North Adelaide Service Partnership v Retail Employees Superannuation Pty Ltd - [2019] SASC 5

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
NORTH ADELAIDE SERVICE PARTNERSHIP v RETAIL EMPLOYEES SUPERANNUATION PTY LTD
[2019] SASC 5
Judgment of The Honourable Justice Blue
30 January 2019
RESTITUTION - MISTAKE: RESTITUTION ARISING FROM A PLAINTIFF'S MISTAKEN ACTIONS - RECOVERY OF MONEY PAID UNDER MISTAKE
EQUITY - GENERAL PRINCIPLES - MISTAKE - RECOVERY OF MONEY PAID OR EXPENDED - MONEY PAID BY MISTAKE - GENERAL PRINCIPLES - MISTAKE OF FACT
CORPORATIONS - LEGAL CAPACITY AND RELATIONS WITH OUTSIDERS - ACTS OF OR KNOWLEDGE OF CORPORATION
Determination of preliminary issue being prima facie liability in action for recovery of superannuation contributions paid by mistake.
The plaintiffs operate Romeos Foodland or IGA stores. Until November 2014 they made superannuation contributions to the first defendant Retail Employees Superannuation Pty Ltd in respect of all employees including employees under 18 years old earning less than $450 per month or working not more than 30 hours per week (exempt employees).
The policy of the directors of the plaintiffs was to pay superannuation only to employees in respect of whom a superannuation guarantee charge would otherwise be levied by Commonwealth superannuation guarantee legislation. Anthony Romeo, the director responsible for this area of the plaintiffs’ operations, in particular intended and believed that superannuation contributions were not being made in respect of exempt employees.
The first defendant adduced evidence that in April or May 2007 two of its employees, Messrs Ludlam and Sabbah, met with the plaintiffs’ Payroll Manager Ms Dinedios and informed her that the plaintiffs were making superannuation contributions in respect of exempt employees. Ms Dinedios gave evidence denying that she was informed of this. The first defendant contends that that, if the evidence of its witnesses is accepted, operative mistake is negated by the knowledge of Ms Dinedios.
Held:
1. Finding made that Messrs Ludlam and Sabbah did inform Ms Dinedios that the plaintiffs were making superannuation contributions in respect of exempt employees (at [69-81]).
2. The knowledge of Ms Dinedios does not negate a finding of operative mistake by the plaintiffs (at [109-115]).
3. Preliminary issue determined in favour of the plaintiffs (at [117]).
Fair Work Act 2009 (Cth) s 172; Superannuation Guarantee Charge Act 1992 (Cth); Superannuation Guarantee (Administration) Act 1992 (Cth) 6, 27, 28; Trade Practices Act 1974 (Cth) s 51AB, 51AC, referred to.
The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239, (2008) 39 WAR 1, discussed.
Barclays Bank Ltd v W. J Simms Son & Cooke (Southern) Ltd [1980] QB 677; Barnes v Addy (1874) LR 9 Ch App 244; Briginshaw v Briginshaw [1938] HCA 34, (1938) 60 CLR 336; Commonwealth Bank of Australia v Kojic [2016] FCAFC 186, (2016) 249 FCR 421; David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48, (1992) 175 CLR 353; Imperial Bank of Canada v Bank of Hamilton [1903] AC 49; Jones v Dunkel [1959] HCA 8, (1959) 101 CLR 298; Kelly v Solari (1841) 9 M & W 54, 152 ER 24; RE Jones Ltd v Waring & Gillow Ltd [1926] AC 670; Rural Municipality of Storthoaks v Mobil Oil Canada Ltd (1975) 55 DLR (3d) 1; Simos v National Bank Australasia Ltd (1976) 45 FLR 97; Westpac Banking Corporation v The Bell Group Ltd (in liq) (No 3) [2012] WASCA 157, (2012) 44 WAR 1, considered.

NORTH ADELAIDE SERVICE PARTNERSHIP v RETAIL EMPLOYEES SUPERANNUATION PTY LTD
[2019] SASC 5
BLUE J:

The plaintiffs carry on businesses operating Romeos Foodland or IGA stores. Until November 2014 they made superannuation contribution payments to the first defendant Retail Employees Superannuation Pty Ltd (RES), as trustee of the Retail Employees Superannuation Trust (REST), in respect of all employees including employees under 18 years old earning less than $450 per month or working not more than 30 hours per week (exempt employees) when they were not obliged by federal superannuation guarantee legislation to do so.
The plaintiffs seek to recover from RES payments in respect of exempt employees in restitution on the ground that they were paid due to operative mistake. The second defendant, Emily Philips, was joined as a representative of the exempt employees who received payments over the relevant period.
These reasons for judgment address a preliminary issue ordered to be heard and determined separately from the balance of issues. The preliminary issue is essentially whether the plaintiffs have a prima facie entitlement to recover the payments in restitution, subject to any defences and assessment of quantum to be decided subsequently.
Although a time limitation defence is not yet to be determined, the trial of the preliminary issue was conducted on the premise that the plaintiffs cannot recover any payments made before 22 December 2010. The focus of the evidence was on the period between 22 December 2010 and 27 November 2014.
Background
The plaintiffs comprise 13 partnerships, each of which comprises two or four companies, and a company which is the trustee of a trust. I refer to any one or more of the plaintiffs, which were formed at different times, collectively as Romeos.
Twelve of the partnerships and the company trustee at material times operated between one and 11 Romeos Foodland or IGA stores in South Australia. There are in total 26 underlying companies which at material times operated 24 Foodland or IGA supermarkets in South Australia. In addition, the thirteenth partnership, comprising two further companies, at material times operated between three and five IGA supermarkets in New South Wales.[1]
[1] This partnership ceased operating one of the supermarkets on 1 March 2013 and another supermarket on 20 June 2015.
The companies were at material times controlled by brothers Paul, Anthony and Joseph Romeo, who were between them their sole directors. They managed the companies as a group and acted as joint managing directors (although they did not adopt that title). Paul Romeo focused on marketing and establishment, refurbishment and maintenance of South Australian stores. Anthony Romeo focused on finance and administration. Joseph Romeo focused on establishment, refurbishment, maintenance and management of New South Wales stores.
In 1987 Paul and Anthony Romeo entered the supermarket business by establishing a Tom the Cheap supermarket at Plympton. In 1990 they established an IGA supermarket at North Adelaide.
On 1 July 1992 the Superannuation Guarantee Charge Act 1992 (Cth) and the Superannuation Guarantee (Administration) Act 1992 (collectively the Superannuation Guarantee legislation) introduced “compulsory superannuation” for employees. This was achieved indirectly by imposing a superannuation charge on employers calculated as a percentage of relevant wages paid (which was not tax deductible) but providing that no charge was payable if the employer made contributions of the same percentage to a superannuation fund for the benefit of the relevant employees (which were tax deductible) (compulsory contributions). The percentage was to start at four per cent in 1992 and to increase progressively until it reached nine per cent in 2002/2003. There was no superannuation charge payable in respect of employees whose wages were less than $450 per month (the $450 per month threshold)[2] or who were under 18 and employed to work not more than 30 hours per week (the 30 hours per week threshold).[3] For ease of reference, I refer to the contributions required to avoid liability for the superannuation charge as if they were compulsory (which is correct in a commercial but not a strictly legal sense).
