The Public Trust in its capacity as Administrator of the Estate of Malcolm Wayne Fowlie v Central Norseman Gold Corporation Pty Ltd
[2016] WADC 155
•3 NOVEMBER 2016
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: THE PUBLIC TRUST in its capacity as Administrator of the ESTATE OF MALCOLM WAYNE FOWLIE -v- CENTRAL NORSEMAN GOLD CORPORATION PTY LTD [2016] WADC 155
CORAM: DERRICK DCJ
HEARD: 12 & 13 SEPTEMBER 2016
DELIVERED : 3 NOVEMBER 2016
FILE NO/S: CIV 3321 of 2014
BETWEEN: THE PUBLIC TRUST in its capacity as Administrator of the ESTATE OF MALCOLM WAYNE FOWLIE
Plaintiff
AND
CENTRAL NORSEMAN GOLD CORPORATION PTY LTD
Defendant
Catchwords:
Contract - Causation - Remoteness - Mitigation of loss
Negligence - Duty of care - Breach of duty - Causation - Remoteness - Mitigation of loss
Legislation:
Civil Liability Act 2002 (WA)
Evidence Act 1906 (WA)
Superannuation Guarantee (Administration) Act 1992 (Cth)
Result:
Judgment for the plaintiff
Damages awarded
Representation:
Counsel:
Plaintiff: Ms W F Gillan
Defendant: Ms S Russell
Solicitors:
Plaintiff: Ellery Brockman
Defendant: Corrs Chambers Westgarth
Case(s) referred to in judgment(s):
British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673
Brodie v Singleton Shire Council [2001] HCA 29; (2001) 206 CLR 512
Burns v MAN Automotive (Aust) Pty Ltd [1986] HCA 81; (1986) 161 CLR 653
Chapman v Hearse [1961] HCA 46; (1961) 106 CLR 112
Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232
Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64
Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; (1999) 200 CLR 1
Department of Housing and Works v Smith (No 2) [2010] WASCA 25; (2010) 41 WAR 217
Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; (2002) 211 CLR 540
Hardie Finance Corporation Pty Ltd v Ahern [No 3] [2010] WASCA 403
Henville v Walker [2001] HCA 52; (2001) 206 CLR 459
Hill v Van Erp [1997] HCA 9; (1997) 188 CLR 159
Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313
Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413
Koufos v C Czarkinow Ltd (The Herron II) [1969] 1 AC 350
March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506
Marinko v Masri (2000) A Tort Rep 81-581
Marsh v Baxter [2015] WASCA 169; (2015) 49 WAR 1
Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61; (2000) 205 CLR 254
Motium Pty Ltd v Arrow Electronics Australia Pty Ltd [2011] WASCA 65
Newmarket Corporation Pty Ltd v Kee-Vee Properties Pty Ltd [2003] WASCA 157
Orchard Holdings Pty Ltd v Paxhill Pty Ltd as Trustee for Paxhill Trust trading as Property People [2012] WASC 271
Overseas Tankship (UK) Ltd v Morts Doc and Engineering Co Ltd, The Wagon Mound (No 1) [1961] AC 388
Overseas Tankship (UK) v The Miller Steamship Co, The Wagon Mound (No 2) [1967] 1 AC 617
Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180
Pyrenees Shire Council v Day [1998] HCA 3; (1998) 192 CLR 330
Sullivan v Moody [2001] HCA 59; (2001) 207 CLR 562
Swick Nominees Pty Ltd v LeRoi International Inc (No 2) [2015] WASCA 35
Tab Corp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272
Tame v New South Wales [2002] HCA 35; (2002) 211 CLR 317
TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130
Vairy v Wyong Shire Council [2005] HCA 63; (2005) 223 CLR 422
Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515
Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40
DERRICK DCJ:
Introduction
The plaintiff is the Administrator of the Estate of Malcolm Wayne Fowlie. Mr Fowlie died in a workplace accident on 15 February 2014. The defendant (which at the relevant time was trading under the name Central Norseman Gold Corporation Ltd) was at all material times Mr Fowlie's employer. The defendant became a private company on 1 August 2014.
The plaintiff claims against the defendant damages for breach of contract or in the alternative negligence. The plaintiff's claim arises out of the defendant's failure to make a number of quarterly superannuation payments into Mr Fowlie's superannuation fund account on their due dates. The consequence of the failure was that there were insufficient funds in Mr Fowlie's superannuation account to pay the premiums for Mr Fowlie's life insurance cover that had been put in place as part of his superannuation arrangements. This in turn resulted in the superannuation fund cancelling Mr Fowlie's life insurance cover a short time prior to his death. The damages claimed reflect the amount of the insurance benefit that would have been payable on the death of Mr Fowlie if the fund had not cancelled the life insurance cover.
At the commencement of the trial I made by consent an order in the following terms:
Each document contained in the trial bundle shall, in the absence of specific objection by another party, be taken to be:
(a)Authentic;
(b)Prepared by its apparent author;
(c)In the case of a communication, sent by the person appearing to have sent it, and received by the persons appearing to have received it on or about the date which it bears;
(d)In the case of a business record, bank statement or other financial record, a record of the transactions recorded in it.
Non-contentious factual background
On 31 May 2012 Mr Fowlie commenced employment with L2 Project Management – Norseman Pty Ltd (L2) as a Dump Truck Operator at a mine site in Norseman. The mine was an underground and open pit mine.
The terms and conditions of Mr Fowlie's employment with L2 were set out in a written contract of employment which Mr Fowlie and the Managing Director of L2 signed on 1 June 2012 (the L2 Employee Agreement). Clause 15 of the L2 Employee Agreement provided:
L2 will make superannuation contributions on your behalf in accordance with its obligations under the Superannuation Guarantee (Administration) Act 1992 (Cth). This amount is specified in Schedule 2; Item 1 and will be paid into the fund of your choice.
Schedule 2 Item 1 of the L2 Employee Agreement, which was headed 'Remuneration for Underground Truck Operator – Level 3', included the following provision:
Superannuation:
In addition L2 Project Management – Norseman Pty Ltd will contribute 9% of your gross salary as required under the Superannuation Guarantee (Administration) Act 1992.
At some point after Mr Fowlie had entered into the L2 Employee Agreement but prior to 1 August 2012, the defendant enrolled Mr Fowlie in the AMP Super Directions for Business superannuation fund reference number D3DSX5 (the AMP Fund). The AMP Fund was established by a deed dated 12 April 1999 as amended by four supplemental deeds, the most recent of which was executed on 28 April 2011 (the Trust Deed). The trustee of the AMP Fund was NM Superannuation Pty Ltd (the Trustee). The administrators of the fund were AMP and AXA.
On or about 1 August 2012 AMP sent a letter to Mr Steve Flockton dated 1 August 2012. Mr Flockton was employed by the defendant as a financial officer. The letter was in the following terms:
Dear Mr Flockton
Plan reference D3DSX5
Central Norseman Gold Corporation
Thank you for the membership enrolments we received for your plan.
The enclosed report details each member's current acceptance status. It shows members who have been accepted as proposed.
We have sent each member a letter which confirms their membership and provides details of their superannuation entitlements under the Fund.
If you have any queries, please contact your financial advisor, Gerry Gudsell on (08) 9301 1002 or our Customer Service Centre on 133 056. We will be pleased to help.
The reference in the first paragraph of the letter to the defendant's 'plan' was a reference to the arrangement under which the defendant participated in the AMP Fund.
The report that was enclosed with the letter and which detailed each member's 'current acceptance status' showed the following in relation to Mr Fowlie:
Name:
Malcolm W Fowlie
Number:
1063278
Acceptance status:
Acceptance as proposed
TFN Supplied:
No
Insurance category details:
All Staff Death, Tpd & Sc
Enrolled in Vesting Group:
No
Enrolled in Subsidised Fee Group:
No
The references in the report to 'Death', 'Tpd' and 'Sc' were abbreviated references to insurance cover for Death, Total and Permanent Disablement and Salary Continuance respectively.
