29)
118 This larger quantum of data was then, according to Mrs Eales, “filtered” so that the particulars extracted dealt only with overtime. (T216, L24-27) This means that payments “at ordinary time” have been “filtered out”. (T217, L1-6) The document “spreadsheet” identifies which company is said to have made the payments, on what date, and on what basis. It then purports to record the extent to which the companies have “overpaid” each worker in each wage payment upon the assumption that the proper basis for payment was that the 25 per cent overtime loading was to be added at the conclusion of the overtime calculation rather than including it at the outset and applying the overtime multiples – time and a half or double time, to the “loaded up” or casual rate rather than the ordinary full-time rate.
119 Section 69 of the Evidence Act 2008, renders “business records” admissible as evidence despite the hearsay rule, but this section applies only to documents “made … in the course of, or for the purposes of, the business”. The present document, as the narrative shows, was brought into existence for the purposes of this proceeding and not for the ordinary purposes of the business of the plaintiffs or Shantfell.
120 Mr Avallone contended that the document should be regarded as admissible under s50 of the Evidence Act, which states:
“50 (1)The court may, on the application of a party, direct that the party may adduce evidence of the contents of 2 or more documents in question in the form of a summary if the court is satisfied that it would not otherwise be possible conveniently to examine the evidence because of the volume or complexity of the documents in question.
(2)The court may only make such a direction if the party seeking to adduce the evidence in the form of a summary has—
(a)served on each other party a copy of the summary that discloses the name and address of the person who prepared the summary; and
(b)given each other party a reasonable opportunity to examine or copy the documents in question.
(3)The opinion rule does not apply to evidence adduced in accordance with a direction under this section.”
121 In closing submissions, he relied on s48(1)(e) of the Act, which provides:
“48 (1) A party may adduce evidence of the contents of a document in question by tendering the document in question or by any one or more of the following methods—
…
(e) tendering a document that—
(i) forms part of the records of or kept by a business (whether or not the business is still in existence); and
(ii) is or purports to be a copy of, or an extract from or a summary of, the document in question, or is or purports to be a copy of such an extract or summary;
…”
122 The effect of these provisions must be seen in light of the definition of document appearing in the “dictionary” appended to the statute in the following terms:
“Document means any record of information, and includes –
…
(c) anything from which sounds, images or writings can be produced with or without the aid of anything else.
…”
123 Mr Donaghey, objecting to receipt of the document, said that admissions by Mrs Eales in cross-examination showed that the “filtering” process which she described in chief was somewhat different in reality from her description. He referred to T254, L17-27. First, the consultancy company that supplied the expert for the filtering process was more appropriately described as “Sage”. At line 23ff, Mr Donaghey asked Mrs Eales “and the way that the data was filtered included excluding certain dates and excluding amounts that weren’t in contention in this proceeding; is that right?” Mrs Eales replied, “it was data for the whole year of 2008 that I – 2009 that I had asked for up until 2015”.
124 Mr Donaghey said that the document was not a summary, rather it represented an adjustment. Further, he said proof in terms of s50 of the Evidence Act must be given by the author of the document. He said others who had previously operated the payroll system were required to give evidence. They included a Ms Cachia. Mr Donaghey concluded, “the method of dealing with those payment records is only described in the evidence”.
125 The starting point for the analysis of these issues is a consideration of the breadth of the definition of “document” in the Evidence Act. The quoted parts of the definition indicate that the company’s payroll records as a whole could be regarded as a “document”. Part of the spreadsheet, however, could not be regarded as a summary of that document, viz the parts which entailed a calculation of the amounts which might have been paid had MBA drafted the agreements the subject of this proceeding in the manner in which the plaintiffs contend they should have been, and a comparison of those amounts against the actual payment.
126 Insofar as the document includes this material, it could be regarded as the functional equivalent of particulars of loss and damage and not a piece of evidence at all. The question then becomes whether the balance of the spreadsheet can be treated as admissible.
127 In his closing submissions, Mr Donaghey, in contrast to the course he took in initially propounding the spreadsheet, placed primary reliance on s48(1)(e) of the Evidence Act in support of the spreadsheet’s admissibility. I turn therefore to that provision.
