Tobin v Commonwealth
[2013] ACTSC 240
•16 December 2013
WILLIAM KEITH TOBIN V COMMONWEALTH OF AUSTRALIA
[2013] ACTSC 240 (16 December 2013)
TORTS – Negligence – negligent misstatement – pure economic loss – negligent misstatement proven – common law negligence – breach of statutory duty – decided in accordance with Meredith v Commonwealth (No 2) [2013] ACTSC 221
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 – same approach as Guy v Commonwealth [2013] ACTSC 128 – leave granted to apply for award of additional damages if liability assessed
Limitation Act 1986 (ACT)
Superannuation Act 1976 (Cth), s 11
Court Procedures Rules 2006 (ACT)
Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185
Commonwealth v Cornwell (2007) 229 CLR 519
Cornwell v Commonwealth (2005) Aust Torts Rep 81-779
Guy v Commonwealth [2013] ACTSC 128
Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2003) Aust Tort Rep 81-692
Knight v Commonwealth [2013] ACTSC 238
Meredith v Commonwealth (No 2) [2013] ACTSC 221
Mutual Life and Citizens’ Assurance Co Ltd v Evatt (1968) 122 CLR 556
Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management (2012) 42 WAR 287
No. SC 751 of 2008
Judge: Refshauge J
Supreme Court of the ACT
Date: 16 December 2013
IN THE SUPREME COURT OF THE )
) No. SC 751 of 2008
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:WILLIAM KEITH TOBIN
Plaintiff
AND:COMMONWEALTH OF AUSTRALIA
Defendant
ORDER
Judge: Refshauge J
Date: 16 December 2013
Place: Canberra
THE COURT ORDERS THAT:
There be judgment for William Keith Tobin against the Commonwealth of Australia.
The parties provide appropriate material in accordance with these reasons from which the damages payable can be quantified.
The parties be heard as to costs.
When he left school, William Keith Tobin, the plaintiff, commenced work with a dry cleaning business in Sydney, but when his son required medical attention in Canberra, he applied for a position with the Commonwealth Department of the Interior.
In late 1973, he was interviewed at the head office of the Department, at Electricity House, London Circuit, Canberra City, and was offered a position as a forest worker.
He started at a depot operated by the Department, the Uriarra depot, and he was offered and accepted a house at the nearby settlement for himself and his family.
Mr Tobin says there was no discussion at his original employment interview about superannuation.
He says that he was not informed later of any eligibility that he may have to join a Commonwealth superannuation scheme.
He says, further, that he was subsequently told on a number of occasions that, as he was a temporary employee, he was not eligible for Commonwealth superannuation. He was, in fact, eligible to apply for admission to a Commonwealth superannuation scheme.
As a result, in 2008, he commenced these proceedings for recovery of damages and loss suffered because of the incorrect information he had been told and the failure by the Commonwealth to protect his interests as to superannuation.
These proceedings are associated with other proceedings, in particular those in which I have given judgment in Meredith v Commonwealth (No 2) [2013] ACTSC 221.
The proceedings were heard together with that case and others in the series and the evidence admitted in the hearing of Meredith v Commonwealth (No 2) was admitted in this case, as in other cases.
Each case, however, had some differences both in relation to liability and, inevitably, in relation to the quantum of any damages to be awarded, should liability be found for the plaintiff.
It is, therefore, necessary to deal with each case separately, but I do not need to re-state much of the evidence which has already been referred to in Meredith v Commonwealth (No 2), nor address the legal principles and issues which I have already resolved in that case.
For example, in Meredith v Commonwealth (No 2), I described the various Commonwealth superannuation schemes (at [23]-[26]); I rely on the description that I there set out. I also use the abbreviations there used, CSS for the Commonwealth Superannuation Scheme and PSS for the Public Sector Superannuation Scheme. Where the various schemes are referred to generally, I call them a Commonwealth superannuation scheme.
THE PLEADINGS
As in the other cases, Mr Tobin pleaded three causes of action: negligent misstatement, negligence and breach of statutory duty.