Also on or about 1 August 2012 AXA sent a letter to Mr Fowlie bearing that date. The letter, so far as is relevant, was in the following terms:
Dear Mr Fowlie,
Member name: Mr Malcolm Fowlie
Member number: 1063278
Plan name: Central Norseman Gold Corporation Limited
Plan number: D3DSX5
Welcome to Super Directions for Business
Your employer has enrolled you in Super Directions for Business (Super Directions), a division of the Super Directions Fund. This is a superannuation fund that you may keep throughout your working life if you choose. No matter where your career takes you, you can continue to direct your super contributions to the Fund. There's also the option of insurance cover.
…
Your membership details are outlined in the Membership summary enclosed. Also accompanying this letter are the following items:
Product Disclosure Statement (PDS)
'Get it together and consolidate your super' brochure, and
Reply paid envelope
We recommend you read the enclosed PDS, together with the Additional information document, available to download at axa.com.au/bsdadditionalinfo.
What do I need to do now?
Please ensure the information contained in your Membership summary is correct as it contains important details about your membership.
If you need to make any changes, please complete the Change to member preferences form contained in the PDS and return it to AXA in the reply paid envelope.
Policy committee
Your plan has a policy committee. The policy committee comprises employer and employee representatives. The committee's function is to provide an avenue of communication between plan members and the Trustee on matters such as the Fund's investment objectives, strategy and performance. The committee can also help deal with members' queries or complaints about the Fund. The policy committee representatives for your plan are contained in your Membership summary.
…
Insurance benefits
We are currently assessing your insurance application. During this health assessment period, we are pleased to provide you with interim accident insurance cover depending on the type of cover that you applied for. Please note however, that this insurance cover only applies in limited circumstances. Please refer to the PDS which details those circumstances.
Insurance cover
To be eligible for cover you must be an Australian resident living in Australia and be aged between 14 and 69 for Death cover. Total and Permanent Disablement (TPD) cover and Salary Continuance cover may be available if you are aged between 14 and 69 and permanently employed working 15 hours or more per week. There may also be other eligibility conditions that are specific to the plan, please refer to the PDS for full eligibility conditions.
…
Consolidating your super
If you currently have your superannuation benefits spread across a number of funds, you may like to consolidate them into this plan. For more information on super consolidation, please read the enclosed brochure, Get it together and consolidate your super. It is important that you check with your plan's financial advisor to determine if super consolidation is in your best interests.
Can we help?
We understand that superannuation and insurance can be confusing, but it doesn't need to be. If you have any queries or would like further information you can contact:
• your plan's financial advisor, Gerry Gudsell on (08) 9301 1002
• AXA's Customer Service Centre on 133 056, or
We will be pleased to help.
The Membership Summary that was enclosed with the above referred to letter set out the details of Mr Fowlie's membership of the AMP Fund. It specified that the defendant was to make the required superannuation contributions on a quarterly basis. It also set out the following information:
INSURANCE DETAILS
Proposed cover
The following insurance cover is subject to underwriting and personal statement requirements and will not be effective unless there is acceptance of cover by the Insurer.
Death
Sum insured (approved): $150,368.00
Annual premium: $2,169.55
Benefit basis: Death – Formula G
TPD
Sum insured (approved): $150,368.00
Annual premium $2,922.65
Benefit basis: TPD – formula G
SC
Percentage of salary: 75%
Annual premium: $2,521.63
Waiting period: 30 days
Benefit period: 2 years
…
Monthly premium: $634.48
…
Insurance assessment requirements
We will contact you shortly to notify you of our assessment decision or request more information if it is needed to complete your assessment.
The Membership Summary also identified the policy committee representatives for the AMP Fund as at 1 August 2012. One of the identified representatives of the defendant on the policy committee was Mr Steve Flockton.
The Product Disclosure Statement (PDS) that was enclosed with AXA's letter stated, so far as is relevant, the following:
1.About Super Directions for Business
Super Directions for Business is a comprehensive super product for companies and their employees designed to maximise members' retirement accumulation and benefits.
There are three main components of a Super Directions for Business plan:
• contributions
• investment choices
• insurance cover.
Super Directions for Business is part of the Super Directions Fund (the Fund). The Trustee of the Fund and issuer of this PDS and Additional Information document is N.M. Superannuation Proprietary Limited, and throughout the PDS is referred to as the Trustee, we, us or our.
2.How super works
…
In most cases super is compulsory. Your employer is required to contribute to a super fund for you, and subject to the terms of your employment, you can usually choose to which super fund your employer makes its compulsory employer contributions.
…
Boosting your super savings
There are many types of contributions that can be made to your Super Directions for Business account. These include:
• employer contributions
• member contributions
…
• rollovers/transfers from other super funds or approved deposit facilities
…
3.Benefits of investing in Super Directions for Business
…
Access to a financial advisor
You have access to a financial advisor selected by your employer to help you understand super and how much you should be saving to fund your retirement lifestyle.
Through your plan's financial advisor, you have access to a comprehensive range of financial planning services. They will be able to assist by providing information and advice on your super investments plus your insurance needs. They can establish an overall financial plan and conduct regular reviews to ensure it reflects your changing circumstances.
Your plan's financial advisor's name and contact number are contained in your Welcome letter.
Default insurance cover
If you have been enrolled by your employer you may have been provided with insurance cover selected by your employer for all members of the employer's plan (subject to eligibility).
Check your Welcome letter and Membership summary to confirm if you have been provided with any insurance cover.
You can add, increase or decrease the amount of insurance cover (subject to eligibility criteria). Any changes to the level or type of insurance you hold may require the provision of health evidence before insurance cover can be approved.
…
8.Insurance in your super
For most people insurance is an important part of any financial plan. Without insurance you and your family may not be able to continue the lifestyle that you have worked hard to provide in the event of you suffering an injury or illness or in the event of your death.
Types of insurance cover
Super Directions for Business offers you the following types of cover:
• Death only
• Death and Total and Permanent Disablement (TPD)
• Death, TPD and Salary Continuance
• Death and Salary Continuance
Cover can be provided as a number of units, a nominated amount or a benefit formula.
As a member of an employer sponsored plan, you may be provided with a level of default insurance cover upon commencement. The type, level of cover and cost of cover is described in your membership summary included with your Welcome letter. The cost of the cover will be deducted from your accumulation each month.
You may opt out of the default cover by notifying us. If you choose to opt out, you will need to complete Section 5 of the Change to member preferences form available at axa.com.au > Forms > Business Super Forms > Super Directions – Change to member preferences.
Insurance arrangements
Employer sponsored – Default cover
Under this insurance arrangement, an employer makes contributions on their employee's behalf and will decide on the type and level of cover for the plan. Premiums for the cost of cover are deducted monthly from your accumulation. Given all employees of an employer plan are provided with the same type and a similar level of cover under these arrangements, the insurer is generally able to provide you with cover without health evidence and at a lower cost than would normally be available to you as an individual (subject to eligibility).
…
Cost of insurance
There are costs associated with insurance cover, in the form of insurance premiums. Insurance premiums are generally deducted from your accumulation on a monthly basis. If you do not opt out of the default insurance cover provided to you, insurance premiums will continue to be deducted from your accumulation. Should there be insufficient funds in your account to pay the premium you will be notified in advance in writing that your cover will cease. The cost of your cover depends on the way your benefit amount is determined (ie: as units of cover, nominated amount or benefit formula).
9.How to open an account
Employer supported
As Super Directions for Business is the nominated super fund for your employer's business, your employer has enrolled you as a member of their plan.
Upon enrolment you will receive a Welcome letter and Membership summary which will confirm your membership details and your default options. To make changes to the default options please complete and return the Change to member preferences form which can be found at axa.com.au > Superannuation > Forms > Super Directions – change to member preferences.
We recommend that you consult your plan's financial advisor when looking to make changes to your insurance cover and/or investment portfolios. It is important to note that a change in your insurance cover may require the provision of health evidence before cover can be approved.
The 'Get it together and consolidate your super' brochure that was apparently enclosed with AXA's letter was not adduced in evidence.
On or about 31 August 2012 AMP sent a letter bearing that date to Ms V Lawes, an employee of the defendant who worked out of the defendant's Perth office. In the letter AMP thanked Ms Lawes for the recent superannuation contribution received and advised Ms Lawes that when processing the contribution AMP had noted that it did not have tax file numbers on file for a number of members including Mr Fowlie.
