Reeve v Commonwealth
[2014] ACTSC 1
•17 January 2014
ROBERT REEVE v COMMONWEALTH OF AUSTRALIA
[2014] ACTSC 1 (17 January 2014)
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 1986 (ACT)
Superannuation Act 1927 (Cth), s 4(5)(c)
Superannuation Act 1976 (Cth), ss 11, 16(4), 66(2), 132, 137(1), 139, Div 3 of Pt IX
Superannuation Act 1990 (Cth)
Court Procedures Rules 2006 (ACT), Sch 2
Factors Influencing a Decision to Transfer from the Commonwealth Superannuation Scheme (CSS) to the Public Sector Superannuation Scheme (PSS)
Commissioner for Superannuation v Boardman (1994) 50 FCR 236
Cornwell v Commonwealth (2005) Aust Torts Rep 81-779
Cornwell v Commonwealth (2007) 229 CLR 519
Duffy v Commonwealth [2013] ACTSC 239
Golden Eagle International Trading Pty Ltd v Zhang (2007) 229 CLR 498
Guy v Commonwealth [2013] ACTSC 128
Knight v Commonwealth [2013] ACTSC 238
Mahoney v J Kruschich (Demolitions) Pty Ltd (1985) 156 CLR 522
Meredith v Commonwealth (No 2) [2013] ACTSC 221
Mutual Life and Citizens’ Assurance Co Ltd v Evatt (1968) 122 CLR 556
Re Rattray and Commissioner for Superannuation (1980) 2 ALD 979
Reseck v Federal Commissioner of Taxation (1975) 133 CLR 45
Skelton v Collins (1966) 115 CLR 94
Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Local Management (2012) 42 WAR 287
Subramaniam v Public Prosecutor [1956] 1 WLR 965
Tobin v Commonwealth [2013] ACTSC 240
Young v Rothin [2009] ACTSC 71
No. SC 769 of 2006
Judge: Refshauge J
Supreme Court of the ACT
Date: 17 January 2014
IN THE SUPREME COURT OF THE )
) No. SC 769 of 2006
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:ROBERT REEVE
Plaintiff
AND:COMMONWEALTH OF AUSTRALIA
Defendant
ORDER
Judge: Refshauge J
Date: 17 January 2014
Place: Canberra
THE COURT ORDERS THAT:
There be judgment for Robert Reeve against the Commonwealth of Australia.
The parties provide appropriate material or submissions in accordance with these reasons from which the damages payable can be quantified.
The parties be heard as to costs.
These reasons for judgment are divided into the following sections:
Introduction and Table of Contents [1]-[8] The pleadings [9]-[11] The earlier evidence [12] The evidence [13] Evidence on behalf of the plaintiff [13]-[64] (a) Robert Reeve [13]-[61] (b) Dennis Allan Wright [62]-[64] The plaintiff’s evidence from Guy v Commonwealth [65]-[317] (a) Martin Guy [66]-[86] (b) Barry Bond [87]-[99] (c) Edward John Rowley Moore [100]-[119] (d) Wilhelmina Davey [120]-[124] (e) Ivan Sako [125]-[138] (f) Ian Peisley [139]-[147] (g) Rodney De Smet [148]-[156] (h) Luigi Cartolano [157]-[166] (i) Colin David Lamont [167]-[184] The defendant’s evidence [185]-[202] (a) Paul Andrew Stott [185]-[202] Defendant’s evidence from Guy v Commonwealth [203]-[317] (g) Ivan James Woods [207]-[247] (h) Terence John Forde [248]-[303] (i) Bevan James Bryce [304]-[317] Assessment of the evidence [318]-[362] Causes of action [363]-[396] Negligent misstatement [366]-[385] Contributory Negligence [386]-[396] Damages [397]-[482] Causation [401]-[418] Period of the damage [419]-[434] Quantum of Damages [435]-[478] Consideration [479]-[482] Taxation [483]-[485] Conclusion [486]-[489] Delay [490]
As can be seen from a series of decisions commencing with Cornwell v Commonwealth (2005) Aust Torts Rep 81-779 and including Meredith v Commonwealth (No 2) [2013] ACTSC 221 and related cases, the eligibility of workers employed under temporary but long term arrangements with the Commonwealth of Australia to join a Commonwealth superannuation scheme was not widely known, and such employees did not take up superannuation during their employment, even though, under certain conditions, it was possible, indeed often likely, that they would be admitted to a Commonwealth superannuation scheme.
In 2009-10, a series of cases were heard together; they focused on temporary employees who had been employed by the Commonwealth through the then Department of the Interior (and its successor) as forestry workers, employed at a forestry depot operated by the Department.
In Meredith v Commonwealth (No 2), a number of legal issues were resolved concerning those cases, and the evidence in that case was received in the other decisions which also addressed the particular circumstances of each individual plaintiff.
Two cases involving temporary workers who were not forestry workers were also heard at the same time. These cases concerned workers who had been employed as temporary transport workers by the same Department.
One such case was that of Mr Martin Guy, decided in Guy v Commonwealth [2013] ACTSC 128. This is the other case.
A number of the issues addressed in Meredith v Commonwealth (No 2) are relevant to this case and reference will be made in these reasons to that decision.
Thus, for example, Commonwealth superannuation has been described in Meredith v Commonwealth (No 2) at [23]-[26], and I rely on what is there said without repeating it here. I also rely on the abbreviations described there, especially CSS for the Commonwealth Superannuation Scheme and PSS for the Public Sector Superannuation Scheme. As there, I will also describe each of such schemes, when undifferentiated, as a Commonwealth superannuation scheme. I shall also refer to the agency that administered the relevant scheme as there described as ComSuper, despite its various changes of name over time.
THE PLEADINGS
In these proceedings, Robert Reeve, the plaintiff, pleaded the same causes of action as did Mr Meredith in Meredith v Commonwealth (No 2), namely negligent misstatement, negligence and breach of statutory duty.
Although there were significant factual differences between the two cases, the elements of the causes of action there pleaded and the structure of the Statements of Claim pleading them were relevantly identical and I can rely on the general description in Meredith v Commonwealth (No 2) at [9]-[22] for that purpose, noting that, factual differences can be addressed in these reasons.
The Commonwealth denied each of the claims made by Mr Reeve and pleaded that the causes of action were not maintainable. It further pleaded that all the claims were barred by statute, the Limitation Act 1986 (ACT), and that any loss or damage suffered by Mr Reeve was caused or contributed to by him, that is, contributory negligence.
THE EARLIER EVIDENCE
It was agreed that the evidence that had been taken in the earlier cases, Meredith v Commonwealth (No 2), Tobin v Commonwealth [2013] ACTSC 240, Knight v Commonwealth [2013] ACTSC 238 and Duffy v Commonwealth [2013] ACTSC 239, would also be taken into account, so far as relevant. I will do so and have regard to what has been set out in those decisions. The hearing of Guy v Commonwealth preceded the hearing of these proceedings and it was agreed the evidence in that proceeding would also be admitted in these proceedings.
THE EVIDENCE
Evidence on behalf of the plaintiff
(a) Robert Reeve
The plaintiff, Robert Reeve, gave evidence by affidavit and orally. He was cross-examined.
Mr Reeve was born in 1945 and, after completing Year 10 at school, worked as a jackaroo for twelve months before moving to Sydney, where he worked in a service station for about seven years, working his way up in a petroleum company to be relief manager.
He married his first wife in the 1960s and they had two children. He moved to Canberra in the early 1970s, working on a farm outside the city for about twelve months.
He then worked for a service station until he took over management of another service station at Yass.
He had no superannuation for any of those periods of employment.
His wife and he purchased a home in Canberra but they separated in the early to mid 1970s and he retained that property.
In 1974, he saw an advertisement for bus drivers to be employed by the Commonwealth, and applied for the job. He was interviewed at a Commonwealth transport depot at Kingston and later received a phone call telling him that his application had been successful. He was directed to report to the Kingston depot for work on the following Monday. He received no form of induction or advice about employment or his entitlements and was not given any information regarding superannuation. He said: “I was simply appointed and told to report for training”.
After three weeks training, he was sent for a medical examination at an office in Civic with the Commonwealth Medical Officer and was passed fit for duty. He never failed any subsequent medical examinations during the course of his employment.
He did not recall ever receiving any documentation relating to the terms and conditions of his employment after he commenced employment. He believed that he was a full-time and permanent employee and, when taking the job, intended to remain in government employment indefinitely.
In about 1976, he transferred to a new depot that had been established at Woden, a southern suburb of Canberra in the Australian Capital Territory. Sometime in that year, he overheard work colleagues speaking about government superannuation in general conversation and decided to make some inquiries. At the time, George Newport was the Assistant Deputy Depot Manager at the Woden depot and his principal duties included dealing with employment-related matters and problems or questions relating to the job which arose from time to time.
He said that he approached Mr Newport at the depot and said words to the following effect: “How do I go about joining the Commonwealth superannuation?”
To the best of his recollection, Mr Newport replied: “You are an industrial employee, you can be sacked on one day’s notice and you are not a public servant, and therefore cannot join the government superannuation scheme.”
Mr Reeve said that he did not query the advice given by Mr Newport and relied upon that advice because he assumed that Mr Newport knew what he was talking about. If, however, he had been provided with the correct advice, he would have joined as soon as he was able, which would have been on 1 July 1976.
In 1979, an opportunity came up to take over a garbage collection contract with the government, and he and some fellow workers decided to resign their Commonwealth jobs and enter into that contract. There were minimal costs, as the government provided the truck and all the equipment.
Mr Reeve said that, if he had been admitted as a member of a Commonwealth superannuation scheme from 1976 and was aware that there would be a substantial payment on retirement, he may not have left government employment at that time.
In 1983, the government changed the garbage collection system, introducing big bins and centralising the contract with major companies. His business could not compete and the contract was terminated. He decided to return to the security of government employment, intending to remain in that employment until his retirement. He saw an advertisement for truck drivers with the Commonwealth Department of Administrative Services and applied for a position. He was interviewed at the depot at Dairy Flat Road in Fyshwick and was subsequently contacted and asked to commence work about three weeks later at the Kingston depot.
Again, at the interview he was not told or given any documentation or other information about government superannuation.
He commenced employment as a truck driver on 22 August 1983, mainly driving tipper trucks. He was given a document called “Department of Administrative Services Transport and Storage Division ACT Branch – Conditions of Temporary/Casual Employment” which he signed. The document stated that he was employed as a temporary driver at “T & S Fyshwick” (that is, the Transport and Stores Division of the Department at the Fyshwick depot) for an initial period of three months and that further employment thereafter was subject to his “conduct, diligence and efficiency”.
After his initial period of employment expired on 25 November 1983, he was offered an additional five weeks of temporary employment from Monday 28 November 1983. It was customary at the time for one contract to end on the Friday and the new one to commence on the following Monday, an arrangement apparently between the Commonwealth and the Union to protect workers and their possible entitlements.