128 If I exclude the columns which I have just described as the functional equivalent of particulars of loss and damage rather than something which can be regarded as a piece of evidence, what remains forms part of the records of Ealwin and Shantfell and purports to be a summary or extract from them.
129 Whilst these paragraphs were not referred to by Mr Avallone, ss48(1)(c) and (d) of the Evidence Act may also be pertinent and supportive of the admissibility of the spreadsheets. These paragraphs offer further means of proof of the contents of documents in the following terms:
“(c)if the document in question is an article or thing by which words are recorded in such a way as to be capable of being reproduced as sound, or in which words are recorded in a code (including shorthand writing)—tendering a document that is or purports to be a transcript of the words;
(d)if the document in question is an article or thing on or in which information is stored in such a way that it cannot be used by the court unless a device is used to retrieve, produce or collate it—tendering a document that was or purports to have been produced by use of the device;”
130 The provisions which I have quoted do not require for the admission of documentary evidence proofed by the “author” of the relevant documents. Proof of computerised data must necessarily entail receipt into evidence of records which constitute assertions of fact such as that a particular payment was made on a particular day or a particular sum of money was received on a particular day which may have been “input” by different persons under the control of a succession of “systems controllers”; to impose the requirement of authorship propounded by Mr Donaghey would render the use of evidence from documentary sources entirely impractical. I overrule Mr Donaghey’s objection to the receipt of the spreadsheet into evidence except as to the calculations in the last two columns which should be treated as particulars of loss and damage.
131 I turn now to the causes of action relied on by the plaintiffs.
Contractual claims
132 According to paragraphs 4A, 5 and 26, Ealwin and Shantfell respectively entered into contracts with MBA for the preparation of the subject agreements. In its Further Amended Defence, MBA admitted the allegations in paragraphs 4A and 4B. As to paragraph 26 of the Amended Statement of Claim, by clause 17 of its Further Amended Defence, whilst not admitting paragraph 26, it said that MBA “was engaged by [Ealwin] to prepare and take necessary steps in relation to the approval of workplace agreements as requested by [Ealwin] for or on behalf of Shantfell”. This contract was said to be partly written, partly oral and partly to be implied constituted by a fees agreement, a tax invoice and telephone conversations between Mr Glover and Ms Dovaston. Insofar as the contract was said to be implied “it was implied to give business efficacy to the contract and by operation of law”.
133 In effect, therefore, it is common ground that MBA undertook the work of preparing the subject agreements pursuant to contract with Ealwin or Shantfell. The question is, did each of these contracts include an obligation on the part of MBA that it would “exercise due care and diligence in the preparation of the workplace agreements”?
134 Mr Avallone’s primary submissions on this point was that the relevant obligation to use due care and skill was to be implied as a matter of law. He referred to Henderson v Merritt Syndicates Ltd [1995] 2 AC 145, 193-4 and Astley v Austrust Ltd (1999) 197 CLR 1.
135 In Henderson’s case, a proceeding was brought by plaintiffs who were underwriting members colloquially described as “names” at Lloyd’s against a number of underwriting agents who had acted as members’ agents, managing agents or combined agents alleging negligence. Lord Goth of Chieveley said:
“It is … my understanding that by the law in this country contracts for services do contain an implied promise to exercise reasonable care (and skill) in the performance of the relevant services; indeed, as Mr Tony Weir has pointed out (XI Int. Encycl. Comp. L, ch 12, para 67)`…it was impossible for the judges to deny that contracts contained an implied promise to take reasonable care, at the least, not to injure the other party’.” [1995] 2 AC 145, 193
136 His Lordship’s analysis was accepted in the High Court of Australia in a joint judgment of Gleeson CJ, McHugh, Gummow and Hayne JJ in Astley v Austrust Ltd (1999) 197 CLR 1, 22-23. Their Honours said:
“History and legal principle combine to indicate that the conclusion of the House of Lords in Henderson is the correct view. The implied term of reasonable care in a contract of professional services arises by operation of law. It is one of those terms that the law attaches as an incident of contracts of that class. It is part of the consideration that the promisor pays in return for the express or implied agreement of the promisee to pay for the services of the person giving the promise. Unlike the duty of care arising under the law of tort, the promisee in contract always gives consideration for the implied term. And it is a term that the parties can, and often do, bargain away or limit as they choose. Rather than ask why the law should imply such a term in a contract for professional services, it might be more appropriate to ask why should the law of negligence have any say at all in regulating the relationship of the parties to the contract? The contract defines the relationship of the parties. Statute, criminal law and public policy apart, there is no reason why the contract should not declare completely and exclusively what are the legal rights and obligations of the parties in relation to their contractual dealings. The proposition that, in the absence of express agreement, tort and not contract regulates the duty of care owed by a professional person to a person hiring the professional services is inconsistent with the historical evolution of professional duties of care which, until recently, could be the subject of action only in contract. Moreover, the conceptual and practical differences between the two causes of action remain of "considerable importance". The two causes of action have different elements, different limitation periods, different tests for remoteness of damage and, as will appear, different apportionment rules.”
