Meredith v Commonwealth (No 2)
[2013] ACTSC 221
•20 November 2013
WAYNE GARRY MEREDITH V COMMONWEALTH OF AUSTRALIA (No 2)
[2013] ACTSC 221 (20 November 2013)
TORTS – Negligence – negligent misstatement – pure economic loss – negligent misstatement proven
TORTS – Negligence – common law negligence – pure economic loss – no specific duty of care identified – claim dismissed on this cause of action
TORTS – Breach of statutory duty – whether s 4(5) of the Superannuation Act 1922 (Cth) or s 11(1) of the Superannuation Act 1976 (Cth) create a statutory duty – they do not – claim dismissed on this cause of action
DAMAGES – damages for negligent misstatement – where the negligent misstatement lead the plaintiff to not join a public sector superannuation fund when eligible – where subsequent competing superannuation scenarios arose as a consequence – use of competing actuarial reports in the assessment of damages in these circumstances – turns on its own facts
SUPERANNUATION – Public service funds – availability of public service superannuation funds to ‘temporary’ Commonwealth employees under the Superannuation Act 1976 (Cth)
TAXES AND DUTIES – tax on a judgment sum – whether tax liability will be assessed on a judgment sum – leave granted to apply for award of additional damages if liability assessed
Limitation Act 1985 (ACT) s 11
Repatriation Act 1920 (Cth)
Scaffolding and Lifts Act 1912 (NSW)
Superannuation Act 1922 (Cth) ss 4, 5, 8, 12, 16, 75, 120,
Superannuation Act 1976 (Cth) ss 11, 17, 28, 29, 40, 45, 53, Pt V
Superannuation Act 1990 (Cth) ss 4, 6, 8, 20, 21, 29, 31, Sch 1, 2
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Handley, K R, Spence Bower, Turner and Handley: Actionable Misrepresentation (Butterworths, 4th ed, 2000)
Bennett v Minister for Community Welfare (1992) 176 CLR 408
Brownlie v Campbell (1880) 5 AC 925
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Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529
Campbell v University of New South Wales (1992) 44 IR 56
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Commonwealth v Cornwell [2006] ACTCA 7
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Groves v Wimborne (Lord) [1898] 2 QB 402
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Mulcahy v Hydro-Electric Commission (1998) 85 FCR 170
Mulcahy v Hydro-Electric Commission (1998) 85 FCR 248
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Mutual Life & Citizens Assurance Co Ltd v Evatt (1970) 122 CLR 628
National Wage Case June 1986 (1986) 301 CAR 611
Nominal Defendant v Gardikiotis (1996) 186 CLR 49
O'Connor v S P Bray Ltd (1937) 56 CLR 464
Perre v Apand Pty Ltd (1999) 198 CLR 180
Rawlinson & Brown Pty Ltd v Witham (1995) Aust Tort Rep 81-341
Re Amalgamated Metal Workers Union of Australia; Ex parte Shell Co of Australia Ltd (1992) 174 CLR 345
Re Manufacturing Grocers’ Employees Federation of Australia; Ex parte Australian Chamber of Manufacturers (1986) 160 CLR 341
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No. SC 528 of 2007
Judge: Refshauge J
Supreme Court of the ACT
Date: 20 November 2013
IN THE SUPREME COURT OF THE )
) No. SC 528 of 2007
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:WAYNE GARRY MEREDITH
Plaintiff
AND:COMMONWEALTH OF AUSTRALIA
Defendant
ORDER
Judge: Refshauge J
Date: 20 November 2013
Place: Canberra
THE COURT ORDERS THAT:
There be judgment for Wayne Garry Meredith against the Commonwealth of Australia.
The parties provide appropriate material from which the damages payable can be quantified in accordance with the reasons for judgment.
The parties be heard as to costs.
These reasons for judgment are divided into the following sections:
Table of Contents and Introduction [1] to [7] The claim by Mr Meredith [8] to [22] Negligent misrepresentation [9] to [12] Common law negligence [13] to [16] Breach of statutory duty [17] to [18] Other submissions in reply [19] to [22] Commonwealth Superannuation [23] to [26] The Evidence [27] to [360] Evidence for the plaintiff [27] to [238] (a) Wayne Garry Meredith [27] to [83] (b) Robert Rough [84] to [92] (c) Kevin Blake [93] to [99] (d) John Williams [100] to [111] (e) Douglas Mitchell [112] to [120] (f) Graeme Todkill [121] to [126] (g) Troy Meredith [127] to [132] (h) William Tobin [133] to [154] (i) Neil Freer [155] to [166] (j) Peter Seal [167] to [184] (k) Raymond Knight [185] to [206] (l) Clifton Stevens [207] to [223] (m) Lorraine Sellars [224] to [227] (n) Glen Tye [228] to [233] (o) Tony Fearnside [234] to [238] Evidence for the defendant [239] to [360] (a) Robert Hunt [240] to [249] (b) Graham McKenzie-Smith [250] to [268] (c) Ronald Murray [269] to [279] (d) Geoffrey McVeigh [280] to [287] (e) Kim-Marie Ivens [288] to [294] (f) George Hayes [295] to [308] (g) John Jamson [309] to [318] (h) William Bates [319] to [360] Consideration of the Evidence [361] to [381] Causes of Action Pleaded [382] to [603] Negligent misstatement [383] to [478] The Commonwealth’s contentions [392] to [478] (a) Position of the parties [393] to [404] (b) Reasonable reliance [405] to [414] (c) Social intercourse [415] to [422] (d) Adjustment reliance [423] to [469] (e) Breach of duty [471] to [478] Negligence [479] to [563] Reasonable foresight of the likelihood of harm [487] to [506] Determinate class of persons who are at risk [507] to [509] Vulnerability [510] to [531] Impairment of legitimate pursuit of autonomous commercial interest [532] Causation of the damage [533] to [542] Closeness of the parties’ relationship [543] to [563] Breach of Statutory duty [564] to [603] The Limitation Defence [604] Contributory negligence [605] to [615] Damages – Causation [616] to [652] Joining the scheme [623] to [631] Future employment [632] to [643] Medical examination [644] to [649] Admission to the scheme [650] to [652] Damages – Quantum [653] to [720] Uncontroversial matters [658] Controversial facts [659] to [683] The Expert Reports [684] to [720] Taxation [721] to [723] Conclusion [724] to [728] Delay [729]
It may be hard to imagine with the current fact of universal, compulsory superannuation in Australia that it is within living memory that general knowledge and awareness of such a retirement provision was foreign, unusual and less that widely understood.
Superannuation was, largely, a matter for government employees, members of the military and well-paid private employees until relatively recently.
These proceedings concern an employee of a Commonwealth agency who commenced full-time work as a temporary employee working in an administrative agency then known as ACT Forests, within the Commonwealth Department of the Interior. I shall refer to this agency as “ACT Forests”; it may have changed its name from time to time, but it is convenient to refer to it in this way. It conducted a number of depots within the government forests around Canberra and provided accommodation at the depots as they were some distance from the Canberra suburbs.
The employee and plaintiff, Mr Wayne Garry Meredith, commenced with ACT Forests on 9 January 1966. He says that, during his working life, he made a number of inquiries about joining a relevant Commonwealth superannuation scheme but was advised he was not eligible.
That advice was not correct and, on 6 August 2007, he commenced these proceedings claiming damages. He pleaded three causes of action: negligent misrepresentation by officers of the Commonwealth, breach of a statutory duty owed to him by officers of the Commonwealth and common law negligence in breach by officers of the Commonwealth of a duty owed to him by the Commonwealth.
The proceedings were heard with other similar proceedings and concluded on 11 February 2010 when I reserved my decision.
THE CLAIM BY MR MEREDITH
As I have noted, Mr Meredith pleaded three causes of action. The Commonwealth defended each.
The first claim – negligent misrepresentation
Mr Meredith’s first claim was in negligent misrepresentation. He claimed that he was told on five occasions between 1966 and 1977 by persons in a management role within the Commonwealth that he was not entitled to join the relevant Commonwealth superannuation scheme. These persons were senior members of staff of the Department, more senior than he was, who each had a position of authority over Mr Meredith and who provided, and, as agents of the Commonwealth, had authority to provide, information or advice about Mr Meredith’s terms, benefits and obligations of his employment.
Mr Meredith says it was reasonable to rely on the advice he was given and that he did rely on it, but that it was incorrect, as he was eligible to join such a Scheme and that the advice was provided negligently. But for the incorrect and negligently given advice, Mr Meredith says, he would have joined the Scheme and, as a result, he has suffered loss and damage.
The Commonwealth put these allegations in issue, including that he relied on the representations made to him, and says that it was unreasonable for Mr Meredith to have relied on the advice in the circumstances and that, despite having made the requests he did; it was unreasonable that he made no further inquiries. The Commonwealth further says that Mr Meredith’s capacity to join the Scheme was subject to a decision that was purely discretionary and required him to pass a medical examination.
In reply, as well as putting these matters in issue, Mr Meredith said that if he had failed to pass the medical examination, he would have been eligible to join the Provident Fund under s 4 of the Superannuation Act 1922 (Cth) (the 1922 Act) and that the failure to make that available to him he has, therefore, still suffered loss and damage.
The second claim – common law negligence
As to the second claim, Mr Meredith says that the Commonwealth administered relevant superannuation legislation, being the 1922 Act, the Superannuation Act 1976 (Cth) (the 1976 Act) and the Superannuation Act 1990 (Cth) (the 1990 Act), which meant that it exercised control over the procedures and policies which informed its employees about their eligibility to join or participate in a Commonwealth superannuation scheme and to facilitate its employees joining such a Scheme. The Commonwealth had, Mr Meredith further asserted, regular contact and means of contact with him and knew the details of his employment and employment circumstances. He further said that the Commonwealth knew and ought to have known that employees in the position of Mr Meredith were unaware of or confused about their eligibility to join a Commonwealth superannuation scheme or the criteria to be met for joining or participating in such a Scheme and that such employees were:
· not informed, routinely or at all, of accurate information about that eligibility, and
· had been misinformed and depended upon the Commonwealth’s officers to provide that information of which they could not be expected to be aware, including as to the value of their entitlement to participate in such schemes.
