Innes v Commonwealth
[2015] ACTCA 33
•17 July 2015
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: | Innes v Commonwealth |
Citation: | [2015] ACTCA 33 |
Hearing Date: | 12 February 2015 |
DecisionDate: | 17 July 2015 |
Before: | Murrell CJ, Penfold and Katzmann JJ |
Decision: | The applicant’s causes of action first accrued on 5 April 1993. |
Category: | Separate question |
Catchwords: | LIMITATION OF ACTIONS — Claim for damages for pure economic loss allegedly caused by negligent misstatements about employee’s entitlement to join Commonwealth superannuation scheme — whether statute-barred under Limitation Act 1985 (ACT) — when cause of action first accrued – when loss ascertainable |
Legislation Cited: | Limitation Act 1985 (ACT) s 11(1), 30, 33, 36 Public Service Act 1922 (Cth) s 76W Limitation of Actions Act 1974 (Qld) s 11(2) Limitation Act 1969 (NSW) ss 50C, 50F, 52, 55, 57, 60A, 60F, 62A, 62D |
Cases Cited: | Comcare v Dunstan (2014) 221 FCR 274 Commonwealth v Cornwell (2007) 229 CLR 519 Wardley Australia Limited v Western Australia (1992) 175 CLR 514 |
Parties: | Barry Charles Innes (Applicant) The Commonwealth of Australia (Other Active Party) |
Representation: | Counsel: Mr B Walker SC with Mr R Davis (Applicant) Mr P Semmler QC with Mr M O’Meara (Other Active Party) |
| Solicitors: Snedden Hall & Gallop (Applicant) Australian Government Solicitor (Other Active Party) | |
File Number: | ACTCA 49 of 2014 |
MURRELL CJ and KATZMANN J:
Barry Charles Innes was an employee of the Commonwealth for some 30 years, from 1963 until he accepted a voluntary redundancy in 1993. Upon satisfaction of the applicable statutory criteria, he was eligible to join the superannuation scheme established by the Superannuation Act 1922 (Cth) (1922 Act). Mr Innes never joined the scheme. He contends that the reason he did not join is that he was negligently informed by employees of the Commonwealth that he was ineligible for membership. In the principal proceeding he seeks damages from the Commonwealth for negligent misrepresentation and for breach of a common law duty of care to take reasonable steps to make its employees aware of their eligibility for membership of Commonwealth superannuation schemes. His claim is one for pure economic loss. The loss was characterised in the statement of claim as:
(a)his failure to join a Commonwealth superannuation scheme; and
(b)his failure to receive Commonwealth superannuation benefits upon and as a consequence of his retirement from the workforce which retirement, were it not for the Commonwealth’s negligence, he alleges would have occurred on 5 June 2007 — his 60th birthday.
Mr Innes commenced the proceeding on 18 May 2011. Section 11(1) of the Limitation Act 1985 (ACT) relevantly provides that “an action on any cause of action is not maintainable if brought after the end of a limitation period of 6 years running from the date when the cause of action first accrues to the plaintiff”. In its defence the Commonwealth pleaded that this action was not maintainable because the causes of action upon which the action was based first accrued on 5 April 1993 (when Mr Innes last worked for the Commonwealth) or, alternatively, on 1 July 2003 (when Mr Innes would have been entitled to access any hypothetical deferred Commonwealth superannuation benefit). On the other hand, Mr Innes contends that his action is not statute-barred because his causes of action did not accrue until 5 June 2007.
On 10 October 2014 Refshauge J referred to this Court for determination as a special case the question raised by this defence, namely, whether, for the purposes of s 11(1) of the Limitation Act, Mr Innes’s causes of action first accrued on 5 April 1993, or alternatively, on 1 July 2003?
For the reasons which follow, the answer to this question is that Mr Innes’s causes of action first accrued on 5 April 1993.
Background facts
For present purposes the parties agreed upon the following facts.
Mr Innes was born on 5 June 1947. He commenced employment with the Commonwealth on 25 February 1963. Although not employed in a permanent capacity, he was required by the terms of his employment to give the whole of his time to the duties of his employment.
Mr Innes’s employment rendered him eligible to apply to join a Commonwealth superannuation scheme created by the 1922 Act, including the Commonwealth Superannuation Scheme (CSS), subject to meeting the applicable statutory eligibility requirements. But he never applied to join a Commonwealth superannuation scheme.