137 A non-statutory implied term, however, may be negatived by an exemption clause in the relevant contract. No exemption clause or clauses have been identified or relied upon in the present proceeding. The alleged implied term was not admitted by MBA.
138 As a further “fallback” contention, Mr Avallone said that a contractual obligation to use due care and skills could be implied as a matter of fact in accordance with the principles stated by the majority of their Lordships in the decision of the Judicial Committee in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266.
139 Mr Donaghey responded compendiously to the two limbs of the argument in support of the implication of this term. It is at times not obvious which limb he is referring to. He complained that the implied term referred to in the Further Amended Statement of Claim and the Amended Reply was not “clearly articulated and lacks evidence which identifies how the term should be implied”.
140 The passages from the joint judgment in the High Court of Australia in Astley’s case appear to establish that, absent an exemption clause, a contract of service, by its very nature and as a matter of law, carries with it an implied obligation on the part of the service provider to supply the services with due care and skill. There is no need to resort to implication as a matter of fact in accordance with BP Westernport. Indeed, such an implication cannot be made because one of the requirements for such implication, as stated by the authority of their Lordships, is that the implication be “necessary”. If the obligation in question is already imposed as a matter of law, there can be no necessity. The criticism of the contention that the obligation to use due care and skill may be implied as matter of fact made by Mr Donaghey in his closing submissions in the following terms: “put simply, the Claim does not specify the element of ‘necessity’ which underpins implied terms in extant contracts; it does not set forth a basis (whether in presumed fact, at law or otherwise).”
141 Further, said Mr Donaghey, “the ‘implied term’ in the pleadings . .. is not clearly articulated and lacks evidence which identifies how the term should be implied”. In my view the term is implied as a matter of law, and not being excluded by any exemption clause is operative in the present case.
142 According to the plaintiff, MBA breached the duty to provide the drafting services with due care and skill because, in the case of overtime payable to casual employees, the multiples of time and a half and double time for overtime, Saturdays, Sundays and public holidays were not applied to the ordinary hourly rate, as was provided for in the awards in force over the period in the previous agreements prepared by the Civil Constructions Federation, and under a range of other enterprise bargaining agreements or their equivalents under the previous industrial legislation entered into by a range of what the evidence disclosed as “tier 1” operators in the construction industry, even in agreements propounded by the dominant powerful and militant union in the construction industry, the CFMEU. There was no warning to Shantfell or Ealwin as to this matter. I accept these contentions on behalf of the Plaintiff. The breach is made out as to each of the contracts.
143 In closing submissions (paragraph 16) however, Mr Donaghey submitted on behalf of MBA:
“The nature of the allegations made by [MBA] is that the Plaintiffs’ conduct should be taken into account, and in a way proportionate to the claims made against the [MBA]. This submission is to the effect that where a party had control of its own affairs, and particularly control of the making of the Agreement and the payments made to its employees, then this should be a factor taken into account, whether that account is in respect of mitigation (in contract) or as contributory negligence, in tort, or otherwise.”
144 Later, at paragraph 115, Mr Donaghey said that even if liability were established there was a question as to whether the breach was causative to any and if so what loss. According to Mr Donaghey, since it was Ealwin or Shantfell who elected to put the enterprise agreements to their workers for a vote, any losses as described flowed from the actions of those companies rather than from any breach on the part of MBA.