He was again offered a contract from 31 December 1983 and, on both of these occasions, required to sign a further conditions of employment document, similar to that referred to above (at [30]).
In 1986, he attended an interview at the Fyshwick depot for a position driving Commonwealth cars. He accepted the position and commenced work on 12 February 1986. The duties performed by staff at the Fyshwick depot included store duties, removals, fleet services (government cars), workshop duties, overseas packing, Commonwealth car services and there was also a human resources and management area.
Mr Reeve said that, a few months after he started driving Commonwealth cars in 1986, he decided to make inquiries to see if he could join a Commonwealth superannuation scheme, as he was in a new area carrying out a new role. He approached the supervisor or manager in charge of human resources, Terence John Forde, and said words to the following effect: “Am I eligible to join the Government superannuation fund?” Mr Forde replied: “No, you cannot join because you are an industrial worker and super is only for public servants.” Mr Reeve said: “Oh well, fair enough” and walked away.
He accepted that the manager would know the correct position, as he did not know of any other drivers who were in a Commonwealth superannuation scheme. He accepted what he was told. He said that if he had been correctly advised as to his eligibility he would have joined immediately and commenced membership in 1986. He said that he could have made the necessary contributions as he was making good money driving the cars. Instead, he took out a superannuation policy with a private insurer on 2 July 1986. Each year he would save what he could, and make one annual deposit into the fund, the amount of which depended on his circumstances in that year.
He made an inquiry of one of the staff in the personnel section about whether the Department would pay fortnightly contributions to his insurer and was told that there were some insurance companies with which the Department had such an arrangement but his insurer was not one of them.
He was a member of the Transport Workers Union from 1974 to 1979 and again from 1983 to 2000. In 1987, he became a union representative until 1998 and was a member of the Branch Committee of Management from 1990 to 1996. As representative, he received inquiries from employees from time to time about leave and pay issues and, in particular, disciplinary matters. Where he could, he would pursue those matters directly with management and, on occasions, refer them to the Branch Committee. He said he did not recall any discussions with the Union about superannuation.
In about 1988, he was assisting in supervising wages each week in his capacity as a union representative. The topic of superannuation came up in general conversation with a pay officer whom he could only identify as “Paul”. Mr Reeve recalled that a security guard was also present whose name he did not know. Mr Reeve said that he said words to the following effect: “I cannot understand why I cannot join the superannuation scheme”. He said that Paul said words to the following effect: “I think it is wrong that you have to be a permanent public servant to join. Unless you get a ruling that you are a public servant, you cannot contribute ... you are an industrial and not a public servant, therefore you cannot join ... It is time the union and management arranged so that you guys can be considered as public servants”.
As Paul was from the Personnel Section, Mr Reeve assumed that he knew about superannuation and it confirmed what he had previously been told by Mr Forde. Accordingly, he considered that he could not join a Commonwealth superannuation scheme until he was appointed as a public servant.
In about 1991, Mr Reeve said he was rostered to fill in for a ministerial driver, Bevan Bryce. During handover for the job, Mr Bryce told him about his own membership of a Commonwealth superannuation scheme. As a result, Mr Reeve said he spoke again to Mr Forde in the canteen saying words to the following effect: “Can I join the superannuation fund? I am aware that another bloke, Bevan Bryce, is a member”. To the best of Mr Reeve’s recollection, Mr Forde replied: “You are not eligible to join the fund. Bryce was able to join because he transferred from a position with the AFP, and he already had superannuation before he commenced employment with DAS”.
Mr Reeve said that throughout his employment with the Commonwealth, management mainly communicated with workers by speaking to them directly, although occasionally there would be meetings or written information would be handed out. There was a noticeboard at each of the depots that displayed information about shifts and rosters and sometimes information about office staff or the social club. Mr Reeve does not recall ever receiving any information or seeing any information on the noticeboards about superannuation. The only information he was provided was that was given to him by Mr Newport, Mr Forde and Paul.
In 1992, the Department required him to nominate a fund into which certain productivity payments were to be paid. The circumstances of this are set out in Meredith v Commonwealth (No 2) at [25]-[26]. The personnel section of the Department suggested that the Australian Government Employees Superannuation Trust (AGEST) was the most common fund and provided him with an application form to complete and sign. Mr Reeve has since learned that employees who were already members of a Commonwealth superannuation scheme were required to pay these additional benefits to ComSuper as addition to the Commonwealth superannuation scheme of which they were a member. At the time, it was not suggested that he was eligible to join a Commonwealth superannuation scheme to which he could have directed the payments.
In about 1995, he was driving a ComSuper employee from the airport. She was, he recalled, a reasonably senior employee. During normal driver-passenger conversation, the issue of superannuation arose and he recalled that she said: “I hope all you boys are in superannuation now”. He said: “What are you talking about, we are not allowed to join”. She said: “Rubbish, you are all eligible to join”. He continued talking with her until he reached her house and she offered: “I am happy to come out to the depot and speak to all of the drivers who are not in the government superannuation fund. You arrange it with your boss”.
Mr Reeve subsequently spoke to his supervisor and told him that he wanted to arrange a meeting at the depot. Permission was granted and an information session took place in early November 1995. Representatives from ComSuper, one of whom was the woman he had driven home from the airport, explained that all Commonwealth drivers were eligible to apply. Mr Reeve said that this was, however, the first time that he was advised that he could do so. It was the first time also that he had discovered information about the PSS and when he first understood that he had been eligible to join a Commonwealth superannuation scheme earlier during his employment.
At the meeting, forms were handed out and he completed one. He cannot recall whether he gave the forms to the personnel section at Fyshwick or sent them directly to ComSuper. In any event, he joined the PSS on 10 November 1995 and immediately changed his contribution rate to 10% of his annual salary. He also transferred the accumulated funds in AGEST into his PSS account.
In 1998, he purchased an ice cream truck for $12,000, financed by the sale of another motor vehicle and accumulated savings. He later borrowed $7,200 from a credit union to fund a replacement for failed equipment and later sold the truck for $8,000, as it had raised little or no income.
In 2000, he was offered a redundancy package. As an opportunity had arisen for him to take on a new business involving Australia Post, he decided to take the package and accepted the offer of voluntary redundancy on 24 October 2000. He retired on 17 November 2000 with final entitlements totalling $62,130.74. He elected also to access his PSS superannuation benefit as a lump sum and was paid $62,817.38 on 6 December 2000.
He also received a pay out from his private superannuation scheme of $16,864 on 23 January 2001. He used these funds to pay off the mortgage on his house.
Since retirement, he has been self-employed in a contract with Australia Post and used some of his superannuation payout to start the business. He left the business in 2004 without any payout.
He commenced a de facto relationship in the mid 1970s. His partner worked for about twelve months at a newsagency and then ceased work.
In 1976, he sold his Canberra property and purchased a Murrumbateman property. After his partner ceased working he was responsible for all household expenses and payment of the mortgage. Interest rates were extremely high during this period and his income was consumed with these expenses, with very little being saved.
He separated from his partner in 1992 and sold the Murrumbateman property. He used a portion of the proceeds to purchase a property in Flynn in about 1993 or 1994 and that was sold in 2004.
In 1998, he commenced a relationship with his current partner, who worked full-time until 2005 when they moved to the South Coast.
Mr Reeve was cross-examined. He was asked about a document that he completed in about 1997, which he had provided to the union about his experience involving superannuation. He said, however, that he did not include in the document everything he could remember about the wrong information he had been given. He said that he wrote no more because he was told that all that was needed was “a brief outline” of the information he believed he had been given. It was pointed out to him that the document actually said
Please set out, in as much detail as you are able, what you were told in relation to your entitlement or lack of entitlement to join a superannuation scheme. Even though you will not recall the precise words used, please provide this information to the best of your recollection. Should you need to give this evidence in court, the court will recognise that your recollection will not be absolutely precise but the court will ask you to do the best you can.
He agreed that the document may have included those words, but he was not sure of whether it said those exact words as he only read it once.
He agreed that when he started at the Kingston depot he was twenty-nine and had been educated to Year 10 at good schools. He had also managed a service station. He said that it never occurred to him to follow up the conversations he had had about superannuation by writing a letter to management. He assumed that the information he was given was correct. He said that he did not see any information from his union about superannuation and did not seek advice from his union. He said that he may have seen some union newsletters, but said:
I suppose at the end of the day I believed, and I still believe that to be the case, that the Commonwealth super scheme was the best available and that is why I was more interested in Commonwealth super as against joining TWU Super.
He said that he did not get any union newsletters and he did not buy The Canberra Times. He did not read articles in it. As it was broadsheet, The Canberra Times was difficult to read as a driver, whereas The Daily Telegraph was not. He said he possibly saw the advertisement for the bus driver’s job in a Yass paper, but could not remember exactly where he saw the advertisement. He did buy the local Yass paper, The Yass Tribune, but that was the only paper he bought.
He explained that his understanding was that you could contribute as little as 2% to a Commonwealth superannuation scheme, because a public servant that he knew in Yass, for whom he understood it was compulsory to join, was paying 2%. That was, he said, in about 1974 or 1975.
He said that, when he started as a driver in 1986, basically the only thing he knew was that it was “a good form of compulsory saving” to get into a Commonwealth superannuation scheme. He knew nothing, however, about the details of a scheme.
He agreed that his statement that he would not have left to run the garbage collection business if he had been a member of a Commonwealth superannuation scheme was a judgement he made with the benefit of hindsight.
When he separated from his wife, he had no maintenance obligations, though, after separation, he had a dependent child. He did not prepare and work out a calculation of what he was earning and what he was paying as at that time in preparation for the court proceedings.
He did not know of the Superannuation Act 1976 (Cth) (the 1976 Act) or the Superannuation Act 1990 (Cth) (the 1990 Act). He did know that the Commonwealth superannuation schemes were established by Acts of Parliament.
(b) Dennis Allan Wright
Dennis Allan Wright commenced employment as a full-time bus driver with ACTION, an agency of the Department of the Interior, on 15 September 1980, initially at the Belconnen Depot.
Mr Wright was interested in joining a Commonwealth superannuation scheme and he approached Mr Newport, who said to him: “You are not eligible to join the superannuation scheme because you are blue collar worker and you are not covered by Commonwealth superannuation”. Mr Wright relied on that information and subsequently took out an endowment policy with a private insurer.
In 1983, he transferred to the Kingston depot and some years later approached the then depot master, Joe Walters, who told him he was eligible to join a Commonwealth superannuation scheme and assisted him in getting the relevant forms. Mr Wright joined a Commonwealth superannuation scheme on 16 May 1989.
The plaintiff’s evidence from Guy v Commonwealth
In addition to this evidence, the evidence given in the matter of Guy v Commonwealth, was admitted for these proceedings. For reasons set out in that decision (at [26]), the evidence was not reproduced in that decision. It is, therefore, referred to below.
(a) Martin Guy
A summary of Mr Guy’s circumstances are set out in Guy v Commonwealth at [3]-[14]. I rely on that material, but need to expand and supplement some of that summary.