The pleadings were relevantly identical to those in Meredith v Commonwealth (No 2) which I have described in that decision (at [8]-[22]). I do not need to repeat them, but rely on what I there said. References to Mr Meredith there are, of course, to Mr Tobin here. Some of the particulars are clearly different, but it is not necessary at this stage to detail those differences, although, where relevant, they will be taken into account in the decision.
Each of the causes of action pleaded by Mr Tobin were denied by the Commonwealth, and certain defences pleaded, including that all claims were barred by statute, the Limitation Act 1986 (ACT), and that any loss or damage suffered by Mr Tobin was caused or contributed to by him, that is contributory negligence.
THE EVIDENCE
Mr Tobin was born in 1947 and completed Year 10 in about 1963. As noted above (at [1]), he commenced employment with a dry cleaning business in Sydney where he worked for about ten years.
He married in 1967 and his children were born in 1968 and 1973.
His youngest child, a son, required medical attention in Canberra so, as referred to above (at [1]), he applied for a position with the then Commonwealth Department of the Interior by lodging a written application in late 1973.
He attended an interview but cannot recall by whom he was interviewed. He was offered a position with the agency known as “ACT Forests”. I have described that agency in Meredith v Commonwealth (No 2) (at [4]) and, although it appears to have changed its name and status from time to time, I will, as I did in that decision, refer to the agency as “ACT Forests”.
Mr Tobin was directed to attend a medical examination with the Commonwealth Medical Officer and did so. He said that he “obtained a clearance”, which I assume means that the medical examination showed no medical issues relating to his employment.
He described then what happened as follows. I have set out this evidence in Meredith v Commonwealth (No 2) (at [135]) but since what happened is an important part of these proceedings, I set out the words of his affidavit in full:
7.I attended the public access window at the place directed and spoke to a male clerk and presented the medical clearance. The clerk appeared to be in a hurry and he filled in the details on the card (in fact, he was in such a hurry that he wrote 1973 instead of 1974) and told me he was going off to morning tea. He showed me two places on the document to sign. I did as I was told, and did not have a chance to read the details on the card. He then advised me that he would fill in the balance of the details and the paperwork would be sent to Bill Bates, who was the supervisor at Forestry. I was directed to report to Mr Bates. As he left, the personnel clerk pointed to some pamphlets, which were in a stand against one of the walls, and told me that I could take some of them if I wished and then he left. I did not take any of the pamphlets, as I did not see the point in doing so.
8. My personnel file contains a copy of a document entitled ‘Employee History and Leave Card’, which bears my signature in two places. One place was an affirmation of employment, and the other place was next to the statement ‘Received ‘Conditions of Service Pamphlet’’. I understand that this is the document referred to in paragraph 7. I did not receive a copy of any pamphlets. I accept that I signed this form at the direction of the clerk but was not given an opportunity to read the form, as explained in paragraph 7. I also accept that my attention was drawn to a stand with a variety of pamphlets on it, but I did not take any and I was certainly not told that I have to take any. I have no idea of the content of the pamphlets, but I can say that there were different pamphlets of different sizes.
Mr Tobin’s wife, Elaine Tobin, also swore an affidavit and she said that she attended with Mr Tobin when he signed up. Her evidence was:
In fact, I had gone with Bill to Civic in 1974 when he signed up for the job with Forestry. It was the first time that the kids had been in a lift. I remember the clerk rudely pulling the shutter down because he was in a hurry. I remember that Bill was not given any paperwork but the clerk saying ‘there are the pamphlets, go for your life’.
Mr Tobin was cross-examined on his evidence. It was suggested to him that he could be wrong about not being given any papers to take away but he said that he was “definitely not wrong about that”. He said, “There was [sic] no papers handed to me at all”.
When asked about his original starting, he said he was given no papers to take away and the clerk had told him that he, the clerk, would ring William (Bill) Bates, the Overseer at the Uriarra depot, to tell him everything was “OK” and that the papers would be sent to Mr Bates.