145 In his submissions at paragraph 105, Mr Avallone said:
“That is akin to a negligent lawyer blaming his client on the basis that it was the client who signed the negligently prepared will. It is not a submission worthy of MBA … which held itself out to be an industrial relations expert and which had the purpose of protecting its members’ interests, …”
146 I agree with Mr Avallone’s response.
147 The effect of these agreements is not a black art nor is it an arcane piece of physics or calculus. Anyone with a command of written English could, by careful analysis, perceive the differential operation of the subject agreements on the one hand, and on the other hand the awards in force over the period, the previous agreements which Shantfell and Ealwin had entered into, and the raft of other agreements involving “tier 1” operators in the construction industry, and even as propounded by the CFMEU.
148 The fact that research or analysis on the part of a customer could bring to light the blunders of the person providing services, in itself, cannot be an answer to a claim of this type. No doubt there are extreme cases where the blunder is so manifest that a failure on behalf of the customer of the services to have it rectified or otherwise rendered inoperative would break the chain of causation. This is not such an extreme case.
149 Acceptance of this contention would, for instance, excuse an otherwise negligent medical practitioner for poor management of an illness or injury because, for instance, the patient could:
(a) perceive the lack of progress in his condition; and
(b) have carried out online research or sought a second opinion from another practitioner.
150 Had MBA wished to operate on the basis that it took no responsibility for the correctness or appropriateness of its drafting, leaving all responsibility on the shoulders of its customers, it could have said so. It should have included an exemption clause in its arrangements, but it did not.
151 In my view, the breach of contract alleged with respect to these various agreements has been made out.
152 I have already dealt with the argument on behalf of MBA based on causation and with respect to the damage alleged to have been suffered by Ealwin and Shantfell.
Contributory negligence
153 As I read the Further Amended Defence of MBA, contributory negligence is relied upon as a partial defence to the claim against MBA in the tort of negligence (See clause 36A of the Further Amended Defence) It does not seem to be relied upon in response to the claim in contract. In Astley v Austrust Limited (1999) 197 CLR 1, the High Court considered the applicability of the statutory defence of contributory negligence under the South Australian Wrongs Act 1936 corresponding to the relevant provisions in the Victorian act as defences against allegations of failure to use reasonable care based on both a contractual implied term and the common law tort of negligence. The court held that the statutory defence of contributory negligence was available with respect to the claim in tort but not in contract. The court approved a number of decisions of the Supreme Court of Victoria to similar effect.
154 Following the decisions in Astley’s case, the Victorian Wrongs Act 1958 was, in 2000 by Act number 75, amended so that it provided not only a statutory defence of contributory negligence in the case of a tortious claim for breach of duty of care, but also where such breach amounts to “breach of a contractual duty that is concurrent and co-extensive with a duty of care in tort”. (Wrongs Act 1958, s25)
155 Section 26(1) of the Victorian Wrongs Act provides that if “a plaintiff suffers damage as the result partly of the claimant’s failure to take reasonable care … and partly of the wrong of any other person”, then the damage recoverable in respect of the wrong must be reduced to such extent as the court thinks just and equitable as regards the claimant’s share in the responsibility for the damage.
156 As previously noted, the expression “wrong” refers to a failure to use reasonable care whether in breach of a tortious duty of care or of a contractual duty to similar effect.
157 It is convenient at this point, therefore, to consider MBA’s allegations of contributory negligence against Ealwin and Shantfell.
158 MBA’s allegations of contributory negligence centre upon Mr Lawrence Eales and his wife who, it was said, “cooperatively” ran the Ealwin group of companies, which included Ealwin, Shantfell and the second plaintiff, Blue Hemet. The evidence disclosed, according to Mr Donaghey, that “no person looked critically at the agreements”. I did not understand Mr Avallone to contend otherwise. It was only in 2016 that the issue raised in this proceeding came to light as a result of discussions between the Ealwin companies and a labour hire operation.
204 As decisions of an intermediate appeal court, they are binding upon me unless they appear to be “plainly wrong”. I do not believe that they are.