Mr Meredith further said that the Commonwealth knew or ought to have known that many of its staff in supervisory or managerial positions were themselves unaware or confused about the eligibility of employees to apply to join a Commonwealth superannuation scheme and the criteria for eligibility and that they regularly received requests from the employees they supervised or managed about eligibility to join a Commonwealth superannuation scheme and gave incorrect information, including advising temporary employees that they were not eligible to join such schemes. He then said that the Commonwealth was aware that, as a result, temporary employees such as Mr Meredith were vulnerable to harm from this reliance upon incorrect information and the failure to provide correct information and were likely to suffer loss and damage as a result of not applying to participate in a Commonwealth superannuation scheme when legally entitled to do so.
These matters, he said, meant that the Commonwealth owed a duty to persons such as Mr Meredith to inform and instruct its employees about their eligibility to join such schemes and to ensure, by appropriate instruction or otherwise, that its staff gave correct and timely advice about these matters and to disseminate accurate and up-to-date information. He said that the Commonwealth breached its duty by failing to do these things and that, as a result of the breaches, he had suffered loss and damage.
The Commonwealth put these matters in issue in its defence. It also said that the superannuation schemes established by the various acts were not administered by the Commonwealth but by independent bodies; for the 1922 Act, the Superannuation Board, a body corporate, for the 1976 Act, the Commissioner for Superannuation, and for the 1990 Act also the Commissioner of Superannuation. It also said that, despite having no duty to do so, it did implement reasonable steps to inform its employees about their eligibility to join an appropriate Commonwealth superannuation scheme.
The third claim – breach of statutory duty
The third cause of action pleaded by Mr Meredith was a breach of statutory duty said to have arisen from the terms of s 4(5) of the 1922 Act and s 11(1) of the 1976 Act which were said to have a purpose of extending the Commonwealth superannuation scheme to temporary employees. It was said that this obliged the Commonwealth to inform employees such as Mr Meredith of their eligibility for such superannuation schemes and to take such steps as may be appropriate to effect that as well as to provide accurate information in respect of such schemes. Mr Meredith then claimed that the Commonwealth breached these obligations by failing to inform its relevant employees and take other specified steps to assist them to become eligible or to join such schemes. Had these breaches not occurred, Mr Meredith said, he would have applied to become a member of a relevant scheme the steps necessary would have been taken for him and he would have been entitled to the benefits of such a scheme. As a result, he said, he has suffered loss and damage.
Again, the Commonwealth put these matters in issue, relying also on the purely discretionary nature of some of the decisions that were required before Mr Meredith would become a member of any such scheme.
Other submissions in reply
The Commonwealth also raised some answers to the whole of Mr Meredith’s claim. The first was that it was barred by s 11 of the Limitation Act 1985 (ACT).
The second was that the Commonwealth said that, if Mr Meredith suffered any loss or damage for which the Commonwealth was liable, such loss and damage was caused by or contributed to by Mr Meredith because, for example, he failed to make adequate inquiries, failed to check the correctness of advice given him, failed to read material disseminated or otherwise available and the like.
The Commonwealth also answered the claim by asserting that Mr Meredith had failed to mitigate his loss.
In response to the argument under the Limitation Act, Mr Meredith, in reply, claimed that the action was commenced within the limitation period, and that such a defence was not available due to the decision of the High Court in Commonwealth v Cornwell (2007) 229 CLR 519. In relation to the allegation that Mr Meredith had failed to mitigate his loss, he claimed, in addition to denying the allegation, that he did not have a reasonable opportunity or capacity to make contributions in a manner that would have yielded a comparable sum to that to be earned from superannuation or that the Commonwealth should be estopped from asserting that the loss he suffered was caused or contributed to by any failure by him to mitigate his loss.
COMMONWEALTH SUPERANNUATION
There were three Commonwealth superannuation schemes in operation during the employment of Mr Meredith. I shall refer to them all in this judgment as “a Commonwealth superannuation scheme”. They were as follows:
(a) The Commonwealth Superannuation Fund (CSF) was established by s 8 of the 1922 Act. Section 75 also established a Provident Fund, which was part of the CSF for employees who elected to join it or who, in circumstances set out in the 1922 Act, were otherwise ineligible to join the CSF but who could nevertheless join the Provident Fund. Section 120 established a Superannuation Board to manage the CSF by, inter alia, investing the moneys of the CSF (s 12), borrowing moneys for the CSF (s 16) and acceptance of medical suitability of an employee for membership (s 5).
(b) The Commonwealth Superannuation Scheme (CSS) was established by the 1976 Act which required eligible employees to pay fortnightly contributions (s 45) and provided for eligible employees’ benefits (Pt V). Section 17 provided for the appointment of a Commissioner for Superannuation who had responsibility for the administration of the Act, apart from the management of the Superannuation Fund, as established by s 40 and into which all contributions and other receipts received by the Commission were to be paid (s 53). The Fund was managed by a Trust established under s 28 as a body corporate (s 29). The Commission had power to direct that temporary employees be eligible to join the CSS (s 11). The CSS closed for new members in 1990.
(c) The Public Sector Superannuation Scheme (PSS) was established by the 1990 Act. It was established by s 4 of the Act under a Trust Deed required to be made in accordance with the Schedule to the Act. The Act’s first Schedule, which set out the form of the Trust Deed (s 4(2)), also established a Fund (cl 2(2)) and the rules for the operation of the PSS. Members were, inter alia, all permanent employees (s 6) and temporary employees who made an election to become members (s 8). Section 20 established the “Commonwealth Superannuation Board of Trustees No 1” (s 20) which became a body corporate (s 21). It was given power in its required form in the Schedule to administer the PSS and to manage and invest the Funds (cl 3). The Board, under the Scheduled rules, was to receive contributions payable by members (r 3.1.1) and by employers (r 3.2.1). It also had other powers, such as in relation to medical examinations of prospective members (r 1.2.1) and determination of whether they should be treated as limited benefits members (r 1.2.2). It had powers to make various other determinations under the Trust Deed. Section 29 of the Act established the position of Commissioner of Superannuation which was responsible for the provision of administrative services to the Board and actions taken by the Commissioner in the name of or on behalf of the Board were taken to have been done by the Board. The Trust established by the 1976 Act became also the investment manager of moneys in the Fund (s 31).
The administrative agency that managed the operations or provided relevant administrative support to the Boards, Trustees and Commissioners was known by various names, including Australian Government Retirement Benefits Office (from 1973), the Retirement Benefits Office (from 1990) and Commonwealth Superannuation Administration or ComSuper (from 1994). For ease of reference, I shall refer to the agency, where necessary, as ComSuper.
In 1986, the Australian Conciliation and Arbitration Commission in the National Wage Case June 1986 (1986) 301 CAR 611 at 645 made provision for employers to pay a percentage of employees’ salary or wages into a superannuation scheme for the employee in lieu of a direct wage increase. Although challenged, this arrangement was upheld in Re Manufacturing Grocers’ Employees Federation of Australia; Ex parte Australian Chamber of Manufacturers (1986) 160 CLR 341.
Such payments were made on behalf of Commonwealth employees, it appears, from about 1988. In the absence of a superannuation scheme of which an employee was a member, the payments were made to a default scheme identified by the employer. In the case of Mr Meredith, that was the Australian Government Employees Superannuation Trust (AGEST).
THE EVIDENCE
The evidence for the plaintiff
(a) The plaintiff, Wayne Garry Meredith
Mr Meredith commenced employment with the Commonwealth as a forest worker on 9 January 1966, when he was nearly nineteen years old. He had married a little less than a month earlier. He applied for the Commonwealth job at the suggestion of his brother-in-law. He said that, before applying for the position with the Commonwealth, he had discussed the benefits of government employment with his wife and that this included the possibility of superannuation.
After a period of probation, he and his wife were provided with a rental house at the Uriarra forestry depot outside Canberra and, later, at another settlement until their house was destroyed in the 2003 Canberra bushfires. He and his wife had four children. Mr Meredith took voluntary redundancy on 29 August 2001, when he was fifty-four years old.
Mr Meredith said that, when he initially applied for the position of forest worker, he attended at offices in South Building in London Circuit, Civic, and had an interview with the then Director of Forestry, who explained matters such as wages, his duties and a two-months probation period. He said he was told that, after the successful probation period, the job would be permanent. He said he was “given a starting ticket” but no other paperwork.
He gave details about his work and the other staff. He said that the Overseer of the depot where he worked was Mr Bill Bates. He understood that Mr Bates was the person to whom he should direct inquiries about his work, wages, requests for holiday leave, overtime and other employment related matters.
He described his duties but I do not have to set them out. He said that there was a practice of management briefings by the Ganger or Leading Hand outside the recreation room of the depot and any meetings took place at the end of each shift in the recreation room where changes in terms and conditions of employment were advised. There were noticeboards at the depot, one for rosters and fire rosters, the other for union notices, and which contained a calendar and a dart board.
After he had completed his probation successfully, his brother-in-law suggested that he should join the Commonwealth superannuation scheme. No-one had, up to that time, mentioned that to him.
Mr Meredith says that, in about April 1966, after he had completed his period of probation, he went to see the Overseer, Mr Bates, to ask him about joining a Commonwealth superannuation scheme.
He said that, to the best of his recollection, he said “I would like a form to join the government super, please give me a form or tell me how to join.” He said that, to the best of his recollection, Mr Bates said, “[y]ou are not an eligible person. You are temporary and a blue collar worker”. He cannot recall the whole conversation; other similar things may have been said.
While thinking this was unfair, Mr Meredith did not question that advice as he did not feel he was in a position to argue with it. He was mindful that he was a temporary employee and was concerned not to risk losing his job. He accepted what he was told.
At this time, his health was excellent and he considered, especially after what he had been told (see [29] above), that he had a long-term permanent position. He felt, too, that he could afford to pay a superannuation contribution; he recalls being able to save from his earnings. He also said that if he had been told that, despite being immediately ineligible, he would be eligible in three years, he would have applied at the earliest time he became eligible.
He was, at the time, a member of the Australian Workers Union (AWU). He spoke to some union delegates from other unions to complain about the unfairness of not being able to join superannuation; none of them ever told him that he was or would become eligible. Indeed, one union organisation said to him “[y]ou are not public servants and therefore you are not eligible to join”.