It was then suggested to him that he did not think he took any papers away with him because he could not recall seeing them with records that he used to keep, but he stated again that he definitely did not get any papers or pamphlets at all.
He was referred to his later reference, in his affidavit, to where he said “I cannot recall getting any such document”, and he accepted that it could have been interpreted as though he might have received a document but did not remember, but he repeated that he “definitely did not get any documents from the clerk”.
Mrs Tobin was not cross-examined at all, including on what she said on this issue.
It is, perhaps, relevant to refer at this point to some evidence of Ms Jane Wilson, who was the employment officer in the Department from the early 1970s until about 1979 or 1980.
In her affidavit, she described her role which was to interview seasonal workers and sign up new bus drivers, forestry employees and parks and gardens employees at the Department of the Interior.
She was required to sign the form headed “Application for Employment – Industrial”, which was completed by applicants for such positions.
She said that she would hand out a “Conditions of Service” document to employees making the application, when they completed the form.
She said she did not recall telling any employees to sign the reverse of the form if they were not, in fact, given a copy of the “Conditions of Service” document.
She did say:
Sometimes we ran out of the Conditions and I couldn’t give a copy to the new employee. If this occurred I do not know whether the Conditions were later sent to the depot for the employee.
Ms Wilson also gave oral evidence; she indicated that there was only one employment officer at the time, although she said “other people did come and do my position if I wasn’t there in the room or if I had too many people which, at that stage with seasonals coming in you had about 60 to 80 people at a time”.
She was, however, “the only one with that designation”, namely employment officer, and so, presumably, the only one who could sign the document.
The document actually signed by Mr Tobin was not in evidence, so it is not possible to confirm the identity of the clerk who attended to Mr Tobin. In any event, on the basis of Ms Wilson’s evidence, it may not have been her, even if she signed the document.
What was significant in the “Conditions of Service” document was the last paragraph, which was as follows:
Superannuation/Provident Fund
After not less than three years or previous employment involving membership of a Superannuation or Retirement Benefit Scheme continuous employment and provided you are aged less than 58 years at the time, you may apply for admittance to the Commonwealth superannuation Fund.
Application forms are available on request from the Industrial Section.
There was no evidence about what was contained in the pamphlets to which Mr Tobin’s attention was directed, and no evidence about whether they contained any information about superannuation.
A similar document to the “Conditions of Service” document referred to above (at [31]) was annexed to the affidavit of Robert Hunt who, during the time Ms Wilson was employment officer, was an industrial officer, personnel officer, assistant inspector and industrial relations officer. He described this document as “a document from 1972”. Significantly, it did not have the last sentence, the second paragraph, which is in the excerpt set out above (at [37]), which referred explicitly to the availability of application forms.
Ms Wilson was a little unsure about the two documents, but thought that the one with the two paragraphs about superannuation was the one she used, “[b]ecause it just, it’s in my memory, sort of. That’s it”. She thought that the one to which she referred may have been used later in the decade, about 1975. She had no particular reason for remembering that.
It appears that, in any event, the document had two parts, the “General Information for Employees”, a one page document, and the “Conditions of Service”, a two page document. She could not recall whether they were physically attached to each other.
No-one else was asked about this specific issue.
On the basis of the evidence, I am satisfied that Mr Tobin did not receive a “Conditions of Service” document when he commenced his employment with ACT Forests.
Mr Tobin began with ACT Forests in early 1974. When he commenced work, he understood that his position was a full-time ongoing one and was not seasonal nor casual. He intended to remain indefinitely employed with the Commonwealth.
He believed that he reported to Mr Bates as the Overseer at the Uriarra depot.
His work as a forest worker involved all aspects of forest working, including planting trees, weed management, clearing forest areas and maintenance of the forest. He was, at times, transferred to other duties, including chain saw operator, fire tower watch and acting leading hand. He became a ranger in 1986.