205 The attacks upon the validity of the deed of transfer therefore fail.
Limitation of Actions Act 1958
206 Section 5 of the Limitation of Actions Act 1958 provides that actions founded on contract or actions founded on tort “shall not be brought after the expiration of six years from the date on which the cause of action accrued”. Special provisions are made in sub-s(1AAA), (1AA) and (1A) relative to personal injury claims, which provisions are not directly relevant in this proceeding. This proceeding was commenced as recently as 2019. On the face of it, most of what is claimed is blocked by the operation of s5. The plaintiffs, however, rely on s27 of the Act as delaying the commencement of the six year time limit until the problems with the agreements were discovered by Ealwin and Shantfell as a result of discussions with a labour hire organisation in 2014.
“Where, in the case of any action for which a period of limitation is prescribed by this Act—
(a)the action is based upon the fraud of the defendant or his agent or of any person through whom he claims or his agent; or
(b)the right of action is concealed by the fraud of any such person as aforesaid; or
(c)the action is for relief from the consequences of a mistake—
the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it:
Provided that nothing in this section shall enable any action to be brought to recover or enforce any charge against or set aside any transaction affecting any property which—
(i)in the case of fraud, has been purchased for valuable consideration by a person who was not a party to the fraud and did not at the time of the purchase know or have reason to believe that any fraud had been committed; or
(ii)in the case of mistake, has been purchased for valuable consideration, subsequently to the transaction in which the mistake was made by a person who did not know or have reason to believe that the mistake had been made.”
207 There is no allegation of fraud or of fraudulent concealment. Success for the plaintiffs in their reliance on s27 depends, therefore, upon establishing that the present is an “action … for relief from the consequences of a mistake and that the discovery in 2014 was the earliest date on which the mistake by Ealwin and Shantfell could have been discovered “with reasonable diligence”.
208 What, then, is an “action … for relief from the consequences of a mistake”?
209 Mr Donaghey, on behalf of MBA, said that since reliance by the plaintiffs on s27 entailed their bringing themselves within an exception to the general role, the onus of proving the exception lay on them. He referred to Cavenett v The Commonwealth [2007] VSCA 88. Next, said Mr Donaghey, in the case of the claim based on the tort of negligence, the cause of action is said to accrue from the first day on which the plaintiff suffered injury or damage. He referred to Hawkins v Clayton (1988) 164 CLR 539, 561 per Brennan J (as he then was), 587 per Deane J.
210 He said that a cause of action should be regarded as accrued whether the plaintiff was aware of all of its elements or not. Special provisions were made in s5 relative to personal injuries which have no application to this proceeding. The concept of accrual was to be found elsewhere in the statute, for instance, in ss14, 20 and 22. He submitted the concept of “accrual” should be taken as having the same meaning throughout the statute.
211 Applying these principles, according to Mr Donaghey, the claims said to arise in 2008 and 2009 should be regarded as having accrued well before the cut-off date of 1 April 2013, being six years before the commencement of this proceeding. According to Mr Donaghey, “one must identify the elements of the particular claim; and identify the date upon [which] each has accrued in the sense of being completed”. He referred to Stingel v Clark (2006) 226 CLR 442. This can differ between causes of action whose elements are not comparable.
212 He said that in Stingel v Clark the High Court held that personal injury arising from a rape would constitute the tort of trespass and the cause of action would be regarded as accruing from the date of the trespass. He said that in the case of both the claims in contract and tort, loss was the final element rendering the causes of action complete. As to the 2008 Shantfell agreement and the 2009 Ealwin agreements, he said the end of the six year period was likely to be 19 March 2015 and 6 August 2015.
213 As to the incidence of burden of proof, where s27 was invoked, he referred, in addition to Cavenett’s case, to Dowling v Bowie (1952) 86 CLR 136, 139-40 per Williams, Fullagar, Kitto and Taylor JJ.
214 As to the plaintiffs’ reliance on s27, Mr Donaghey noted that it first became part of Victorian law under the Limitation of Actions Act 1955 and derived ultimately from the English Limitation Act 1939, as s26 of that Act. Mr Donaghey said that there were relatively few cases on the proper meaning in paragraph (c) of what an action for relief from the consequences of a mistake might be.