He discussed the issue with Mr Bates again on at least two further occasions in the next two years but Mr Bates on each occasion confirmed that he was not eligible to join.
When Mr Meredith commenced employment, the Forester-in-Charge, Mr Ron Murray, was overseas. On his return, Mr Meredith decided to approach him, especially because he had heard that some forest workers at another depot were members of the Commonwealth superannuation scheme. His evidence was as follows:
I said to Mr Murray words to the best of my recollection: ‘Why can’t we forest workers join government superannuation?’
Mr Murray said words to the best of my recollection: ‘You are not entitled to join as far as I know.’
I said: ‘Why?’
Mr Murray replied words to the best of my recollection: ‘You already know why’.
I then said to Mr Murray words to the best of my recollection: ‘I have been told a couple of workers are in the scheme and I want to know what is the situation.’
Mr Murray then shrugged his shoulders and threw up his arms. I understood from that action that the conversation was over. From this conversation I understood that I would not be able to take this matter any further with Mr Murray. I concluded from this conversation that I was still ineligible to join the Commonwealth superannuation scheme and that this would continue for as long as I was a forestry worker.
In November 1969, Mr Meredith was promoted to Leading Hand and appointed as union representative, a position he held until 1972.
In late 1969 or early 1970, with other union representatives, he attended a meeting with Mr Mark Edgerly, ACT Director of Forests. After the meeting, he took the opportunity to speak to Mr Edgerley about superannuation. His evidence about that conversation was:
I said words to the best of my recollection: ‘Now that I am a leading hand, am I permanent and able to join the super?’
Mr Edgerly replied with words to the best of my recollection: ‘What information have you been given?’
I then responded to Mr Edgerly with words to best of my recollection: ‘I’ve been told that I am not eligible to join because I am not permanent.’
Mr Edgerly then replied with words to the best of my recollection: ‘There is no change to government super for you; you can’t get in.’
In 1977, he was again promoted to the position of Ganger. Mr Bob Crutwell had replaced Mr Murray as Forester-in-Charge.
Mr Meredith said that the question of superannuation was frequently discussed by workers and himself around this time. He passed on to the other workers the information he had been told by Mr Bates, Mr Murray and Mr Edgerly. There was a general feeling that this was unfair.
At some stage, he made a further inquiry on behalf of his gang and he says he was again told by Mr Bates or Mr Gary Croston (Second-in-Charge assisting the Forester-in-Charge and, then later, the Forester-in-Charge), “[t]hey are not permanent public servants and it is a public service scheme”.
He says that during the whole period of his employment at the Uriarra depot he did not see or hear any information advising that he was eligible to apply for a Commonwealth superannuation scheme, though from time to time private superannuation and insurance sales representatives visited the depot and spoke to employees.
In about February 1984, Mr Meredith was promoted to Overseer at the Pierce’s Creek forestry depot. He did not see there any information about superannuation.
He said that he first became aware that he was eligible to join the Commonwealth superannuation scheme in about 1990 when two employees came from the ACT Forest’s central office to Pierce’s Creek to provide information about the changes to the superannuation arrangements. At about this time, he met a fellow forest employee who had been a member of a Commonwealth superannuation scheme during his employment.
In January 1991, soon after learning that he was eligible, he suffered a severe back injury which required him to take a good deal of time off work. He was concerned about the impact of the injury on his future ability to return to work and his ability to support his family. Thus, he concerned himself with issues of his rehabilitation and compensation rather than pursuing any inquiries about superannuation.
He did return to work and in July 1994 was transferred to the ACT Government’s employ as a result of Self-Government in the ACT. He was not told at that time that he could join the then Commonwealth superannuation scheme nor was he given any information about superannuation.
In 1997, he suffered an aggravation to his back injury and had to take further time off work but, on return to work, had to perform part time duties as he had physical restrictions. Because of these matters, he did not make any further inquiries about his eligibility to join a government superannuation scheme.
On 29 August 2001, he accepted a voluntary redundancy. He said that he would have applied to access his superannuation when he turned fifty-five if he had been a member of a Commonwealth superannuation scheme from when he was first eligible.
During his employment, he did purchase insurance policies but eventually surrendered them as they did not seem worthwhile. He looked into obtaining private superannuation but thought the benefits were unattractive.
His evidence was that during his years of employment, he used his income to support his wife and four children. He and his wife put his savings into a credit union account maintained by his wife.
As to the insurance policies, his best recollection was that he surrendered them in the 1980s and that the larger policy realised a sum of about $5,000.
After he was made redundant, he was not allowed to receive a pension but received a Newstart allowance from Centrelink. Since 2004, he has been in receipt of a disability allowance of approximately $530 per fortnight.
He and his wife purchased their first home, a house at Sussex Inlet, in April or May 2003 for $120,000 and spent $50,000 to $70,000 on repairs to it.
Mr Meredith’s wife was diagnosed with lung cancer towards the end of 2005 and died in mid 2007. Mr Meredith used the funds he had from the AGEST scheme, into which he had contributed, for costs associated with her treatment and for a motor vehicle to provide more reliable transport to access medical assistance for his wife in Wollongong and accommodation while there. It was also used for funeral expenses.
In cross-examination, Mr Meredith was challenged as to whether the affidavit he had made contained his words or were the words of his lawyers from information that he gave them. He was firm that they were his words and, indeed, nothing in the cross-examination led me to any other conclusion.
It was said, however, in the Commonwealth’s submissions, that because some of the words of the conversation were “to the best of [his] recollection”, despite him being insistent that the affidavit was “word for word” from what he had told his solicitors, I should treat his claim “with considerable caution”. It seems to me, however, that this mistakes the evidence given by Mr Meredith. He was asked and answered that the words in the affidavit were his words rather than the words of his lawyers from information he gave them. He did not say in cross-examination that the words in the conversations quoted in the affidavit were necessarily verbatim the words used in the conversations many years ago.
I do not accept that Mr Meredith was asserting that the words in the conversations were necessarily the exact words said in those conversations; indeed, the affidavit is clear that they are simply “to the best of his recollection” and that is what he maintained in cross-examination.
Mr Meredith was also asked the reason for his conversation with the union organiser, one Mr Bill Spellman. His evidence was:
You’ve said, have you not, that after you spoke to Bill Bates early in your employment in 1966 you had some doubt about what Bill Bates had said? --- Yes, that’s correct.
Isn’t that why you spoke to Bill Spellman? --- I had doubts after I also spoke to Ron Murray and Mark Edgerley and then spoke to Bill Spellman.
All right, your recollection is that you spoke to Bill Spellman after you’d spoken to all of the others? --- That’s correct.
Okay. And Bill Spellman said to you - and I’m quoting from paragraph 17 of your affidavit - ‘You are not public servants and therefore you are not eligible to join’? --- That’s correct.
You accepted what Mr Spellman told you? --- Yes because I’d already accepted that I wasn’t - I could not join.
Yes, but you accepted what Mr Spellman told you because you didn’t make any further enquiries after that, did you? --- No.
He did not, however, pass on to his fellow forest workers the contents of this conversation with Mr Spellman. When asked about that he said:
Well I believed after the last interview with Mark Edgerley I believed I couldn’t join and I passed on - if people asked me because they knew I asked - other people asked - and it was little discussions in and around gangs why ‘what happened to you when you asked’.
He also referred to his conversations with Mr Bates in the context of complaining to him about how unfair it was that he could not join the superannuation fund. At least one of these conversations, according to his evidence in cross-examination, was in a vehicle being driven by Mr Bates when they were driving around to see gangs at work.
In cross-examination also, he described Mr Bates as “my superior who was my boss and I respected him”. He said that he did not know that Mr Bates was a temporary employee. Mr Meredith thought that, when he gained his promotion, he may have been considered “more permanent”; hence his further inquiries.
Mr Meredith also said in cross-examination that he spoke to other union representatives to complain that it was unfair he could not join a Commonwealth superannuation scheme, but that they were union representatives, not organisers such as Mr Spellman.
Mr Meredith was also asked questions in cross-examination about what happened after he learned in about 1990 that employees such as himself could join a Commonwealth superannuation scheme. This was when another forest worker, Mr John Reardon, told him that he had been in such a scheme for a number of years. Mr Reardon had not, however, told him before that that he was a member of the scheme. Indeed, he said that when he was told, he did not at first believe him.
As noted above, Mr Meredith later moved to the ACT Forests depot at Pierce’s Creek as Overseer but said that, in the seven years he was there, there was not a lot of discussion about superannuation and the unfairness of not being able to join a Commonwealth superannuation scheme.
It was put to him in cross-examination that he had been told by Mr Richard Duffy in 1985 that Mr Reardon was a member of a Commonwealth superannuation scheme. He said he did not recollect it and, if it had happened, he would have approached Mr Reardon then.
He agreed that when Mr Reardon told him that he had been a member of a Commonwealth superannuation scheme for some years, he was very angry. He said he was planning to find out how to join the scheme but, when he had the serious back injury, he did not do so. He was off work for about twelve months altogether. He said he was not allowed to return to work into his old job. By January 1992, he was returning to work on a rehabilitation return-to-work programme over a period of time. He started on about three to four hours and it took him about six months to get back to work. He did, however, make a full recovery but had another medical problem in 1995, though it was not work related. He could not remember, however, how long he was off work on that occasion.
He agreed that, in 1997, he had a recurrence of his back injury in the middle of the bush fire season and was off full duties and never returned to his earlier position. He was involved in a gradual return-to-work programme, working part time initially at the central depot at Mount Stromlo. He thought that this was about 1999.
He then worked at the Murrumbidgee River Corridor after working at Griffith Library for about six months. He said, in cross-examination, that he did not talk to anyone else at work about superannuation at that time because “[t]here was too much going on at that time with rehabilitation” and because he had to “learn the new ropes” where he then became employed.
It was put to him that his two sons had joined a Commonwealth superannuation scheme as temporary employees but he said that he did not know at the time, although he later found out. He said that they did not discuss work at home.
He did not know that superannuation was governed by law or that there was a Superannuation Act. He also said that he did not read newspapers, although after about the 1990s he did read them perhaps once a month. He certainly did not read them between 1972 and 1974, and did not see any articles about superannuation published in The Canberra Times around that time. He gave the same answer in relation to articles in 1989 in The Canberra Times.