On or about 14 September 2012 L2 sent a letter to Mr Fowlie bearing that date. The letter was in the following terms:
In order to improve the efficiencies of the Central Norseman Gold Corporation Ltd (CNGC) operation, L2 Project Management – Norseman Pty Ltd (L2PM) in consultation with the Board of Directors of CNGC have agreed to a variation of the project management contract, whereby L2PM workers assigned to the Norseman project will be transferred to the CNGC. This will assist workers in a long-term career path with CNGC.
CNGC will be responsible for existing and future outstanding payroll and human resource matters.
This is effective as at Monday 17 September 2012.
During this transitional period the management of L2PM will continue to assist CNGC through this process.
Also on or about 14 September 2012 the defendant sent a letter to Mr Fowlie dated 14 September 2012. In the letter the defendant said the following in relation to the proposed employment transfer:
The Board of Directors for Central Norseman Gold Corporation Ltd (CNGC), in consultation with L2 Project Management – Norseman Pty Ltd (L2PM), have agreed to a variation of the Project Management contract and accepted L2PM's recommendation for CNGC to undertake the development of the Norseman workforce directly. The senior personnel of L2PM will continue to assist the Board of CNGC in the management of the operations.
In doing so, we are pleased to confirm our offer to transfer your employment directly to CNGC. Unless notified in writing differently your Position will remain the same. This is effective as at 17th September 2012.
On acceptance of this offer, all serviced based accruals, entitlements and outstanding liabilities (eg. Superannuation, Workcover and PAYG), will be the responsibility of CNGC. The serviced based entitlements take into consideration Annual Leave, Personal (Sick & Carers) Leave and Long Service Leave entitlements.
Your current remuneration, terms and conditions will remain the same and are outlined in the CNGC Employee Agreements. You will continue to be paid fortnightly into a nominated bank account of your choice.
…
Malcolm, Central Norseman Gold Corporation Ltd would like to take this opportunity to welcome you and trust that your continued employment with us will be both rewarding and enjoyable. Please sign, date and return the attached copy of this letter to confirm your acceptance of the position.
The above offer of employment will remain open until 5.00pm Monday, 17th September, 2012. If your acceptance to this offer is not returned to Lisa Young by close of business on Monday 17th September 2012, it will be acknowledged that you do not wish to accept this offer and you have resigned from your position.
On 17 September 2012 Mr Fowlie commenced employment with the defendant.
On or about 17 September 2012 AXA sent a letter to Mr Fowlie bearing that date. The letter was in the following terms:
Your insurance benefits
Salary Continuance cover restricted
Total and Permanent Disablement cover removed
Dear Mr Fowlie
We wrote to you on 23 August 2012 requesting health evidence (a Personal Statement) to upgrade your Salary Continuance cover.
As we have not received this information, we are unable to complete your assessment. Your Salary Continuance cover has been restricted to the Automatic Acceptance Limit (AAL).
An AAL is the maximum level of cover we can provide without requiring health evidence.
Total and Permanent Disablement cover
Our Welcome letter dated 1 August 2012 had incorrect information about your Total and Permanent Disablement (TPD) cover. Unfortunately your TPD cover has been removed as the maximum entry age is 55.
No premiums have been deducted from your balance.
We apologise for any inconvenience we've caused.
Your insurance details
Your Death cover remains unchanged.
Your Salary Continuance waiting period is 30 days, with a monthly benefit payable for up to 2 years.
At this point in the letter the benefit amounts for the death cover and the salary continuance cover, and the annual premiums payable for each form of cover, were specified.
The letter concluded by stating that if Mr Fowlie had any queries he could contact his financial advisor Gerry Gudsell on (08) 9301 1002 or AXA's Customer Service Centre on 13 30 56.
On 2 October 2012 Mr Fowlie and an authorised representative of the defendant signed a written contract of employment which set out the terms and conditions of Mr Fowlie's employment with the defendant (the CNGC Employee Agreement). The CNGC Employee Agreement specified the commencement date of Mr Fowlie's employment with the defendant to be 17 September 2012.
The terms and conditions of Mr Fowlie's employment with the defendant under the CNGC Employee Agreement were the same as those that had existed under the L2 Employee Agreement save that Mr Fowlie's job description changed from Dump Truck Operator to Loader Operator and his salary was slightly higher. Thus, cl 15 of the CNGC Employee Agreement provided:
Superannuation
CNGC will make superannuation contributions on your behalf in accordance with its obligations under the Superannuation Guarantee (Administration) Act 1992 (Cth). This amount is specified in Schedule 2; Item 1 and will be paid into the fund of your choice.
Schedule 2 Item 1 of the CNGC Employee Agreement provided, in part, as follows:
Superannuation
In addition Central Norseman Gold Corporation Limited will contribute 9% of your gross salary as required under the Superannuation Guarantee (Administration) Act 1992.
From the commencement date of Mr Fowlie's employment with the defendant he received fortnightly payment slips. The payment slips specified the superannuation guarantee payment that the defendant was obliged to pay on behalf of Mr Fowlie for the previous fortnight.
On 3 October 2012 the defendant was placed in administration. The period of administration ceased on 12 March 2013.
On 12 March 2013 the defendant was placed in administration under a Deed of Company Arrangement (DOCA). The period of administration under the DOCA ceased on 30 April 2013.
On 24 April 2013 the defendant made a contribution to Mr Fowlie's superannuation account for the quarter ending 31 March 2013.
During the period 25 April 2013 to 11 February 2014 the defendant did not make any superannuation contributions to Mr Fowlie's superannuation account for the quarters ending 30 June 2013, 30 September 2013 and 22 December 2013. During this period a total of $8,843.09 in superannuation contributions accrued to Mr Fowlie.
Despite the fact that the defendant did not make any superannuation contributions to Mr Fowlie's superannuation account during the entire period 25 April 2013 to 11 February 2014, Mr Fowlie's fortnightly pay slips issued during this period continued to show the amount of the superannuation guarantee payment payable by the defendant on Mr Fowlie's behalf for the previous fortnight. In other words, the pay slips did not give any indication on their face that the superannuation contributions for the quarters in question had not in fact been paid into Mr Fowlie's superannuation account.
On or about 21 August 2013 AMP sent a letter to Mr Fowlie bearing that date enclosing his annual statement for his AMP Fund superannuation account for the period 1 July 2012 to 30 June 2013. The 'summary of activity' which formed part of the annual statement revealed that for the relevant period the total payments made into Mr Fowlie's superannuation account were $6,915.02, of which amount $6,194.81 was comprised of superannuation contributions. The summary of activity further revealed that for the relevant period the total deductions from the account were $5,438.18, of which amount the insurance premium component was $4,485.86. In other words, the summary of activity showed that the closing balance in Mr Fowlie's superannuation fund account for the financial year ending 30 June 2013 was $1,476.84.
The annual statement included a note informing Mr Fowlie that his annual insurance premium for the year commencing 1 July 2013 was $2,681.86. The annual statement also identified the policy committee representatives for the AMP Fund. One of the employer representatives specified was Mr Steve Flockton.
On or about 12 December 2013 AMP sent a letter to Mr Fowlie bearing that date. The letter was, so far as is relevant, in the following terms:
Dear Mr Fowlie,
Unpaid insurance premiums notification
Super Directions for Business
Central Norseman Gold Corporation Limited
You currently have a superannuation account with Death and Salary Continuance insurance cover in this plan.
However, there are insufficient funds in your account to continue paying the insurance premiums.
This means that the Trustee, N.M Superannuation Proprietary Limited, cannot continue to provide you with insurance cover.
What happens now?
We are not receiving superannuation contributions for you. This may be because:
• You have exercised your choice to contribute to an alternative superannuation fund. If so, we will cancel your insurance on 11 January 2014.
• You are no longer working for the Central Norseman Gold Corporation Limited plan. If so, one of the following will apply:
•If you ceased employment before 1 July 2007, your insurance stopped on the date you left the Central Norseman Gold Corporation Limited and you are not eligible for continuance of insurance cover.
•If you ceased employment on or after 1 July 2007, your insurance will be cancelled on the date we are notified that you ceased or 11 January 2014, whichever occurs earlier
What do I have to do?
You should discuss the implications of the points above with your financial planner.
• If you no longer work for the Central Norseman Gold Corporation Limited plan, please complete and return the enclosed Employment ceased (individual) details form by 2 January 2014. When we receive the form, we will transfer your superannuation account into the Super Directions for Business Rollover Section.