Mr Innes last worked for the Commonwealth on 5 April 1993 when he was 45 years of age. He accepted a voluntary redundancy and, as a result, his employment was terminated by the relevant Departmental Secretary under s 76W of the Public Service Act 1922 (Cth). Had he been a member of the CSS he would then have been entitled to either:
(a)an early retirement benefit under s 59 of the Superannuation Act 1976 (Cth) (1976 Act), which superseded the 1922 Act; or
(b)elect, under s 137 of the 1976 Act, to defer payment of superannuation benefits pending the occurrence of any of the matters specified in s 139(2) of the 1976 Act.
After leaving the service of the Commonwealth Mr Innes took up employment in the private sector where he remained until 13 December 2013 when he retired, then aged 66.
10. Mr Innes alleges that, but for his reliance on the negligent advice he was given, he would have:
(a)joined the Commonwealth Superannuation Fund established by the 1922 Act (the 1922 Fund) on or about 25 February 1966;
(b)automatically transferred from the 1922 Fund to the Commonwealth Superannuation Fund established by the 1976 Act when the 1976 Act commenced (the 1976 Fund);
(c)accepted a voluntary redundancy and ceased employment with the Commonwealth on 5 April 1993; but
(d)elected at that time to preserve (i.e. defer) his superannuation entitlements;
(e)remained in the workforce until age 60 (5 June 2007); and
(f)only then accessed his CSS benefits.
11. This scenario was described in submissions as “the counterfactual”.
The legislative framework
12. A summary of the legislative scheme appears in the judgment of the majority in Commonwealth v Cornwell (2007) 229 CLR 519 (Cornwell) at [21]‑[33]. As their Honours explain, both the 1922 Act and the 1976 Act established “defined benefits” schemes in which employees made contributions.
13. Under the 1922 Act contributions were made for pension units and, upon retirement, a contributor became “entitled” to receive a pension determined according to the number of units for which the contributor was contributing at retirement (s 43). Separate provision was made for entitlements upon retirement for invalidity or physical or mental incapacity to perform the duties of the employment (s 45) and for the payment of pensions to widows and children (ss 46‑48).
14. Under the 1976 Act, the entitlement to superannuation was given to “eligible employees” and their benefits were calculated by reference to years of “contributory service”, not contributions to pension units. Pensions were calculated as a percentage of final salary, the percentage fixed by reference to the “period of contributory service” with the result that the greater the number of complete years of contributory service, the higher the percentage of final salary paid as a pension.
15. The Superannuation Act 1990 (Cth) (1990 Act) established a somewhat different scheme but its details are irrelevant in the present case as, upon the agreed or assumed facts, Mr Innes would have remained in the 1976 Fund until he left the employ of the Commonwealth on 5 April 1993.
16. At that time, s 59 of the 1976 Act provided:
(1)Where a person who has not attained the age of 60 ceases to be an eligible employee by reason of early retirement, then, if the person does not make an election under section 62, he is entitled to:
(a)standard early retirement pension in accordance with section 60;
(b)if he does not make an election under section 64, additional early retirement pension in accordance with subsection 61 (1); and
(c)lump sum benefit (if any) in accordance with subsection 61 (2).
(2)Payment of benefit to which a person becomes entitled under this section may be postponed under Part VIB.
17. “Eligible employee” is defined in s 3 of the 1976 Act. It is unnecessary to turn to the definition because there is no dispute that Mr Innes was indeed an “eligible employee”.
18. In substance, s 62 enabled a person, who is or would be deemed by s 58(3) to have retired involuntarily, to elect to be paid a lump sum benefit under that section, provided that the election was made in writing to the Commissioner no later than three months after and no earlier than three months before the date of retirement.
19. As at 5 April 1993, s 58 of the 1976 Act relevantly provided:
(1)For the purposes of this Act, a person shall be deemed to have ceased to be an eligible employee by reason of early retirement if the person is deemed by subsection (2) to have retired voluntarily, or by subsection (3) to have retired involuntarily.
…
(3)Where a person ceases to be an eligible employee because:
…
(b)the person is retired under section 76W of the Public Service Act or the person's employment or appointment is terminated, otherwise than under that Act, on a ground similar to a ground specified in that section;
…
the person shall, for the purposes of this Act, be deemed to have retired involuntarily.