He was shown a document produced by the Industrial Section of the Department of the Interior headed “General Information for Employees” and said that he had never seen it. He was also shown a booklet entitled “Commonwealth Superannuation” published by the Superannuation Board in May 1967 and said that he had never seen it either. He was also shown a booklet, said to be orange in colour, entitled “Joining the Department of Territories – Conditions for Industrial Workers” published by the Department of Territories in about 1985. He said that he had never seen it. He did refer to an occasion where “a lot of books” had been thrown out from the Central Office at Mount Stromlo and there were a lot of different coloured books so he may have seen it then but he did not read it or look at it.
He also confirmed in cross-examination that he never took out private superannuation because he found it unattractive and insurance policies were better for him at the time.
He said that he earned other income during the time he was employed. He played football and was paid for that at about $20.00 per game which totalled about $80.00 per week. He was also employed hay carting, being paid $1.25 per hour. In re-examination, he added that he was allowed during his holidays to undertake contract tree planting. For the planting of pine trees, he was paid as a contractor. He could also do that work on a Saturday or a Sunday as overtime. He said that he used also to cut wood for $10.00 a tonne and cart the wood which would bring him in about $60.00 over a weekend. He noted that his wife also worked and that she saved money. He also earned overtime on occasions.
He was asked about the union of which he was a member, the AWU, and their portable superannuation scheme. He said that, at the time, he did not know about that and, although he received Union newsletters in the early days, probably the early 1970s, he then ceased to receive them. He said that even when they were received, they were not regular. He denied seeing any newsletters from the Union talking about its superannuation scheme and encouraging people to join it. He did not know the scheme existed.
In re-examination, he confirmed that his wife would also save money.
After he had given evidence, Mr Meredith was recalled and it was put to him in further cross-examination that Mr Bates could not recall any of the conversations that Mr Meredith said he had had with him. He was asked whether he was or could be mistaken and he said that he was not. He said that he remembered the conversations and confirmed that he had the conversations with Mr Bates. He said that “Mr Bates wanted to handle all the administration as far as wages, entitlements and rec leave and all that”.
Mr Meredith agreed that Mr Bates did not have power to fire people.
It was also put to him that Mr Murray, in his evidence, had said that he did not recall the conversation alleged to have occurred (at [39] above) but, again, Mr Meredith confirmed that the conversations occurred and denied that his memory was faulty. He also denied that his recollection was “wishful thinking”, noting that his recollection was probably stronger than Mr Murray’s, “because it concerned [him]”.
He denied that Mr Murray ever said to him that it was possible for him, Mr Meredith, to join a Commonwealth superannuation scheme. He denied that Mr Murray ever told him that he should seek information elsewhere and Mr Meredith re-affirmed what he had said in his affidavit.
In further re-examination, Mr Meredith said that he was informed that “all pay-related issues, holidays, sick leave, all that was to go through your Overseer”. That was, for most of his employment, Mr Bates. He also said that Mr Bates did not tell him that he did not know whether Mr Meredith could join superannuation; he had said affirmatively that he could not, as he said “[y]ou were a blue-collar worker and not a permanent worker, a temporary public - temporary worker ”.
(b) Robert Rough
Mr Robert Rough also gave evidence. He commenced as a forest worker with ACT Forests in February 1971 and recalls an occasion in about 1975-6 when he was working in a group for which Mr Meredith was the Leading Hand. He could not recall why, but they started to talk about superannuation and he remembered someone in the group saying “[y]eah, but you’ve got to remember you’re a public servant”. He said that, in response to this remark, somebody else said “[b]ut if we’re public servants, why aren’t we in super”. He said that this question triggered a fair bit of discussion which went on for several days. He said things became heated because there was a feeling that the workers were being subject to unfair discrimination. He then said:
Okay let’s not go any further with this. I am asking Wayne [Meredith], who is here, as our leading hand to go and ask if we are public servants why aren’t we in government super.
He said that they asked Mr Meredith to make those enquiries and the next day they waited for him to go and see the Forester-in-Charge, Gary Crosten, and the Overseer, Mr Bates. He said that when Mr Meredith came out of the office his words, to the best of his recollection, were “[w]e aren’t entitled to be in the Commonwealth superannuation scheme because we’re blue-collar workers and not white-collar workers”. He said that they accepted that because it had come from the Forester-in-Charge and Overseer and he did not hear about Commonwealth Superannuation again. He said that there was a noticeboard in the recreation room at the Uriarra Depot but he never saw any information on it about superannuation.
He was cross-examined and denied that he was wrong about the words spoken by Mr Meredith, who he assumed had been told that by Mr Bates or Mr Crosten because he had come from the office. He said that he had first been asked to remember this conversation about two or three years before he gave evidence, though he did recall an occasion in about 1989 or 1990 when he met an acquaintance from his time at ACT Forests and they discussed it. He was not, at the time, employed by the Commonwealth but he understood that there was talk about a possible claim against the Commonwealth for superannuation which had not been paid.
A few years later, he said there was a meeting to discuss such claims. He has not sued the Commonwealth in respect of superannuation.
He said that he was certain that the words quoted in his affidavit, referred to above (at [84]), were very clear because “the following days was an ongoing argument” involving all the members of the gang and he said that he clearly remembers the words used. Although the words he used in his oral evidence were not precisely the words he used in the affidavit, they were, as conceded by the Commonwealth, “pretty damn close”, but he accepted that they might not have been exactly the words that were used; certainly they set out the gist of what was said.
Mr Rough said that he did not have other discussions with fellow employees because he accepted the answer that Mr Meredith had given him.
Mr Rough said that he did not recall ever getting a “Conditions of Employment” document or any pamphlet about superannuation. He also said that he did not join a private superannuation scheme while employed by the Commonwealth. His knowledge of superannuation and how important it was came after he left the Commonwealth and was working privately with his wife in a business. They then both took out private superannuation schemes. That was in about 1982.
He said that he was a member of a Union, but did not hear anything about superannuation from the Union. He saw a few Union newsletters but he did not read the local newspaper, The Canberra Times. He was conscious that he would be able to rely on the aged pension in due course.
Mr Rough further said in cross-examination that he did not know whether Mr Bates was a member of a Commonwealth superannuation scheme.
(c) Kevin Blake
Mr Kevin Blake was also employed as a forest worker at the Uriarra depot in 1973 or 1974. He said in evidence that he recalled having a discussion with other forestry workers about Commonwealth superannuation and why they could not be part of a scheme. As a result of that discussion, he decided to go and ask about it. He went to see Mr Bates in his office at Uriarra and asked him “[w]hy can’t we pay into super?” Mr Bates replied with words to the following effect “well you are not entitled because you are only casual. There are only four permanent workers here and the rest are casuals.” He then returned to the other workers and told them what he had been told.
It was put to him in cross-examination that Mr Bates had sworn an affidavit saying that he had no recollection of that conversation. Mr Blake denied that he could be wrong and confirmed that the conversation occurred. He agreed that what he put in the affidavit was the gist of what was said, “same sort of meaning”, though he could not recall the exact words. He said that the first time he had been asked to recall the details of the conversation was about five or six years ago from the time he was giving evidence in 2009. He agreed that he had claimed compensation from the Commonwealth for the same cause but it appears that no proceedings had been commenced.
He said that he was a member of a Union and that he may have discussed the superannuation with his Union representative but did not have a recollection of what he was told. He did say that he had had some memory difficulties after he had suffered a heart attack, though “some things I can remember”.
He also said that, when he went to sign on at offices in Civic for his original employment, he was not given any papers. He did sign something, but did not get a “Conditions of Employment” document or any pamphlets. He then went to see Mr Bates and the only thing he was told was that “the work’s hard” and that he was on probation.
Mr Blake said that after he was told that he could not join a Commonwealth superannuation scheme, he did not take out private superannuation or life insurance.
He said he really did not know anything about superannuation, but “the guys reckon it’d be good to be in”. He did not know how much it would cost. He did not know whether his Union had a superannuation scheme. He said that he may have read a newspaper but could not recall the name of the paper. He also said that he did not think about receiving the age pension when he retired, although he knew that there was an old age pension. He was aware of noticeboards in the recreation room but had a poor memory of what the notices were. He was not aware whether Mr Bates was a member of a Commonwealth superannuation scheme and merely said, “what he said about superannuation well you have to believe him because he was the boss”.
Mr Blake considered the appropriate term for himself at the time was “a forestry worker”. He would have described himself as a casual but not as a temporary employee. He did not know that superannuation was governed by a law.
(d) John Williams
The next witness was Mr John Williams. He commenced work for ACT Forests in about June 1968. At the time, he was not provided with any documents or other information about conditions of employment. He said that he was not provided with any documents about superannuation at the time he commenced.
He recalled that, after some time, probably in 1973, there was a discussion amongst his fellow forest workers about superannuation. He then decided to see the Overseer, Mr Bates, about it and went to his office at the Uriarra depot. His evidence was
To the best of my recollection, I said: ‘Am I eligible to join the Commonwealth superannuation scheme?’
Bill Bates, to the best of my recollection, responded with the following words: ‘You are an industrial worker and you’re not entitled to join the scheme.’
I believe he may have used the words, ‘blue collar worker’. From his comment, I understood that whilst I remained an industrial, or blue-collar worker, I could not join the government superannuation scheme.
Mr Williams said he also had a discussion with the then Forester, Mr Cruttwell, around the same time. This was prompted because he had heard that Mr Bates may have been in a Commonwealth superannuation scheme and he wished to check his own eligibility. His evidence was:
To the best of my recollection, I said the following words:
‘Why am I not eligible to join the government superannuation scheme when other industrial employees, such as overseers, are in it?’
To the best of my recollection, Mr Cruttwell responded:
‘You are an industrial employee, not a permanent employee, and, therefore, you are not eligible to join the scheme.’
He then took out an insurance policy with a private insurer, but discontinued it in late 1973. In late 1974, he made a further inquiry of the Forester, then Mr Robert Williams. His evidence was:
To the best of my recollection, I again said:
Why can I not get into the government superannuation scheme?
Robert Williams simply replied with:
Because you’re not eligible.