He confirmed that the managers of the depot sometimes spoke to the workers at the beginning of the day about jobs for that day, but would also communicate through Leading Hands and Gangers. There were, from time to time, meetings, mainly union meetings, or seminars, which he remembered later, about redundancies but information was usually transferred by word of mouth.
He described a noticeboard on the wall of the recreation room which sometimes displayed fire duties rosters, information about the Transport Workers Union, some silly photos, and information about safety. He never saw anything about superannuation on the noticeboard.
In late 1974, about six months after he started working with ACT Forests, he had a conversation with some of the members of his gang and the discussion turned to the issue of superannuation. He did not recall the precise words but it was suggested that it “was a good thing to be in” and the question arose as to whether the workers were eligible. One of the gang members, Kevin Blake, volunteered to ask Mr Bates about superannuation. Mr Tobin saw Mr Blake go to Mr Bates’ office. He knew that the Forester was not there at the time.
A few minutes later, Mr Blake came back from the office and said words to the best of Mr Tobin’s recollection, “Bill said we are only here as casuals, the only people who are permanent are Bill [Bates], Tom [Bateup], Atillio [Padovan] and Ashley [Ritherdon]. They are able to join the super but we cannot get superannuation”.
This surprised Mr Tobin because he thought he was a permanent employee, but, as the information had come from Mr Bates, he assumed it was correct and there was no further discussion. Mr Tobin proceeded on the basis that he was ineligible.
Mr Blake also gave evidence, which is set out in Meredith v Commonwealth (No 2) at [93]-[99]. It is consistent with the evidence given by Mr Tobin.
As is also noted there, Mr Bates deposed in an affidavit that he could not recall the conversation, but Mr Blake was adamant that it had occurred and this is confirmed by the evidence of Mr Tobin.
Interestingly, Graham McKenzie-Smith, the Forester, does not recall Mr Blake working at the Uriarra depot at all.
In cross-examination, it was put to Mr Bates that he did have an idea “a couple of years ago” that there was some confusion about eligibility of the men to join a Commonwealth superannuation scheme and that may have been the explanation for the wrong advice being given. He agreed with that. He also agreed that his memory of events may have been better a couple of years ago.
I also note some difficulties with Mr Bates’ memory referred to in
Meredith v Commonwealth (No 2)at [341]-[345], [355]-[356].
Having carefully considered the evidence, I am satisfied that the conversation occurred as set out above (at [49]-[50]).
Mr Tobin also recalled a subsequent conversation with his Leading Hand, Wayne Meredith. His evidence was:
I was travelling with Mr Meredith and other workers in a forestry vehicle (Toyota Landcruiser) and the issue of superannuation came up in conversation. I recall that Frank Casey was sitting at the front of the vehicle with Wayne Meredith. I think that Len Taylor was in the vehicle. My recollection is that one of the workers (I think Frank) said that Bill Bates had told Kevin Blake that the only permanent employees eligible for superannuation were Bill Bates, Tom Bateup, Atillio Padovan and Ashley Ritherdon. Wayne said: ‘Yes, I think that Bill, Tom, Padovan and Ash are the only permanents at forestry.’ Wayne Meredith was a leading hand and higher up in the hierarchy than I was and I trusted the information that he provided to me.
Mr Tobin was cross-examined about this conversation. He was reasonably certain it did not happen in 1975; he thought it was 1976 but it could have been 1977. He thought, however, that it was unlikely to have occurred in 1977, but he was not absolutely certain.
Mr Meredith had no specific recollection of this event. His evidence was, however, supportive. I summarised it in Meredith v Commonwealth (No 2) (at [43]):
Mr Meredith said that the question of superannuation was frequently discussed by workers and himself around this time. He passed on to the other workers the information he had been told by Mr Bates, Mr Murray and Mr Edgerly. There was a general feeling that this was unfair.