In late 1984 or early 1985, Mr Guy went to see the then Administration Officer at the Fyshwick depot, Mr Forde, about superannuation. He considered that, as second-in-charge of the depot, Mr Forde would be an appropriate person to ask.
He said that he said to Mr Forde: “I would like to join the superannuation fund”. Mr Forde said: “Go and see the personnel section”.
Mr Guy said that he then went to the Personnel Section, which was in another building, and told a male person there: “Terry [Forde] told me to come down here and talk to you about superannuation”. The male replied: “We don’t know about that, you will have to go and talk to Terry Forde”.
Within a week of that conversation, Mr Guy said he went back to see Mr Forde and told him: “I talked to personnel section and they referred me back here”. It was then that Mr Forde said: “As you are not a public servant, because you are a temporary employee, you are not entitled to join the fund.”
Mr Guy said he remembered clearly what was said because he was frustrated and thought he was “getting the run-around”, wondering why Mr Forde had not told him this in the first place.
Because the male in the personnel section had referred him back to Mr Forde, he accepted that Mr Forde would know the correct information and saw no need to make any further inquiry.
Mr Guy became aware that some other drivers seemed to be members of a Commonwealth superannuation scheme, but assumed that they had other eligibility entitlements because of what Mr Forde had directly told him.
During the whole of his employment, Mr Guy said that he was not at any time provided with any information about Commonwealth superannuation or his eligibility to join a Commonwealth superannuation scheme. His work requirements meant that, after collecting his vehicle, he would spend most of his time away from the depot. He was rarely at the depot. Even when he transferred to driving Commonwealth cars, he rarely socialised with work colleagues and did not do so outside work hours.
During Mr Guy’s oral evidence, an aerial photograph of the Fyshwick depot was tendered and he identified the buildings where he had spoken to Mr Forde and then to the male in the personnel section.
In cross-examination, Mr Guy was asked about his knowledge of the 1976 Act; he did not know of it. He said he occasionally read The Canberra Times, probably starting around 1986. He said this coincided with the start of his work as a Commonwealth car driver when he would have a lot of time on his hands. He did not regularly read the paper, though, and did not read anything in it about superannuation, specifically the 1990 Act.
He was also, during his employment with the Commonwealth, a member of the Transport Workers Union (TWU). He did not, however, see union newsletters or circulars and did not read anything about the TWU superannuation scheme.
He was asked questions about the meeting in 1995, referred to above (at [43]-[44] and in Guy v Commonwealth at [10]). The superannuation representative at the meeting was a woman, also referred to above (at [43]-[44]). She told the meeting that “the government superannuation scheme was a very good scheme to get into”.
Mr Guy, when asked whether he had ever talked to anyone in detail about how the scheme worked, said he had not. He denied that, when he attended the meeting, he was not very interested at all in superannuation. His denial is supported by the speed with which he joined the PSS after the meeting.
He said that he was aware of the old-age pension and he agreed that he had never joined a private superannuation fund, or taken out life insurance. He was aware of the payment of moneys on his behalf into AGEST in about 1990.
Despite saying in his affidavit that the contributions to AGEST were, he “understood ... because of the superannuation guarantee legislation”, he maintained that he did not know “anything about superannuation” at the time.
He was asked about why he approached Mr Forde in 1984 or 1985, and said that he had overheard “some people” talking about superannuation.
He was also asked some questions about how he was able to see Mr Forde and his attendance at the personnel section. I do not need to recount that. He was asked why he did not return to see Mr Forde immediately after he had been referred back to him by the male employee at the personnel section. He said that he had work to do and denied that the question was not important to him.
He reaffirmed that when Mr Forde told him that he could not join a Commonwealth superannuation scheme, information that he had originally asked him for, he considered that he was “getting the run-around”, but nevertheless did not say to Mr Forde that he could have told him the information in the first place because he “didn’t want to cause any problems, arguments”.
It was put to Mr Guy that Mr Forde did not recall any of these conversations and that he knew at the time that temporary employees were eligible to apply to join a Commonwealth superannuation scheme. Mr Guy maintained that this was “totally opposite to what [Mr Forde] told [him]”. He said that what Mr Forde said in his affidavit was wrong. He denied that he had got the matter “mixed up in [his] memory”, even though it was 25 years ago. He said he was first asked to remember the conversation in 1999. He said, however, that he remembered the incident clearly because “it was important at the time” and he calculated when the conversation with Mr Forde happened because he worked it out from when he started work at the Fyshwick depot.
He agreed that he did not check the information Mr Forde gave him by asking his union to confirm it; he just accepted what he had been told. He did not verify it with anyone else, even after he had heard others talking about their membership of a Commonwealth superannuation scheme, because he knew that they had worked in other departments before joining the transport section.
(b) Barry Bond
In an affidavit filed in these proceedings, Barry Bond deposed that a family friend, a public servant working in a government department, assisted him to apply for and obtain a job as a motor mechanic in the workshop of the Commonwealth Department of Administrative Services at the Fyshwick depot. He attended a job interview in about 1982 and was offered the position. He initially declined. He was not, at that stage, given any information about government superannuation.
Subsequently, he discovered that the position was still available and he made contact with the Department and was again offered the position. As before, there was no discussion about Commonwealth superannuation. He commenced work in June 1983. He could not recall signing any forms, but he says he may have done so. He was not given any paperwork to take home nor was he given any information about superannuation.
Not long after he commenced work, he had a telephone conversation with his public service friend and, during the discussion, his friend said words to the effect of: “Now you have started work, make sure you join Commonwealth super”.
Soon after that, he spoke to the foreman of the workshop, Bill Bailey, and asked him in words to the following effect: “What do I do about joining Commonwealth super?” Mr Bailey said, to the best of Mr Bond’s recollection: “You are not entitled to join it because you are a blue collar worker”. He assumed that Mr Bailey knew what he was talking about and did not inquire further about Commonwealth superannuation.
About eleven months later, he moved to another shed and became a driver on 23 May 1984. He was not given any information about Commonwealth superannuation at the time.
Shortly after, however, he attended a meeting in one of the conference rooms. The meeting was addressed by the personnel manager, Mr Forde. During the course of the meeting, one of the drivers asked: “What do we have to do about joining the government superannuation?” Mr Bond said that Mr Forde answered with the following words, to the best of his recollection: “You cannot join the government superannuation because you are blue collar workers”. Mr Bond said there was no qualification on this statement and he was left with the clear impression that, whilst he was a blue collar worker, he would not be able to join a Commonwealth superannuation scheme.
In late 1984, when he was undertaking radio duties, he spoke to the supervisor, Allan Monk, who was with his son, Peter Monk, also a driver. He noticed that Peter Monk was filling out superannuation forms and said words to the effect “What is going on here?” Peter Monk responded along the following lines: “I am filling out the forms to join superannuation”. He then said words to the effect of: “You should join”. Mr Bond said that he replied: “I was told that I was not eligible to join” or words to that effect.
At that stage, Allan Monk said, to the best of his recollection: “No, you can join, I will arrange that for you”. Mr Bond recalled that one of those in the office rang the head office and arranged for him to sign up and join the relevant Commonwealth superannuation scheme. He joined on 22 November 1984. He assumed that there had been some change in the rules but did not discuss the matter with other drivers as he rarely saw them.
He was not aware of any briefings or seminars for car drivers about their eligibility to join a Commonwealth superannuation scheme and, in the period he worked at the Fyshwick depot, he did not see on any noticeboards any posters, documents or other information about superannuation. He had not made a claim on the Commonwealth for the statements made to him by Mr Forde.
Mr Bond was cross-examined. He described the workshop staffing hierarchy as having a foreman, Mr Bailey, who “was the boss of the workshop”. He was responsible for the timesheets and was described by Mr Bond as the “go-between before the general manager”; he said: “he was our boss virtually”. The next more senior person was the manager of the whole area, Tony Hartnett, then the boss of the whole depot.
He referred to meetings and described them as meetings “for general things, something that’s happening or because we were new, they were probably giving us some new details and things like that”. There was no meeting about superannuation.
It was put to him that Mr Forde did not recall any conversation as alleged by Mr Bond. Mr Bond said that, when Mr Forde said in his affidavit that he knew that temporary employees could join a Commonwealth superannuation scheme, that was not truthful. He denied that Mr Forde actively tried to sell membership of a Commonwealth superannuation scheme to temporary employees.
He explained that one of the reasons why he thought he could join superannuation after Mr Monk explained that to him was because he, Mr Bond, was at that stage working in the office. He said that Peter Monk was also working in the office at the time. His understanding was that drivers who did a bit of office work were entitled to join superannuation.
(c) Edward John Rowley Moore
Evidence was given by another driver, Edward John Rowley Moore, who was first employed by the Commonwealth government in 1983.
At the time, his brother, who was a member of the public service, had encouraged him to take a job with the government and seek access to a Commonwealth superannuation scheme because of the benefits of the scheme. Superannuation was, thus, very much on his mind when he became a Commonwealth employee.
In 1983, he had responded to an advertisement in The Canberra Times and, after applying, attended for an initial interview. There was no discussion about superannuation at the interview.
He started work on 8 March 1983 at the Fyshwick depot and arranged to see his supervisor, Jim Kershaw, about joining a Commonwealth superannuation scheme. He was told to go to the personnel section of the Department at the Fyshwick depot and that they would give him information.
He went to the personnel section and spoke to a male person who, he deposed in his affidavit he thought may have been Mr Forde. In cross-examination, he was prepared to identify the person as Mr Forde. He asked the person: “How do I go about joining the Commonwealth superannuation scheme?” and the person answered: “You are not eligible to join the government superannuation because you are a blue collar worker”. He said: “What do you mean I am a blue collar worker?” and the person replied: “You are out driving cars, you are not sitting behind a desk as a clerical worker, you are a blue collar worker”.
Sometime later he spoke to his brother, who told him that he did not think that advice was correct. He thought there may have been a twelve month qualification period and encouraged him to make further inquiries after about twelve months.
In 1984, he spoke again to his supervisor, Mr Kershaw, who referred him to see Mr Forde, the manager of the personnel section.
He went to see Mr Forde again and said to him to the best of his recollection: “Can I now join the government superannuation scheme?” Mr Forde said, to the best of his recollection: “You were told last year that you could not join because you are blue collar worker. That remains the case. However, if you wish to, you can go down to where the representative from National Mutual is and he can help you out with private superannuation”. Because of Mr Forde’s position and his seniority, he accepted what he was told.
He subsequently spoke to other drivers who confirmed that they had received the same advice.
He later took out a private superannuation scheme with an insurer and he continued to contribute to that fund until later he joined the PSS on 21 August 1990.
Mr Moore was cross-examined on his evidence. At the time of giving his evidence, he was still driving as a car driver for the Commonwealth.
He confirmed that, although in 1983 he was not sure who he was told to see at personnel, his recollection was that he was told to see Mr Forde in 1984 and saw him and that he was the same man he saw in the earlier year.