[2] Superannuation Guarantee (Administration) Act 1992 section 27(2).
[3] Superannuation Guarantee (Administration) Act 1992 section 28 and definition of “part time employee” in section 6(1).
In 1992 Romeos commenced making superannuation contributions to REST on behalf of employees in order to avoid paying the superannuation charge. Anthony Romeo was not then aware of the $450 per month or 30 hours per week thresholds.
In 1996 Romeos established an IGA supermarket at Erindale and sold the North Adelaide IGA supermarket. By that time they had ceased to operate the Tom the Cheap supermarket.
Independent Holdings Ltd (renamed or taken over by Metcash in 2000) had a “retail accounting department” that provided accounting and payroll services to independent supermarkets and other retailers. Kylie Moritz was in charge of the retail accounting department. In 1996 Romeos engaged IHL to provide payroll services, as part of which IHL calculated superannuation contributions to be made to REST. IHL used Sybiz software to provide its accounting and payroll services.
Between about 1990 and 1996 Donna Dinedios worked for IHL in general administration. In 1999 she returned to work for IHL in the marketing department. On occasions thereafter she assisted Ms Moritz and thereby developed a familiarity with Sybiz.
Romeos established a Foodland supermarket at North Adelaide in 1997 and a Foodland supermarket at Magill in 2000. Over the next 14 years they established more Foodland and IGA supermarkets.
Sometime between 2000 and 2002 Metcash disbanded its retail accounting department. Ms Moritz started her own business providing the same payroll services to former clients of Metcash, including Romeos. She continued to use the Sybiz software.
In 2004 Anthony Romeo had a discussion with Ms Moritz. She informed him of the $450 per month threshold and the 30 hours per week threshold, of which he had previously been unaware.
In November 2004 Angelo Mignone commenced employment with Romeos and was soon promoted to Human Resources Manager. He was responsible for recruitment and management of staff but did not administer payroll or superannuation.
In April 2005 Ms Dinedios was employed by Romeos to perform general clerical and administration duties.
In late 2005 or early 2006 Romeos decided to commence payroll processing internally instead of engaging Ms Moritz to undertake it. They offered a promotion to Ms Dinedios to Payroll Manager in charge of payroll processing, which she accepted. It was decided that Romeos would take over payroll processing from Ms Moritz from 1 July 2006.
Romeos purchased a licence to use the Sybiz software. The Sybiz software enabled the creation of various staff types, including by reference to age and employment basis (permanent or casual) because wage rates varied according to the age of employees up to the age of 21 and according to whether the employee was permanent or casual. For example, one staff type is “17 year old casual”.
The Sybiz software enabled the creation of more sophisticated staff types via the “Edit Staff Type” function. This function contained a field entitled “casual super monthly gross” which enabled a dollar figure to be entered. This function also contained a tick box entitled “Employees assigned to this staff type are under 18 years, casual and work 30 hours or less in a week”.
Between March and June 2006 Ms Dinedios worked with Ms Moritz to gain a better understanding of the Sybiz software and payroll processing. At this stage Romeos had six supermarkets. All of the data contained in Ms Moritz’ files was migrated to Romeos’ computer system. Ms Dinedios gave evidence that she did not adjust any of the settings within Sybiz.
From 1 July 2006 payroll processing was undertaken inhouse by Ms Dinedios using the Sybiz software. Ms Dinedios reported to Anthony Romeo. Thereafter, when an additional supermarket was acquired, Romeos personnel duplicated existing settings for existing stores to set up the new store in the Sybiz software.
In April or May 2007 there was a meeting at a coffee shop in the North Adelaide Village Shopping Centre between Ms Dinedios and Anthony Ludlam and Elliott Sabbah of RES (the coffee shop meeting). It is in dispute what was said during this meeting.
In 2007 Romeos embarked on a major expansion, acquiring 16 former Bi-Lo stores from Coles. In 2007 Concettina Parente commenced employment with Romeos in administration. In 2009 she moved into the payroll section working under the supervision of Ms Dinedios.
In 2009 the South Australian plaintiffs separately entered into a series of enterprise agreements with the Shop, Distributive and Allied Employees Association South Australian Branch (the SDA) pursuant to section 172 of the Fair Work Act 2009 (Cth). These agreements were approved by the federal Workplace Authority. In 2012 these individual agreements were replaced by a single enterprise agreement between the South Australian plaintiffs collectively and the SDA. This enterprise agreement was approved by Fair Work Australia. Terms of the enterprise agreements[4] included the following:
22.1Superannuation will be paid to Employees in accordance with the Superannuation Guarantee legislation (or any successor legislation).
22.2The current superannuation payment rate is 9%, calculated on ordinary time earnings (within the meaning of the applicable ATO ruling), and is payable to those Employees earning in excess of $450 in a calendar month (or such other amount as required by legislation).
[4] The 2012 enterprise agreement contained an additional subclause which it is not necessary to reproduce. What was clause 22 in the 2009 enterprise agreements became clause 21 in the 2012 enterprise agreement.
Each employee of Romeos entered into a written contract of employment in terms of a standard letter of employment. The terms of the standard letter varied over the years. The versions used between 2010 and 2014 contained the following term relating to superannuation:
In addition to your wages, you may also be entitled to superannuation. Your entitlement to superannuation will be in accordance with Superannuation Guarantee legislation.
The great majority of employees of Romeos who were under 18 were casuals and worked less than 30 hours per week.
In April 2013 Ms Dinedios ceased employment with Romeos. Ms Parente was appointed Payroll Manager in her place.
In November 2014 Venera Spadavecchia commenced employment with Romeos as payroll officer under the supervision of Ms Parente. On 27 November 2014 Ms Spadavecchia was looking for other information on the Australian Taxation Office website when she happened to notice a statement that employees under 18 years of age were not entitled to superannuation guarantee contributions unless they were earning at least $450 per month and working more than 30 hours per week. This attracted her attention because, as far as she was aware, Romeos’ employees under 18 years of age were not excluded from superannuation contributions.
Ms Spadavecchia mentioned this information to Ms Parente and another Romeos employee. They looked at the settings in the Sybiz software and discovered a tick box that, if ticked, excluded superannuation contributions for employees under 18 years of age who did not work more than 30 hours per week. This tick box was not ticked. Ms Parente reported the discovery to Anthony Romeo. Ms Parente and Ms Spadavecchia took remedial action for the future.
Romeos asked RES for a refund of superannuation contributions paid in respect of employees who were under 18 years of age and did not work more than 30 hours per week or did not earn $450 per month. RES refunded contributions paid since 1 July 2014 but declined to refund contributions paid in respect of previous financial years.
On 22 December 2016 the plaintiffs commenced this action against RES seeking repayment of superannuation contributions made in respect of exempt employees (the non-compulsory contributions). The earliest claim by a plaintiff was for contributions in respect of the period from 1 July 2000 to 30 June 2014 and the other plaintiffs’ claims were for contributions in respect of various periods starting from 1 July 2003 to 11 October 2013 and in each case ending on 30 June 2014.
The trial
I made an order that there be a trial of preliminary issues in the action comprising issues other than certain “defences” pleaded by RES (change of position and time limitation) and quantum.