When challenged as to whether the conversations with Mr Blake and Mr Meredith occurred, Mr Tobin asserted emphatically that they did, stating that he used to keep diaries containing what had happened. Unfortunately, those diaries were also lost in the 2003 Canberra fires. He was, however, asked when he was first requested to remember the conversations and he said that it would be in about 1996. He affirmed, however, that they were clear in his memory.
Having regard to the evidence, including all the evidence in Meredith v Commonwealth (No 2), I am satisfied that the conversation with Mr Meredith also occurred.
Mr Tobin was asked about the meeting where he was first told that he could join a Commonwealth superannuation scheme and he confirmed that he joined straight away.
Mr Tobin acknowledged that superannuation was a topic of conversation amongst forestry workers at the depot, though he said it was not a “regular” topic of conversation. It seemed to arise when a new person started or someone had finished probation and was told that they could not join a Commonwealth superannuation scheme.
Mr Tobin said that the next he heard anything significant about superannuation was sometime in the mid 1980s, when a member of his gang told him that arrangements have been made for a private superannuation representative to attend at the Uriarra depot and he was invited to attend the meeting.
Mr Tobin said that this was the first time it had occurred to him that he could access private superannuation or insurance, but, because of some of the conditions, he chose not to take out a policy. He made no further inquiries.
He was a member of the Australian Workers Union (AWU) from 1974 to 2001 and the union representative between 1985 and 2001. He said, that prior to 1985, he had received no information from the AWU about Commonwealth superannuation.
In 1986, Mr Tobin became a Ranger at another depot, the Stromlo depot. As at the Uriarra depot, management communicated by word of mouth and there was also a box at the depot where messages could be left.
At about this time, Mr Tobin was involved with efforts made by Rangers, including himself, to have their positions re-classified as public service positions.
Mr Tobin described certain events at the meeting which was called to vote on whether Rangers should become permanent public servants. These events were also described in Meredith v Commonwealth (No 2) (at [148]). He said:
Before the vote, during discussion about whether we should become public servants, someone said that we would have to be in the Commonwealth superannuation scheme and we would have to pay 3 percent to 10 percent of our salary. I stood up and said: ‘Wait a moment. Now you’re telling me I have to pay superannuation when before I was told I couldn’t pay super.’
Mr Tobin was admitted to the PSS on 26 September 1991, contributing 5% of his salary. He was required to undergo a medical examination and did so with no apparent issues.
He said that he had known during his time as a forest worker that there was substantial benefits from being a contributor to a Commonwealth superannuation scheme. He also said that he would have been able to make the contributions without too much difficulty, confirmed by the fact that he made a contribution to the PSS in excess of the minimum required.
I have described in Meredith v Commonwealth(No 2) (at [25]-[26]) the circumstances under which payments were made to the Australian Government Employees Superannuation Trust (AGEST).
Contributions had been paid on Mr Tobin’s behalf to AGEST and he transferred those funds on 17 March 1995 into his PSS account.
In March 1996, he reduced his contribution rate to the PSS from the 5%, at which he started contributing, to 3% but increased it to 10% in December 1996. In August 2000, he again decreased his PSS contribution rate to 3% due to expenses he was paying at the time. His recollection was that these were occasions when he purchased a car and had expenses relating to his house. His preference was to have cash to purchase those items, knowing that he could increase his superannuation contribution at a later stage.
In early 2001, redundancy offers were made to forest workers. The discussions included providing the workers with an estimate of final benefits and information about accessing their PSS benefit. He attended a meeting at the Stromlo depot. He asked the representative of the ACT Government whether he was able to leave his benefit in the PSS, where he felt it would be more secure than investing elsewhere. He was concerned, in particular, because of the collapse of HIH Insurance Limited when, on 15 March 2001 it was placed into provisional liquidation.
As a result, he was worried about the potential for insurance companies to become insolvent. He was, however, advised that if he took a redundancy package, he did not have the option to remain within the PSS. He understands now that that advice was incorrect.