He confirmed that he had been working for the Commonwealth for twelve months when he saw Mr Forde for the second time.
He explained that, after the second conversation, he did not pursue the question of joining a Commonwealth superannuation scheme again because “it was common knowledge around that we were all told that we couldn’t join, we weren’t eligible”.
He relied, however, on the information that Mr Forde gave him because of his seniority and the position that he occupied.
Mr Moore was asked whether he was aware that Mr Forde did not recall the conversations Mr Moore had said he had had with him and said he was aware of that. He was also aware that Mr Forde said he knew that temporary employees were eligible to join a Commonwealth superannuation scheme. He disagreed that Mr Forde had that knowledge.
He said that he did not recall reading or seeing anything about Commonwealth superannuation in the local newspapers. He said he would read The Canberra Times on Saturdays but not during the week.
He was a member of the TWU but did not read anything from the Union about superannuation. He did know that the TWU had its own superannuation scheme.
He knew Mr Bond, but did not know that he was a member of a Commonwealth superannuation scheme.
Mr Moore was a careful witness, not given to asserting a matter about which he may have had a doubt. The detail of his evidence was consistent and credible. In cross-examination, it was not suggested to him that he had concocted his evidence and he maintained the version he had given.
(d) Wilhelmina Davey
A further witness was Wilhelmina Davey, who commenced employment as a Comcar driver in about 1989. She recalled that, when she commenced employment, she was advised by one of the supervisors that she could not join a Commonwealth superannuation scheme because she was “a blue collar worker” and not a public servant. She accepted the advice given and did not apply to join a Commonwealth superannuation scheme although she was aware of productivity payments.
She deposed that Mr Forde was the Administrator of the Fyshwick depot when she started work there. She stated that Mr Forde never encouraged her to join a Commonwealth superannuation scheme.
She also deposed that her brother-in-law, Bevan Bryce, never mentioned to her that he was contributing to a Commonwealth superannuation scheme, nor suggested to her that she should join.
She recalled being told by Mr Reeve, in about 1995, that there was to be a meeting about superannuation and she attended. She recalled that a representative of ComSuper was present and the attendees were told that they were eligible to join a Commonwealth superannuation scheme and should do so immediately. She then made arrangements to join the PSS and continued as a member until she left employment in 1999.
Ms Davey was briefly cross-examined as to how many supervisors she had and suggested it was probably two. She could not remember the exact words used by the supervisor who spoke to her about superannuation. It was not suggested that she was incorrect in any of her evidence.
(e) Ivan Sako
Ivan Sako then gave evidence. He came to Canberra in 1964, initially employed by Commonwealth Hostels Limited, but applied for a position with the Commonwealth Department of the Interior at its Kingston depot. He was subsequently interviewed but, at the interview, was not given any documents about superannuation. He commenced employment on 4 August 1969 as a truck driver at the Kingston depot and worked there until the depot was moved to Fyshwick.
Within the first few months after commencing work, he had a discussion with another worker, whose name he could not recall, about superannuation. The worker said words to the following effect: “You have to wait twelve months to apply for superannuation”. He was interested in joining superannuation, but was not sure that the worker knew enough about it, so he decided to check on what he had been told by asking his supervisor, Bruce Tibbey.
About six months after he commenced employment, he had a discussion with Mr Tibbey in his office at Kingston. He asked him, to the best of his recollection: “How can I join the government superannuation fund?” He said that Mr Tibbey replied along the following lines: “I am sorry, you cannot get into superannuation; you are an industrial worker. You are not eligible”.
About six months later, he spoke to a pay officer at the pay office and said to her: “Can I join government superannuation?” She offered to find out for him, left the room and came back three or four minutes later, telling him, to the best of his recollection: “I am sorry Ivan you cannot join”.
Still dissatisfied with the information, he spoke to another supervisor, Eric Lawless. He was aware that Mr Lawless was in a public service position and asked him why he could not join superannuation. To the best of his recollection, Mr Lawless replied: “You are not a public servant, you are an industrial worker and are not entitled to join superannuation”. At no stage during any of these conversations was reference made to a qualification period or other pre-condition; he was simply told that he was not entitled to join because he was a blue collar worker and he accepted that advice.
He recalled a discussion in about 1984 with Mr Moore, Barry Stewart and Mr Forde. The discussion took place in the administration office of the Fyshwick depot. He heard either Mr Moore or Mr Stewart ask Mr Forde about joining superannuation and that Mr Forde said words to the following effect: “You are not entitled to join the superannuation fund but you can go to National Mutual or AMP”. This advice was consistent with the subject of a representation made to the Commonwealth by the TWU in 1986, referred to below (at [233]).
Mr Sako referred to insurance representatives regularly attending at the Fyshwick depot, selling insurance on pay days. He joined one of those funds.
In 1990, he was told by another driver that there was now an entitlement to join a Commonwealth superannuation scheme and he joined the PSS on 22 November 1990.
Mr Sako was also cross-examined.
He was asked some questions about the conversations he had related and confirmed that, when he spoke to Ms Renton in the pay office, he did not know that he needed a certificate for future employment to be eligible and that no one had told him that.
He knew that Mr Forde had said he had no recollection of the conversation with him but he was certain that the conversation had taken place. He said he “absolutely” disagreed with Mr Forde’s denial that he had given the advice as Mr Sako had stated in his evidence.
Mr Sako confirmed that he read newspapers, but had read nothing about superannuation or tax. He did not, however, read The Canberra Times, but did read The Daily Telegraph and The Daily Mirror.
He was a member of a union but did not see union newsletters.
He was asked about his conversation with Mr Lawless. He said that Mr Lawless told him he was a public servant when he approached him for information. He was not aware that Mr Lawless had joined a Commonwealth superannuation scheme as a temporary employee. He said that Mr Lawless had told him they were “blue collar workers” and that he was a “white collar worker”. He stated that: “Everywhere you went you’re told you can’t [join a Commonwealth superannuation scheme] well you stopped asking the question”.
(f) Ian Peisley
Evidence was given by Ian Peisley, who commenced as a Commonwealth car driver with the Commonwealth Department of Administrative Services in about 1983. He was interested in joining a Commonwealth superannuation scheme and heard discussions amongst the drivers about it.
He went to see his manager, Eddy Carnall, to ask him what he had to do to join the fund.
He recalled that Mr Carnall responded with words to the following effect: “Those guys who are in it transferred from other departments, such as the Navy or Air Force. Their superannuation was transferred over”. He was referred to the Human Resources Section for further information.
In about 1984, he was in the canteen at the depot and spoke to Mr Forde. Mr Forde told him to come to the office to speak to him about the matter. He did so and Mr Forde said to him words to the following effect: “The superannuation is not available to you as you are not considered to be a public servant. You are not a permanent employee. You are entitled to long service leave and other benefits but you cannot join the superannuation”.
Mr Peisley accepted what he had been told and did not join a Commonwealth superannuation scheme until 1988. He joined at that time because he received information from another manager, Phil Hayes, who advised that he was eligible to join, and he joined the CSS and later transferred to the PSS.
While he was working for Comcar, he did not recall any seminars held at the depot for drivers dealing with superannuation and he saw no notices or other information on the noticeboards about superannuation.
In cross-examination, he was asked whether he signed a document headed “Conditions of Temporary Casual Employment” and said that he could not recall signing such a document, though he was aware that he was a temporary employee. He knew that his job would be reviewed in three months but could not recall signing any document.
He did not know that he needed twelve months employment before becoming eligible to join a Commonwealth superannuation scheme, but had learned that subsequently. He agreed that the conversations with Mr Forde and Mr Carnall occurred before he had completed twelve months employment.
At the time, George Newport was the depot master at the Belconnen depot.
(g) Rodney De Smet
Evidence was given by Rodney De Smet, who commenced employment with the Commonwealth Department of Administrative Services as a Commonwealth car driver in 1984.
He said that his father was also a Commonwealth car driver and he was aware that his father had never been able to join a Commonwealth superannuation scheme. His father had told him that Commonwealth car drivers were considered as blue collar workers and not public servants. The only way that they could join a Commonwealth superannuation scheme was to wait until a supervisor left, in which case one of the drivers could “move up” to become a supervisor and therefore join.
He said that not long after he started work he was present at a meeting when Mr Forde spoke concerning eligibility to join a Commonwealth superannuation scheme and recalled that Mr Forde said: “You are not eligible to join the super scheme because you are a blue collar worker”.
Mr De Smet said that, in 1993, he applied for and obtained a national marketing role with the Department and that, as that was “a public service position”, he automatically joined a Commonwealth superannuation scheme.
He recalled that, while he was employed as a Commonwealth car driver, an insurance representative would attend at the workplace and try to sell insurance products to the workers. He understood that this was with the approval of the supervisors at the depot.
Mr De Smet was cross-examined and asked about the information passed on by his father. He said that his father, uncles and great-uncles had all been in the Commonwealth car agency and that his father had spoken about work on many nights and that included discussions about Commonwealth superannuation. His understanding, at least from his father, was that, as Commonwealth car drivers were not public servants, they could not join a Commonwealth superannuation scheme. He agreed that such an understanding was almost “in [his] blood”.
He identified the statement he heard Mr Forde make and said that it took place in the departmental canteen at Fyshwick, during the induction period, within a couple of days after his commencement.
Mr De Smet noted that new drivers were on a probationary period of about three months and thereafter became permanent casuals.
It was not suggested to him that Mr Forde had not used the words “blue collar workers”.
(h) Luigi Cartolano
Luigi Cartolano began employment with the Commonwealth Department of Administrative Services in 1983. At the time of giving evidence, he remained currently employed as a Commonwealth car driver.
He deposed in the first of his two affidavits that he had received information which led him to the view that he was not entitled to join a Commonwealth superannuation scheme. He remained of that view until he attended a meeting at the Fyshwick depot of the Department, where an officer of ComSuper spoke to the meeting and encouraged temporary employees to join a Commonwealth superannuation scheme. This appears to be the meeting referred to above (at [44]).
In his second affidavit, he deposed that when he commenced as a removals driver with his Commonwealth employment, his supervisor told him that he was not eligible to join a Commonwealth superannuation scheme.
On 26 August 1985, he transferred to the Commonwealth car agency and his wife, who had been in the public service, urged him to pursue inquiries about joining a Commonwealth superannuation scheme.
He further deposed that Mr Forde at no stage approached him nor encouraged him to join a Commonwealth superannuation scheme and, on two or three occasions over the next couple of years, he asked Mr Forde if he could join such a scheme; on each occasion he was told the same thing, that he was only a temporary employee and not eligible.
Finally, realising that he would not be permitted to join a Commonwealth superannuation scheme, he took out a private insurance policy in 1987.
Mr Cartolano was cross-examined.
It was put to Mr Cartolano that Mr Forde had deposed, in his affidavit, that he did not recall the conversation. Mr Cartolano accepted that Mr Forde had said this, but, although he could not remember the exact words, he repeated that Mr Forde had “always come up with the same words, that we are not entitled to join the public service superannuation because we are on a temporary basis employment”.