• If you are still working for the Central Norseman Gold Corporation Limited plan and haven't exercised your choice to contribute to an alternative superannuation fund, you will need to talk to your employer about their superannuation contributions for you.
If your account balance continues to be less than required to pay your insurance premiums, we will cancel your Death and Salary Continuance insurance cover on 11 January 2014 and your membership will remain open without insurance.
Any questions?
If you have any questions please contact us or call your financial planner.
On the first page of the letter in the top right-hand corner the 'Contact details' were specified to be West Insure Financial Group. The contact phone number and a contact email address for West Insure Financial Group were provided. The contact email address referred to 'jlouwrens'. The telephone and email contact details for AMP's Customer Service Centre were also specified on the front page of the letter.
On Saturday 28 December 2013 or Sunday 29 December 2013 Ms Sharne Pietersen attended Mr Fowlie's house in Norseman. Mr Fowlie's wife, Mrs Raewyn Fowlie, was present at the time.
Ms Pietersen was employed by the defendant as its Administration Officer. She was a work colleague and friend of Mr Fowlie.
Ms Pietersen attended Mr Fowlie's house because she knew that Mr Fowlie and his wife were shortly to travel to Kalgoorlie, and because she wanted to ask Mr Fowlie to collect some glasses for her from an optometrist in Kalgoorlie.
While Ms Pietersen was at Mr Fowlie's house, Mr Fowlie gave to her the letter that he had received from AMP dated 12 December 2013. Mr Fowlie asked Ms Pietersen, in substance, if she could take the letter with her to the defendant's office and try to sort out for him the issue raised in the letter. Ms Pietersen took the letter with her as requested.
Mr Fowlie worked during the period 30 December 2013 to 10 January 2014. During this period Ms Pietersen did not revert to Mr Fowlie with any information regarding the AMP letter dated 12 December 2013.
On 9 January 2014 Ms Pietersen was made redundant by the defendant.
On 11 January 2014 Mr and Mrs Fowlie went on holiday together. They went on a road trip to Mandurah, Perth and Geraldton.
On 14 January 2014 Mr Fowlie's insurance cover under the AMP Fund was cancelled. AMP advised Mr Fowlie of the cancellation of his insurance cover by letter addressed to him dated 14 January 2014. The letter was in the following terms:
Dear Mr Fowlie,
Cancellation of insurance confirmation
Super Directions for Business
Central Norseman Gold Corporation Limited
We wrote to you on 12 December 2013 to explain that your insurance premiums were unpaid due to insufficient funds in your superannuation account, and that we would be unable to continue to provide you with insurance cover.
Your account balance continues to be less than required to pay your insurance premiums, and we confirm that we cancelled your insurance cover on 14 January 2014.
You will continue to be a member of the Central Norseman Gold Corporation Limited plan, but without insurance. Your benefit entitlement is now your account balance only.
Any questions?
If you have any questions please contact us or call your financial planner.
The 'Contact details' set out in the top right-hand corner of the letter were the same as the contact details that had been provided in AMP's letter dated 12 December 2013.
On 24 January 2014 Mr and Mrs Fowlie's holiday road trip came to an end. Mr Fowlie returned to work on or about that date.
On 12 February 2014 the defendant drew a cheque made payable to AMP for the payment of superannuation contributions, including the following contributions in respect of Mr Fowlie:
1.$3,067.38 for the period 1 April 2013 to 30 June 2013;
2.$2,696.38 for the period 1 July 2013 to 30 September 2013; and
3.$3,079.33 for the period 1 October 2013 to 22 December 2013.
On 15 February 2014 Mr Fowlie died in the workplace accident.
On 19 February 2014 the cheque drawn by the defendant on 12 February 2014 in payment of the superannuation contributions for Mr Fowlie was presented for payment by AMP.
During the period 22 December 2013 to 16 February 2014 superannuation contributions in the amount of $1,874.98 accrued to Mr Fowlie.
On 5 June 2014 the defendant drew a cheque made payable to AMP for the payment of superannuation contributions, including a contribution in the amount of $1,874.98 in respect of Mr Fowlie, for the period 22 December 2013 to 16 February 2014. On 2 July 2014 AMP presented this cheque for payment.
Cases of the parties - summary
The plaintiff's claim in contract as pleaded and presented at trial can be summarised as follows.
By reason of cl 15 and Schedule 2 Item 1 of the CNGC Employee Agreement the defendant was contractually obliged to pay superannuation contributions (being 9% of Mr Fowlie's gross salary) in accordance with the provisions of the Superannuation Guarantee (Administration) Act 1992 (Cth) to a fund of Mr Fowlie's choice. To comply with this contractual obligation the superannuation contributions for the quarters ending 30 June 2013, 30 September 2013 and 31 December 2013 had to be paid by the defendant on or before 28 August 2013, 28 November 2013 and 28 February 2014 respectively. The defendant, by failing to pay any superannuation contributions on behalf of Mr Fowlie to the AMP Fund during the period 25 April 2013 to 11 February 2014, breached its contractual obligation under the CNGC Employee Agreement. The defendant's breach of its contractual obligation caused Mr Fowlie's death cover under the AMP Fund to be cancelled. The breach of contract therefore caused the plaintiff to suffer loss in the amount equal to the benefit that would have been paid to the plaintiff if the death cover had not been cancelled, namely $128,887.
The plaintiff's case in negligence as pleaded and presented at trial may be summarised as follows.
The defendant, by no later than early January 2014, acquired knowledge of the contents of AMP's letter to Mr Fowlie dated 12 December 2013 by reason of Ms Pietersen having shown it to the defendant's mine accountant Ms Tracey Reid on or about 31 December 2013. The defendant therefore knew that if it did not pay the superannuation contributions for Mr Fowlie that had already fallen due for payment and which it was contractually obliged to pay, Mr Fowlie would lose the benefit of the death cover. In these circumstances the defendant, from the time that it acquired knowledge of the contents of AMP's letter, owed to Mr Fowlie a duty of care to ensure that it would make the required contributions so that the insurance cover would not lapse. The defendant, by failing to pay any superannuation contributions on or before 14 January 2014 breached the duty of care that it owed to Mr Fowlie. The breach of duty caused Mr Fowlie's death cover under the AMP Fund to be cancelled. The breach of duty therefore caused the plaintiff to suffer loss comprised of the benefit that would have been paid to the plaintiff if the breach of duty had not occurred, namely $128,887.
The defendant, so far as the plaintiff's case in contract is concerned, does not dispute that by reason of the terms of the CNGC Employment Agreement it was contractually obliged to pay to a superannuation fund of Mr Fowlie's choice quarterly superannuation contributions (being 9% of Mr Fowlie's gross salary) for the quarters ending 30 June 2013, 30 September 2013 and 31 December 2013 on or before 28 August 2013, 28 November 2013 and 28 February 2014 respectively. The defendant does not dispute that by failing to pay the superannuation contributions for the quarters ending 30 June 2013 and 31 December 2013 by their due dates it breached its contractual obligation under the CNGC Employee Agreement. Nor does the defendant dispute the quantification of the claimed loss (that is, does not dispute that the death cover benefit that would have been paid to the plaintiff on the death of Mr Fowlie if the death cover had not been cancelled is $128,887). However, the defendant denies that it is, as a result of its breach of contract, liable to pay to the plaintiff anything other than nominal damages. More specifically, the defendant's case can be summarised as follows:
1.The breach of contract did not cause the plaintiff to suffer the claimed loss;
2.If the breach of contract did cause the plaintiff to suffer the claimed loss, the loss was too remote to be recoverable; and
3.If the breach of contract did cause the plaintiff to suffer the claimed loss and the loss was not too remote to be recoverable, the amount of damages payable should be reduced to a nominal amount only because Mr Fowlie failed to mitigate the loss.