Anthony Romeo gave affidavit and oral evidence. His evidence included that it was the policy of the directors of the Romeos companies to make superannuation contributions in respect of, and only in respect of, employees for whom superannuation contributions were compulsory to avoid the superannuation charge under the Superannuation Guarantee legislation. He believed before November 2014 that Romeos was only making superannuation contributions in these circumstances. He was not told by Ms Dinedios in 2007 or any other time or by anyone else before November 2014 that Romeos was paying superannuation to employees in respect of which payment was not compulsory. Similar evidence was given by Paul and Joseph Romeo, who were not cross-examined on their affidavits. There is no challenge to this evidence.
Anthony Romeo gave evidence that until 2004 he was ignorant of the $450 per month and 30 hours per week thresholds. In 2004 he had a conversation with Ms Moritz during which she informed him of the existence of those thresholds. Thereafter he believed that Romeos was not making superannuation contributions in respect of exempt employees. There is no challenge to this evidence.
Angelo Mignone gave affidavit and oral evidence. He described Romeos’ industrial arrangements. He gave evidence that he was not told by Ms Dinedios in 2007 or any other time or by anyone else before November 2014 that Romeos was paying superannuation to employees in respect of whom payment was not compulsory. He also gave evidence that in 2017 he was asked by Romeos’ solicitor, Mr Krips, to seek contact details for Ms Moritz. He looked through Romeos’ old payroll records but did not find any contact details for her.
Daniel Krips gave oral evidence. He said that in 2017 he undertook searches on the Internet for Ms Moritz but did not locate her. He also undertook searches using the business name look up tool on the Consumer and Business Affairs website of business names that he believed she had used but did not find them.
Ms Parente gave affidavit and oral evidence about the systems at Romeos for processing payroll and superannuation contributions and the events in November 2014. Ms Spadavecchia and Daniela Tropeano gave affidavit evidence about the events in November 2014. Ms Parente and Ms Tropeano also gave evidence about their calculation of non-compulsory superannuation contributions between July 2010 and November 2014 (which was not directly relevant on the preliminary issue).
There is no challenge by the defendants to the credit or reliability of the above witnesses and I accept the evidence as summarised above.
Ms Dinedios gave affidavit and oral evidence. She was cross-examined and her evidence about the coffee shop meeting was challenged. I address her evidence below.
Elliott Sabbah gave affidavit and oral evidence. He has been employed by RES since 1995. From 1998 to 2008 he was National Client Services Manager (and since 2010 he has been National Stakeholder Manager). In his role as National Client Services Manager, the various State Client Services Managers, including Mr Ludlam, reported to him. He gave evidence that in that role he travelled around Australia and usually met employers in company with the local Client Services Manager. He attended approximately 50 meetings per year with employers. He gave evidence about the coffee shop meeting which was challenged in cross-examination and which I address below.
Anthony Ludlam gave affidavit and oral evidence. He has been employed by RES since November 2004, initially as Client Services Manager SA & NT and from 2007 as Senior Relationship Manager SA. Leaving aside the Northern Territory, substantively his duties have been the same since 2004, namely to develop and maintain relationships with employers and members including assisting employers to interpret and meet their legislative superannuation requirements and help employers and members engage with REST. He gave evidence that in that role he regularly met employers. He gave evidence about the coffee shop meeting which was challenged in cross-examination and which I address below.

After the conclusion of the trial, I made an order joining Ms Philips as representative of all persons employed by a plaintiff between December 2010 and November 2014 in respect of whom superannuation contributions were made to REST and no individual superannuation guarantee shortfall would have arisen under the Superannuation Guarantee legislation in the absence of such contributions. I made this order to give the employees likely to be affected if the plaintiffs succeed in the action the opportunity to participate in the action.
Ms Philips elected not to seek to adduce additional evidence or cross-examine the witnesses who gave evidence at trial. She made written submissions concerning factual findings that should be made concerning the coffee shop meeting and concerning certain legal issues.
The parties’ contentions
The plaintiffs contend that they paid the non-compulsory contributions to REST by mistake and they are recoverable (subject to defences) in restitution. They originally characterised their mistake as the payments being contrary to their policy and intention to pay only compulsory contributions. However, by closing addresses they characterised their mistake based on the evidence of Anthony Romeo that he mistakenly believed that no payments were being made to persons under 18 who fell below the $450 per month or 30 hours per week thresholds.
The defendants accept that, assuming that the coffee shop meeting did not occur, the plaintiffs made the payments due to an operative mistake and (subject to defences) they are recoverable in restitution.
The defendants invite me to make findings about what was said during the coffee shop meeting along the lines of the evidence given by Mr Sabbah and Mr Ludlam and to reject the evidence of Ms Dinedios to the contrary. They invite me to find that consequentially Mr Dinedios knew by the end of the coffee shop meeting that Romeos was making non-compulsory contributions in respect of exempt employees.
The defendants contend that, if these factual findings are made, Ms Dinedios was authorised to receive information from RES (including information that Romeos was making non-compulsory contributions) and her failure to disclose that information, and her continuation of past practices, was in breach of her employee duties to the plaintiffs.
RES contends that the knowledge of Ms Dinedios that Romeos were making non-compulsory contributions should be attributed to the plaintiffs and negates a finding that the payments were made by reason of an operative mistake by the plaintiffs. Ms Phillips does not make a submission one way or the other in respect of this contention.
The plaintiffs contend, in response to the RES contention, that whatever knowledge Ms Dinedios had is not to be attributed to them for the purpose of the restitution of monies paid by mistake.
The plaintiffs also rely on an alternative species of restitution being the recovery of payments made for failure of basis or failure of consideration.[5] For reasons that will become apparent, it is not necessary to consider this alternative cause of action.
[5] Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68, (2001) 208 CLR 516.
Prima facie recovery of monies paid due to mistake
As observed above, it is common ground that, ignoring the coffee shop meeting, the plaintiffs have established a prima facie entitlement (subject to defences) to recover superannuation contributions in respect of exempt employees since 22 December 2010.
In Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd[6] Goff J said:
(1)If a person pays money to another under a mistake of fact which causes him to make the payment, he is prima facie entitled to recover it as money paid under a mistake of fact.
(2)His claim may however fail if
(a)     the payer intends that the payee shall have the money at all events, whether the fact be true or false, or is deemed in law so to intend; or
(b)     the payment is made for good consideration, in particular if the money is paid to discharge, and does discharge, a debt owed to the payee (or a principal on whose behalf he is authorised to receive the payment) by the payer or by a third party by whom he is authorised to discharge the debt; or
(c)     the payee has changed his position in good faith, or is deemed in law to have done so.[7]
[6] [1980] QB 677.
[7]    At 695.