At the meeting, he also spoke to John Reardon, another employee, who told him that he had been a member of a Commonwealth superannuation scheme from the early 1960s even though he was a “temporary employee”. This was the first time that Mr Tobin had been given any information suggesting he was eligible to join a Commonwealth superannuation scheme at an earlier stage. He challenged Mr Reardon saying “[b]ecause I was a temporary, I couldn’t join” but Mr Reardon said to him that that was incorrect.
After a thirty minute interview with financial advisers, Mr Tobin was offered a voluntary redundancy on 14 June 2001, which he accepted. He said he accepted because he “had insufficient funds in PSS to provide for [his] retirement at this time”.
He said that if he had a more substantial accumulation of funds within the PSS, he would seriously have considered not accepting the redundancy and would have remained in government service. He confirmed this in his oral evidence saying:
Me and the wife were talking about it, that I would have stayed on with Forestry and never took the redundancy package if I would have known that I could have applied for super in ’76, I think it was ’76, that I was entitled to put in for it. If I would have had say, $400,000 or $500,000 or $600,000 whatever it was, knowing that the super was building up each year I would have kept on going in the super fund and not accepted the redundancy package because I would have known that each year that super fund would have been gaining in interest and interest and interest and I had the possibility of putting maybe 7 to 10% in to build up and build up for my retirement that I could have got a pension, your Honour.
If, and this is a hypothetical question, but if you had remained working in Forestry, do you know when you would have likely retired? --- Most probably, not knowing I found out I got cancer, but 60. I would have said 60 because me and the wife had been talking about it that it would probably be worth taking it at 60 because we both worked from when we left school and very rarely we ever took a holiday. So I would say 60.
Mr Tobin retired from the ACT Public Service on 4 July 2001 with a final entitlement of $89,296.97.
In about August 2001, he commenced a cleaning business using funds from the redundancy payment. He also used funds to help his daughter put a deposit on a house and his son to deal with some Family Court proceedings. The balance of the funds was invested in a private superannuation fund.
He elected to access his PSS benefits as a lump sum which he rolled into an NRMA retirement plan. If he had been given correct advice, he would have elected to preserve his benefits in the PSS.
In 2002, he withdrew $20,000 from the NRMA plan to invest in business.
In 1980, Mr Tobin had purchased a house with his wife in O’Connor. The house was sold in 1986 and the proceeds used to finance the purchase of a property in Wamboin. That property was sold in 1995 when he purchased a property in Cootamundra.
He and his family remained living at the Uriarra settlement until the bushfires in 2003, when his property was destroyed. He said that all his paperwork from his employment was also destroyed at that time.
Since 3 July 2008, he has been receiving an invalidity pension from Centrelink.
Mr Tobin was, as is clear from what I have said above, cross-examined on a number of aspects of his evidence. He said, for example, that he did not know, even at the time he was cross-examined, that when he commenced employment with the Commonwealth he would have had to have three years continuous employment before he was eligible to apply for admission to a Commonwealth superannuation scheme. He also did not know that he needed a certificate to say that he would, at that stage, be employed for a further seven years.
He said that he did not ever raise with the Union questions of ineligibility to join a Commonwealth superannuation scheme. He said that he did not know that Mr Bates was a member of a Commonwealth superannuation scheme. What he understood was that Mr Bates was a permanent employee. Indeed, he said that his understanding was that there were four permanent employees at the Uriarra depot, one of whom was Mr Bates.
He said that his understanding that Mr Bates was a permanent employee assisted his understanding that he was ineligible to join a Commonwealth superannuation scheme.
He seemed a little unsure about exactly what he understood from the conversation in the landcruiser which I have referred to above (at [58]). He was asked whether he took from it anything about superannuation and said “I probably did, but going back thinking about it, I should have pressured, should have went further on to the, inquired more about”.
He admitted that he did not follow up the question of eligibility for either Commonwealth or private superannuation for about ten years, even though his wife joined a Commonwealth superannuation scheme in 1985.