Various documents were shown to Mr Cartolano about his employment. He indicated that, when he transferred to the Commonwealth car agency, he did not recall signing a new employment contract. The only thing that was processed was his security classification.
He was asked about his various job transfers, but said that, while he understood that he was changing from one job to another, he basically stayed with exactly the same department.
(i) Colin David Lamont
An affidavit of Colin David Lamont was read. He deposed that he joined the ACT branch of the TWU in 1981, after a period as Branch Secretary of the Australian Public Service Association (Fourth Division Officers’).
He recalled that, before 1981, transport employees were split into two groups, with bus drivers and similar employees remaining with the Department of Territories and car drivers and other drivers moving to the Department of Administrative Services.
During his period with the Public Service Association and the TWU, he deposed that his members included supervisors, permanent public servants and many temporary workers. He deposed that his experience was that those who were not permanent employees were invariably not members of a Commonwealth superannuation scheme. He deposed
There was a clear culture in the public service that distinguished between the classes of employees, namely permanent public servants and clerical officers on the one hand and other employees, such as blue collar workers and industrial workers on the other.
In 1981, he became an organiser or the ACT Branch of the TWU responsible for bus drivers and employees of the Department of Administrative Services. In 1985, he took over from Doug Carpenter as Branch Secretary of the ACT TWU.
Between 1981 and 1986, he was a catalyst, with other union representatives, for development of an industry-based superannuation scheme for TWU members. He had always been a strong supporter of the availability of superannuation for all employees, without discrimination.
He deposed that he knew Mr Carpenter well and worked closely with him between 1981 and 1985. He attended many meetings with him at workplaces and with the Trades and Labour Council, with Ministers and departmental heads and officers including in arbitration hearings and other places.
He deposed that Mr Carpenter was a strong advocate of superannuation for all workers. He deposed that it was his view that in an employer-contributed superannuation scheme, all workers should be eligible to participate equally. This applied generally, but particularly with the Commonwealth superannuation schemes. He deposed that he had often heard Mr Carpenter advocate that temporary employees should have the same right to participate in the CSS as permanent public servants.
He deposed that he had never heard Mr Carpenter in any forum, at any meeting or at any time, do anything other than advocate the benefits of appropriate superannuation for members in general and of the CSS in particular.
He deposed also that Mr Carpenter was vehemently opposed to workers being sold private superannuation policies where only employees made contributions, especially where Commonwealth superannuation schemes, which included an employer contribution, were available to such workers.
He deposed that he was aware Mr Carpenter was concerned about the possibility that the Commonwealth government may reduce or abandon the old-age pension by replacing it with private superannuation schemes. He deposed that he was sure Mr Carpenter was strongly opposed to any form of compulsory superannuation which was only employee contribution-based.
Mr Lamont further deposed that he was concerned that government departments were opposed to proper benefits, such as superannuation for temporary employees, because of the additional administrative and other costs.
He and Mr Carpenter met frequently with the officer in charge at the Fyshwick depot and raised the problem of TWU members who were temporary employees not being able to participate in the CSS. He said that they were all told there was always some reason why that was difficult. He deposed that things were said such as that “such issues need to be considered and concluded as part of a whole package” or “the [Department of Administrative Services] finance structures don’t permit us to make it available to everyone” or “we would need to make provisions for a much larger budget allocation” or “we don’t want to price ourselves out of the market when we come to compete with the private sector”.
He deposed that he recalled, in the late 1970s and 1980s, receiving complaints from workers that they had been told that they could not join a Commonwealth superannuation scheme, though he did not recall the precise details.
He deposed that it was his recollection that there was never any systematic or co-ordinated effort to advise temporary employees of their eligibility to participate in Commonwealth superannuation. He further said that he would regularly visit workplaces and check on their noticeboards to see what management was telling his members. He deposed that not once before the late 1980s did he recall seeing a notice or circular on a noticeboard at the Fyshwick depot or any other workplace giving temporary employees information about Commonwealth superannuation in general or their eligibility to join in particular. He was aware that such information and circulars existed.
He deposed that, although he saw Mr Forde at Fyshwick from time to time, Mr Forde never raised with him any concern about Mr Carpenter advocating that TWU members should not be encouraged to join the CSS. Indeed, he deposed that he did not recall Mr Forde ever mentioning superannuation to him at all. He deposed that the evidence given by Mr Forde, set out below (at [254]), was totally inconsistent with the views he had heard Mr Carpenter often express.
He also rejected the suggestion that the TWU prevented members from obtaining membership of a Commonwealth superannuation scheme. There was some union resistance, he, however, deposed, to the push by government to make some of the industrial members permanent public servants because that may have rendered them ineligible to join the TWU.
He deposed that there was no TWU ACT Branch newsletter although there was a quarterly national magazine in the late 1980s but it was not widely distributed.
Mr Lamont was not cross-examined on his evidence.
The defendant’s evidence
Paul Andrew Stott(a)
Paul Andrew Stott was Collector of Public Moneys from 1985 to about 1989 at the Transport and Storage Division of the then Commonwealth Department of Administrative Services located at the Fyshwick depot.
He became a member of the CSS when appointed to the Public Service on 25 July 1985.
In his affidavit, he said he did not specifically remember Mr Reeve as an employee, and did not recall having the conversation to which Mr Reeve referred above (at [35]). He said that he would definitely not have said some of the words attributed to him, namely “unless you get a ruling that you are not a public servant, you cannot contribute”, as he says he did not have the knowledge of employment conditions to make such a statement. He accepted, however, that he may well have made the other statements attributed to him in the conversation.
He deposed that, during the time he was at the Fyshwick depot, he knew that the situation in relation to superannuation was different for temporary employees, to whom he referred as “industrials”, but he did not know why.
He did recall having some conversations with temporary employees about superannuation, but he said they were just “general conversations” about how additional contributions to Commonwealth superannuation were not tax deductible.
He said that in his role as Collector of Public Moneys, he did not regard himself as having any responsibility or authority to provide advice about superannuation and did not recall anyone ever asking him for such advice. He said that, if they had asked, he would have directed them to speak to the personnel section at the depot.
It was accepted that there was a slight error in Mr Stott’s affidavit, where the reference to “a ruling that you are not a public servant” was a typographical error and the “not” should be omitted.
Mr Stott was cross-examined. He was asked about his election, as a member of the CSS, not to transfer to the PSS. He said that he considered the alternatives after receiving two packages of information from ComSuper.
He agreed that he started as a temporary employee with the Commonwealth Department of Administrative Services in December 1984 and that he commenced making his superannuation contributions on becoming a permanent public servant in July 1985.
He said that, although he was, even as a young man joining the Commonwealth Public Service, concerned about his future, he did not recall any entitlement to superannuation at that time. He had a private insurance policy and realised the importance of superannuation and saving even at that early time.
In response to the questioning of him about the circumstances of the Fyshwick depot, he agreed that the payroll section was co-located with the personnel section and that he was the only Paul employed there in 1988 as far as he could recall. He said that Mr Forde was in charge of the personnel section. He also said that he had not been given any training about the details of superannuation entitlements available to Commonwealth car drivers.
He said that private sales people from insurance firms came to sell superannuation schemes at the Fyshwick depot and that they visited on a number of occasions. He could not recall whether they attended on pay day but he did sign himself up for some additional superannuation. He agreed that when he became a permanent public servant, he realised that he had to contribute to a Commonwealth superannuation scheme as “part of the conditions of my employment”.
He was asked about the delivery of pays and said that they were handed out by him personally to each driver and that there would be a security guard and a witness from the pay office also there. Thus, drivers had to return at least on pay day even if they had been out on the road for the rest of the week.
He identified the area in the aerial photograph where he delivered the pays as the place where Mr Reeve identified the personnel section. This was also the building where Mr Guy had said that he went when told by Mr Forde to go to the personnel section to make his inquiries. Mr Stott’s evidence was also supportive of the evidence that Mr Guy gave about what he was told when he went there.
Mr Stott did not specifically recall Mr Reeve.
He also agreed that a TWU representative could have, as described by Mr Reeve, witnessed the handing out of pays and he accepts that Mr Reeve could have asked “I can’t understand why I cannot join the superannuation scheme”. He agreed that he could have responded: “I think it is wrong that you have to be a public servant to join”. That reflected his understanding and views of the scheme.
He expressed a concern about the suggestion that he said that Mr Reeve had to get a ruling before becoming eligible, as suggested by Mr Reeve; it suggested a greater understanding of the rules than Mr Stott thought he had. He said it was not the sort of language he would have used because he did not really know about official rulings, though everything else that Mr Reeve suggested he said sounded correct. He agreed that if it had been something less formal, like “unless you are a public servant you cannot contribute”, he may well have said that.
He said that he did not ever discuss Commonwealth superannuation with Mr Forde, other than briefly, and then specially about not being able to get a tax deduction for such additional contributions.
Defendant’s evidence from Guy v Commonwealth
As with the evidence adduced on behalf of Mr Guy in Guy v Commonwealth, the evidence adduced in that case by the Commonwealth was also admitted into evidence in this case. For the reasons set out above (at [65]) it is necessary to recount that evidence.
In addition, evidence of general relevance given in the original matter, Meredith v Commonwealth (No 2) was also relevantly admitted.
Thus, in particular, the evidence of the following persons which was specifically relevant, was admitted (with the relevant paragraph numbers in brackets after their names referring to the discussion of their evidence in Meredith v Commonwealth (No 2)):
(a) Robert Hunt ([240] to [249]);
(b) Geoffrey McVeigh ([280] to [287]);
(c) Kim-Marie Ivens ([288] to [294]);
(d) George Hayes ([295] to [308]);
(e) John Jamson ([309] to [318]).
In addition, some further evidence given in Knight v Commonwealth was also taken into account, being the evidence of
(f) Jane Wilson ([75] to [88])
There was other evidence given.
(g) Ivan James Woods
Retired public servant, Ivan James Woods, gave evidence both in an affidavit and orally.
He was first employed by the Commonwealth in 1964 and worked in Adelaide and Melbourne before relocating to Canberra in 1967. He worked for the Commonwealth Department of Supply in the Stores and Transport Division at its Kingston depot and, following a restructure in mid 1977, relocated to the Fyshwick depot of the Commonwealth Department of Administrative Services, Stores and Transport Division. In 1980, he became the Transport Manager at the Fyshwick depot which required him to work with drivers and supervisors as well as delegates from the TWU to ensure that driving rosters were run efficiently.
In the mid to late 1980s he became Assistant Manager (Transport) of the Division at the Fyshwick depot and reported to the Branch Manager. On a number of occasions, he acted on higher duties as Branch Manager. He retired from the Department in November/December 1990.
He described the restructure but it is not necessary to recount that; he did note that the Stores and Transport Division employed approximately 350 people consisting of 100 public service officers, 180 car drivers and supervisors and 70 stores and workshop staff.