In David Securities Pty Ltd v Commonwealth Bank of Australia[8] Mason CJ, Deane, Toohey, Gaudron and McHugh JJ cited the above passage with approval[9] and held that monies paid under an operative mistake of law are recoverable in the same manner as those paid under an operative mistake of fact and the elusive distinction between a mistake of fact and law need not be drawn for the purpose of this cause of action in restitution. In that context, their Honours said:
… the rule precluding recovery of moneys paid under a mistake of law should be held not to form part of the law in Australia…
Having rejected the so-called traditional rule denying recovery in cases of payments made under a mistake of law, it is necessary to consider what principle should be put in its place. It would be logical to treat mistakes of law in the same way as mistakes of fact, so that there would be a prima facie entitlement to recover moneys paid when a mistake of law or fact has caused the payment…
The proposition that there should be a prima facie entitlement to recover moneys paid when a mistake of fact or law has caused the payment has not been universally accepted. Two alternative formulations of the basis of recovery have been proposed: first, that the person making the mistaken payment must have supposed that he or she was legally liable to make the payment; and, secondly, that the mistake of the person making the payment must have been a fundamental one. The first of these formulations can be subjected to the same criticism levelled at the traditional rule denying recovery in cases of mistake of law, namely, that it is illogical to concentrate upon the type of mistake made when the crucial factor is that the recipient has been enriched. To overturn the traditional rule and then replace it with a proposition incorporating the classic formulations of the liability approach … would be counter-productive…
The second alternative formulation asserts that, in addition to being causative, the mistake must also be fundamental…If the payer has made the payment because of a mistake, his or her intention to transfer the money is vitiated and the recipient has been enriched. There is therefore no place for a further requirement that the causative mistake be fundamental; insistence upon that factor would only serve to focus attention in a non-specific way on the nature of the mistake, rather than the fact of enrichment. If a strict approach is taken towards the issue of mistake so that a plaintiff bears the burden of establishing on the balance of probabilities that a causative mistake has been made, there would also be no need to appeal to the element of fundamentality as a limiting factor. So, the payer will be entitled prima facie to recover moneys paid under a mistake if it appears that the moneys were paid by the payer in the mistaken belief that he or she was under a legal obligation to pay the moneys or that the payee was legally entitled to payment of the moneys. Such a mistake would be causative of the payment…The respondent's submission that the appellants must independently prove "unjustness" over and above the mistake cannot therefore be sustained. The fact that the payment has been caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the respondent to make restitution. Before that prima facie liability is displaced, the respondent must point to circumstances which the law recognizes would make an order for restitution unjust. There can be no restitution in such circumstances because the law will not provide for recovery except when the enrichment is unjust. It follows that the recipient of a payment, which is sought to be recovered on the ground of unjust enrichment, is entitled to raise by way of answer any matter or circumstance which shows that his or her receipt (or retention) of the payment is not unjust.[10]
[8] [1992] HCA 48, (1992) 175 CLR 353.
[9] At 380.
[10] At 376-377, 378, 379. (Citations omitted)
Subject to the question of attribution of Ms Dinedios’ knowledge to the plaintiffs, the relevant decision maker at Romeos was Anthony Romeo who had responsibility for payroll and superannuation. He authorised and signed the cheques making the superannuation contributions to RES in the mistaken belief that no payments were being made in respect of exempt employees. He would not otherwise have authorised and signed the cheques. His mistake was therefore an operative mistake.
The coffee shop meeting
I first make findings concerning the discussion at the coffee shop meeting and consequentially concerning Ms Dinedios’ state of mind before turning to the relevance of those findings to the recoverability of the payments by the plaintiffs.
It is common ground that in April or May 2007 there was a meeting at a coffee shop in the North Adelaide Village Shopping Centre between Ms Dinedios and Messrs Ludlam and Sabbah of RES.
Mr Ludlam gave evidence that after he commenced employment with RES a major part of his job was to meet with employer representatives and to have other dealings with them by telephone and email. He said that he met with Ms Dinedios in her capacity as Payroll Manager for Romeos on three occasions including the coffee shop meeting. He also had telephone and email dealings with her involving at least 10 dealings in total.
Ms Dinedios gave evidence that she only recalled one meeting with Mr Ludlam (being the coffee shop meeting), although she believed that he visited once or twice on other occasions when they only exchanged basic greetings. She said that over the period from 2005 to 2013 she had “way less than” five dealings with him, whether in person or by telephone or email.
I prefer the evidence of Mr Ludlam over that of Ms Dinedios as to how many dealings they had. Overall Mr Ludlam was a more impressive witness and he also had a better memory in respect of his dealings with Ms Dinedios than she had of her dealings with him.
Mr Sabbah and Mr Ludlam both gave evidence that during the coffee shop meeting there was discussion about the fact that there was no need for Romeos to make contributions, as it was doing, for employees under 18 years old who worked no more than 30 hours per week or earned less than $450 per month. They both gave evidence that this was not merely a general discussion about the requirements imposed by the Superannuation Guarantee legislation but was a specific discussion about Romeos making contributions when not required to do so. They both gave evidence that Ms Dinedios told them that Romeos intentionally made superannuation contributions for all employees including those for whom it was not compulsory.
Mr Sabbah gave evidence in his affidavit that he recalled a discussion with Ms Dinedios to the following effect:
Ms Dinedios:       Paying contributions for 15 and 16-year-olds is such a pain.
Mr Sabbah:But you do not need to pay for them. There’s no need for an employer to make contributions for employees aged under 18 who work less than 30 hours per week and earn less than $450 per month.
Ms Dinedios:       Oh no we pay for everyone regardless and anyway, it is too difficult for the payroll system to process. Our system isn’t intuitive enough.
Mr Sabbah:You know you could get those contributions back?
Ms Dinedios:       We do not do that – that is stingy to take away money. We look after our people.
Mr Ludlam gave evidence in his affidavit that he recalled a discussion with Ms Dinedios to the following effect:
Mr Ludlam:Do you know you are making contributions for people under 18? There is an exemption for employees aged under 18 who work less than 30 hours per week and earn less than $450 per month, so you do not need to make contributions for them.
Ms Dinedios: That’s okay. That’s how we do it.
Ms Dinedios gave evidence that she had very little recollection of the discussion at the meeting. She only recalled meeting with Mr Ludlam and had no recollection that Mr Sabbah was present or of him at all. If he was present, she had no recollection of his saying anything. She did not recall any discussion on the topic of junior employees or any other class of employees or about superannuation contributions not being compulsory for any class of employees.
Ms Dinedios gave evidence that she was already aware, as a result of working with Ms Moritz, of the existence of the $450 per month and 30 hours per week thresholds for employees who are under 18 years old. She gave evidence that she believed throughout her employment with Romeos that superannuation contributions were not made in respect of such employees. She categorically denied being told by Mr Sabbah or Mr Ludlam that Romeos was making superannuation contributions in respect of such employees or that she confirmed that this was what Romeos did.
Mr Sabbah gave evidence that he had a particular reason to recall the discussion because, although he had heard from other employers that there were difficulties configuring the software to deal with the thresholds, no employer before (or since) said that they intentionally made non-compulsory contributions and were not interested in their being refunded.
Mr Ludlam gave evidence that he had a particular reason to recall the discussion because before the meeting he accessed REST’s electronic client relationship management tool and noticed that Romeos was paying superannuation for all employees including exempt employees and this was unusual.