20. Notwithstanding that he accepted what the parties referred to as a voluntary redundancy, Mr Innes’s employment was terminated under s 76W of the Public Service Act. Consequently, for the purposes of the 1976 Act he was deemed to have retired involuntarily. It was common ground on the counterfactual that s 62 is irrelevant, because there was no suggestion that Mr Innes would have elected to be paid a lump sum benefit under that section. His case is that he would have made an election under s 137.
21. Section 137 stated that a person who ceases to be an eligible employee by operation of s 58(3) may, no more than 21 days later, “elect, by notice in writing to the Commissioner, that [Division 3] apply in relation that person”. At the time of Mr Innes’s deemed involuntary retirement from the Commonwealth, the effect of an election under s 137 was that “deferred benefits” were applicable in respect of the person making the election (s 139(1)). Section 139 stated that deferred benefits were “payable” on the day immediately after the earliest of the following occurrences:
(a)the employee being assessed as being totally and permanently incapacitated;
(b)the employee’s death;
(c)the date selected and notified by the employee so long as it was on or after the date he or she attained the “minimum retiring age” under the Act (then 60); and
(d)the employee’s 65th birthday.
22. Section 139 was amended and renumbered by the Superannuation Legislation Amendment Act (No 1) 1995 (Cth) (1995 Amendment Act) to become s 138. The first, second and fourth events set out above remained unchanged (although the date the deferred benefits became payable changed to the day before, rather than immediately after, the relevant event). However, the third event (the new s 138(2)(c)) was amended to read “subject to subsection (3), if the person, by written notice given to the Board, selects a date (not earlier than the date on which the notice is given) for the start of the payment of the deferred benefits — the date so selected”. By subsection (3) paragraph (2)(c) was excluded unless:
(a) the person will have, by the date selected:
(i) reached the age that would have been his or her minimum retiring age for the purposes of this Act if he or she had not ceased to be an eligible employee and had continued to occupy the position held by him or her immediately before so ceasing; and
(ii) reached the 55th anniversary of the person’s birth;
(b) the person has provided the Board with a statement to the effect that he or she has retired from the workforce.
23. The minimum retiring age was now 55 (subject to presently irrelevant exceptions).
24. In other words, with the passage of the 1995 Amendment Act, if a contributor who had elected to defer payment of his or her superannuation entitlement survived to the age of 55, had not become totally and permanently incapacitated for work and had notified the Board in writing that he or she had retired from the workforce, the benefits then became payable.
25. Further changes were made in 2003 so as to delete the requirement in s 138 that the employee supply the Board with a statement to the effect that he or she has retired from the workforce, such that s 138(3) then read:
Paragraph 2(c) does not apply unless the person will have, by the date selected, reached the age that would have been his or her minimum retiring age for the purposes of this Act if he or she had not ceased to be an eligible employee and had continued to occupy the position held by him or her immediately before so ceasing.
26. As the Commonwealth put it in its written submissions, “[t]he effect of this amendment was that, from 1 July 2003, in order for a person to access a deferred benefit under the 1976 Act, it was no longer necessary to have retired from the workforce. All that was necessary was for the person to have attained the age of 55 years.”
Legal principles
27. The relevant legal principles are discussed in many cases but three High Court decisions were central to the arguments of the parties: Hawkins v Clayton (1988) 164 CLR 539 (Hawkins), Wardley Australia Limited v Western Australia (1992) 175 CLR 514 (Wardley) and Cornwell. Cornwell is of particular importance because it also involved a claim for damages in tort for pure economic loss resulting from negligent misstatements concerning a Commonwealth employee’s eligibility to join a Commonwealth superannuation scheme.