So far as the plaintiff's claim in negligence is concerned, the defendant denies that Ms Pietersen, on or about 31 December 2013 or at all, showed to Ms Reid the letter from AMP to Mr Fowlie dated 12 December 2013. The defendant therefore denies that it had acquired, at any time prior to the death of Mr Fowlie, knowledge of the contents of AMP's letter to Mr Fowlie, and consequently also denies that it owed the alleged duty of care. In the alternative, the defendant contends that even if, contrary to its primary position, it did owe the alleged duty of care and did breach the duty by failing to pay any superannuation contributions for Mr Fowlie on or before 14 January 2014, the breach of duty did not cause the plaintiff to suffer the claimed loss. The defendant further contends that if it was in breach of the duty of care, and the breach did cause the plaintiff to suffer the claimed loss, the loss was too remote to be recoverable. Finally, the defendant contends that even if the claimed loss was not too remote to be recoverable, the amount of damages payable to the plaintiff should be reduced to nil due to Mr Fowlie's failure to mitigate the loss.
Questions for determination
It follows from my summary of the cases of the parties, that the questions for my determination so far as the plaintiff's claim in contract is concerned are as follows:
1.Did the defendant's breach of its contractual obligation under the CNGC Employee Agreement cause the plaintiff to suffer the claimed loss?
2.If the defendant's breach of its contractual obligation under the CNGC Employee Agreement did cause the plaintiff to suffer the claimed loss, is the loss too remote to be recoverable?
3.If the defendant's breach of its contractual obligation under the CNGC Employee Agreement did cause the plaintiff to suffer the claimed loss, and the claimed loss is not too remote to be recoverable, should the amount of any damages payable be reduced to a nominal amount by reason of Mr Fowlie having failed to mitigate the loss?
With respect to the plaintiff's negligence claim, both parties agree that in order for the plaintiff to prove that the defendant did, by no later than early January 2014, acquire knowledge of the contents of AMP's letter to Mr Fowlie dated 12 December 2013, the plaintiff must prove that Ms Pietersen did show the letter to Ms Reid on or about 31 December 2013. The defendant accepts that if the plaintiff does prove that Ms Pietersen did show the AMP letter to Ms Reid as alleged, this will be sufficient to establish that it did acquire knowledge of the contents of the letter. Both parties also agree that proof that the defendant acquired knowledge of the contents of the letter is an essential pre-condition to the plaintiff proving the existence of the alleged duty of care, although the defendant does not accept that proof of this pre-condition is of itself sufficient to prove the existence of the duty of care. Accordingly, so far as the plaintiff's negligence claim is concerned, the questions for my determination are as follows:
1.Did Ms Pietersen, on or about 31 December 2013, show to Ms Reid the letter from AMP to Mr Fowlie dated 12 December 2013?
2.If Ms Pietersen did, on or about 31 December 2013, show to Ms Reid the AMP letter, did the defendant, by no later than early January 2014, owe a duty of care to Mr Fowlie to ensure that it would make the required contributions so that the insurance cover would not lapse?
3.If the defendant did owe to Mr Fowlie the alleged duty of care, did the defendant breach the duty of care by failing to pay any superannuation contributions for Mr Fowlie on or before 14 January 2014?
4.If the defendant did owe the alleged duty of care and did breach the duty, did the breach of duty cause the plaintiff to suffer the claimed loss?
5.If the plaintiff did suffer the claimed loss as a result of the defendant's breach of duty, is the loss too remote to be recoverable?
6.If the plaintiff did suffer the claimed loss as a result of the defendant's breach of duty, and if the loss is not too remote to be recoverable, should the amount of damages payable to the plaintiff be reduced to nil because Mr Fowlie failed to mitigate the loss.
I will deal with each of the above identified questions in turn. However, before doing so there are some other matters that I need to address.
Evidence adduced
The plaintiff adduced evidence from two witnesses, Ms Pietersen and Mrs Fowlie. The defendant adduced evidence from Ms Reid.
During the trial I was told by the plaintiff's counsel that Ms Pietersen, a resident of Kalgoorlie, had been properly served with a subpoena to attend court to give evidence, had been provided with a train ticket to travel from Kalgoorlie to Perth on the day before the trial so that she could attend the trial to give evidence and had been booked accommodation in Perth, but had nonetheless failed to travel to Perth for the trial. Counsel informed me that her client had received a text message from Ms Pietersen on the morning of the trial indicating that she had missed the train and would not be in attendance at the trial. In these circumstances the plaintiff's counsel adduced the evidence of Ms Pietersen by tendering pursuant to s 79C(1) of the Evidence Act 1906 (WA) an affidavit affirmed by Ms Pietersen on 28 May 2014, save for two paragraphs of the affidavit which were deleted. The affidavit was tendered, in its edited form, without objection by the defendant subject to the defendant being able to make submissions as to the weight to be placed on its contents.
The plaintiff's counsel did not make any applications consequential upon Ms Pietersen's failure to attend court in answer to her subpoena.
Change of superannuation fund choice form
During the course of the trial the defendant tendered, over objection by the plaintiff, a copy of an Australian Taxation Office 'Change of superannuation Fund Standard Choice Form'. The form was tendered under s 79C(1) and/or s 79C(2a) of the Evidence Act 1906 (WA).
The form is the form that was, at the relevant time, provided by the Australian Tax Office to employees to enable them to inform their employer that they wanted their superannuation contributions paid by the employer into a superannuation fund other than the fund chosen by the employer.
The form is split, so far as is presently relevant, into Part A and Part B. Part A is the section of the form which the employer is to complete. In Part A provision is made for the employer to specify the superannuation fund into which the employer will pay superannuation contributions for the employee in the absence of the employee choosing for the contributions to be paid into a different fund. Part A of the form that was tendered was not completed by the defendant.
Part B of the form is the part to be completed by the employee. It is the part in which the employee specifies his or her choice of fund in the event that he or she does not want the employer to pay his or her superannuation contributions into the fund chosen by the employer.
Part B of the tendered form was completed by Mr Fowlie. It was signed by him on 2 October 2012. In Part B Mr Fowlie indicated that he wanted all future superannuation contributions to be made to his own choice of fund, and specified his chosen fund to be TAL Superannuation and Insurance Fund (TAL Fund). He specified in the form his existing TAL Fund membership number.
As I have already indicated, Part A of the form was not completed by the defendant. Moreover, and as is apparent from my above statement of the non‑contentious facts, Mr Fowlie, despite having completed Part B of the form, at all times remained a member of the AMP Fund. Further, there was no evidence adduced at trial as to what Mr Fowlie actually did with the form and, in particular, whether he actually provided the form to a representative of the defendant.
At trial the defendant did not seek to contend that I should find on the basis of the partially completed form that Mr Fowlie did ultimately choose for his superannuation contributions to be paid by the defendant to the TAL Fund. This is hardly surprising given that the form was not completed by the defendant, that the defendant (at least up until 24 April 2013) continued to pay superannuation contributions for Mr Fowlie into the AMP Fund, and that there was no evidence adduced as to what Mr Fowlie actually did with the form. Rather, the defendant contended, in the context of advancing its case on the issue of remoteness of loss, that the relevance of the form was to in effect highlight or demonstrate the point that under the terms of the CNGC Employee Agreement the obligation imposed on the defendant was to pay superannuation contributions into a fund of Mr Fowlie's choice and that therefore the defendant did not know as at 17 September 2012, being the commencement date of Mr Fowlie's employment with the defendant, what Mr Fowlie's choice of superannuation fund would be.
Given that Part A of the form was not completed by the defendant, the absence of any evidence as to what Mr Fowlie actually did with the form, and the fact that Mr Fowlie remained a member of the AMP Fund, I am not satisfied on the basis of the form that Mr Fowlie, on or about 2 October 2012, actually made a final decision for his superannuation contributions to be paid to the TAL Fund or conveyed any such decision to the defendant. The only finding of fact that I make on the basis of the form is that on 2 October 2012 Mr Fowlie filled out Part B of the form in the way that I have indicated.
As to the defendant's contention that the completion by Mr Fowlie of the form serves to highlight or demonstrate that as at 17 September 2012 the defendant did not know what Mr Fowlie's choice of superannuation fund would be, the state of the defendant's knowledge in this regard as at 17 September 2012 and thereafter is an issue to which I will return when I come to deal with the defendant's argument that the claimed loss is too remote to be recoverable.
The plaintiff's contract claim
I turn now to deal with each of the above posed questions for determination relating to the plaintiff's claim in contract.
Did the breach of contract cause the plaintiff to suffer the claimed loss?
