Mann v United Super Pty Ltd

[2004] NSWSC 1093

CITATION:	Mann v United Super Pty Ltd & Anor [2004] NSWSC 1093
HEARING DATE(S):	21/10/04
JUDGMENT DATE:	18 November 2004
JUDGMENT OF:	Gzell J
DECISION:	Claim for interest alone sustainable under inherent jurisdication in equity to compensate for breach of trust. Action statute-barred.
CATCHWORDS:	INTEREST - Whether Equitable Relief or Fiduciary Relationship - Claim to total and permanent disablement under superannuation fund rejected - Payment subsequently made by trustee - Whether claim for interest as equitable compensation for alleged breach of trust by initial rejection sustainable - LIMITATION OF ACTIONS - Trusts and Deceased Estates - Action for interest - Incapacity and rejection of claim more than six years before action brought - Whether statute-barred
LEGISLATION CITED:	Supreme Court Act 1970 Limitation Act 1969
CASES CITED:	London, Chatham & Dover Railway Co v South Eastern Railway Co [1893] AC 429 Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd (1983-1984) 157 CLR 149 Hungerfords v Walker (1988-1989) 171 CLR 125 Wallersteiner v Moir (No 2) [1975] 1 QB 373 US Surgical Corporation v Hospital Products International Pty Ltd (1982) 2 NSWLR 766 Catt v Marac Australia Ltd (1986) 9 NSWLR 639 Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945 Armstrong v East West Airlines (Operations) Ltd, unreported, NSWSC, 3 February 1994 Cigna Insurance Asia Pacific Ltd v Packer (2001) 11 ANZ Insurance Cases 61-492
PARTIES :	Tony Colin Mann - Plaintiff United Super Pty Ltd - 1st Defendant The National Mutual Life Association of Australasia Ltd - 2nd Defendant
FILE NUMBER(S):	SC 3226/04
COUNSEL:	Mr G Beauchamp - Plaintiff Mr M Condon - 1st Defendant Mr R Cavanagh - 2nd Defendant
SOLICITORS:	Firths The Compensation Lawyers Middletons TurksLegal

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

THURSDAY 18 NOVEMBER 2004

ANOR

Introduction

1 The plaintiff, Tony Colin Mann, was a member of a superannuation fund of which the first defendant, United Super Pty Ltd, was trustee. It entered into an insurance policy covering its liabilities under the fund with the second defendant, The National Mutual Life Association of Australasia Ltd. Mr Mann made a claim on the trustee that he was totally and permanently disabled. His claim was rejected. Years later he repeated his claim and he received a lump sum payment out of the fund. His suit was for interest on that amount from the date his claim was first refused.

Can a claim for interest alone be sustained?

2 In London, Chatham & Dover Railway Co v South Eastern Railway Co [1893] AC 429 the House of Lords confirmed that at common law an award of interest as compensation for late payment of damages was not open. That proposition was accepted by the High Court in Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd (1983-1984) 157 CLR 149 at 162.

3 In Hungerfords v Walker (1988-1989) 171 CLR 125 the High Court declined to follow London, Chatham holding that damage from the loss of use of money was a foreseeable loss recoverable as a component of an award of damages. But Mr Mann did not sue for common law damages.

4 The Supreme Court Act 1970, s 94(1) provided that in any proceedings for the recovery of any money the court might order that there should be included in the sum for which judgement was given, interest at such rate as it thought fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date when the judgment took effect. But Mr Mann did not sue for the recovery of any money. He sued for interest alone.

5 The Supreme Court Act 1970, s 95(1) provided that where judgment was given or an order was made for the payment of money, interest should, unless the court otherwise ordered, be payable at the prescribed rate from the date when the judgment or order took effect on so much of the money as was from time to time unpaid. But Mr Mann received no judgment for the payment of money.

6 Equity had adopted a broader approach to awards of interest. It was held to be part of the inherent jurisdiction of a court of equity to award interest as part of equitable compensation where a person had improperly profited from his fiduciary position (Wallersteiner v Moir (No 2) [1975] 1 QB 373).

7 The inherent power to grant relief by way of monetary compensation for breach of a fiduciary or other equitable obligation was analysed by McClelland J in US Surgical Corporation v Hospital Products International Pty Ltd (1982) 2 NSWLR 766 at 816 and repeated and augmented by Rogers J in Catt v Marac Australia Ltd (1986) 9 NSWLR 639 at 659-660.

8 Mr Mann alleged that the trustee was in breach of duty when it rejected his claim and it improperly profited by the retention of funds that should have been disgorged to him.

9 Mr Mann relied upon Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945. There the plaintiff made a claim that he was entitled to total and permanent disablement benefits under a superannuation fund. At [5], Bryson J assumed that he would also be entitled to interest.