When he commenced employment with the Commonwealth as a permanent employee, he became a member of a Commonwealth superannuation scheme as joining was compulsory. He was unsure about whether fourth division officers could join though he suspected there was an avenue for their membership.
He said that he could not recall ever being asked about superannuation, which indicated to him that it was “never really an issue with the driving staff”. None of the witnesses in these proceedings, however, suggested that they or anyone else had ever raised the issue with him. He said that the topic was, however, raised on several occasions, including by the TWU in around 1977 when the Commonwealth Department of Administrative Services acquired the Commonwealth car fleet, in about 1987 when the first superannuation guarantee levy was imposed and in around late 1989/early 1990, when the PSS was introduced.
He said that if an employee had asked him about Commonwealth superannuation, he would have told them that they could get superannuation either through a private company or by joining a Commonwealth superannuation scheme and the decision was up to them. If the employee wanted to become a member of a Commonwealth superannuation scheme he would have explained that they would need to undergo a medical examination with a Commonwealth Medical Officer and would have told them to see someone in the personnel section to get the necessary paperwork. He was unaware of any incorrect advice being given by personnel staff on the matter. This was not particularly cogent evidence because, as noted above (at [213]), not one witness suggested he had ever been asked. In addition, he did not suggest he had shared his knowledge with any of the supervisors working for him.
He expressed his impression that the TWU opposed their member joining a Commonwealth superannuation scheme, especially in the mid 1970s. He recalled a meeting where in 1977 where the TWU Secretary, Doug Carpenter, clearly stated that he did not agree with Commonwealth superannuation with words to the effect of
My blokes aren’t going to join any fucking super scheme. The old-age pension is there to look after them when they retire.
He said that the departmental Assistant Secretary, Alan Shakespeare, responded that Commonwealth superannuation was available. Mr Woods said that the exchange was one of the feature points of an otherwise pretty volatile meeting and he was surprised by Mr Carpenter’s comments because he could not understand why he would be against his members joining a Commonwealth superannuation scheme.
Mr Woods said that a number of the drivers, not TWU delegates, mentioned to him privately that they did not agree with Mr Carpenter and his views. He was aware that a number of drivers contributed to a Commonwealth superannuation scheme.
He said that the situation with the TWU became less heated after Mr Carpenter retired and was replaced by David Lamont in the mid 1980s.
He noted that the Fyshwick depot was a highly unionised workplace with all drivers being members of the TWU.
He remembered Mr Reeve who was a delegate in the mid to late 1980s but did not recall him being at the Fyshwick depot prior to 1986, though there is no doubt he was there.
He referred to each depot, including the Fyshwick depot, as having a noticeboard where various items from internal and external sources were displayed. He said that such external material included government gazettes, ComSuper newsletters and head office directions. He said that the general philosophy at the depot was that employees were responsible for reading notices and acting accordingly but that issues were raised either with union delegates or management.
Mr Woods was cross-examined, including about the meeting with Mr Carpenter, about the comments made in it of which he was quite certain. He was definite about the words used and said that there “could have even been more” but remembered the words that he quoted very distinctly. He agreed that, whatever scheme Mr Carpenter was talking about, Mr Shakespeare “set him straight about the Commonwealth scheme”.
It was put to him that Mr Carpenter, from 1981, was a strong advocate for his members to be members of a Commonwealth superannuation scheme. He agreed with that, saying that he “did not hear very much about superannuation from Doug Carpenter or anyone else after that meeting”.
He knew David Lamont who had taken over from Mr Carpenter as the TWU Secretary and said that he got on well with him.
It was put to him that Mr Lamont said that he had attended many meetings with Mr Carpenter and that Mr Carpenter was a strong advocate for superannuation for all workers. Mr Woods said that this was not something he had heard him advocate. It was also put to him that Mr Carpenter had said that “It was his view that in an employer contributed superannuation scheme all workers should be eligible to participate equally” and he said that he never heard Mr Carpenter say that.
He pointed out that the date of these statements was six or seven years after the outburst that he had heard. He also noted that there were other issues about a degree of reluctance for employees to change departments which, he said, might put Mr Carpenter’s comments “in a little bit better context”.
He said that he did not hear Mr Carpenter advocate that temporary employees should have the same rights to participate in the CSS as permanent employees. He could not recall whether Mr Lamont might have said that, but he would not be surprised if he had done so.
He was asked whether, after 1981, at least Mr Carpenter was a strong advocate for his members to join the CSS and he said: “I would say he’d be an advocate for his employees” meaning his members and, rather contrary to his earlier evidence, he accepted that, after 1981, Mr Carpenter was an advocate for his members being eligible to participate in the CSS. He had no knowledge, however, of Mr Carpenter being opposed to his members being offered private superannuation schemes. He said that this was never an issue so far as he was aware, although he agreed that there were times when insurers sent representatives on to the depot and collected money, premiums and so on from drivers. They had approval from management to do that.
Mr Woods could not recall any systematic or co-ordinated effort before the 1980s to advise temporary employees at the Fyshwick depot of their eligibility to participate in a Commonwealth superannuation scheme.
Mr Woods said that the cost of superannuation was not a reason to keep temporary employees out of superannuation. He agreed, however, that were more temporary employees to become members of a Commonwealth superannuation scheme, a larger budget would have been required.
He did say, that prior to the CSS, the relevant Commonwealth superannuation scheme had a rule that temporary employees did not have any entitlement at all, so far as he knew, to join the super scheme. That was, in fact, inaccurate, but is an interesting perspective on the knowledge of such a person about Commonwealth superannuation. It is a clue, perhaps, to why there seemed such ignorance of the eligibility of temporary employees to membership of a Commonwealth superannuation scheme.
He said that he did not hear any concerns expressed in 1986 within the TWU that its members were not being advised of their entitlements to be members of a Commonwealth superannuation scheme and that the union was making alternative arrangements. He thought, however, that, if that was the TWU position, he would have been aware of it and that such a concern was never expressed to his knowledge; it would have been quite contrary to his view of the TWU’s position at least in the 1970s and 1980s.
He was shown a document from the Public Service Board of about 1986 which referred to a request by the TWU that existing members should be exempted from a requirement to contribute to a Commonwealth superannuation scheme and continued
The main reason for this request was that the TWU representatives felt that a large number of their members may not have been aware in the past of heir [sic] entitlement to join the fund and may have made alternative arrangements
Mr Woods said that he was not aware of that position though it did “ring a bell”. He felt that, for him not to have remembered it, the unions concerned could not have been “as forceful a concern as what most of their representations were”. He said he may not have been at the meeting where such concerns were expressed.
Nevertheless, he maintained that, if a temporary employee had approached him, the employee would have been given the correct information and been able to make an application to join a Commonwealth superannuation scheme. He suggested that “nobody seemed to take the time to do that”. Again, I note that no one suggested that he had actually been approached, nor did he say that any of his staff told him that they had been approached.
Indeed, he said that he was not aware of incorrect advice being given by his personnel staff to employees. He was not aware of personnel staff being asked and did not think they were ever asked to his knowledge, though they clearly were approached. He accepted that they may not have relayed that information to him especially as he only heard about it when it became a problem.
He agreed that it became a problem in 1986 but felt that there may have been more pressing problems with the TWU rather than superannuation, such as staffing issues, selection procedures and “things like that”.
He was taken to passages in his affidavit which were obviously confusing and admitted that superannuation was a confusing issue.
He also pointed out that he would have ensured that the requirement for prior continuous service of twelve months was drawn to the attention of potential applicants, but indicated that most of them would have met that criterion as “the majority of the industrial staff would have been there for more than twelve months”. He said that he never had occasion to advise a driver at the Fyshwick depot that they should join a Commonwealth superannuation scheme. It would, however, be important for the criterion to be indicated out to workers who inquired.
He was also asked about the information that came about the PSS in 1989-90 and said that it was distributed to everyone in the depot. He agreed it was a comprehensive package.
Not only that, but the content was reinforced by the admitted statement made by Mr Stott in general conversation.
Looking at the circumstances of Mr Reeve at the time, it is difficult to see why he should make further inquiries when he has been given specific advice. As Higgins CJ said in Cornwell v Commonwealth (2005) Aust Torts Rep 81-779 at 67,211; [87]:
The defendant having created a lack of expectation in the plaintiff of any entitlement can hardly complain that he made no enquiries. This aids the plaintiff’s answer to any claim of contributory negligence but provides no separate cause of action. It also supports the plaintiff’s cause of action for negligent misstatement.
Of course, such reliance cannot survive contrary information and if any information came to Mr Reeve that led him to doubt the advice he had received, it may have required him to make further inquiries which he was well able to make.
There was, however, no such evidence apart from the statement of Mr Bryce which did cause Mr Reeve to inquire and to be told again he was not eligible. There was nothing put in the evidence that would require such further inquiries to be made until Mr Reeve fortuitously drove for a ComSuper employee. He then acted immediately and ultimately joined the PSS.
I do not consider that there should be any reduction in any damages to which Mr Reeve is entitled because of any contributory negligence committed by him.
DAMAGES
As I have found that Mr Reeve was negligently and culpably misinformed about his eligibility to join a Commonwealth superannuation scheme, and relied on that information not to apply to join such a scheme, I must determine whether he is entitled to damages and, if so, the amount of those damages.
Although at the time Mr Reeve became a Commonwealth employee, he would have required three years prior continuous service before becoming eligible to join a Commonwealth superannuation scheme, changes in legislation meant that he would have become eligible on 1 July 1976.
At that date, a temporary employee had, under s 11 of the 1976 Act, to have one years continuous prior service and to have satisfied the Commissioner for Superannuation that he or she was likely to continue in that employment for a further period of at least three years after the date on which he or she requested that he or she be treated as an eligible employee.
In addition, s 16(4) of the 1976 Act required an applicant to undergo a medical examination which, if it showed a relevant physical or mental condition, may have consequences under s 66(2) of the 1976 Act, for the amount of benefits payable where there is a cessation of employment on the grounds of the invalidity, especially where related to such a condition.
Causation
To determine whether Mr Reeve suffered any damages, I need to determine whether he would have applied to join and, if so, whether he would have been admitted as a member, of a Commonwealth superannuation scheme, even had he been correctly advised.
It seems to me that I need to answer the following questions:
(a) Would he actually have applied to join and joined if correctly advised of his eligibility;
(b) Would he have obtained the necessary certification of future employment prospects;
(c) Would he have successfully passed the medical examination; and
(d) Would the discretion be exercised to allow Mr Reeve to join?
I will answer each of these questions in turn.
(a) Would he actually have applied to join and joined if correctly advised of his eligibility?
The Commonwealth did not submit that Mr Reeve would not have applied and, if successful, would not have joined if correctly advised of his eligibility to join a Commonwealth superannuation scheme.
I am satisfied he would have done so. When told by Mr Forde that he was ineligible, he joined a private superannuation scheme. He had sufficient funds to do so. Like other drivers, he was earning good wages. When ultimately he was found to have been eligible in 1995, he joined immediately.