215 In the present case, he said, the nature of the `action’ was “a claim in respect of the contractual or tortious conduct of the defendant [MBA]. It is a claim for relief, not for the consequences of a mistake, but rather for relief from:
(a) the allegation that [MBA] breached its obligations, both contractual and otherwise; and
(b) compensation, or in the case of contract, damages for the breach of obligations.”
216 He said the operation of the section was not dependent upon the occurrence of a mistake or fact or law, “rather it is limited to whether the relief is for consequences of a mistake”.
217 In any event, accepting that Ealwin and Shantfell became aware of the subject issues in or about April 2016 and raised them with MBA, the plaintiffs had not put on sufficient evidence to demonstrate the date upon which the mistake could have been determined with reasonable diligence. He referred to failure to call a Ms Cachia or a Mr Chesini without explanation. He referred to the evidence of Mr Eales referring to various financial documents, including profit and loss statements, wage summaries and so forth, which were neither discovered nor put into evidence.
218 The plaintiffs did not establish what steps they, or Shantfell, had taken, and whether those steps amounted to “reasonable diligence”.
219 On behalf of the plaintiffs, Mr Avallone referred to the historical analysis of the operation of s27 and its analogues in Paciocco v ANZ Bank (2015) 236 FCR 199 and Phillips-Higgins v Harper [1954] 1 QB 411, 418 per Pearson J (as he then was).
220 Mr Avallone referred to and relied upon the analysis of Rein J in Sinclair v Registrar-General [2010] NSWSC 173. His Honour said that the “mistake” referred to must be one made by the plaintiff. Mistake by a defendant would not avail in the invocation of the section. He relied on the statement at [38] where his Honour, having said that a mistake by the defendant would not avail, continued:
“There must be some other characterisation available to make it actionable, such as negligence or misleading and deceptive conduct, which reinforces the view that the mistake required for s 56 [an analogue of s27] must be the plaintiff’s mistake.”
221 Therefore, said Mr Avallone, where the claim was for negligence by way of breach of a tortious duty of care or breach of a contractual implied condition to render services with due care, the mistake which would engage s27(c) of the Act would not be the defendant’s mistake but one by the plaintiff, in the present case, Ealwin or Shantfell. He said, whether such a mistake was an essential ingredient of the cause of action or its “gist” would “depend upon a consideration of the facts of each case”.
222 Referring to David Securities Pty Limited v Commonwealth Bank of Australia (1992) 175 CLR 353, 369, 374, mistake could include sheer ignorance as well as incorrect belief. He submitted this approach should be applied. He referred to Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 per Lord Hope, concluding, “that where a person is under a mistaken belief as to the state of facts due to incorrect information or ignorance of the actual state of facts, then such a mistake is one within the contemplation of s27(c) of the Limitation Act. It is a mistake of fact.” (Closing Submissions, paragraph 145)
223 I turn then to consider whether the present is an action “for relief from the consequences of a mistake”. In Phillips-Higgins v Harper [1954] 1 QB 411, the claim before the court was for underpayments of salary. Absent the operation of the equivalent of s27, the Limitations legislation would have barred any claims for years prior to 1945-46.
224 Speaking of paragraph (c), his Lordship said:
“The right of action is for relief from the consequences of a mistake. It seems to me that this wording is carefully chosen to indicate a class of actions where a mistake has been made which has had certain consequences and the plaintiff seeks to be relieved from those consequences. Familiar examples are, first, money paid in consequence of a mistake: in such a case the mistake is made, in consequence of the mistake the money is paid, and the action is to recover that money back. Secondly, there may be a contract entered into in consequence of a mistake, and the action is to obtain the rescission or, in some cases, the rectification of such a contract. Thirdly, there may be an account settled in consequence of mistakes; if the mistakes are sufficiently serious there can be a reopening of the account.” [1954] 1 QB 411, 418.