Applicable legal principles
It is well established that in contract law (as in the law of negligence) the question whether a particular loss was caused by a particular breach is determined by applying the criteria of common sense. The relevant question is whether the defendant's breach was so connected with the plaintiff's loss that, as a matter of common sense and experience, it should be regarded as a cause of the loss.
Although it is necessary to show that the loss would not have occurred 'but for' the breach relied upon, this may not in all cases be sufficient if there are reasons of justice or policy against attributing causal responsibility: see generally March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506, 522; Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413, 418, 434, 456 ‑ 457; Henville v Walker [2001] HCA 52; (2001) 206 CLR 459, 493 ‑ 494; Newmarket Corporation Pty Ltd v Kee-Vee Properties Pty Ltd [2003] WASCA 157 [163]. It is implicit in the 'but for' test that if the loss in question would have occurred even if there had been no breach of contract, that breach cannot be regarded as the cause of the loss: Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232, 271.
It is not necessary for the relevant breach to be the exclusive or dominant cause of the loss. It is sufficient if the breach materially contributes to the loss suffered: Chappel v Hart (238, 244); Henville v Walker (493); Newmarket v Kee-Vee [164].
The causal link between a breach and loss can be severed by an act or event which occurs after, and independently of, the breach (novus actus interveniens). A plaintiff's own conduct can sever the causal link: Newmarket v Kee-Vee. However, an event or conduct cannot be relied upon as breaking the causal link if the risk of its occurrence was created or enlarged by the breach, or if the event or conduct was foreseeable as a 'serious possibility or a not unlikely occurrence' of the breach in question: Kenny & Good v MGICA; Newmarket v Kee-Vee.
Defendant's submissions
The defendant accepts that if it had not breached its contractual obligation under the CNGC Employee Agreement by failing to pay by the due dates the superannuation contributions for Mr Fowlie for the quarters ending 30 June 2013 and 30 September 2013 there would, at all material times, have been sufficient funds in Mr Fowlie's superannuation account to meet the cost of the premiums payable for the death cover. However, the defendant submits that despite this fact its breach of contract constituted by its failure to pay the superannuation contributions by the due dates was not the cause of the cancellation of Mr Fowlie's death cover because Mr Fowlie, armed with the knowledge of the situation as set out in AMP's letter to him dated 12 December 2013, could have taken a number of reasonable steps to pay, or have paid, into his superannuation account a sufficient amount to meet the cost of the death cover premiums. The reasonable steps which the defendant contends Mr Fowlie could have taken are those which it contends that Mr Fowlie should have taken in order to mitigate the claimed loss. In short the defendant contends, even if this was not expressly enunciated by its counsel, that Mr Fowlie's failure to take the asserted reasonable steps constituted a break in the chain of causation between the breach and the claimed loss.
Analysis and decision
In my view the defendant's breach of the CNGC Employee Agreement, constituted by the defendant's failure to pay superannuation contributions for Mr Fowlie for the quarters ending 30 June 2013 and 30 September 2013 on or before the due dates, was so connected with the cancellation of Mr Fowlie's death cover that, as a matter of common sense and experience, it should be regarded as being the cause of the cancellation of the cover and the consequential loss suffered by the plaintiff. To put the issue in terms of the 'but for' test, but for the defendant breaching the CNGC Employee Agreement by failing to make the superannuation contributions for Mr Fowlie on the due dates, the death cover would not have been cancelled because there would have been sufficient funds in Mr Fowlie's superannuation account to meet the premiums for the cover. Consequently, the death benefit would have been able to be paid to the plaintiff on Mr Fowlie's death.
Further, even it is assumed for present purposes that Mr Fowlie could have taken steps to pay, or have paid into his superannuation account, funds sufficient to enable the death cover premiums to be met (an issue to which I will return in due course), I do not consider that it can be said that Mr Fowlie's failure to take these positive steps amounted to a break in the chain of causation. In my view, a person's failure to take positive steps to remedy the natural and ordinary consequences of a breach of contract does not operate so as break the chain of causation between the breach and the loss. Mr Fowlie's failure to take the asserted reasonable steps goes, in my view, to the issue of mitigation of loss not causation.
For the reasons I have stated, I am satisfied that the defendant's admitted breach of its contractual obligation under the CNGC Employee Agreement caused the cancellation of Mr Fowlie's death cover and the consequential non‑payment of the death cover benefit to the plaintiff on the death of Mr Fowlie. It follows, in my opinion, that the plaintiff has established that the defendant's breach of contract caused the plaintiff to suffer the claimed loss.
Is the claimed loss too remote to be recoverable?
Applicable legal principles
The fundamental principle governing the award of damages in contractual cases is that if a plaintiff suffers loss by reason of a breach of contract the object of the award of damages is to place the plaintiff, so far as money can do so, in the same position as he or she would have been in had the contract been performed: Tab Corp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272 [13]. However, there is some limitation placed on the operation of this fundamental principle. The limitation is that a plaintiff's loss or damage, even if caused by the defendant's breach of contract, must not be too remote: Burns v MAN Automotive (Aust) Pty Ltd [1986] HCA 81; (1986) 161 CLR 653, 667, 672 ‑ 673. If the loss is too remote it is not recoverable. Whether the loss is too remote to be recoverable is a question of fact: Burns v MAN Automotive (675).
In deciding if a plaintiff's loss is too remote the question is whether, on the information available to the defendant when the contract was made, the defendant should, or a reasonable person in the defendant's position would, have realised that such a loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or loss of that kind should have been within the defendant's contemplation: Koufos v C Czarkinow Ltd (The Herron II) [1969] 1 AC 350, 385; Burns v MAN Automotive (667, 672 ‑ 673); Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 92, 99; Motium Pty Ltd v Arrow Electronics Australia Pty Ltd [2011] WASCA 65 [72]. To put it another way, loss suffered by a plaintiff as a result of the defendant's breach of contract will not be too remote to be recoverable if, at the time the contract is made, the defendant should, or a reasonable person in the defendant's position would, have realised that a loss such as the plaintiff claims was sufficiently likely to flow from the breach to make it proper to hold that the loss flowed from the breach, or that such a loss should have been within the defendant's contemplation: Motium v Arrow Electronics [73].
Defendant's submissions
As I have already pointed out, the defendant does not dispute the quantification of the plaintiff's claimed loss, being the benefit that would have been paid to the plaintiff if the death cover had not been cancelled. Rather, the defendant's submission is that the claimed loss is too remote to be recoverable because on the information that was available to the defendant at the time that Mr Fowlie commenced employment with the defendant and at the time that the CNGC Employee Agreement was made:
1.The defendant should not, or a reasonable person in the defendant's position would not, have realised that the loss was sufficiently likely to flow from the breach; and
2.The loss should not have been within the defendant's contemplation.
In support of this primary submission the defendant advances a number of subsidiary contentions. The subsidiary contentions are as follows.
First, the defendant was not responsible for providing death cover to Mr Fowlie or funding the payment of his death cover premiums. Rather, death cover was an optional benefit of the AMP Fund which Mr Fowlie could, if he wished, take up and maintain at his own expense. That this was the case is apparent from the letter from AMP to Mr Floxton of the defendant dated 1 August 2012 and the Membership Summary that was sent to Mr Floxton under cover of the letter, the terms of the letter from AXA to Mr Fowlie dated 1 August 2012, the terms of the PDS, and the terms of the Trust Deed (specifically Rule 9.2 and Schedule A, Rule A1.1(a)).
Second, at the time that the CNGC Employee Agreement was made the defendant was not privy to and had no basis for knowing:
1.What Mr Fowlie's choice of superannuation fund was or would be;
2.Whether Mr Fowlie had or would take up and maintain the optional insurance cover available under the AMP Fund;
3.How much Mr Fowlie's particular premiums for the insurance cover would be if he took up and maintained the insurance available as part of the AMP Fund;
4.What the balance of Mr Fowlie's superannuation account was likely to be at any particular time; and
5.Whether Mr Fowlie would make any additional contributions into his superannuation account.
Third, as is revealed by AXA's letter to Mr Fowlie dated 1 August 2012, AXA's letter to Mr Fowlie dated 17 September 2012, AMP's letter to Mr Fowlie dated 21 August 2013, AMP's letter to Mr Fowlie dated 12 December 2013, and AMP's letter to Mr Fowlie dated 14 January 2014, all communications relating to Mr Fowlie's superannuation account with the AMP Fund were between the administrators of the AMP Fund and Mr Fowlie personally. The defendant was not privy to these communications.