He had sufficient funds to make contributions without hardship.
(b) Would he have obtained the necessary certification of future employment prospects?
The Commonwealth submitted that Mr Reeve did not establish by evidence that on the balance of probabilities he would have obtained the relevant certification of future employment. I reject that.
In the first place, I set out in Meredith v Commonwealth (No 2) at [632]-[643] some of the material that addressed the future employment criterion with the Public Service. That shows that:
(a) by 1971, the future employment criterion had become somewhat of a formality; and
(b) the number of applicants rejected on this ground was very small.
This is supported by a formal admission made by the Commonwealth, namely
12.The Defendant is not specifically aware of any temporary employees at the workplaces referred to in 6 above in the periods referred to in the interrogatories who had satisfied the statutory qualifying period and who had applied to join the CSF, or the CSS or the PSS having had such application rejected.
The workplaces referred to in “6 above” included the Fyshwick depot.
In the second place, the evidence of Mr Woods was highly relevant. He was generally clearly supportive of temporary employees joining a Commonwealth superannuation scheme. He gave no indication of applying a restrictive or technical approach to such applications. The impression I gained was quite to the contrary.
In any event, he gave explicit evidence on this issue. The evidence was as follows:
The drivers who started in the 1980s, they could have looked forward I take it to many years of employment once they’d started? --- They were – yes, it was pretty secure I thought, as long as you behaved yourself and did all the things you expected an employee to do.
That accords with the evidence of Mr Bryce to the same effect (at [315]).
I am satisfied that Mr Reeve would have received the appropriate certification.
(c) Would he have successfully passed the medical examination?
Mr Reeve was medically examined after three weeks of training as noted above (at [20]) and passed fit for duty.
There were, apparently, further medical examinations from time to time. Mr Woods was asked about this and his evidence is as follows:
... [the drivers] got regular medical checkups? --- I think drivers had one either every 12 months or every two years. That was pretty rigidly enforced. It’s just I can’t remember the time frame.
Mr Reeve did disclose that in the late 1980s he was diagnosed with diabetes but he said that he “remained fit for work throughout the balance of [his] Commonwealth employment” and that he “continued to pass the annual medical fitness requirements of the job”.
No real suggestion was made in the evidence that Mr Reeve was other than quite fit.
I am satisfied that Mr Reeve would have passed the relevant medical examination.
(d) Would the discretion be exercised to allow Mr Reeve to join?
There is a discretion exercisable by the Commissioner of Superannuation notwithstanding Mr Reeve meeting the statutory eligibility conditions, which must be exercised before a temporary employee can become a member of the CSS. In all the circumstances, nothing was put to me as to any likelihood that such a discretion would not be exercised in favour of Mr Reeve had he met the eligibility criteria. I accept that the discretion would have been exercised in favour of his admission.
Period of the damage
Although I have accepted that had he been correctly advised, Mr Reeve would have joined a Commonwealth superannuation scheme on 1 July 1976, he left the employ of the Commonwealth in 1979.
He rejoined the Commonwealth as an employee in 1983. Although he did not make a further inquiry of Mr Forde until 1986, it seems to me that he would have rejoined a Commonwealth superannuation scheme when re-employed by the Commonwealth had he been correctly advised initially and thus his damages would have, subject to one matter referred to below, commenced in 1984, when he would, again, have gained the necessary twelve month period of pre-application continuous service.
Mr Reeve, however, submitted that, had he been correctly advised in 1976, he would have joined a Commonwealth superannuation scheme and not left the employ of the Commonwealth in 1979. His affidavit evidence was
If I had been admitted as a member of the Commonwealth Superannuation from 1976 and I had known that there was a substantial pay-out waiting for me upon retirement, I think that may have led me not to leave government employment.
In his oral evidence, he was very frank about his situation. The evidence was
So you say in paragraph 14 of your affidavit that if you had been admitted to government super in 1976 and had known that there was as a substantial payout waiting for you on retirement, you think that you may – that that may have led you not to leave government employment, you recall saying that? --- I do, yes.
Well, what features of your knowledge or understanding back then in 1979 about the way super worked would enable you to make that decision? --- I made that decision now based on, if I’d have known in back in those days, it would have made a different to what I may have done by leaving the Commonwealth, but I’ve only made it since I’ve been aware of what Commonwealth superannuation is worth now.
So that’s a statement made totally with the benefit of hindsight? --- Exactly, yes.
I am not satisfied that Mr Reeve would, in fact, have remained in Commonwealth employment in 1979 if he had been from 1976 a member of a Commonwealth superannuation scheme. He would not have had sufficient contributions to be likely to result in a “substantial payout”. He also seemed to have operated quite successfully the new business he then started and he only ceased doing so and rejoined the Commonwealth when unforeseen circumstances changed beyond his control and his business lost their government contract. There is nothing to suggest that he was other than enthusiastic and, subject to the ultimate termination of his contract, optimistic about this new venture.
When Mr Reeve rejoined the Commonwealth, he was initially given three short term temporary contracts, one commencing on 22 August 1983, another on 25 November 1983, and one on 31 December 1983 before being offered permanent employment from 6 March 1984.
On 6 March 1984, he accepted an offer of permanent employment as from 12 March 1984. The Commonwealth submitted that this was the date on which the period of continuous employment for his eligibility to join the CSS should start, so that it meant Mr Reeve was not eligible to re-join the CSS until 12 March 1985.
It was accepted that each temporary contract until 12 March 1985 included express provisions that his employment could be terminated at any time and was not guaranteed beyond the express period of the contract. It does not seem to me that these provisions affect the continuity of employment unless they are activated, that is unless his employment was terminated or not renewed, and this did not happen.
I consider that, for the purposes of continuous employment, the relevant start date is 22 August 1983, so that his twelve month eligibility period ended on 21 August 1984. In so finding, I apply the approach articulated by Gibbs J in Reseck v Federal Commissioner of Taxation (1975) 133 CLR 45 at 50, where his Honour said
... the employment of the taxpayer was terminated by his employer on 24th September 1971, he re-commenced work for the same employer (although in a different district) on 27th September 1971 and his employment was again terminated on 11th February 1972. In most cases in which a workman ceased his employment on a Friday and commenced employment again with the same employer on the following Monday it would be impossible to say that his employment had ever been terminated. If there were a contract agreement or arrangement whereby the employment of the workman was terminated and recommenced it would no doubt be possible to invoke the provisions of s 260 of the Act, but even without the aid of that section in many cases when all the facts had been regarded the proper conclusion to be drawn would be that there had been no termination of the workman’s employment at all.
For a relevant application in the context of superannuation, see Re Rattray and Commissioner for Superannuation (1980) 2 ALD 979 at 988; [27].
The consequences of this are twofold. The first is that Mr Reeve’s damages are in two parts. The first part is that he would have joined on 1 July 1976 but resigned in 1979. On resignation, he would have been entitled to receive a refund of his contributions and also the interest that had accrued on them. That interest would have been part of the damages to which he was entitled. The second part is the period of his subsequent entitlement after he joined the Commonwealth again.
The other finding is that his period of damage for that latter period would have commenced on 22 August 1984.
There is, however, one other issue that I need to decide. It arises from a note made in the report of the actuary retained by Mr Reeve. The note, which I will take as a submission, is in the following terms:
You have asked me to comment on the possibility of scenario one, where Mr Reeve’s potential CSS pension is based on both his first and second periods of contributory service.
My reading of the CSS Super Book suggests that this is possible. The CSS Super Book (publication date March 1996) indicates that where a member resigns and takes a deferred benefit, if they return to a Commonwealth employer before the deferred benefit being payable, providing they meet scheme eligibility requirements, they would again become a member of the CSS. And in that case:
The deferred benefit would be cancelled and you would become a new member but with credits of your member and productivity components (plus interest accumulations to the date of re-entry to the CSS), and your previous scheme membership.
The issue is that, when Mr Reeve resigned in 1979, he could have made an election under s 137(1) of the 1976 Act as it was in 1979, the effect of which was that Div 3 of Pt IX of the Act would apply. The effect of this has been helpfully summarised by von Doussa J in Commissioner for Superannuation v Boardman (1994) 50 FCR 236 at 238 where his Honour said:
An election made under s 137(1) would have the effect that Div 3 of Pt IX of the Act would continue to apply to the person who ceased to be an eligible employee. That Division provides for various benefits which can be chosen by an employee who resigns. The particular benefits which the respondent now seeks to enjoy are ‘deferred benefits’ provided for in s 136. These benefits are more commonly referred to as ‘preservation of superannuation rights’, or simply ‘preservation’. Had the respondent made an election under s 137(1) not later than 21 days after he ceased to be an eligible employee, he would automatically have become entitled to preservation of superannuation rights. In the particular circumstances of the respondent, upon his again becoming an eligible employee his period of contributory service for the purposes of the Superannuation Scheme would be taken to include the 8.7 years of contributory service which he had achieved prior to his resignation on 28 April 1979, along with the period of service which again commenced on 31 March 1980.
In the case of Mr Reeve, it would appear that this would have allowed for the two and a half or so years service from 1 July 1976 to be included in his period of service.
Section 139(1)(b) of the 1976 Act, however, makes deferred benefits applicable only if Mr Reeve had completed five years of eligible employment, defined in s 132 to mean the period of contributory service, that is the period after becoming eligible to join a Commonwealth superannuation scheme. That period, for Mr Reeve, commenced on 1 July 1976 and even by 31 December 1979 had not been reached. Thus, the question of deferred benefits does not arise and I do not need to consider it further.
Quantum of Damages
As I have found that, had Mr Reeve been correctly informed, he would have applied to join and would have been admitted as a member of a Commonwealth superannuation scheme, he has suffered damages by not having done so. The next issue is the amount of the damages to which he is entitled.
In Mahoney v J Kruschich (Demolitions) Pty Ltd (1985) 156 CLR 522 at 527, the High Court said
Damages are awarded as compensation for each item or aspect of the damage suffered by a plaintiff, so that a single sum is awarded in respect of all the foreseeable consequences of the defendant’s tortuous act or omission.
As Windeyer J pointed out in Skelton v Collins (1966) 115 CLR 94 at 128
The one principle that is absolutely firm, and which must control all else, is that damages for the consequences of mere negligence are compensatory. They are not punitive. They are given to compensate the injured person for what he has suffered and will suffer in mind, body or estate. Only so far as they can do so is he entitled to have them.
Expert actuaries were retained by both the Commonwealth and Mr Reeve to provide assistance in determining any damages payable by the Commonwealth.
Mr David Heath, an actuary of Cumpston Sarjeant Pty Ltd, Consulting Actuaries, gave evidence for Mr Reeve. Mr Peter Martin, also an actuary, employed with the Australian Government Actuary, gave evidence for the Commonwealth. Both had appropriate qualifications and experience, and their expertise and entitlement to give expert evidence was not in issue.