28. First, negligence is not actionable without proof of damage. Indeed, it is said that the gist of an action in negligence is damage. Thus, a cause of action in negligence is not complete until damage occurs. Ordinarily, damage first accrues when some damage is sustained even if the plaintiff is unaware of it at the time. See Cornwell at [5]‑[6] (Gleeson CJ, Gummow, Kirby, Hayne, Heydon and Crennan JJ) and Scarcella v Lettice (2000) 51 NSWLR 302 at [13]‑[15] (Handley JA). Unless the damage is negligible or minimal, time runs from this point. As the majority noted in Cornwell at [6], in Hawkins at 543, 587, 599‑600 the High Court rejected the proposition that, at least in claims in negligence for economic loss, time does not run until the plaintiff discovers or could on reasonable inquiry have discovered that damage has been sustained. This means that the sustaining of some loss or damage will be enough to trigger the commencement of the limitation period, even if far more substantial loss or damage occurs at a much later time. While this circumstance can result in apparent injustice, parliaments have taken this into account in some instances by providing for suspensions, for example in cases of fraud (see, for example, Limitation Act 1985 (ACT) s 33; Limitation Act 1969 (NSW) s 55; Limitation of Actions Act 1958 (Vic) s 27); and incapacity or disability (see, for example, Limitation Act 1985 (ACT) s 30; Limitation Act 1969 (NSW) ss 50F, 52; Limitation of Actions Act 1958 (Vic) ss 23(1), 27E, 27J), exceptions in actions for damages for dust-related diseases (see, for example, Dust Diseases Tribunal Act 1989 (NSW) s 12A; Limitation of Actions Act 1974 (Qld) s 11(2)), and extensions of time in other personal injury cases (see, for example, Limitation Act 1985 (ACT) s 36; Limitation Act 1969 (NSW) ss 50C, 57, 60A, 60F, 62A, 62D; Limitation of Actions Act 1958 (Vic) s 27K). It is common ground that there is no provision for extending the time in the present case and it was not suggested that any exception or suspension applied here.
29. Secondly, because economic loss can take various forms, the answer to the question of when the cause of action first accrues may require consideration of the precise interest which has been infringed: Hawkins at 601 (Gaudron J); Wardley at 527 (Mason CJ, Dawson, Gaudron and McHugh JJ); Cornwell at [16] (Gleeson CJ, Gummow, Kirby, Hayne, Heydon and Crennan JJ). Both the kind of economic loss and the time it is first sustained depend on the nature of the interest infringed: Wardley at 527.
30. Once the interest said to be infringed is identified, it is necessary to determine when the loss caused by the negligence is first “ascertained or ascertainable”, by reference to established events rather than likelihood or probability. That is to say, it is necessary to determine when some actual damage first occurred; “[p]rospective loss is not enough” (Wardley at 527).
31. In the present case ascertaining when damage first accrues requires close attention to the legislative scheme. The superannuation legislation contains criteria that need to be established before a claimant’s loss will mature into actual, ascertainable damage. It was this same legislation that the High Court considered in Cornwell.
32. Mr Cornwell commenced employment with the Commonwealth in 1962. Although classified as a temporary employee, he was employed on a full-time basis. Like Mr Innes, although eligible for acceptance for membership of the CSS, he claimed that he had been dissuaded from applying for it by misleading advice given by a Commonwealth employee, in his case his superior officer. In 1987 Mr Cornwell’s position was reclassified as a permanent public service position. At that point he joined the 1976 Fund, later transferring to the scheme established by the 1990 Act (the 1990 Fund). He retired on 31 December 1994 and was paid superannuation benefits referable to his membership of the 1976 Fund and the 1990 Fund. He sought damages for the economic loss he suffered because the benefit he received on his retirement was worth less than it would have been had he not relied on the negligent advice he had been given in 1965.
33. The Commonwealth argued that Mr Cornwell’s claim was statute-barred because his loss crystallised in 1976 when he lost the opportunity to join the 1922 Fund or, in the alternative, in 1987 when he in fact joined the 1976 Fund.
34. Mr Cornwell argued that his loss accrued on his retirement in 1994.
35. The majority accepted Mr Cornwell’s argument on the basis that, even if he had joined the 1922 Fund in 1965, his entitlements would have been contingent upon meeting the statutory criteria set out in the 1922 Act. Mr Cornwell could have obtained the amount of his actual contributions under the 1922 Act were he to resign or be dismissed or discharged. But, the majority said, “beyond that, his entitlements were prospective and contingent upon the falling in at a future time of the statutory criteria. The same was true of [Mr Cornwell’s] position under the 1976 Act after 24 March 1987 and before his retirement seven years later…” (at [37]). Importantly, for present purposes, at [18] their Honours described Mr Cornwell’s “interest” (in the sense that the word is used in Wardley) as the “entitlement” he stood to enjoy upon retirement.
36. At [19] their Honours held:
What was only in prospect until the falling in of one or more of various contingencies, matured into actual loss at the end of the respondent’s service and upon the falling in of one or more of the statutory contingencies which had to be met for the respondent to be entitled to a statutory benefit.