In relation to the first of the above referred to contentions I note that Rule 9.2 of the Trust Deed, which is headed 'premiums payable', is in the following terms:
In circumstances where the Assets of the Fund are represented wholly by a Policy the Trustee must apply pursuant to Rule 8 all contributions, transfers and other receipts of the Fund as the premium under that Policy but in any other circumstance, the Trustee must pay premiums in respect of each Policy from the Cash Float Account (if any) or from such other Accounts as the Trustee considers to be appropriate and where the context so requires shall debit the amount paid to:
(a)the Contribution Accounts of the relevant Member; or
(b)any other Account of the relevant Plan,
or partly from one and partly from the other and in such proportion as the Trustee shall determine.
Rule A1.1(a) of Schedule A to the Trust Deed is in the following terms:
The Group Division shall be comprised of:
(a)Plans where a Plan offers each employee who becomes a Member of that Plan superannuation benefits, including optional insured benefits payable in the event of death, total and permanent disablement and total but temporary disablement;
…
In summary, I am left on the one hand with the untested and what I perceive to be somewhat problematic evidence of Ms Pietersen, and on the other hand with the clear, unambiguous and tested evidence of Ms Reid. When I weigh these two bodies of evidence in the context of all of the other evidence adduced, I prefer the evidence of Ms Reid. I accept Ms Reid's evidence on the point in question. It follows that I find that Ms Pietersen did not on 31 December 2013 or on any date thereafter show to Ms Reid the letter from AMP to Mr Fowlie dated 12 December 2013.
I note that it was in this context pointed out on behalf of the defendant that there is no reference in the minutes for the meeting on 31 December 2013, or for that matter in the minutes of any subsequent meetings that both Ms Pietersen and Ms Reid attended prior to Ms Pietersen being made redundant, to Ms Pietersen raising the issue of the letter with Ms Reid or to Ms Reid raising the issue of Mr Fowlie's superannuation at a meeting. However, I do not consider this to be a matter of significance. Ms Pietersen does not say in her affidavit that she raised the matter of Mr Fowlie's letter in the meeting. Further, she was only at the meetings in her capacity as the Administration Officer responsible for taking the minutes of the meetings. She was not present at the meeting as a person who was contributing to the discussion about things like the defendant's financial position or any other matters. Further, the minutes of meetings to the extent that they do make reference to queries being raised by employees about the superannuation situation, do not name the employees in question. Accordingly, I do not consider the absence of any reference in any of the minutes to either Ms Pietersen or Ms Reid raising the issue of Mr Fowlie's superannuation to be of significance. It is not a matter which has influenced me in arriving at my above stated finding of fact.
Did the defendant owe a duty of care to Mr Fowlie to ensure that it would pay the required superannuation contributions so that the death cover would not lapse?
As I have already indicated, both parties agree that a pre‑condition to the establishment of the alleged duty of care is that Ms Pietersen did show Ms Reid the letter from AMP to Mr Fowlie dated 12 December 2013. It follows, in light of my above expressed finding in relation to this issue, that the answer to the question whether the defendant owed to Mr Fowlie the alleged duty of care must necessarily be in the negative. Nonetheless, I propose for the benefit of the parties and for the sake of completeness to address as briefly as possible the question whether the defendant owed the alleged duty of care, and the other questions that I have posed for my determination in relation to the plaintiff's negligence claim, on the assumption that the letter was, contrary to my finding, shown to Ms Reid.
Applicable legal principles
The relationship that existed between Mr Fowlie and the defendant, namely that of employee and employer, is of course one of those categories of relationship in which an established duty of care exists, namely a duty owed by the employer to the employee to prevent injury. However, and as both parties accept, it cannot be said that there is an established duty of care owed by an employer to an employee to prevent the employee suffering loss of a benefit in the form of loss of insurance cover.
Given that the alleged duty of care does not fall within a category in respect of which it has been established that a duty of care exists, it is necessary for me to consider whether there are a sufficient number of features that are significant to the type of case under consideration, sometimes referred to as 'salient features', which combine so as to constitute a sufficiently close relationship between the plaintiff and the defendant to give rise to the alleged duty of care. Previous decisions in analogous cases may provide an important guide to the determination of whether a novel type of case demonstrates sufficient salient features to warrant the imposition of a duty of care: see generally Hill v Van Erp [1997] HCA 9; (1997) 188 CLR 159, 176 179, 189, 210, 237 239; Pyrenees Shire Council v Day [1998] HCA 3; (1998) 192 CLR 330 [73] ‑ [100], [278]; Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180 [70] - [76], [107], [109] ‑ [110], [281] - [282], [332] - [335]; Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; (1999) 200 CLR 1 [3], [71] - [73], [77] - [78], [149], [222], [270] – [274]; Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61; (2000) 205 CLR 254 [60] - [61]; Brodie v Singleton Shire Council [2001] HCA 29; (2001) 206 CLR 512 [315] - [321]; Sullivan v Moody [2001] HCA 59; (2001) 207 CLR 562 [42] - [61]; Tame v New South Wales [2002] HCA 35; (2002) 211 CLR 317 [96] - [108], [268] - [272]; Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; (2002) 211 CLR 540 [81], [99], [234] - [244]; Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515 [16] - [18]; Swick Nominees Pty Ltd v LeRoi International Inc (No 2) [2015] WASCA 35 [384] ‑ [387]; Hardie Finance Corporation v Ahern [354] ‑ [376]; Marsh v Baxter [295] ‑ [312], [675] ‑ [698].
It is apparent from the cases cited in the previous par, that depending on the type of case at hand the salient features that are often present in relationships in respect of which a duty of care has been held to exist include the following:
1.The alleged duty did not give rise to the imposition of liability in an indeterminate amount for an indeterminate time to an indeterminate class;
2.The alleged duty related to a positive act as opposed to a mere failure to act;
3.The harm suffered by the plaintiff was a direct result of the conduct of the defendant;
4.The defendant assumed responsibility for preventing injury to the plaintiff;
5.The defendant knew or ought to have known of the risk of injury to the plaintiff;
6.The defendant had the ability to control the risk of injury to the plaintiff;
7.The plaintiff placed reliance on the relevant conduct of the defendant;
8.The plaintiff was vulnerable to risk of injury from the defendant's conduct, that is, the plaintiff was not able to protect him or herself from the defendant's want of reasonable care either entirely or in a way that would cast the consequences of loss on the defendant; and
9.The plaintiff's vulnerability, if any, was the result of something done by the defendant.
It has been recognised that vulnerability in the sense described above is an important if not essential factor to the existence of a duty of care in pure economic loss cases: Marsh v Baxter [311].
Whether a duty of care exists is to be determined by reference to the salient features that existed immediately prior to the alleged negligent conduct of the defendant and not thereafter: Vairy v Wyong Shire Council [2005] HCA 63; (2005) 223 CLR 422 [49], [145]; Perre v Apand [112], [336]; Hardie Finance Corporation v Ahern [360].
Parties' submissions
The plaintiff's submission, which is of course founded on the proposition that the defendant did acquire knowledge of the AMP letter, is that there are sufficient salient features in the present case to justify the imposition on the defendant of the alleged duty of care.
The defendant's position is that the alleged duty did not come into existence even if it did, contrary to it primary position, acquire knowledge of the contents of the AMP letter. The defendant submits that even in these circumstances there is an insufficient number of salient features present in the relationship that existed between it and Mr Fowlie to justify the imposition of the alleged duty of care. I note that the defendant does not contend that the way in which the plaintiff has framed the alleged duty of care is in any way problematic.
Analysis and decision
Neither the plaintiff nor the defendant drew my attention to any analogous case in which a duty of care has been held to exist. Therefore, without the benefit of any analogous case from which I can derive assistance, I turn to consider what, if any, of the above identified salient features do exist in the present case and whether any such salient features are sufficient to justify the imposition on the defendant of the duty of care alleged.
A number of the above identified salient features do, in my opinion, exist in the present case.
The alleged duty does not give rise to the spectre of indeterminate liability.
The alleged duty asserts an obligation on the part of the defendant to perform a positive act, namely to make the required superannuation contributions in accordance with its contractual obligation.