As a result, he took out a superannuation policy with a private insurance company in about 1986.
Mr Williams was cross-examined and denied that he could have been wrong about his conversation with Mr Bates, even though Mr Bates said that he had no recollection of it. He said that his memory was not defective even though he was remembering something that was thirty years ago. He said that he had been first asked to remember the conversation probably a couple of years before he was giving evidence. He said that the conversation had come up in passing in between. He said that he initially made a claim for compensation in respect of the advice given about superannuation but he let that lapse.
He agreed in cross-examination that the words used in his evidence were not “the exact words” but he said “they were fairly close”.
He said that he did discuss superannuation with workmates from time to time. He acknowledged working with one forest worker who, he later found out, was a member of a Commonwealth superannuation scheme.
Mr Williams later said that he successfully applied for a public service position and joined the Public Sector Superannuation Scheme (PSS).
When he joined ACT Forests, he signed on in Civic. He signed a document which was tendered in evidence. It notes on it “received conditions of service pamphlet”. He acknowledged that he was given some documents but he was not too sure what they were. He said he did not study them and he no longer had any copy of them. He said that the only thing he probably would have read would have been the starting time and where he was to report.
He was a member of the AWU but was not aware that the Union had a portable superannuation scheme. He did receive Union newsletters but did not see anything in them that he thought was applicable.
He denied that superannuation was not in front of his mind because, as he noted, he, in fact, did join a private superannuation scheme when he was told he could not join the Commonwealth one. He did not know that superannuation was governed by a Commonwealth law and said that he was aware of noticeboards at the Uriarra depot in the recreation room and the door of the Overseer’s office. In re-examination, he said he did not recall seeing any information relating to superannuation on the noticeboards.
(e) Douglas Mitchell
Mr Douglas Mitchell commenced working for the New South Wales Government as a forestry worker in 1974 and moved to Canberra in 1986, when he commenced with ACT Forests.
He recalled that, not long after commencing employment, he was part of a discussion within his gang about superannuation; one of the others told him that, as blue-collar workers, they could not join a Commonwealth superannuation scheme.
He recalled that, in the 1990s, he attended a meeting at the Stromlo depot where representatives of the Commonwealth superannuation agency visited and discussed the PSS. He subsequently completed documents and joined the PSS on 20 August 1996.
In cross-examination, Mr Mitchell was shown a document that he signed when commencing employment with the Commonwealth. A paragraph above his signature read:
After 12 months’ service you will be covered by the Commonwealth Employees’ Redeployment and Retirement Act 1979. You will also be eligible to apply to join the Commonwealth superannuation scheme.
At the time he joined the Commonwealth, he was a member of a private superannuation fund. He joined a Commonwealth superannuation scheme, the PSS, when he transferred to the ACT Government following Self-Government. He joined in 1996.
He said that Mr Bates always said that the forest workers could not join superannuation.
Mr Mitchell was a member of the AWU but did not know that it had a superannuation scheme. He did not receive newsletters from the Union. He thought he may have seen articles in the newspaper about changes to the Superannuation Scheme.
In re-examination, he said he did not read the document that he had signed when he joined the Commonwealth. His attention was not drawn to anything in the document.
He also said that, unlike New South Wales, where he would get information with his payslips, he never received anything from the Commonwealth about any superannuation scheme which is why, during or prior to his employment with the ACT, he did not join a Commonwealth superannuation scheme.
(f) Graeme Todkill
Mr Graeme Todkill said that he joined ACT Forests in 1979. He met with the forester, Mr Graham McKenzie-Smith, at the Uriarra depot where he was interviewed. In the interview, Mr McKenzie-Smith outlined various matters but mentioned superannuation and told him that he was not eligible to join a Commonwealth superannuation scheme. He said that, to the best of his recollection, Mr McKenzie-Smith said, “industrial workers are not entitled to join the Government Superannuation”. He said that he knew from discussions with another forestry worker that blue-collar workers were industrial workers.
It was not until 1990 that he found out that he was able to join a Commonwealth superannuation scheme about the time that the PSS commenced. He attended a seminar and joined the PSS.
It was put to Mr Todkill that Mr McKenzie-Smith had sworn an affidavit saying that he had no recollection of the conversation referred to by Mr Todkill. It was put to him that he might be wrong about the conversation, but he denied that. He agreed that the conversation was a long time ago and said that he had only been asked to remember the conversation first when the possibility of proceedings was mooted. He said that he had not made a claim for compensation against the Commonwealth in respect of the advice that he had received.
Mr Todkill said that, although he had not made a claim, he was interested in making a claim but had been told that because he was still working he could not put in a claim until he stopped working.
Even though he had not joined a Commonwealth superannuation scheme, he had purchased an endowment policy in about 1979.
He was a member of the AWU but never saw any newsletters and did not know of the Union’s portable superannuation scheme. He did not read newspapers and, indeed, had some difficulty in reading. The only knowledge he had about superannuation came from some managers at a few information sessions that he attended. He knew that there were noticeboards at the Uriarra depot but did not see anything on them about superannuation. He did not know that Commonwealth superannuation was governed by a law.
(g) Troy Meredith
The next witness was Mr Troy Meredith, a son of the plaintiff. He commenced work as a forestry worker in September 1986. He told one of the members of his gang that he was going to ask to join a Commonwealth superannuation scheme and was told by that person, “[y]ou won’t be allowed to join, I wasn’t allowed”. He had also been told by his Ganger that he was not allowed to join a Commonwealth superannuation scheme.
As a result, he went to see Mr Bates in his office at the Uriarra depot and said to him, “I would like to join super”. Mr Bates responded, “[t]hey don’t have super for blue-collar workers, you are not entitled to it”.
Mr Troy Meredith said that he argued with Mr Bates about that on a number of occasions. But as he could not join, he took out a private insurance policy in 1987 through an insurance representative who attended the depot.
He said that in early 1991, a government representative came to the depot and held a meeting with workers, telling them that they could join a Commonwealth superannuation scheme and he joined the PSS in 1991.
In cross-examination, it was put to him that Mr Bates had sworn an affidavit saying that he had no recollection of the conversations. He said that he did not think he could be wrong about the conversation, even though it took place over twenty years earlier. He could not recall when he was first asked to remember the conversation, but probably about twelve months prior to giving evidence in 2009. He said that he had thought about the conversation since he had had it, although not “the exact words”. He accepted that the words set out in his evidence were not the exact words Mr Bates used; he said there were “probably a few other words put in amongst them”, but that his evidence was the gist of what Mr Bates said.
He said that he was not a claimant for compensation and he had chosen not to be. He did join a Commonwealth superannuation scheme in 1991. He said he did not have many conversations with his father about work but may have told him that he joined a Commonwealth superannuation scheme. He said that when he signed on he could not recall whether he was given a “Conditions of Employment” document. He was a member of the AWU and thought that he would have spoken to someone in the Union about eligibility for superannuation as it was a bone of contention. He did not receive any advice from the Union confirming what he had been told. He did not see any Union newsletters. He agreed that there were noticeboards at the Uriarra depot but did not read them. He did not read newspapers.
(h) William Tobin
Mr William Tobin was a plaintiff in his own proceedings but his evidence was also heard in these proceedings.
He said that he lodged a written application for a position with the Department of the Interior in late 1973 and attended an interview at the head office of the Department. He was offered a position as a forest worker and directed to report to the Uriarra depot, which he did. He and his wife remained living at the Uriarra depot until 2003 when the Canberra bushfires destroyed their property.
He described his employment process. He attended a medical examination, obtaining “a clearance”, and took the form to the head office of the Department where he attended a public access window. He spoke to a male clerk and presented the medical clearance. The clerk filled in details. He appeared in a hurry and told Mr Tobin that he was going off to morning tea. Mr Tobin said that the clerk showed him two places on the document to sign which he did and the clerk advised him that he would fill in the balance of the details and the paperwork would be sent to Mr Bates. He was directed to report to Mr Bates. He said that, as he left, the clerk pointed to some pamphlets in a stand against one of the walls and told him he could take them if he wished. Mr Tobin did not take any of the pamphlets. He did not subsequently receive any pamphlets.
He commenced work on 7 January 1974 and understood that his position was a full-time, ongoing one. He certainly intended to remain indefinitely employed by the Commonwealth.
He reported to Mr Bates on commencement and was told that he would be on the equivalent of a six-month trial.
He said that during his time as a forest worker, management would sometimes speak to the workers outside the depot at the beginning of the day. This appeared to be mainly about jobs for the day. Management would also communicate through the Leading Hands and Gangers and there were occasional union meetings or seminars (though he described these as “about redundancies etcetera”). He knew there was a noticeboard on the wall of the recreation room which sometimes displayed fire duties, rosters, information about the union, “some silly photos” and information about safety. He never saw anything about superannuation on the noticeboard.
In late 1974, after his six-month “trial” period had ended, he was talking to some other members of his gang awaiting a briefing. The question of superannuation came up and, while he did not recall the precise words, there was a discussion about it and the fact that it was a good thing to be a member. Questions were raised as to whether the workers were eligible and Mr Blake volunteered to go and ask Mr Bates about superannuation.
Mr Tobin said that after a few minutes, Mr Blake came back and said
Bill [Bates] said we are only here as casuals, the only people who are permanent are Bill [Bates], Tom [Bateup], Atillio [Padovan] and Ashley [Ritherdon]. They are able to join the super but we cannot get superannuation.
Mr Tobin said that this surprised him because he thought he was a permanent employee, but, because Mr Bates had said it, he assumed it was correct and there was no further discussion. He proceeded on the assumption that he was ineligible. As he had seen Mr Blake walk to the Overseer’s office where Mr Bates had his office and saw him come back from that office, he believed the conversation took place with Mr Bates.
He referred to another conversation when he was a member of Mr Meredith’s gang at a time when Mr Meredith was the leading hand. He said he was travelling with Mr Meredith and other workers in a forestry vehicle and the issue of superannuation came up.
One of the workers in the van recounted what Mr Blake had told them that Mr Bates had said, and Mr Tobin said that Mr Meredith commented, “Yes, I think that Bill, Tom, Padovan and Ash are the only permanents at Forestry”. Mr Tobin said that, because Mr Meredith was a Leading Hand and “higher up in the hierarchy than I was”, he trusted the information provided.