37. Therefore, Mr Cornwell’s loss became actual and ascertainable when the various contingencies aligned so as to entitle him to a statutory benefit. The majority held that that occurred at the time of his retirement and not before.
38. Mr Innes submitted, in effect, that his case was relevantly indistinguishable from Cornwell in that the contingencies in his case did not mature into actual loss until 5 June 2007 when he would have retired but for the negligence of the Commonwealth because (under the counterfactual) it was not until that time that he would have accessed his deferred benefit. An argument to the same effect was rejected by Burns J in Henry v Commonwealth (2012) 264 FLR 381 (Henry), which Mr Innes contended had been wrongly decided.
39. Mr Henry was an employee of the Commonwealth and a member of the CSS. He alleged that on his resignation in 1986 to take up employment in the New South Wales public service, he was negligently advised that his only option was to take a refund of his contributions plus interest although in fact the 1976 Act gave him the right to elect to have his superannuation entitlements preserved until his retirement from the workforce. He claimed that, but for the negligent advice, he would have elected to defer his benefits until his retirement from the workforce on 13 July 2007 and that his causes of action first accrued at that time. On the other hand, the Commonwealth maintained that the action was statute-barred because the causes of action first accrued at the time he left the Commonwealth public service or, at the latest, when his application to make an election under s 137(1) was refused. Burns J rejected both contentions, finding that the cause of action accrued on 27 October 2004 when Mr Henry turned 55. His Honour stated, at [41], that:
[t]he date upon which it became clear whether the plaintiff suffered a loss by reason of the defendant’s negligent misrepresentation is set out by s 138 of the 1976 Act. It is the date upon which deferred benefits would have been payable. On that date the counter-factual position crystallised such that it was possible to determine if the plaintiff had suffered a loss.
40. The reason his Honour found that the counterfactual position crystallised at this point in time was that it was on that date that Mr Henry had reached his minimum retirement age and “all of the statutory contingencies had fallen in”. It was then that he would have been entitled to the payment of the deferred benefits. His Honour said at [42] that “[t]o suggest that a later, arbitrary date chosen by the plaintiff (such as his date of retirement) is the appropriate date, effectively allows the plaintiff to choose the commencement of the limitation period, and is not mandated by reference to the relevant statutory scheme”.
41. The facts in the present case are different but it is common ground that, if Henry was correctly decided, then Mr Innes’s claim is statute-barred. That said, it is not necessary to determine whether Henry was correctly decided. The answer to the separate question is to be gleaned by applying the principles outlined in the High Court authorities, principally Cornwell, to Mr Innes’s circumstances.
When did the causes of action first accrue?
42. The first question is what was the interest the Commonwealth infringed in this case; the second, what were the contingencies that needed to be realised for Mr Innes to become entitled to superannuation under the 1976 Act; and the third is whether those contingencies had been realised.
43. Mr Innes identified the interest that was infringed by the Commonwealth as the benefit he would have received but for the Commonwealth’s negligence. He said that this interest is identical to the interest infringed in Cornwell.
44. Having regard to Mr Innes’s characterisation of his interest, he said that where the benefit that might be received but for the breach is contingent upon the occurrence of events prescribed by the statute, then the evidence must show these events would all occur before any claim can be said to arise as a result of the breach.
45. He argued that, when comparing what retirement benefits have actually been received by Mr Innes with the benefits that would have been received but for the negligence, the approach taken by Burns J once again confuses what theoretically could have happened with what would have occurred.
46. Mr Innes submitted that it is not enough that he might have suffered some loss if he did something that was hypothetically possible if, in fact, the weight of evidence shows that he would have done something different.
47. Mr Innes argued, further, that before the preconditions of payment are met, no right would exist to any specific part of the CSS funds. He said that the statutory contingencies would not have been satisfied (counterfactually) until his retirement at age 60. Only then could it be established that all of the statutory preconditions necessary for the receipt of any benefit have been fulfilled. In substance he contended that one of the contingencies that must “fall in” for his cause of action to accrue is the choice that would have been made by him. That choice was to defer his retirement benefits to a later date with the result that the falling in of the contingencies depended upon the exercise of his choice. Picking up on the words “elect” in s 137 and “selected” in s 139, he argued that the choices he would have made are the statutory contingencies that were not satisfied until the date he would have retired in the counterfactual scenario.
48. Mr Innes asserted that preservation of his retirement benefits is not a trigger for the accrual of his cause of action. He maintained that, before the date of his prospective retirement (on the counterfactual), when he would have received his deferred benefit, his claim was only “in prospect” and had not matured into actual loss.