I formed a favourable impression of the evidence given by Mr Sabbah and Mr Ludlam. They each acknowledged that they were first asked to recall the conversation approximately 10 years after the event, that they could not recall precisely what was said and that their recollection may have been inaccurate to the extent that they recalled their impressions of what was said rather than the precise content of what was said. They each consistently maintained throughout cross-examination that reference was made to Romeos making payments for exempt employees as opposed to theoretical discussion about the legislative requirements and that Ms Dinedios indicated that this was intentional conduct on the part of Romeos rather than accidental. Each had his own reasons to recall the conversation (out of many conversations with many employer representatives) and would have had no reason to recall the conversation if it had been the type of conversation consistent with the evidence of Ms Dinedios. Although there are differences in their recollection on which Romeos place great emphasis, the evidence of each corroborates the evidence of the other insofar as they each said that reference was made to Romeos making payments for exempt employees and doing so intentionally. Each was cross-examined at some length about the difficulties of recalling what was said ten years ago but this aspect does not shake my confidence in their evidence.
By contrast, I formed an unfavourable impression of the evidence given by Ms Dinedios. She was defensive and unconvincing in her evidence.
Romeos point to the different recollection of Mr Sabbah and Mr Ludlam about who said to Ms Dinedios that Romeos did not need to make contributions for exempt employees. I do not consider that the evidence was inconsistent in this respect. It is to be observed that in their evidence in chief each witness only set out his own conversation with Ms Dinedios and did not attempt to set out any conversation between the other and Ms Dinedios, nor is this surprising given human nature. It is inherently likely that during the course of the conversation each said that Romeos did not need to make contributions for exempt employees. Each gave evidence that this was a matter which stood out in his memory for the reasons he gave. Mr Ludlam did not deny that Mr Sabbah may have also said that Romeos did not need to make contributions for exempt employees: he said that he did not recall it but it was possible. Mr Sabbah said that Mr Ludlam may well have also said that that Romeos did not need to make contributions for exempt employees and he characterised this as “very likely”.
During cross-examination Mr Sabbah was shown a letter dated 15 July 2016 from RES’ solicitors to Romeos’ solicitors which set out Mr Ludlam’s recollection of the conversation more or less in the same terms as his affidavit and said that RES had obtained confirmation regarding Mr Ludlam’s recollection from Mr Sabbah. There is no evidence as to the detail of the conversation between Mr Sabbah and whoever at REST conveyed those instructions to its solicitors. There is no basis to find that Mr Sabbah was asked to confirm the precise detail of Mr Ludlam’s recollection as opposed to the effect that Ms Dinedios was told that Romeos was making contributions in respect of exempt employees and she indicated that this was intentional.
During cross-examination Mr Sabbah said that it was possible that Mr Ludlam’s recollection, as narrated in the letter, was accurate and that his was not. On a fair reading of his evidence, he was referring at that point to what Ms Dinedios said rather than to the question who told her that Romeos were making contributions in respect of exempt employees. Mr Sabbah was consistent in his evidence that his own recollection was and remained that he said this to Ms Dinedios, regardless of whether Mr Ludlam also did so.
I find that during the course of the conversation each of Mr Sabbah and Mr Ludlam said to Ms Dinedios that Romeos was making contributions in respect of non-exempt employees. I find that the reference was to actual contributions rather than merely to the thresholds under the Superannuation Guarantee legislation. Even if it was only one of Mr Sabbah and Mr Ludlam who made this statement, it does not cause me to doubt the evidence of either of them. Regardless of who said it, I do not doubt that at least one of them said it. I reject the evidence of Ms Dinedios to the contrary.
In relation to what Ms Dinedios said, there is also a degree of commonality in, and a degree of difference between, the evidence of Mr Sabbah and Mr Ludlam. On each of their versions, Ms Dinedios conveyed that the payment of contributions for all employees, including exempt employees, was intentional. The evidence of each was inconsistent with the evidence of Ms Dinedios, who categorically denied saying what either Mr Sabbah or Mr Ludlam attributed to her.
I am satisfied that Ms Dinedios did say words that indicated that the payment of contributions for all employees was intentional. Again I formed a favourable impression of the evidence given by Mr Sabbah and Mr Ludlam and an unfavourable impression of the evidence given by Ms Dinedios. Again, although their versions differ, they corroborate each other to the extent that Ms Dinedios did indicate that the payment of contributions for all employees was intentional. Given the concern that each of Mr Sabbah and Mr Ludlam had about employers making non-compulsory contributions in ignorance, it is inherently likely that they would have sought to ascertain whether the contributions were intentional or accidental which would potentially affect the future.
Ms Dinedios gave evidence that she does not recall ever looking at the “Edit Staff Type” function insofar as it enabled entry of a dollar figure or ticking of a box in respect of employees under 18 years working 30 hours or less per week. She gave evidence that she never adjusted whatever had been entered for staff types in this respect when she inherited the data from Ms Moritz. If she had been told by Ms Moritz of the $450 per month and 30 hours per week thresholds and considered them important, it is inherently likely that she would have checked that the Sybiz system was configured not to produce reports providing for contributions in respect of exempt employees. It would in any event have been easy to look at the superannuation contributions reports produced by Romeos and sent to REST which showed the age category, date of birth and salary of employees to check that superannuation contributions were not being made in respect of exempt employees. The fact that she did not take either of these steps causes me to doubt that before the coffee shop meeting she had appreciated (or at least fully appreciated) the fact or significance of the distinction between non-exempt and exempt employees. This might explain her making a statement to the RES employees that Romeos’ conduct was intentional.

It is also to be remembered that Ms Dinedios gave evidence that in 2006 Romeos only had six stores. The differential between making superannuation contributions for all employees and excluding exempt employees would have been much smaller than later when Romeos had 24 stores. I consider that Ms Dinedios engaged in reconstruction as to her state of mind before the meeting and in denying the evidence of Mr Sabbah and Mr Ludlam.
I reject a submission by Romeos inviting me to find that Ms Dinedios understood the RES representatives only to be referring to the legislative requirements and not to Romeos’ conduct if they referred to the $450 per month and 30 hours per week thresholds. Equally I reject a submission by Romeos inviting me to find that Ms Dinedios said words to the effect “That is okay. That’s how we do it” (per Mr Ludlam’s evidence) and thereby conveyed or intended to convey that Romeos paid compulsory contributions and did not pay contributions in respect of exempt employees.
I find that, by the conclusion of the coffee shop meeting, Ms Dinedios was aware that Romeos were making superannuation contributions in respect of exempt employees and were was not legally required to do so.
I reject a submission by Romeos that it is necessary to approach the findings about what was said during the coffee shop meeting and about Ms Dinedios’ state of mind at the end of it having special regard to the considerations identified in Briginshaw v Briginshaw.[11] Neither the plaintiffs nor the defendants suggested that Ms Dinedios acted dishonestly between 2007 and 2013 by reason of knowledge she acquired during the meeting. In any event I have no doubt in accepting the evidence of Mr Sabbah and Mr Ludlam over that of Ms Dinedios as set out above.
[11] [1938] HCA 34, (1938) 60 CLR 336.
There is no suggestion by any party that Ms Dinedios conveyed the knowledge she acquired during the meeting to Anthony Romeo or Mr Mignone or any other person in a management position at Romeos and I find that she did not.
Given my findings above, there is no need to making findings on the reason given by Ms Dinedios, if any, for Romeos’ conduct in making non-compulsory contributions. For the sake of completeness, on Mr Ludlam’s recollection Ms Dinedios did not give a reason why Romeos made such contributions. On Mr Sabbah’s recollection, Ms Dinedios said that it was due to difficulties with the payroll system dealing with differentiation and Romeos did not want to be stingy (at least as to refunds).