The next time he received any information about superannuation was in the mid-1980s when a member of his gang advised him that he had arranged for a private superannuation representative to attend at the depot and was invited to the meeting. Mr Tobin said that this was the first time it occurred to him that he could access private superannuation or insurance.
He attended the meeting but chose not to take out a policy as questions revealed there would be a penalty if he changed the fund or left the fund.
Mr Tobin was a member of the AWU from the time he commenced work until 2001. He was the union representative between 1985 and 2001. Before 1985, he received no information from the union about Commonwealth superannuation.
In 1986 he became a ranger at the Stromlo depot for ACT Forests.
He said that, in about September 1991, he was at a meeting to discuss whether rangers should become permanent public servants. There was, at the meeting, some discussion about whether that meant they would become public servants, and someone said that they would have to be members of a Commonwealth superannuation scheme. He stood up and said “[w]ait a moment now you’re telling me I have to pay superannuation when before I was told I couldn’t pay super.”
He then joined the PSS and contributed 5% of his salary. He was required to undergo a medical examination which he successfully completed.
In cross-examination, Mr Tobin agreed that he had not had a conversation directly with Mr Bates and the information had come from Mr Blake and Mr Meredith.
Mr Tobin agreed that it was about 1996 when he was first asked to recall the conversation. He said that he had kept records but it appears that they were burnt in the Canberra bushfires.
He was asked about the meeting where he learnt about eligibility for superannuation and he said that it came as a shock that, officially, he first then knew that he could have joined a Commonwealth superannuation scheme. He did not wait long before joining; he joined straight away.
Mr Tobin said that superannuation was not a regular topic of conversation, though it might arise when a new forestry worker commenced or had finished their probation.
He said that he hardly ever received union newsletters and did not read union information. He said he could not remember reading The Canberra Times in his 25 to 26 years at Uriarra though he used to get The Daily Telegraph, mainly in the football season.
(i) Neil Freer
Another forestry worker, Mr Neil Freer, gave evidence. He had commenced employment in ACT Forests in 1984 and was placed at the Uriarra depot under the supervision of Mr Bates.
He successfully completed his probation in November 1984 and was appointed “full-time”. He was told by the Leading Hand “[y]ou have a job for life now”.
He understood that government superannuation would provide good benefits and asked his Leading Hand, “[w]hat do I do about getting into the government superannuation?”
The next day, his Leading Hand told him that “Bill Bates says that he has heard from higher up in government that we are not able to get into the superannuation scheme, as it is for public servants and overseers and not for us”. Mr Freer said he was disappointed and, a few days later, saw Mr Bates and asked him “[h]ow come we cannot get into superannuation?”
He said that Mr Bates said to him, “[y]ou cannot join the scheme. I have been told by upper management that you are not eligible to join, as it is only available for public servants, bosses or white-collar workers”.
He queried with Mr Bates why that would be the case now that he was permanent.
He also spoke to the representative of the Federated Engine Drivers and Fireman’s Association (FEDFA) and the union representative for the Transport Workers Union. They confirmed to him that he had been told that forest workers could not join the superannuation scheme.
Later, he attended a meeting where a representative from an insurance company came out to sell insurance and superannuation schemes. He said that no-one at the meeting suggested that any of the forest workers were eligible to join a Commonwealth superannuation scheme. As a result, he took out a life policy and a group assurance policy.
Later, he was transferred to the ACT Government, working for Totalcare Industries Limited. He was told by an employee that he should be a member of a Commonwealth superannuation and immediately obtained the forms and joined the PSS in July 1998.
In cross-examination, he was asked about the statement in Mr Bates’ affidavit saying that he had no recollection of the conversation recounted by Mr Freer. He denied “definitely” that he could be wrong; he said he remembered the day when he asked about it because he was not very happy that he was not eligible to join a Commonwealth superannuation scheme.
He was also asked about what he was required to sign after he had successfully completed his probation and he said that he had been sent to an office in Civic where he received “a green slip” with the start date and his name and address on it. He then reported back to the Uriarra depot and started work again.
He said that he used to buy The Daily Telegraph or The Mirror newspaper but that he did not see union newsletters. He knew about Commonwealth superannuation from friends of his mother who had worked in government jobs. His understanding was that government superannuation was “for public servants”.
(j) Peter Seal
Mr Peter Seal commenced work for the Commonwealth government in 1967 in what was then known as the Postmaster-General’s Department. He was not then a member of any superannuation scheme nor was he aware of superannuation.
He joined the Army as a volunteer in 1969, leaving in 1975. At the time, his brother and step-father both worked for ACT Forests and he applied for a position there. He was appointed as a forest worker on 9 June 1975, commencing initially at the Pierce’s Creek depot but then transferring to the Uriarra depot.
A few months after commencing as a forest worker, he received a cheque from the Defence Force Retirement and Death Benefits Scheme, being a payout of his superannuation from that scheme.
As a result, he decided to make inquiries about joining the Commonwealth superannuation scheme and approached Mr Bates. His evidence was:
I said to Bill Bates, words to the effect:
‘Am I able to join the government superannuation fund?’
He responded with words to the effect:
‘You are not entitled to join the government super fund, as you are not a public servant, you are temporary employee.’
Sometime later he spoke with a union delegate who also confirmed his understanding that forest workers were not eligible to join the scheme.
He recalled that, sometime later, Mr Bates arranged for an insurance representative to come to the Uriarra depot to offer private insurance products. He signed up for such a product but discontinued it after two years.
In about 1985, he took leave without pay to become a full-time organiser with the union and, during that period, he was certain that the union was not aware that temporary employees were eligible for membership of the Commonwealth superannuation scheme.
He returned to government service in 1992, ascertaining that he was able to join a Commonwealth superannuation scheme, and did so immediately.
In cross-examination, he noted that he had been initially a member of the AWU but later joined the FEDFA for which he became an organiser.
His attention was drawn to the fact that Mr Bates had made an affidavit saying that he had no recollection of the conversation to which Mr Seal had deposed. He confirmed his own version.
He said that he was first asked to recall the conversation in about 1996. He was, at one stage, a claimant against the Commonwealth government, but did not presently have any court proceedings against the Commonwealth.
He accepted that the words he recounted were similar to those used but would not definitely assert that they were the exact words used; they contained the gist of the conversation.
He said that, while a union organiser, he did not seek legal advice about the entitlement of forest workers to superannuation.
He also said that he was not aware of a superannuation scheme conducted by the AWU and the only superannuation scheme for the FEDFA was a construction scheme for building sites.
He also accepted that there were other conversations in the workplace about superannuation and, while he did not agree it was a “hot topic”, he said it was “a warm topic”; it was discussed.
He agreed that he took out a number of insurance products, although he was unsure about whether they would be classed as superannuation schemes. He did not continue with them because it became obvious to him after a period of time that the benefits being provided were minimal. He agreed that, when he did join a Commonwealth superannuation scheme, he paid 2% of his salary. He thought he had a choice at that stage of paying either 5% or 2%, and he paid the latter.
He agreed that he found out about the relevant Commonwealth superannuation scheme and his eligibility on or about 20 August 1992.
In re-examination, he explained that he elected to pay at the rate of 2% of salary because his wife was employed at the time; she was a member of a superannuation scheme, they had young children and, while his wife was employed, he did not see the need for a higher rate.
(k) Raymond Knight
Another plaintiff in parallel proceedings, Mr Raymond Knight, also gave evidence and his evidence was heard in these proceedings as well.
Mr Knight gained qualifications as a spray painter and first became employed by the Commonwealth in 1977 when he sought employment with ACT Forests.
He filled out an application form and saw an officer of the Department of the Interior in Canberra following which he was told to report to the Uriarra depot. He recollected having an interview at the Uriarra depot with Mr McKenzie-Smith but said that there was only discussion about the job itself.
He said that the application for employment that he completed recorded that he received a document referred to as a “Conditions of Service” pamphlet, but he does not recall receiving any such paperwork and he had no understanding of any eligibility to join a superannuation scheme.
While working for ACT Forests, he, in common with most of the forest workers, resided at the Uriarra depot.
He confirmed the arrangements for communication of information that had been given by other witnesses.
He also recalled a discussion about superannuation in about April 1977 when a group, including Mr Rough and Mr Tobin, asked Mr Meredith to approach the Overseer to find out whether members of the gang were entitled to join a Commonwealth superannuation scheme. He recalled that later, perhaps the same day or the next day, Mr Meredith came back to the gang and said words which, to the best of his recollection, were as follows “[w]e are not eligible to join the fund because we are not public servants.”
He said that he assumed that this was the correct position because the information must have come from Mr Bates, Mr Croston or Mr McKenzie-Smith.
As a result of that information, he made no further enquiries until he had a conversation with Mr Bates. He said that after about a year of work as a forest worker, he came to know Mr Bates pretty well. He recollects that he asked Mr Bates about joining a Commonwealth superannuation scheme and that Mr Bates said to him, to the best of his recollection “[y]ou are not eligible to join the fund.”
As a result he did nothing further about it.
In cross-examination, Mr Knight’s attention was drawn to the fact that Mr Bates had sworn an affidavit saying that he had no recollection of having the conversation which Mr Knight said he had had with him. He denied that it was possible he could be wrong about the conversation but accepted that the exact words were not necessarily those used in his affidavit; they were the gist of it or words to that effect.
He agreed that he was first asked to recall the conversation in 1995, when fellow staff had put to him that they could have joined a Commonwealth superannuation scheme and he was asked to fill out a form saying what he believed. It led him to make the claim that he did.
He also agreed that there was discussion amongst fellow workers about superannuation and, while he said it would not have been “the top of the conversation”, it was generally discussed. He said the discussion did die off a bit, but ebbed and flowed.
He knew later on that there were several members of the Commonwealth Superannuation scheme who were temporary employees, “senior industrials”, but he did not know at the time he joined.
He also said that, while he discussed superannuation with Mr Bates, he did not ask him about whether Mr Bates was a member and, if so, how he was eligible.
He also said that he did not recall actually signing documents in the Canberra office of the Department when he joined at first, though he is aware of a document which suggests he received a “Conditions of Service” pamphlet. He did not, however, recall signing the document or taking any paperwork away with him, nor being given any pamphlets.