225 Speaking of the action before him, his Lordship said:
“In this case the mistake, in my judgment, has had no relevant consequence for the purposes of this section. As the statement of claim shows, the plaintiff’s claim is to recover moneys due to her under a contract, and the cause of action is the same as if she had sued for each unpaid balance on its due date. By reason of the mistake she failed to realize that the balance was due to her and by that mistake the right of action was concealed from her. But that is not sufficient. Probably provision (c) applies only where the mistake is an essential ingredient of the cause of action, so that the statement of claim sets out, or should set out, the mistake and its consequences and pray for relief from those consequences.” (Ibid, at 418-419)
226 Later, his Lordship continued:
“…the carefully chosen wording of the provision (c) must have its proper effect notwithstanding any resulting anomalies. No doubt it was intended to be a narrow provision, because any wider provision would have opened too wide a door of escape from the general principle of limitation by six years’ lapse of time, which is, of course, a reasonable and normally salutary principle …” (Ibid, at 419)
227 In Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, the House of Lords considered a claim for the recovery of money paid under mistake of law relative to interest rate swap agreements which were subsequently held to be ultra vires. One of the questions for their Lordships was whether the limitation period ran from the date of the discovery of the mistake. The equivalent section to s27 of the Victorian Act was s31(1)(c) of the English Limitation Act 1980. Lord Hope of Craighead considered that the claim was for relief from the consequences of a mistake and the provision deferring the operation of the time limit was applicable. [1999] 2 AC 349, 416-7
228 In Sinclair v Registrar-General [2010] NSWSC 173, the plaintiffs sought relief against the defendant Registrar-General for his mistaken removal of a caveat from the register kept under the Real Property Act 1900. Rein J held that the plaintiff’s claim was time-barred. At [38], his Honour concluded in a passage quoted and relied upon by Mr Donaghey, that the relevant mistake “must be made by the plaintiff”. At [37], he gave as his primary reason for rejecting the operation of the exception in the equivalent of s27(c) that mistake was not an essential part of the statutory cause of action against the Registrar-General, despite the relevant sections referring to “error”, “misdescription” and “omission”. His Honour noted that the relevant section in the Real Property Act required “the loss or damage to be the result of the operation of the Real Property Act, which adds an immediate qualifier”. At [39]-[40], his Honour reached the conclusion “that courts should not read provisions which ameliorate the effects of general limitation provisions too generously”.
229 In Hillebrand v Penrith Council [2000] NSWSC 1058, the claim was for negligence causing economic loss. The council was alleged to have negligently conveyed away the plaintiff’s land. Austin J at [35] said, “the cause of action in negligence causing economic loss is complete when the plaintiff first suffers actual economic loss or damage”. As to the equivalent of s27(c), assuming that the plaintiffs did not become aware of the true situation until 1997 or July 2000, his Honour said:
“This section does not apply. It is applicable only where the cause of action seeks relief from the consequences of a mistake. The cause of action in the present case seeks relief from the consequences of negligence rather than a mistake.”
It was true that the particulars of the negligence relied upon involved the assertion that the council made mistakes including the mistake of confusing Lots 17 and 20 in Plan 610 with Lots 17 and 20 in Plan 967412, “but the gist of the cause of action is negligence rather than mistake.” [48]
230 In Candibon Pty Ltd v The Minister for Planning [2011] 183 LGERA 10, Emerton J (as she then was), considered inter alia a claim in the tort of negligence. A question arose as to whether the running of the six year limitation period should be delayed by the operation of s27(c). it was said that the commencement of the limitation period should be delayed until the plaintiff became aware of the true situation until such time the plaintiff had been labouring under a mistake. Her Honour referred to the decision of Pearson J in Phillips-Higgins v Harper, noting that whilst it had been the subject of criticism in England, it had been followed in Australia.
231 The reasoning of Pearson J led her Honour to conclude as follows:
“In my view, the ‘essential ingredients’ of Candibon’s negligence claim are the making of the Statements and the alleged purpose for which they were made, Candibon’s reliance on the Statements to sell the land to the Minister and the loss suffered by it as a result of selling the land to the Minister. The cause of action was complete at the time of sale and, had Candibon discovered the true state of affairs and brought the negligence claim within the limitation period, it would not have been necessary to plead that it made a mistake in order to recover. Candibon’s ‘mistake’ as to whether or not it had a cause of action in negligence is not an essential ingredient of the negligence claim itself. Moreover, the ‘gist of the action’ is the Minister’s conduct and Candibon’s reliance on it, and not Candibon’s mistake as to whether it had a cause of action against the Minister arising from that conduct.” [2011] VSC 415.