During cross-examination, Mr Sabbah said that the word “stingy” was his impression from what Ms Dinedios said rather than what she said and he could not recall the words used to explain the reason why Romeos made non-compulsory contributions. He accepted that it was possible that Mr Ludlam’s recollection about what Ms Dinedios said as recorded in the solicitors’ letter of July 2016 was accurate and his own recollection to the extent that it differed was inaccurate. Nevertheless, he consistently maintained that he had a high level of confidence that Ms Dinedios gave such reasons for Romeos’ conduct.
During cross-examination, it was put to Mr Ludlam that “there was no discussion of the configuration of Romeos software system or anything to that effect” and he agreed: however, this was not the same as asking him whether Ms Dinedios said that differentiating exempt employees would cause difficulties with the payroll system. Similarly, it was put to Mr Ludlam that “there was no discussion that you [can] recall about it being stingy to try and get refunds for payments that had been made to exempt employees prior to 2007” and he agreed: however, this was not the same as asking him whether Ms Dinedios said that it would be stingy not to pay superannuation for exempt employees.
Mr Sabbah said during cross-examination that other employers had told him that there were difficulties with payroll systems coping with exempt employees. On the one hand Mr Sabbah may have confused his conversation with Ms Dinedios with conversations with other employers. On the other hand this means that it is not inherently unlikely that Ms Dinedios may have referred to such difficulties.
Overall I regard Mr Sabbah as an impressive witness. In addition it is likely that he asked for some explanation for what was highly unusual conduct by an employer. I find on the balance of probabilities that Ms Dinedios did give some explanation for Romeos’ conduct involving differentiation against exempt employees in the payroll system not being justified.
Finally, although it does not affect my findings and the defendants do not suggest that any Jones v Dunkel[12] inference is applicable, I note that Romeos’ efforts to locate Ms Moritz were relatively cursory and if she had given evidence it may be expected that she could have shed much light on the state of mind of Romeos’ personnel.
[12] (1959) 101 CLR 298.
The attribution of Ms Dinedios’ knowledge
I have found that Ms Dinedios knew after the coffee shop meeting in April or May 2007 that Romeos were making payments of superannuation contributions in respect of exempt employees when not obliged to so.
RES contends that under the principles of attribution of knowledge to a company of officers and employees the knowledge of Ms Dinedios should be attributed to the plaintiff companies. It does not matter that regard must be had to the state of mind of Anthony Romeo as well as Ms Dinedios because their states of mind should be aggregated for this purpose. Ms Dinedios owed a duty to the plaintiff companies to pass on her knowledge that they were making payments in respect of exempt employees and her knowledge should be attributed to them because of the existence of this duty.
RES also contends that under the principles of attribution of knowledge to a principal of an agent the knowledge of Ms Dinedios should be attributed to the plaintiff companies. Again, the states of mind of Anthony Romeo and Ms Dinedios should be aggregated for this purpose. Ms Dinedios had authority from the plaintiff companies to receive information from RES that the plaintiffs were making payments in respect of exempt employees and her knowledge should be attributed to them because of the existence of this authority.
RES relies heavily as support for these propositions on the judgments of Owen J in The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9)[13] and the Western Australian Court of Appeal in Westpac Banking Corporation v The Bell Group Ltd (in liq) (No 3).[14]
[13] [2008] WASC 239, (2008) 39 WAR 1.
[14] [2012] WASCA 157, (2012) 44 WAR 1.
Romeos contend that the attribution of knowledge to a company or a principal depends on the context, including whether the requisite knowledge is objective, hybrid or subjective; whether it is an element of a cause of action or a defence; and the context of the relevant cause of action or defence. They contend that the test for determining whether a mistake has been made in the context of recovery of monies paid under an operative mistake is subjective; the relevant state of mind here is an element of the cause of action; and the relevant context here is that what is relevant is the state of mind of the decision-maker who made the decision to pay. In those circumstances, the state of mind of an employee of the company who is not the decision-maker is irrelevant. Further it does not matter whether that employee had a duty to convey information to the decision-maker or authority to receive relevant information from a third party.
Romeos point to authorities in which it has been held that a mistake operating at the time of payment is nevertheless an operative mistake for the purpose of recovery of monies paid by mistake even though that person previously knew the true position but has forgotten or overlooked that knowledge. The plaintiffs contend that these authorities are inconsistent with the principles of attribution articulated by RES.
In The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9)[15] the plaintiffs brought an action against six banks or syndicates of banks who took eleventh hour security over the assets of the Bell group companies relying on the equitable causes of action of knowing assistance in, and knowing receipt of the proceeds of, breach of duty by the directors of the Bell group companies under both limbs of what is known as the rule in Barnes v Addy.[16] Voluminous evidence was adduced concerning the state of mind of officers of the banks, including whether they suspected or had reason to suspect that the Bell group companies were insolvent. The treatment by Owen J and the Court of Appeal of the question of knowledge of the banks needs to be understood in the context that knowledge for the purposes of the limbs in the rule in Barnes v Addy can be either subjective or objective. For example, if a reasonable person in the position of the defendant would have known of the breach of duty, it is sufficient even though the defendant had no such knowledge.
[15] [2008] WASC 239, (2008) 225 FLR 1.
[16] (1874) LR 9 Ch App 244.
Owen J upheld the plaintiffs’ claims based on knowing receipt being the first limb in Barnes v Addy.
Owen J considered the attribution of knowledge by company officers or employees to a company. Passages from the judgment of Owen J relied on by RES include the following:
The knowledge and state of mind of directors (and to a lesser extent senior officers) will generally be taken to be that of the company. But this will not always be the case. As Nourse LJ said in El Ajou v Dollar Land Holdings plc:
It is important to recognise that management and control is not something to be considered generally or in the round. It is necessary to identify the natural person or persons having management and control in relation to the act or omission in point.
The directing mind and will of the company in relation to a given transaction will not necessarily be that of a single person. Also, this person may vary from transaction to transaction. Persons will often be treated as the directing mind and will of the company if they have been granted authority to act on behalf of the company in relation to the transaction, or have been vested with autonomy, control, discretion or a significant degree of responsibility in relation to the transaction (or similar transactions).
Where all the requisite knowledge is not held by a single person representing the 'directing mind and will', a court may, in certain circumstances, aggregate the knowledge of multiple agents to determine the knowledge of the company…
It follows that knowledge can be imputed to a company even where the pieces of knowledge are held by several people, rather than a single figure. But this is not to say that every piece of information held by separate employees can be aggregated. Furthermore, there are no definite rules concerning aggregation of information…
There is an important distinction here. There are cases in which mere knowledge of facts held by separate officers are aggregated to determine the total knowledge held by the company as a separate legal entity. There are other cases in which a particular state of mind is sought to be attributed to the company. This attribution is based on an aggregation of the knowledge of separate officers, none of whom necessarily hold that state of mind. The first type of aggregation is certainly possible given the appropriate circumstances. The second type is more controversial…
These statements indicate that it might be possible to aggregate pieces of knowledge in order to determine the overall knowledge held by a company, but it will be more difficult to aggregate pieces of knowledge held by separate individuals to attribute a subjective state of mind to the company.