He had some private superannuation but he did not recall reading anything about superannuation. Newspapers were not delivered to the Uriarra depot and, while he came regularly into town, he did not see them, certainly not regularly. He had no memory of reading anything in the newspapers about superannuation or changes to superannuation laws.
He was, for most of the time he was working for ACT Forests, a member of the AWU but he did not receive newsletters. He did not read about any superannuation scheme operated by the Union.
He had conversations with various union officials, whom he had named, about Commonwealth superannuation and that he could not join. He said he was told that he was not eligible. He did not, however, seek advice from a lawyer, accountant or financial adviser.
He recalled a meeting in about 1995 when he found out that he could have joined a Commonwealth superannuation scheme even though he was a “temporary employee”. He thought that the meeting was convened by the Union and addressed by Union delegates.
He thought that that meeting may have encouraged some people to claim against the Commonwealth for the failure to correctly advise about the eligibility for such employees to join a Commonwealth superannuation scheme.
He was asked some questions about who attended the meeting and who addressed the meeting but he could not recall.
(l) Clifton Stevens
Mr Clifton Stevens gave evidence that, in 1968, he applied for a job with ACT Forests and attended at the office at the Uriarra depot. He spoke to Mr Bates and applied for a job through him but did not sign anything and was not given anything to read.
He was later required to call into the office in Canberra to complete an application form but was not given any information about superannuation nor a “Conditions of Employment” pamphlet.
He also recalled discussion amongst fellow workers about Commonwealth superannuation and overheard rumours that some employees were apparently members of a Commonwealth superannuation scheme.
He said that the discussion raised his interest in the matter and he felt that it might be a good idea to have the security of superannuation, so he went to see Mr Bates in his office. He said to him words to the following effect “[h]ow do I get into superannuation?” and Mr Bates responded, to the best of his recollection, by saying “[y]ou cannot get into government superannuation as you are not a permanent employee. You have to be permanent to get in.”
About a week later, an agent for an insurance company came to see him at his home. He was not sure how that was organised so soon after his discussion with Mr Bates. The agent said, “I heard you wanted to look at superannuation . You need the security of some superannuation”. Mr Stevens agreed to sign up for a policy.
Purchase of “age 60” vs “age 65” units
The other issues relate to the assumptions that need to be made to quantify the damages. The first is whether Mr Meredith would purchase “age 60” units or “age 65” units. Significantly, however, “age 65” units are cheaper than “age 60” units.
The difference to the outcome is not large ($6,000 between the calculations of the two actuaries).
In my view, Mr Meredith is likely to have purchased “age 65” units; while I have found that he would have had funds to contribute to superannuation, I think money would not have been plentiful and he would have chosen the lesser contribution.
Transferral to the PSS
When the 1990 Act established the PSS, as noted above (at [22](c)), then members of the CSS had a choice as to whether to transfer to the PSS or to remain in the CSS, either by deliberate choice or by simply failing to elect to transfer to the PSS. As to what would happen when Mr Meredith had that choice, the picture is somewhat more complicated. As with the earlier case, Guy v Commonwealth [2013] ACTSC 128 at [41], the evidence “is, quite frankly, thin”. As I there said
There is little about it in his affidavit and nothing in his oral evidence. That is not really surprising because it is a hypothetical matter about which an ex post facto opinion may be of limited value.
Mr Heath prepared a careful analysis which showed clearly that there was a financial benefit in Mr Meredith remaining in the CSS. His approach was set out as follows:
The usual form of retirement benefit under the CSS is not a lump sum, rather it takes the form of an indexed pension together with a lump sum. In order to compare the benefits between the CSS and PSS we have calculated appropriate CSS pensions at each age, together with the appropriate lump sum. For PSS, part of the above lump sum is convertible to a pension. For comparison purposes, we have made this pension equivalent to the CSS pension, and compared the remaining lump sum.
The calculations showed that, with an equal pension under both scenarios, for each of age 55, 60 and 65, the lump sum available to Mr Meredith under the CSS was substantially larger.
Mr Heath commented:
It should be noted that the figures above represent illustrative calculations in an attempt to chart a reasonable course of action for Mr Meredith if faced with the decision to transfer to PSS in 1990. Our earlier reports indicate that Mr Meredith’s benefits would have been higher with no transfer to the PSS, however the calculations in those reports were done in a retrospective manner, with the benefit of hindsight. The above calculations are based on reasonable assumptions that would have been made at the time, rather than with hindsight. The calculations above appears to show that a transfer to the PSS would have financially disadvantaged Mr Meredith, and that this disadvantage was foreseeable at that time.
We also note that the advice above considers normal retirement benefits only. As our calculations in the report dated 16 November show, should Mr Meredith have taken a CSS benefit in the form of a deferred benefit it would lead to a higher amount than the retirement benefit. This is another advantage of the CSS which is not available to PSS members.
These really were submissions rather than opinions received as evidence.
Thus, Mr Martin also provided appropriate submissions. He said
CSS retirement benefits are, for all but a small number of people, likely to be higher in actuarial value terms than standard PSS benefits (that is, assuming 5% contribution rate in the PSS). It follows that, if the decision was to be made on that basis, then virtually no-one would have transferred.
He then referred to a number of relevant factors. The first of these was that, on resignation, PSS members could receive a return of their member component and retain a preserved employer component in the fund. A CSS member who resigned, however, did not retain an entitlement to a preserved employer component; such members had to preserve all their benefits to achieve this.
The PSS allowed its members on retirement to take their entire retirement benefit as an immediate lump sum, possibly a more attractive option to older members at the date of conversion. Further, PSS members on retirement could take all or part of their benefit as a CPI indexed pension, which would have an actuarial value at least 60% higher than the lump sum benefit.
Thirdly, there was a flexible contribution rate so that PSS members could contribute up to 10% of salary, though they could choose a contribution as low as 2%.
Mr Martin further noted that “[m]any members were not engaged with their superannuation”. He acknowledged that there was likely to be some suspicion of the government’s intention in establishing the new scheme and these forces may have led to an inertia against change.
He pointed out that there would also have been some “workplace-centric decision making” but I have no evidence of what approach applied at the workplace of Mr Meredith.
A senior Comsuper officer, Mr George Hayes gave some relevant evidence. He said
[F]or many people it was very line ball and for me personally I thought it was a pretty line ball. It wasn’t – you pretty well had to take a view as to how you thought your career was going to pan out ... as I say it was pretty personal. I mean some people – see, if you stayed in the CSS you were going to get a benefit which was going to be pension and lump sum. In the PSS you could take all of your benefit as a lump sum or you could take – provided you took up to half of this pension you could pension and lump sum. Some people who thought they were, say, investment gurus probably thought I’m going to get hold of this lump sum and do fantastic things with it. But the general view was, I think, but I’m not – COMSuper was neutral on it ... the financial people in the press at the time, because there was a lot of information around the place. Their position was well if you – if you’re in this situation, you’re worried about the decision, stay in the CSS, but that wasn’t COMSuper’s position.
While there was quite a lot of negative comment in the press about the PSS, it does not seem to me that this would be a relevant factor in this workplace where the press obviously had little influence and that would have been unlikely to have flowed through to Mr Martin’s “workplace-centre decision making.”
Relevant factors in Mr Meredith’s case include the following. He clearly had savings when he was made redundant, suggesting that he would not have made a priority of getting a lump sum at that stage. At the date of the required election (I assume 1 July 1990) his younger child was eighteen years old and his sons were working. His injury did not occur until about six months later.
I do not consider that Mr Meredith would have thought of himself as an investor; I formed the opinion he would have sought the security of a pension.
I am satisfied that Mr Meredith would have, in 1990, remained in the CSS.
Maximisation of contribution
The next issue is whether he would have maximised his contributions at any stage. There is nothing in the evidence to suggest that.
Pension or lump sum
Finally, I consider that Mr Meredith would have taken his ultimate benefit as a pension. He had funds and was clearly looking for security.
The Expert Reports
As I have noted (at [657]), both Mr Heath and Mr Martin prepared reports which calculated six scenarios or used six methods to calculate the loss sustained by Mr Meredith. These scenarios were based on assumptions made as to some of the options available to Mr Meredith, such as whether he would take a pension or a lump sum and whether he would have remained in the CSS or transferred to the PSS.
None of the scenarios reflect what I have found, namely that from 1 July 1992, the negligent misstatements made to Mr Meredith were no longer causative of Mr Meredith’s failure to join a Commonwealth superannuation scheme. I shall deal with that issue later.
Mr Martin helpfully analysed the differences between his report and that of Mr Heath so that I could consider them and decide which assumptions were supported by or more consistent with the evidence.
I note that the results of comparable calculations by both actuaries were not wildly dissimilar though the differences did lead to differences in outcome of over $100,000 in some cases.
I have already (at [663]-[665]) dealt with the question of whether Mr Meredith would have purchased “age 60” or “age 65” units, preferring the latter. I shall deal briefly with the other matters of discrepancy between the reports.
Final salaries(a)
Mr Heath used a figure of $47,694 for Mr Meredith’s final salary while Mr Martin used $44,306. In both cases, the figures were supplied by the solicitors who retained them.
A Statement of Agreed Facts was tendered. It showed that Mr Meredith’s final salary was $47,694. That is the figure that should be used.
Calculation of accumulated AGEST account(b)
Mr Heath calculated the balance of Mr Meredith’s AGEST account as $47,655 to which he added “penalty interest”. Mr Martin estimated the balance as at $29,000 at age 55 to which he also added “penalty interest”. Penalty interest was, in fact, pre-judgment interest under r 1616 of the Court Procedures Rules 2006 (ACT).
Mr Heath states that he based his calculations on payslips, presumably provided by Mr Meredith. On the other hand, it appears that Mr Martin based his calculations on the salary figures provided by the lawyers who retained him. I have noted above that these differ from the agreed calculations.
In the circumstances, I prefer the calculations of the accumulated AGEST account conducted by Mr Heath.
Calculation of PSS scheme equity at retrenchment(c)
Mr Martin suggested that Mr Heath had overestimated Mr Meredith’s potential and hypothetical “actual” PSS entitlements by double counting his productivity contributions. This calculation was based on a method, it appears, that is inconsistent with the PSS fund rules. In the circumstances, it seems to me that the method consistent with the fund rules should be followed and, to that extent, the approach of Mr Martin is to be preferred.