10 It was submitted by the trustee that the decision was distinguishable because the claim to interest was coupled with the claim to entitlement to superannuation benefit. That is a difference. In my view, however, a claim to interest was open to Mr Mann and it did not matter that the claim was brought independently of any contractual claim that was open to Mr Mann had he not been paid by the trustee.

11 In Armstrong v East West Airlines (Operations) Ltd, unreported, NSWSC, 3 February 1994, Brownie J saw no difficulty in the analogous situation where the plaintiff received a cheque for his entitlement under a superannuation scheme and then sued the trustee claiming equitable compensation interest in respect of the period of alleged unreasonable delay.

The limitation period

12 Mr Mann’s claim to interest dated from 1 May 1996, the day his claim was rejected. He commenced these proceedings on 2 June 2004. The Limitation Act 1969, s 24(2) provided that an action on a cause of action to recover arrears of interest on principal money was not maintainable if brought after the expiration of the limitation period fixed for an action between the same parties to recover the principal money. Section 48 provided that an action on a cause of action in respect of a breach of trust was not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrued or a limitation period for the cause of action fixed by another provision of the Act.

13 In Cigna Insurance Asia Pacific Ltd v Packer (2001) 11 ANZ Insurance Cases 61-492, an injured worker sued his insurer alleging permanent disablement. The question was whether he was out of time. It was held at 75,701 that the cause of action accrued when it could reasonably be concluded that the respondent was entirely prevented from engaging in any occupation for which he was relevantly fitted for the remainder of his life. Mr Mann was injured on 13 January 1994. But it does not matter whether time is computed from that date or the date of rejection of his claim, 1 May 1996. In either case, the proceedings were statute barred.

14 Mr Mann argued that he had repeated his claim in 2000 and in 2002. But the breach of trust was alleged to have occurred on 1 May 1996 and that was the date from which the plaintiff calculated the interest.

15 The claim in the summons to a declaration that Mr Mann is entitled to interest from the trustee must be dismissed.

Other issues

16 In light of my finding that the plaintiff’s action was statute-barred, it is unnecessary for me to consider the other issues raised in the proceedings. For completeness, I mention them.

17 The relevant definition of total and permanent disablement appeared in the insurance policy and, relevantly, meant that in the opinion of the insurer, after consideration of medical evidence satisfactory to it, Mr Mann was unlikely ever to be able to follow his usual occupation and any other occupation for which he could be reasonably considered qualified by education, training or experience.

18 In my view, Mr Mann was faced with the difficulty that it was by no means clear that in rejecting his claim on 1 May 1996, the trustee breached its duty to him. The letter of that date summarised the medical evidence. One doctor said that Mr Mann was capable of continuing his employment as a glazier particularly if he was able to do it following the removal of plaster. Another doctor said he was fit to seek suitable work but was unlikely, because of prolonged periods of standing and walking, to resume fulltime employment as a glazier. He might have sought work on a part-time basis.

19 Mr Mann also faced the problem that there were provisions in the trust deed limiting the liability of the trustee. Clause 26 provided that neither the trustee nor a delegate of the trustee was liable for, or in respect of, any action, claim, counter-claim, set-off, demand, liability, cost or expense whatsoever arising from any act or omission in connection with the scheme or the deed other than an act or omission involving fraud or wilful misconduct, wilful neglect or wilful default.

20 The trustee also argued that it had been released from liability by Mr Mann when he accepted a payment, said by the trustee to have been made ex gratia. The form he signed stated:

“In accepting the final Total and Permanent Disablement Benefit from Cbus, I acknowledge that my insured benefit for death ceased upon admittance of my TPD benefit by the Fund’s Insurer. I hereby release the Trustee of Cbus from all further liability to pay any further benefits to me.”

The form also contained a further acknowledgement:

“By signing below and returning this form to Cbus Administration I understand that I will have no further insurance entitlements from the Fund as my TPD benefit has been admitted by the Fund’s Insurer.”

Cbus was an acronym for Construction & Building Unions Superannuation by which the superannuation fund was known. TPD stood for total and permanent disablement.

21 In my view, the release and acknowledgement were limited to benefits under the superannuation fund and did not exclude a claim to equitable compensation for breach of trust.

The second defendant

22 Mr Mann conceded that he had no cause of action against the insurer. He said the relationship between the trustee and the insurer did not emerge until after the proceedings had been initiated.

23 The claim in the summons to a declaration that Mr Mann is entitled to interest from the insurer must be dismissed.

Conclusion

24 I will dismiss the summons. I will hear the parties on costs. I direct the parties to bring in short minutes of orders reflecting these reasons.

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Last Modified: 11/18/2004