On the other hand, in Re Chisum Services Pty Ltd, Wootton J contemplated that, in certain circumstances, it may be possible to aggregate pieces of information held by separate officers to determine the state of mind of the company. In Chisum, Wootton J was not prepared to attribute to a corporation (a bank) information contained in a document when the document was in the possession of the head office but had not then been received by the relevant branch. The officers at the head office did not appreciate its significance. The officer had a duty to pass on the document to the regional branch, where its significance would have been appreciated. But that obligation was not enlivened at the time when the bank's state of mind was assessed. Wootton J commented, at 298, that:
The inference that has to be drawn is that the payee had reason to suspect the specified matters. The reason to suspect would only arise from the co-existence of the separate pieces of information in one mind, and I do not think that it would be sufficient to say that both pieces of information were possessed by the Bank through separate agents, unless one had the duty and opportunity to communicate it to the other.
Wootton J's dicta therefore suggests that it may be possible to aggregate separate pieces of information held by separate officers to establish that the corporation knew both things at once. This aggregation would thereby give rise to a particular state of mind, if the bearer of one piece of information had a duty and opportunity to communicate it to the other. If this duty and opportunity exists, the court may infer that the company simultaneously knew both facts from the time when, in the usual course of events, the information would have or should have been communicated…
Whether a court is prepared to infer that the company held particular knowledge or had a particular state of mind, based on the collective knowledge of its officers and agents, depends on the circumstances of the case. It may depend on the type of information and the effect that such a piece of information may have (or should have had) on the particular employee. It will also depend on the employees' positions, their duties and responsibilities, and their proximity to the relevant transaction…
Inferring knowledge or state of mind may also depend on whether the court is evaluating the company's knowledge objectively or subjectively. For example, in Chisum the court was looking at a quasi-objective state of mind – whether the company had 'reason to suspect'. In contrast, in Macquarie it appears there was a greater reluctance to impute to the bank knowledge of something that would constitute fraud.
I have not been able to find a case where knowledge held by separate employees has been aggregated to allow a finding of a state of mind that is not held by any individual employee. But I believe that Chisum, Krakowski, Radio Rentals and Macquarie leave this possibility open in the right circumstances.
… it is not the case that the court will aggregate knowledge if there is a duty and opportunity to communicate, but rather it may do so. There is a need to demonstrate the nature, source and content of the duty. Any duty to communicate would have to be owed to the person who holds the other relevant information, although arguably it would also include situations where both possessors of information have a duty and opportunity to communicate their knowledge to a superior. The particular information would also have to fall within the scope of that duty. [17]
[17] At [6143]-[6147], [6149]-[6151], [6156], [6158]-[6159], [6161]. (Citations omitted)
As can be seen, Owen J expressed the principles in a diffident manner and in non-categorical terms.
Owen J also considered the attribution of knowledge by agents to a principal. Passages from the judgment of Owen J relied on by RES include the following:
A principal will only be fixed with knowledge held by the agent if the agent acquires knowledge of something material to the transaction for which he is responsible whilst acting in the course of, and within the scope of, his authority. Further, the circumstances must be such that there is a duty on the agent to communicate that information to the principal. In such circumstances, the principal will be deemed to have constructive knowledge from the time when the principal would have received the information had the agent acted with due diligence:
As the banks put it in their closing submissions, the court must determine three things. First, the precise parameters or scope of the agent's authority, both substantively and temporally. Secondly, whether the knowledge in issue was obtained in the course of that authority. Thirdly, whether the knowledge is relevant to the authority…
Where an agent has actual or apparent authority to receive formal notification from a third party, notification to the agent within the scope of that actual or apparent authority will effectively bind the principal regardless of whether the principal actually receives the information.[18]
[18] At [6187]-[6189]. (Citations omitted)
As can be seen, Owen J expressed the principles in what appeared to be uncontentious terms in that case.
When Owen J came to consider the facts, it is not clear that anything turned on any controversial principles of attribution. Owen J said:
I do not think that many issues arise as to whether a particular bank officer's state of mind can be taken to represent that of 'the bank', at least whether they had sufficient capacity. Generally speaking, all of the main participants on behalf of the banks were of such seniority and possessed sufficient responsibility in relation to the facilities with the Bell group that they can be considered to be the directing mind and will in relation to the Transactions.[19]
[19] At [7310].
In Westpac Banking Corporation The Bell Group Ltd (in liq)(No 3)[20] the Court of Appeal by majority dismissed the banks’ appeals. Drummond AJA, with whom Lee AJA relevantly agreed,[21] held that Owen J did not err insofar as he articulated or relied on principles of attribution.[22]
[20] [2012] WASCA 157, (2012) 44 WAR 1.
[21] At [1099]-[1100].
[22] At [2179]-[2202].
Turning to the principles governing the recovery of monies paid by reason of operative mistake, it is clearly established that the test as to the plaintiff’s state of mind is purely subjective: it is irrelevant that a reasonable person in the plaintiff’s position would have known the true position or that the plaintiff had the means of knowledge or that the plaintiff had forgotten the true position.[23]
[23] Kelly v Solari (1841) 9 M & W 54, 152 ER 24 at 58 per Lord Abinger CB; Imperial Bank of Canada v Bank of Hamilton [1903] AC 49 at 56 per Lord Lindley delivering the judgment of the Privy Council; RE Jones Ltd v Waring & Gillow Ltd [1926] AC 670 at 688 per Lord Shaw of Dunfermline.
In Kelly v Solari[24] Mr Bates and Mr Clift were directors of an insurance company that insured the life of the late Mr Solari. In November 1840 they were told that the policy had lapsed but in February 1841 they signed a cheque for the insured sum in favour of the executor. They gave evidence at trial that they had forgotten in February 1841 that they had previously been told that the policy had lapsed. The Court of Exchequer held that, if the jury accepted their evidence, their previous knowledge was no bar to recovery of the payment for operative mistake. Lord Abinger CB (with whom Parker B, Gurney B and Rolfe B agreed) said:
Then there is a third case, and the most difficult one, – where the party had once a full knowledge of the facts, but has since forgotten them. I certainly laid down the rule too widely to the jury, when I told them that if the directors once knew the facts they must be taken still to know them, and could not recover by saying that they had since forgotten them. I think the knowledge of the facts which disentitles the party from recovering must mean a knowledge existing in the mind at the time of payment. I have little doubt in this case that the directors had forgotten the fact, otherwise I do not believe they would have brought the action; but as Mr Platt certainly has a right to have that question submitted to the jury, there must be a new trial.[25]
[24] (1841) 9 M & W 54, 152 ER 24.
[25] At 26 [58].

In Imperial Bank of Canada v Bank of Hamilton[26] and in RE Jones Ltd v Waring & Gillow Ltd[27] the Privy Council and the House of Lords approved the principle as formulated in Kelly v Solari.
[26] [1903] AC 49 at 56 per Lord Lindley delivering the judgment of the Privy Council.
[27] [1926] AC 670 at 680 per Viscount Cave LC (with whom Lord Atkinson and Lord Carson agreed) and 688-689 per Lord Shaw of Dunfermline.