Annuity factors for pension benefits(d)
Mr Heath assumed an annuity factor for the indexed pension of 16.430; Mr Martin assumed the factor at 14.770.
Mr Heath assumed an annuity factor for the non-indexed pension of 16.430; Mr Martin assumed the factor of 11.632.
Mr Martin’s position was clear. He said:
I do not believe that it is appropriate to assume the same annuity factor for both a CPI indexed pension and a non-indexed pension. For example, a CPI indexed pension commencing at $10,000 p.a. has a higher value than a non-indexed pension of $10,000 p.a. However, assuming the same annuity factor would result in equal value being given to these two income streams.
The annuity factor is based on mortality and a discount rate. Mr Heath based his mortality on the population projections of the Australian Bureau of Statistics. He used a discount rate of 3% based on the decision of the High Court in Todorovic v Waller (1981) 150 CLR 402.
Mr Heath said he used the tables that he did because of the approval of them by the High Court. In Golden Eagle International Trading Pty Ltd v Zhang (2007) 229 CLR 498, the Court unanimously approved the use of “prospective tables” as preferable to “historical tables”. Both were published by the Australian Bureau of Statistics. As Kirby and Hayne JJ, with whom, on this issue, Gummow, Callinan and Crennan JJ agreed, said (at 517; [70]):
The Court of Appeal held [(2006) 45 MVR 365 at 376 [55]] that ‘it is appropriate for the courts to make their estimations on the basis of the best information available: the projected tables would appear to be a more accurate assessment of future trends than the historical tables’. There is no reason to doubt that the Court of Appeal was correct in its conclusion that the projected tables published by the Australian Bureau of Statistics were more likely to give an accurate estimate of future life expectancy than the historical tables published by the Bureau. That being so, it follows that the Court of Appeal was right to conclude that, despite the then prevailing practice in the courts of New South Wales, the primary judge should have used the prospective rather than the historical tables.
While the tables on which Mr Heath relied were approved, it seems to me that they were used because they were ‘prospective rather than historical’, but gave no special imprimatur to the particular tables of the Australian Bureau of Statistics.
Mr Martin seemed to rely on the Australian Life Tables which are the Life Tables published by the Australian Government Actuary.
These tables appear to be historical and, accordingly, I prefer the approach on that issue adopted by Mr Heath. To the extent that this approach differs to that I took in Guy v Commonwealth at [84], it is because that issue was not presented so clearly.
It does seem to me, however, that Mr Martin’s comment identifies the correct approach, namely that it would not be appropriate to apply the same annuity factor to an indexed pension as to a non-indexed pension. To the extent that this is appropriate, the approach of Mr Martin is to be preferred, namely a different factor for the two types of pensions.
I could not tell from the evidence, however, how that difference was actually calculated. Should it become relevant, I shall consider it later.
As to the discount rate, I am persuaded that, as the pension is linked to movement in the Consumer Price Index and the actuary to the CSS applies the rate of 3.5%, this is the rate that should be applied.
Tax on lump sum(e)
For reasons that appear below, I do not need to address this issue.
Interest on additional lump sum scenario(f)
Mr Heath applied pre-judgment interest under the Court Procedures Rules on the additional lump sum in relation to the pension scenario for the CSS between age 55 and the date of his calculation. That amounted to approximately $25,000. Mr Martin applied credit union rates of interest; that amounted to approximately $19,000.
It seems to me that Mr Heath’s approach should be preferred.
Saved member contributions(g)
Mr Meredith would, of course, have had the use of the contributions that he otherwise would have paid as contributions to a Commonwealth superannuation scheme, whether CSS or PSS.
Mr Heath assumed that the opportunity cost of these contributions which were not required to be made to a Commonwealth superannuation scheme would be best represented by applying building society rates. Mr Martin applied credit union rates.
Mr Meredith’s evidence was that he put his savings into a credit union account that he and his wife conducted. It seems to me that these rates are the appropriate ones to apply in the case of Mr Meredith.
Consideration
The Commonwealth submitted that Mr Meredith was not very likely to have actually joined a Commonwealth superannuation scheme when he first was able to do so. This, I assume, was on the basis that he was unlikely to have been prepared to pay the contributions because of his personal circumstances.
I reject that. Given Mr Meredith’s persistence in seeking out whether he was eligible, it seems to me so unlikely as not to warrant consideration that if he found he was eligible, he would not have joined a Commonwealth superannuation scheme. This is supported by his actions in taking out various insurance policies.
I have, however, come to the conclusion that by 1 July 1992, a somewhat arbitrary date, but inevitably so, Mr Meredith knew that he was eligible because of the information he had received about Mr Reardon and his reaction to that information that he gave in evidence.
I have already found (at [681]) that Mr Meredith would not have transferred to the PSS and would have remained a member of the CSS in 1990.
The evidence also suggests, and I am prepared to find, that Mr Meredith would have, on redundancy, deferred accessing his benefits under the CSS until he turned 55. The evidence showed that he had some capital in addition to the redundancy payment he received and the advantage of deferral, which was only for a little over four months, would have accrued substantial benefits to him.
When he took his benefits, I accept that he would have taken an indexed pension for the employer component of his CSS benefits and a lump sum for the member and productivity components. The evidence shows that he was made redundant at a relatively early age, with no issues of ill-health that might suggest that he would have been better off with the whole of his benefits being received as a lump sum. While his back injury would have affected his employability, it was not life-threatening. It did, however, suggest that an indexed pension was a desirable benefit for his security.
His assets showed that he was able to purchase a home and he showed no evidence of seeking to invest a lump sum in a business venture or that he wanted to manage his own investments. He clearly had use for some lump sum payment, as his investment in his home made clear but a pension was clearly preferable.
Having made these findings, however, I do not consider that I have the actuarial evidence that permits me to quantify the damages that Mr Meredith should receive. It does appear likely that it would be along the lines of Mr Heath’s scenario 4 but with some differences. The scenario would be as follows:
(a) he would have continued as a contributor to the CSS until 1 July 1992;
(b) he would not have joined the PSS;
(c) he would have preserved his benefits in the CSS until age 55;
(d) he would have made no additional contributions though he would have received the statutory employer contributions from 1 July 1992;
(e) the employee contributions saved would have been only up to 1 July 1992; and
(f) there would be pre-judgment interest in accordance with the Court Procedures Rules from 29 August 2001 to the date of judgment.
The other criteria would be as I have found above and earlier in these reasons.
TAXATION
The question of whether the damages would be taxed was a live issue, whether as a capital gain or as income. Both parties made submissions about this, the Commonwealth submitting that the damages were not taxable on either basis and Mr Meredith submitting that they would be taxable. Mr Meredith further submitted that the damages should include a component to compensate him fully for any tax imposed other than that which would have been imposed if the receipts had been received in the ordinary way.
In Guy v Commonwealth at [90]-[93], I said:
90.The Commonwealth, however, referred to a number of cases where the Court did not rule on the issue but reserved leave to apply for additional damages in respect of any damages referable to income tax or capital gains tax. See Rabelais Pty Ltd v Cameron (1995) 95 ATC 4552; Turner v T R Nominees Pty Ltd (1995) 31 ATR 578; P M Sulcs & Associates Pty Ltd v Daihatsu Australia Pty Ltd [2001] NSWSC 798 at [114]-[119]. See also P M Sulcs & Associates Pty Ltd v Daihatsu Australia Pty Ltd [2008] NSWSC 683.
91.The Commonwealth submitted that it was appropriate to take the course adopted in those cases and reserve to the plaintiff leave to apply for additional damages should the award be assessed as liable to tax on any basis. At this time, argument would be permitted as to whether it is appropriate for there to be such an award and, if so, of what amount.
92.Mr Guy, through his counsel, suggested that such a proposal was apparently inconsistent with the “once and for all” principle (Namol Pty Ltd v A W Baulderstone Pty Ltd (1993) 93 ATC 5101) but nevertheless adopted the Commonwealth’s proposal, which, his counsel submitted, “makes sense for a number of reasons”.
93.These include that Mr Guy has the comfort of knowing that if the Commissioner of Taxation were to levy tax, he could return to the court to recover damages for any loss thereby occasioned. It also provides certainty to the court to know whether tax would be levied and, if so, how much would be levied, so as properly to provide compensation for what is at law required to be compensated.
It seems to me that this is appropriate in this case also. I shall proceed in the same way.
CONCLUSION
As a result of the foregoing, I shall enter judgment for Mr Meredith on his claim in respect of negligent misstatement.
So far as damages are concerned, however, I shall invite the parties to provide me with appropriate material on which I can quantify the damages in accordance with these reasons. That would, desirably, be a report from an appropriately qualified actuary. Each party may wish to retain their own and provide separate reports. If so, I would wish that the actuaries confer to see if they could agree or, at least, narrow the extent of any disagreement.
The parties may prefer, however, simply to make submissions. Indeed, they may be able to agree on the quantity of the damages flowing from my decision.
Accordingly, I shall relist the matter in a few days to give the parties the opportunity to make submissions on how they wish to proceed.
I shall, also, hear the parties as to costs, though this may have to await the quantification of the damages.
DELAY
I sincerely regret that the pressure of business of the Court has delayed the delivery of judgment in this matter. Nevertheless, I have read carefully the entire transcript and the exhibits tendered at the trial as well as my contemporaneous notes. I have also had detailed and comprehensive written submissions from the parties which I have also carefully read. These have resulted in a good recall of the proceedings and of the witnesses giving evidence, notwithstanding the passage of time.
I certify that the preceding seven hundred and twenty-nine (729) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Refshauge.
Associate: 2013
Counsel for the Applicant: Mr R Davis and Mr J Gordon
Solicitor for the Applicant: Sneddon Hall & Gallop
Counsel for the Respondent: Mr S P Estcourt QC and Ms C Dowsett
Solicitor for the Respondent: Australian Government Solicitor
Date of hearing: 18-19, 23-26, 30 November, 1-3, 8-11, 14 December 2009, 9-11 February 2010
Date of judgment: 20 November 2013
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