49. In the alternative, Mr Innes submitted that the relevant interest or entitlement was an entitlement to participate in the statutory scheme “by giving notices, making elections, et cetera”.
50. The characterisation of the interest allegedly infringed as the money Mr Innes would have received but for the Commonwealth’s negligence must be rejected. As in Cornwell, what Mr Innes stood to enjoy was “an ‘entitlement’ conferred by federal statute law. This ‘entitlement’ was his ‘interest’ in the sense used…in Wardley”: Cornwell at [18]. His alleged loss is the entitlement to receive superannuation from the CSS upon satisfaction of the statutory criteria. The relevant interest is the entitlement to receive the benefit, not the receipt of the benefit. That does not mean, of course, that (the limitation question aside) the likelihood that he would have deferred payment to a later date would have been irrelevant. To the contrary, his intention to defer payment would doubtless affect the amount of damages he could recover.
51. Mr Innes submitted that anyone who elects to defer has no entitlement under s 59. In essence the argument was that s 137 ousts the application of s 59. He said for the purposes of the Cornwell analysis, the “entitlement” is the “entitlement to receive money”.
52. This submission did not assist Mr Innes.
53. On the agreed facts, Mr Innes had, on the counterfactual, an entitlement to receive a benefit in the nature of superannuation at the time he was deemed to have involuntarily retired from the Commonwealth public service. All the relevant contingencies had been satisfied. He was not yet 60. He had ceased to be an eligible employee by reason of early retirement.
54. While on the assumed facts he would have elected to defer payment, making that election would not have extinguished the entitlement; it would merely have affected the time (and presumably the amount) of the entitlement. His right to elect to preserve his superannuation benefits by deferring payment presupposes that at the time of the election he had an entitlement to at least one of the various early retirement benefits provided for in Div 2 of Pt V of the 1976 Act. Had Mr Innes decided to defer receipt of his benefits that would have constituted the utilisation of an available means of dealing with payment, but it would not have affected the crystallisation of his interest.
55. The critical difference between Cornwell and the present case is that, as at the dates the Commonwealth contended the limitation period began to run, Mr Cornwell was not entitled to receive anything. Accordingly, he had suffered no ascertainable loss. In Cornwell the date when actual loss occurred was when Mr Cornwell became entitled to a statutory benefit. The first point in time when he became entitled to any statutory benefit was upon his retirement. That was because the statutory source of Mr Cornwell’s entitlement was s 55 of the 1976 Act which related to “standard age retirement pension[s]”. In contrast, the statutory source of Mr Innes’s entitlement was (relevantly) s 59 of the Act which provided for early retirement benefits. The statutory criteria or conditions (the contingencies) for an entitlement to arise in each case are different. While Mr Cornwell had to achieve the statutory retirement age before he was entitled to receive anything, Mr Innes was entitled to receive a superannuation benefit when he was deemed to have retired involuntarily from the Commonwealth public service. That he would have chosen to defer payment or receipt is beside the point.
56. Contrary to Mr Innes’s submission, it is not that the law is prejudiced against a contingency that relies on a claimant’s choice. Indeed a choice or discretion that affects the accrual of an entitlement may well be a relevant contingency. But the choice to defer payment is quite a different matter.
Mr Innes was critical of Burns J’s description of the date “selected by the plaintiff” as “arbitrary”: Henry at [42] and see above at [40]. He argued that his Honour erred by conflating a theoretical ability to apply for a specific benefit with the actual receipt of that benefit. He submitted that the ability to apply for a benefit itself has no intrinsic value, but is merely one step among many that must be completed before a statutory benefit may be paid. The error, he contended, in Burns J’s approach is that it treats the ability to apply to receive a certain benefit at a particular time as “constructive receipt” of that benefit. Mr Innes contended that his position is supported by Comcare v Dunstan (2014) 221 FCR 274 (Comcare v Dunstan), where the Full Federal Court rejected the “constructive receipt” approach.
58. Mr Innes’s reliance on the rejection of the “constructive receipt” approach in Comcare v Dunstan is misplaced. That case concerned the meaning of “receives” in the context of considering whether an employee who elected to defer superannuation benefits under s 137 of the 1976 Act and had not applied for payment of that benefit under s 138 had received any benefit. The Full Court’s finding that the respondent could not be taken to have received a benefit (within the meaning of s 21A(1)(b) of the Safety, Rehabilitation and Compensation Act 1988 (Cth)) says nothing about whether and when an entitlement arises and loss first accrues under the Limitation Act.