In Rural Municipality of Storthoaks v Mobil Oil Canada Ltd[28] Mobil by its production accounting section in Calgary made monthly payments to the Municipality of quasi-royalties pursuant to petroleum leases. In July 1964 by letter signed by its District Landsman Mr Morris, Mobil surrendered the relevant portions of the petroleum leases and a copy of the surrender letters was sent to Mr Haraldson at Calgary. However, Mr Haraldson omitted to notify the production accounting section and it continued to make monthly payments until March 1968. The Municipality argued that there was no relevant mistake by Mobil because Mr Landsman knew the true position. The Supreme Court of Canada held that this was no bar to recovery. Martland J (with whom Laskin CJ, Judson, Ritchie, Spence, Pigeon, Dickson, Beetz and de Grandpré JJ agreed) said:
The second submission was that the payments made by Mobil to the Municipality were voluntarily made with full knowledge of all of the facts. It is contended that the knowledge of Mr Morris, the district landsman, who signed the letters of surrender, was the knowledge of Mobil and, therefore, that Mobil knowingly made the payments to the Municipality. This raises the issue as to whether a corporation, whose authorised agent makes payments of money on its behalf, under a mistake of fact, is entitled to recover the money if some other agent of the corporation had full knowledge of the facts.[29]
[28] (1975) 55 DLR (3d) 1.
[29] At 7.
Martland J referred to the decision in Kelly v Solari and its affirmation by the House of Lords in RE Jones Ltd v Waring & Gillow Ltd and concluded:
In my opinion the mistake which occurred on the part of the accounting department of Mobil in continuing the payments to the Municipality after the surrenders, not knowing that the lease had ceased to exist in relation to legal subdivisions 15 and 16, was a mistake of fact by Mobil within the rule stated in Kelly v Solari.[30]
[30] At 9.
In Simos v National Bank Australasia Ltd[31] the bank was entitled to recover the amount of cheques signed by one signatory paid by tellers who it was inferred were ignorant of the requirement that they be signed by two signatories even though another teller who set up the account was aware of the true position. Connor J said:
It seems clear from the foregoing cases that an action for money had and received is available to recover money paid by one person to another under a bona fide forgetfulness of facts which disentitles the other person to receive it. A party may recover notwithstanding that he had the means of knowledge of the facts unless he paid the money intentionally, not choosing to investigate the fact. Knowledge is not the same as means of knowledge.[32]
[31] (1976) 45 FLR 97.
[32] At 106.
Returning to the facts of this case, Anthony Romeo was the person within the plaintiff companies who decided what payments were to be made by way of superannuation contributions to REST in respect of employees. He was also the signatory to the cheques in payment of the contributions. His intention and belief was that payments were only being made to employees who were not exempt employees. He was the relevant decision-maker.
By contrast, Ms Dinedios was not a relevant decision-maker. She had no authority to decide whether or not contributions were to be made in respect of exempt employees. Her role was purely administrative, she was to oversee the calculation of payments of superannuation so as to discharge the plaintiffs’ obligations under the Superannuation Guarantee legislation. Her knowledge that payments were being made in respect of exempt employees is irrelevant to the state of mind of the plaintiff companies and in particular their decision to make the payments.
The cases clearly establish that, if Anthony Romeo had previously been aware that the Sybiz software was set up in a manner such that superannuation contributions were made in respect of exempt employees but forgot that fact when he authorised payment and signed a cheque in payment of contributions, his previous knowledge would be no bar to recovery. The position is analogous in relation to the knowledge of Ms Dinedios.
When principles of attribution of knowledge to corporations were developed in the early to mid twentieth century, it was determined that the “directing mind and will” of the company was to be ascertained and that person’s or those persons’ knowledge was to be attributed to the company.[33] More recently, it has been held that this is not a universal principle and regard must be had to the particular context in which the issue arises.[34]
[33] Leonard's Carrying Company Limited v Asiatic Petroleum Co Ltd [1915] AC 705 at 713-714 per Viscount Haledane LC; HL Boulton (Engineering) Company Limited v TJ Graham & Sons Limited [1957] 1 QB 159 at 172 per Denning LJ; Tesco Supermarkets Limited v Nattrass [1972] AC 153 at 171 per Lord Reid, 180 per Lord Morris, 187 per Viscount Dilhorne and 190 per Lord Pearson.
[34] Meridian Global Funds Management Asia Limited v Securities Commission [1995] 2 AC 500 at 511- 512 per Lord Hoffman delivering the judgment of the Privy Council; Director of Public Prosecutions (Vic) Reference Number 1 of 1996 [1998] 3 VR 352 at 355 per Callaway JA (with whom Phillips CJ and Tadgell JA agreed); Director-General, Department of Education and Training v MT [2006] NSWCA 270, (2006) 67 NSWLR 237 at [23] per Spigelman CJ (with whom Ipp JA and Hunt AJA agreed).
In the context of a cause of action in restitution for monies paid due to operative mistake, it is necessary to identify the directing mind and will of the company in respect of the specific transaction or transactions effecting payment, and that will be the person or persons who decided to make the payment. In the present case, that person is Anthony Romeo. It was not Ms Dinedios.
It is unnecessary to consider whether Ms Dinedios owed a duty to convey her knowledge to Anthony Romeo. Assuming that she owed such a duty, if the test for the existence of mistake were objective, it would be arguable that her knowledge should be attributed to Anthony Romeo. However, the test is subjective and there is no basis on which her knowledge can be attributed to Anthony Romeo or the plaintiff companies.
RES contends that Ms Dinedios had authority to receive information from RES relating to payment by Romeos of superannuation contributions in respect of exempt employees. In the law of agency, authority usually connotes that the agent is authorised by the principal to enter into a contract or otherwise create or change a legal relationship with a third party. Ms Dinedios had no such authority vis a vis RES. In the law of agency, a principal can authorise an agent to receive a communication from a third party on the principal’s behalf as if it had been received by the principal. Anthony Romeo on behalf of the plaintiff companies conferred no such authority on Ms Dinedios. In these circumstances it is meaningless to say that Ms Dinedios had authority to receive on behalf of the plaintiff companies’ information from RES. Even if she had such authority, it would make no difference because the test for recovery of monies paid due to the operative mistake is subjective and her knowledge cannot be attributed to Anthony Romeo or the plaintiff companies.
Finally, I note that in Commonwealth Bank of Australia v Kojic[35] the Full Court of the Federal Court held that the knowledge of two different employees of the bank could not be aggregated for the purpose of attributing their knowledge to the bank in the context of a cause of action against the bank for unconscionable conduct under sections 51AB or 51AC of the Trade Practices Act 1974 (Cth). Although the decision was confined to unconscionable conduct under the Act, section 51AB merely re-enacts the general law equitable concept of unconscionable conduct. In addition Edelman J (with whom Allsop CJ and Besanko J relevantly agreed) expressed several general criticisms of the concept of aggregation for the purpose of attribution of knowledge of different officers or employees to a corporation.[36]
[35] [2016] FCAFC 186, (2016) 249 FCR 421.
[36] At [94]-[105].
Conclusion
The preliminary issue is decided in favour of the plaintiffs. They have a prima facie entitlement to recover from RES the amount of superannuation contribution payments made in respect of exempt employees, subject to any “defences” that may be advanced and subject to assessment of the quantum of the recoverable payments made.