232 Her Honour also referred with approval to a decision of Barton v Chibber (unreported Hampel J, 29 June 1989) where, according to her Honour, Hampel J “held that mistake is the gist of the action where it is the mistake itself that gives a right to reply to a court for relief, for example, in an action for recovery of money paid under a mistake of fact.” [350]
233 The academic criticism referred to by her Honour was an article in 68 Modern Law Review 848 by “J Edelman” who subsequently has been a justice of the High Court of Australia.
234 In Paciocco v ANZ Banking Group Limited (2015) FCR 199, the Full Court of the Federal Court considered an appeal in representative or class proceedings relative to a variety of fees charged by the bank on the ground inter alia that they were unenforceable penalties. A question that arose was whether the running of the limitation period should be delayed based on s27(c). The court consisted of Allsop CJ, Besanko and Middleton JJ. Besanko J, with whom Middleton J concurred on this point, considered the history of s27(c). He said the origin of the English model for s27(c) resulted from the Fifth Interim Report of the Law Revision Committee (1936) (CMD 5334) paragraph 23, where the Committee said:
“A somewhat similar position arises in cases where relief is sought from the consequences of mistake, e.g., when money is paid on property transferred under a mistake. The equitable rule is that the time should only run under the Statutes of Limitation from the time at which the mistake was, or could with reasonable diligence have been, discovered. At present this rule does not apply in cases which formerly fell within the exclusive cognisance of a court of law (Baker v Courage, [1910] 1 K.B. 56). It only applies to cases which were formerly only actionable in a court of equity, or were within the concurrent jurisdiction of the two systems (Re Mason [1928] Ch. 385, and [1929], 1 Ch.1; Re Blake, [1932], 1 Ch. 52). It was held in Baker v. Courage (supra) that the Judicature Acts had not altered the common law rule.
The position appears to us as unsatisfactory as the position with regard to the effect of concealed fraud, and accordingly we recommend that in all cases when relief is sought from the consequences of a mistake, the equitable rule should prevail and time should only run from the moment when the mistake was discovered, or could with reasonable diligence have been discovered. We desire to make it clear, however, that the mere fact that a plaintiff is ignorant of his rights is not to be a ground for the extension of time. Our recommendation only extends to cases when there is a right to relief from the consequences of a mistake. In such cases it appears to us to be wrong that the right should be defeated by the operation of the Statutes of Limitation.
We wish to add that neither this recommendation nor those contained in the preceding paragraph are intended to encroach upon or affect the existing rules of equity relating to laches and acquiescence.” (2015) FCAFC 50 [384]
235 His Honour concluded at [396] that the section should be regarded as ambulatory in its operation and as extending to mistakes of law.
236 On the basis of these authorities, s27(c) would seem to have no operation in the present situation. Granted that Ealwin and Shantfell can be regarded as having laboured under a mistake, that mistake is not an element of the causes of action which they are prosecuting in the same way as a mistake of fact or law would be in a claim for the recovery of monies based upon restitutionary principles or to set aside a contract entered into by virtue of a mistake.
237 For s27(c) to operate, mistake must be the “gist” of the action, that is an indispensable element of it. Here, the claim is one for negligence, whether in tort or by breach of an implied contractual term. Mistake is no part of either cause of action. The case stands similarly to Hillebrand and Phillips-Higgins v Harper.
238 Despite suggestions in the course of closing submissions that Sinclair v Registrar-General represents a different view, the passages quoted from Rein J show that his Honour considered the nature of the cause of action in question and rejected the operation of the s27(c) analogue on the basis that mistake was not the “gist” of the cause of action.
239 It follows that to the extent that the causes of action in this proceeding accrued before 1 April 2013, which would seem to be the case based on the 2008 and 2009 agreements, s5 of the Limitations of Actions Act operates to bar recovery for damages for those matters.
240 In light of this conclusion, the question whether Ealwin and Shantfell could or should have discovered the issues as to the treatment of loadings and the enterprise bargaining agreements the subject of this proceeding “with reasonable diligence” before April 2016 does not arise for decision.
Disposition
241 I direct parties on or before 5 May 2020 to bring in short Minutes to give effect to these reasons.
Costs
242 I have heard no submissions on the question of costs and so I will reserve them.
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