The harm suffered by Mr Fowlie (and hence the plaintiff) was a direct result of the conduct of the defendant. If the defendant had paid the superannuation contributions for Mr Fowlie for the quarters ending 30 June 2013 and 30 September 2013 on or before the due dates, there would have been sufficient funds in Mr Fowlie's superannuation account to meet the death cover insurance premiums with the result that Mr Fowlie's death cover would not have been cancelled.
On the assumption that contrary to my finding of fact Ms Pietersen did show the AMP letter to Ms Reid, the defendant knew or ought to have known that there was at least a risk that if it did not pay the superannuation contributions for the June 2013 and September 2013 quarters on or before 11 January 2014, there would be insufficient funds in Mr Fowlie's superannuation account to meet the death cover insurance premiums with the result that the death cover would be cancelled and the death cover benefit would not be paid in the event of Mr Fowlie's death.
The defendant did have the ability to, if not control, then at least reduce the risk of harm to Mr Fowlie (and the plaintiff) constituted by the loss of the death cover by paying the already due superannuation contributions for the June 2013 and September 2013 quarters on or before 11 January 2014.
Mr Fowlie did place reliance on the relevant conduct of the defendant. More specifically, Mr Fowlie relied on the defendant to pay the superannuation contributions in accordance with its contractual obligation in order to enable him to meet the cost of his death cover insurance premiums.
In addition to the above salient features that are present in this case, there is one further feature which does exist in the present case and which also points, in my view, in favour of the conclusion that the alleged duty should be held to exist. I refer here to the relationship of employer and employee that existed between the defendant and Mr Fowlie.
On the other side of the ledger, there are two of the above identified salient features that in my opinion do not exist in the present case. The first is the assumption of responsibility feature. The defendant did not at any stage assume responsibility for preventing the loss of Mr Fowlie's death cover insurance. The second is the vulnerability to risk of injury feature. Mr Fowlie was able to protect himself from the risk of the loss of the death cover insurance that arose from the defendant's failure to pay the superannuation contributions on their due dates. He was able to do so by taking the steps that I have found that he should have taken in order to mitigate the loss caused by the defendant's breach of its contractual obligation.
Clearly, there are more salient features present in this case than are absent. There is the added factor of the relationship of employer and employee that existed between the defendant and Mr Fowlie independently of the salient features. On the other hand, the absence of two salient features, one of which is the 'important' vulnerability feature, is not without significance.
Ultimately I have reached the conclusion that the salient features that were at the relevant time present in this case, and the relationship of employer and employee that existed between Mr Fowlie and the defendant, are in combination sufficient to justify the conclusion that the relationship between the defendant and Mr Fowlie was of such closeness as to give rise to a duty of care on the part of the defendant of a type similar to that alleged by the plaintiff. However, and notwithstanding the absence of any complaint on the part of the defendant in relation to the way in which the plaintiff frames the alleged duty of care, I do not accept that the duty of care that I am satisfied came into existence imposed on the defendant an obligation to ensure that Mr Fowlie's insurance cover would not lapse. I say this for two reasons. First, because the defendant's contractual obligation was to do no more than pay superannuation contributions for Mr Fowlie in accordance with the provisions of the Superannuation Guarantee (Administration) Act. Second because the defendant, even on the assumption contrary to my finding of fact that it did have knowledge of the contents of the AMP letter, did not have any definite knowledge of the amount of Mr Fowlie's death cover premiums, and did not have any definite knowledge as to whether payment of the superannuation contributions that it was contractually obliged to make would be sufficient to meet the cost of the premiums. The payment of the premiums was not the defendant's responsibility.
In my opinion the duty of care owed by the defendant to Mr Fowlie was a duty to take reasonable care to prevent Mr Fowlie suffering the loss, comprised of the cancellation of his death cover insurance, as a result of its failure to pay by the due dates the superannuation contributions for Mr Fowlie for the quarters ending June 2013 and September 2013.
Did the defendant breach the duty of care?
The issue of breach of duty is governed by div 2 of pt 1A of the CLA. Division 2 of pt 1A is comprised of s 5B.
If I had found that the defendant did owe to Mr Fowlie a duty to take reasonable care to prevent Mr Fowlie suffering the loss of his death cover insurance as a result of its failure to pay by the due dates the superannuation contributions for Mr Fowlie for the quarters ending June 2013 and September 2013, I would also have found, taking into account the matters specified in s 5B(1) of the CLA, that the defendant, by failing to pay prior to 11 January 2014 the superannuation contributions that were due and owing for the June 2013 and September 2013 quarters, breached the duty of care.
Did the breach of duty cause the plaintiff to suffer the claimed loss and damage?
The issue of causation is governed by div 3 of pt 1A of the CLA. Division 3 of pt 1A is comprised of s 5C and s 5D.
If I had found that the defendant did owe to Mr Fowlie the duty of care that I have identified above, I would also have found that the defendant's breach of duty, comprised of its failure to pay prior to 11 January 2014 the superannuation contributions that were due and owing for the June 2013 and September 2013 quarters, was a necessary condition of the harm suffered by the plaintiff (that is, the loss of the death cover benefit), and that it was appropriate for the scope of the defendant's liability to extend to the plaintiff's loss: CLA, s 5C(1)(a), s 5C(1)(b). I would have arrived at this conclusion for substantially the same reasons as those which I have given for finding that the defendant's breach of contract caused the plaintiff to suffer the loss of the death cover benefit.
Is the claimed loss too remote to be recoverable?
The test for remoteness in negligence is different to that in contract. In the law of negligence the loss caused by a breach of duty will be too remote to be recoverable if it was of a type or kind that was not a reasonably foreseeable consequence of the breach: Overseas Tankship (UK) Ltd v Morts Doc and Engineering Co Ltd,The Wagon Mound (No 1) [1961] AC 388; Chapman v Hearse [1961] HCA 46; (1961) 106 CLR 112. In general terms consequences are foreseeable if they not far‑fetched or fanciful: Overseas Tankship (UK) v The Miller Steamship Co, The Wagon Mound (No 2) [1967] 1 AC 617, 641 - 644; Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40, 47 ‑ 48.
The defendant's submissions that the claimed loss is too remote from any breach of duty to be recoverable are in essence the same as those advanced in support of its argument that any loss suffered by the plaintiff as a result of its breach of contract is too remote to be recoverable. Thus the defendant's submissions in this regard are at least in part founded on the assertion that Ms Pietersen did not at any time show to Ms Reid the letter from AMP to Mr Fowlie dated 12 December 2013. The defendant did not address the question whether I should still conclude that the claimed loss is too remote to be recoverable even if I find (contrary to the finding of fact that I have actually made) that Ms Pietersen did show to Ms Reid the AMP letter.
As I have already pointed out, the defendant did not have any definite knowledge of the amount of Mr Fowlie's insurance premiums, and did not have any definite knowledge as to whether payment of the superannuation contributions that it was contractually obliged to make would be sufficient to meet the cost of the insurance premiums. Nonetheless, even taking into account these matters it is my opinion that the type of loss suffered by the plaintiff, namely the loss of the death cover benefit payment, was a reasonably foreseeable consequence of the defendant's breach of duty, comprised of its failure to pay prior to 11 January 2014 the superannuation contributions that were due and owing for the June 2013 and September 2013 quarters. This type of loss could not, in my view, be described as far-fetched or fanciful. This is particularly so given that the terms of AMP's letter to Mr Fowlie dated 12 December 2013 by its terms clearly linked, if not expressly then by implication, the non-receipt of the superannuation contributions with the fact that there were insufficient funds in the superannuation account to pay the death cover insurance premiums.
Should the amount of damages payable be reduced to nil because Mr Fowlie failed to mitigate the loss?
If I had found that the defendant did owe to Mr Fowlie the duty of care that I have identified above, I would also have found that Mr Fowlie failed to mitigate the loss caused to the plaintiff by the breach of the duty. I would have come to this conclusion for the same reasons as I have given for concluding that Mr Fowlie failed to mitigate the loss caused by the defendant's breach of contract.
Conclusion
For the reasons I have stated, I dismiss the plaintiff's claim in negligence, but uphold the plaintiff's claim for breach of contract. I award nominal damages in the amount of $100.
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