59. The alternative argument outlined at [49] above was never developed and is difficult to understand. If Mr Innes’s entitlement were to be characterised as his right to make an election, that entitlement first accrued in or about April 1993. If the point he was trying to make was that time could not run until he discovered that he had the right, it is tantamount to saying that the cause of action arose when he became aware of a material fact relating to the cause of action. It follows from our earlier observations that such an analysis is not open on the authorities.
60. In summary, Mr Innes first suffered actual loss and damage when the statutory contingencies aligned so that, if he had been a CSS member, he would have been entitled to a (i.e. any) statutory benefit (Cornwell at [19]). Contrary to Mr Innes’s submission, the use of the indefinite article in Cornwell was no accident. Indeed, it is consistent with the position in Wardley. It is at the point at which actual damage is ascertainable that the cause of action will accrue, even if the loss would be greater at a later time. In this case actual damage is ascertainable as at 5 April 1993 because on that date Mr Innes would have had an entitlement to choose from certain options and, on the counterfactual, would have become entitled to superannuation benefits in accordance with s 59. His loss was the loss of the involuntary redundancy benefits which he would have received had he been a member of the CSS. It was not a negligible or minimal loss. The fact, assumed for present purposes, that Mr Innes, having chosen the benefits available under s 59, would have elected to defer payment of those benefits does not mean that his loss was only hypothetical or prospective. He had an entitlement. What he chose to do with it, including when he chose to be paid, is another matter. On 5 April 1993 all relevant statutory contingencies “fell in” and the cause of action was complete.
Costs
61. There is no reason why costs should not follow the event. Accordingly, Mr Innes should pay the Commonwealth’s costs.
| I certify that the preceding sixty-one [61] numbered paragraphs are a true copy of the Reasons for Judgment of their Honours Chief Justice Murrell and Justice Katzmann. Associate: Date: 17 July 2015 |
PENFOLD J:
62. I agree with the conclusions of Murrell CJ and Katzmann J that the answer to the question referred for decision should be 5 April 1993, and with their Honours’ proposed costs order. I also agree with their Honours’ reasons, with one qualification that has no particular significance in this case but could be significant in another case.
63. The first “counterfactual” proposition that must be accepted for the purposes of the Special Case is that, but for the Commonwealth’s negligence, Mr Innes would have joined an appropriate Commonwealth superannuation scheme at some point before his appointment was terminated under s 76W of the Public Service Act 1922 (Cth).
64. If, counterfactually, he had been a member of the relevant Commonwealth superannuation scheme, he would have been an eligible employee and would, by reason of the termination under s 76W, have been “a person who has not attained the age of 60 who ceases to be an eligible employee by reason of early retirement” (s 59 of the Superannuation Act 1976 (Cth)). He would also have been a person who ceased “to be an eligible employee by reason of early retirement” for the purposes of s 62 of that Act. That is, by reason of the termination of his appointment under s 76W, Mr Innes would have acquired an entitlement to a choice of superannuation benefits as described in ss 59 and 62.
65. That was the point at which, in my view, the statutory contingencies would have fallen in such that Mr Innes would have become entitled to a statutory benefit (Commonwealth v Cornwell (2007) 229 CLR 519 at [19]). Once those contingencies had fallen in, and the cause of action had accrued, it does not seem to matter in relation to the limitation issue what choices Mr Innes would have made about the form in which that statutory benefit was taken, and both ss 62 and 59 are equally relevant.
66. The counterfactual proposition that Mr Innes would have chosen the benefits under s 59 (receipt of which could be deferred), rather than a lump sum benefit under s 62, seems to have no work to do, in terms of the limitation question, once the cause of action has accrued (it may however have work to do in any assessment of damages). As already noted, the cause of action accrued at the point when, but for the negligence of the Commonwealth, the termination of his appointment would have entitled Mr Innes to a superannuation benefit with a choice of payment options under ss 59 and 62 (not at the point when he would, counterfactually, have made his choice among those options).
| I certify that the preceding five [5] paragraphs numbered [62]-[66] are a true copy of the Reasons for Judgment of her Honour Justice Penfold. Associate: Date: 17 July 2015 |
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