Mr Heath prepared a Report which set out three scenarios based on three alternate evidentiary findings. Scenario 1 was based on Mr Reeve preserving his benefit when he resigned but for the reasons set out above (at [434]). I do not need to consider that scenario. The second scenario was based on Mr Reeve joining the CSS on 22 August 1984 and not electing to join the PSS in 1990. The third scenario was based on Mr Reeve joining the CSS on 1 July 1976, taking a lump sum benefit and rejoining in August 1983.
Mr Martin prepared a Report with three scenarios also. The first was based on Mr Reeve becoming a member of the CSS on 12 March 1985 and electing to join the PSS on 1 July 1990. The second scenario was based on Mr Reeve joining the CSS on 12 March 1985, remaining in the CSS and taking his benefits on redundancy as an immediate lump sum only. The third scenario was close to the third scenario in Mr Heath’s Report.
There were a range of factors that are relevant to the calculations beyond just the matters I have referred to in describing the three scenarios prepared by each actuary. Some of these factors were uncontroversial and some of them were controversial. I shall deal with each and decide, where I need to do so, as to the controversial factors.
(a) Uncontroversial factors
Mr Reeve was born in 1945. He commenced employment with the Commonwealth in 1974 but first became eligible to join a Commonwealth superannuation scheme on 1 July 1976. He resigned in 1979. The evidence of the exact date is unclear but Mr Heath used in his Report 1 July 1979 and no objection was taken to that.
Mr Reeve recommenced employment with the Commonwealth on 22 August 1983. He joined AGEST on 30 April 1992 and transferred to the PSS on 10 November 1995. He ceased employment with the Commonwealth on 17 November 2000.
(b) Controversial factors
I have already dealt with some of these as follows:
· First period of membership: I have found (at [404]) that Mr Reeve would have joined the CSS on 1 July 1976. He would not have remained in Commonwealth employ but would have resigned in 1979 and rejoined on 22 August 1983.
· Date of rejoining the CSS: I have found (at [424]) that for the purpose of eligible continuous service, the period commenced on 22 August 1983 and not 12 March 1985.
I deal with the other matters as follows.
(i) Transfer to the PSS
When the Superannuation Act 1990 (Cth) (the 1990 Act) created the PSS, members of the CSS were given an opportunity to elect to join the PSS. If a member of the CSS did not expressly elect to join the PSS, he or she remained a member of the CSS.
I have addressed the issue in some detail in Meredith v Commonwealth (No 2) at [666]-[678] and I rely on what I there said.
As in the other cases, the evidence about what Mr Reeve would have done as to an election is quite thin. It is, of course, a hypothetical question about which direct evidence is of only limited value and I can really only decide by inference.
Again, the submissions of the parties were not particularly helpful. Mr Reeve merely submitted that he “would likely have remained in the CSS after the commencement of the PSS in 1990”.
The Commonwealth’s somewhat more helpful submission was as follows:
... it is submitted that for the reasons given in each of the other plaintiff’s cases Mr Reeve would probably have chosen the PSS, or at the very least the alternative more advantageous election from Mr Reeve’s point of view has not been established by any evidence. On the contrary, in Mr Reeve’s case the PSS allowed members to take their entire retirement benefit as an immediate lump sum. Mr Reeve resigned from the Commonwealth in order to pursue a small business venture not once, but twice, and it follows, it is submitted that the opportunity to receive his entire benefit as a lump sum is an option that would have provided Mr Reeve with a motivation to transfer to the PSS.
Reference was also made to helpful submissions prepared by Mr Martin entitled Factors Influencing a Decision to Transfer from the Commonwealth Superannuation Scheme (CSS) to the Public Sector Superannuation Scheme (PSS). It is summarised in Meredith v Commonwealth (No 2) at [671]-[676].
Reference was made in Mr Reeve’s submissions to negative commentary in the press about the PSS but Mr Reeve did not read The Canberra Times. He gave no evidence that suggests he received financial advice when he ultimately accepted the redundancy offered in 2000.
Mr Reeve’s evidence in his affidavit was
I elected to access my PSS superannuation benefit as a lump sum, and I was paid a net benefit of $62,817.38 on 6 December 2000. If I had joined the CSS at the time when I was first eligible, or at an earlier date, and had more funds available in the scheme, and had the option of accessing an indexed pension and a lump sum, I would have done so. I received a payout from my Zurich policy of $16,864.00 on 23 January 2001. I used these funds to pay off the mortgage on my house at Flynn.
Of course, the election had to be made in 1990, ten years before this redundancy. It was to be made only seven years after the failed business venture led him back into Commonwealth employment. That is likely to have had some effect on Mr Reeve wanting some security at the time.
I also note, as a small point, that, as I have noted above (at [316]), Mr Bryce remained a member of the CSS. This is some support for what Mr Martin described as a “work-place centric” attitude.
I am satisfied on the balance of probabilities that Mr Reeve would not have elected to transfer to the PSS at 1 July 1990.
(ii) Lump sum loss at resignation and retrenchment
A small amount of $1000 difference is disclosed in the estimates made by Mr Heath and Mr Martin relating to Mr Reeve’s potential CSS lump sums from the first and second periods of CSS membership. There are different approaches.
In all the circumstances, I accept Mr Heath’s approach.
(iii) Past Pension payments
Mr Heath calculated past pension payments to 31 January 2009 at $96,796 which attracted pre-judgment interest of $33,357. Mr Martin calculated the payments to 30 September 2009 as $103,042 and $38,462 respectively.
Given that the payments would continue until judgment, these amounts will need to be recalculated up to the date of judgment together with pre-judgment interest at the standard rate set out in Sch 2 of the Court Procedures Rules 2006 (ACT).
(iv) Future Pension payments
The amount for future pension payments depends on the annuity factor to be applied as well as the appropriate discount factor.
I have addressed these issues in Meredith v Commonwealth (No 2) at [695]-[705]. I rely on what I there said and do not need to repeat it.
In summary, it seemed to me that Mr Heath relied on “prospective tables” while Mr Martin relied on “historical tables”. The former approach has the support of the High Court in Golden Eagle International Trading Pty Ltd v Zhang (2007) 229 CLR 498 at 517; [70]. That is, accordingly, the approach to be adopted.
So far as the discount factor is concerned, however, the fact that 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.
(v) Reversionary pension
Mr Heath included in his calculation an amount for the reversionary pension that may be payable to Mr Reeve’s partner should he pre-decease her.
That contingency has not arisen and may not arise. That, of course, does not necessarily mean that damages should not make provision for a contingency. See Young v Rothin [2009] ACTSC 71 at [268].
The fact is, however, that legally this is not a claim that can be made by Mr Reeve. It is not an entitlement he has; it is an entitlement of his partner and she is not a party to the proceedings.
No provision should be made for this head of damage.
(vi) Saved member contributions
Mr Reeve would, of course, have had the use of that portion of his wages that would, had he been admitted to membership of a Commonwealth superannuation scheme, been paid as contributions. His damages must, therefore, be discounted accordingly to provide for the use he had of those funds.
Mr Heath and Mr Martin each used a different approach to the calculation of the amount by which the damages should be discounted to provide for this factor. Mr Heath assumed Mr Reeve would have invested the saved member contributions in a mixture of life policies and building society deposits. Mr Martin, who relied on instructions that Mr Reeve was buying properties from time to time, assumed that a reasonable value could be obtained by applying average mortgage rates.
Further, Mr Heath valued the saved member contributions at the date on which Mr Reeve accepted the offered redundancy and did not make an allowance for the actual contributions that Mr Reeve made to the PSS.
As to the first issue, there was little evidence from which I could infer what the correct approach was.
The relevant activities of Mr Reeve were as follows. He purchased a home in Kambah when he came to Canberra in the early 1970s but sold it between 1976 and 1979 when he purchased a property at Murrumbateman. He sold that property in 1992 and purchased a property in Flynn which he sold in 2004. Thus, over the period of more than 30 years, he purchased three properties.
He invested in a business in 1979, though there were, he said, “no set-up costs ... [and] minimal legal costs” as all capital equipment was provided by the government. In 1998, he purchased an ice-cream truck with the proceeds of the sale of a motor vehicle and replaced failed equipment with funds borrowed from a credit union. In 2000, he started a new business involving Australia Post.
He took out a superannuation policy with Zurich Australian Superannuation Pty Ltd on 2 July 1986. He said, “Each year I would save what I could and make one annual deposit into the fund”.
I am not satisfied that mortgage rates are the appropriate basis for the calculation of the value by which the damages should be discounted. I am satisfied on the balance of probabilities that Mr Reeve is more likely to have paid the saved member contributions into the credit union and then some into his superannuation policy. While Mr Heath suggested that comparative entities are not identical with those entities, I am satisfied that Mr Heath’s approach is the appropriate one so far as this aspect is concerned.
On the other two aspects, however, I consider Mr Martin to be correct. That is to say, the appropriate date for valuing the saved member contributions should be to the date of judgment and the actual contributions Mr Reeve made to the PSS should be deducted.
Consideration
While I have basically accepted the approach set out in the third scenario of Mr Heath, which is similar to the third method of Mr Martin, I have made some variations based on the findings I have set out above.
There is, however, at least one specific matter on which I am not sufficiently confident that I have sufficient information to be able to calculate the damages, namely the past pension payments. It may be that some of my findings would require other adjustments.
Accordingly, I will invite the parties to confer and endeavour to quantify the damages on the basis of my findings.
The findings may be summarised as follows:
(a) Mr Reeve would have joined the CSS on 1 July 1976;
(b) He would have resigned on 1 July 1979 and received his accrued contributions with interest;
(c) He would have rejoined the CSS on 22 August 1985;
(d) He would not have elected to transfer to the PSS on 1 July 1990;
(e) He would have accepted a redundancy on 17 November 2000;
(f) The calculations should be made in accordance with my findings made above; and
(g) There should be pre-judgment interest in accordance with the Court Procedures Rules up to the date of judgment.
TAXATION
The question of whether the damages would be taxed whether as a capital gain or as income, was a live issue. Both parties made submissions on the issue, the Commonwealth submitting that the damages were not taxable on either basis and Mr Reeve submitting that they would be taxable. Mr Reeve 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 [2013] ACTSC 128, 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 Reeve 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. In the other cases, it has not been necessary for a report from an appropriately qualified actuary to be provided and agreement has been reached between the parties. If there is no agreement, however, I am happy for each party to retain their own actuary and provide separate reports. If so, I would wish that the actuaries first confer to see if they could agree or, at least, narrow the extent of any disagreement.
Accordingly, I shall hear the parties 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 four hundred and eighty-nine (490 ) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Refshauge.
Associate:
Date: 16 January 2014
Counsel for the Plaintiff: Mr R Davis and Mr J Gordon
Solicitor for the Plaintiff: Sneddon Hall & Gallop
Counsel for the Defendant: Mr S P Estcourt QC and Ms C Dowsett
Solicitor for the Defendant: 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: 17 January 2014
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