He also denied that he was unenthusiastic about joining a Commonwealth superannuation scheme in 1991, when consideration was being given to making Rangers permanent public servants. He explained that some of his fellow workers had only a short time to go before retirement and it seemed to him unfair that they would be required to join. He said that he was not averse to superannuation; what concerned him was that, whereas he had earlier been told he could not join, now he was being required to join.
It was suggested to him that he would not have contributed even if he were eligible in 1976, but he said emphatically that he would have joined. He explained that the only reason he decreased his contributions from time to time, which, of course, he had then re-increased, was because he and his wife preferred to pay cash for relevant items. He did not have a credit union account and did not like hire-purchase.
He accepted that, in 1976, he had two children under the age of six with a wage of approximately $6,000 per annum. He was not entirely clear about how much he would have had to pay for a superannuation contribution at that stage.
There was some cross-examination about terminology, but he said that, to his mind, “casual”, “temporary”, “industrial”, and “blue-collar” were all interchangeable terms to describe his employment status. He said that casual workers, mainly students, were introduced into the forestry work in the later 1980s, although he accepted that there may have been casuals to undertake some planting work at other times.
He said that he was not aware that he would have been entitled to the age pension when he retired, though he was aware that people who retire at age sixty five have access to a pension. He said he had known that for about thirty years.
In re-examination, he said that his financial circumstances were “pretty good” in 1976. He and his wife were able to save money particularly as he was starting to get overtime in the fire season. His wife initially worked very casually and part-time at the hospital, but that was at a later stage; it was, he said, in the late 1980s.
He explained, further, that when he felt that he should have made further inquiries following the conversation in the landcruiser, he simply said that:
Well, thinking about it now, the things that happened, you think to yourself gee I was stupid. I should have enquired more about it from the questions that were told to us. When you think back now you think to yourself well wait a moment. And you think to yourself there’s things that happened, that people were on probation and after the probation they were told they were on full-time.
Mr Tobin said that he joined the AWU when he started employment, but that he hardly ever received union newsletters. He confirmed that the newspaper was not delivered to the Uriarra depot and he did not read them. He could not remember reading the newspaper for twenty-five years or so. When he did read the newspaper, it would be The Daily Telegraph and not The Canberra Times. If he wanted to read The Daily Telegraph, he would have to go into Woden or Cooleman Court, and he did that sometimes during the football season.
The Commonwealth further submitted that Mr Tobin must have, even though he did not read The Canberra Times or see AWU newsletters, known that there was available advice and information about the Commonwealth superannuation scheme. I do not accept that.
I have analysed in Meredith v Commonwealth (No 2) the situation with regard to media and union reports (at [462]-[469]). It does not seem to me that the situation in relation to Mr Tobin is any different from that there described and I do not accept that Mr Tobin would have known about eligibility for superannuation from any such information.
Mrs Tobin also filed an affidavit. She was not cross-examined on it. I have referred to some of her evidence above (at [22]). She gave evidence about discussions she had with her husband at the time redundancy was offered. She deposed in her affidavit that, “We discussed the fact that he had not joined the government superannuation for some years as he was told that he was not eligible.”
Mrs Tobin herself joined a Commonwealth superannuation scheme in early 1985. It is clear from the evidence tendered in the proceedings, however, that she was classified as a permanent officer which was her mode of entry into the scheme.
Although Mr Tobin was somewhat vague about his wife’s membership, it is clear that even an inquiry by him would have made it clear that there was a very significant and, so far as these proceedings are concerned, relevant difference between his employment and that of his wife, a difference emphasised in the answers to queries he had made to his superiors about Commonwealth superannuation.
CAUSES OF ACTION
For the reasons set out in Meredith v Commonwealth (No 2), I consider that Mr Tobin cannot make out a claim against the Commonwealth in negligence or in breach of statutory duties.
I do consider, however, that he may, subject to the evidence, maintain a claim against the Commonwealth for negligent misstatement.
As mentioned earlier (at [15]), the Commonwealth pleaded that Mr Tobin’s claim was barred by the Limitation Act. For the reasons set out in Meredith v Commonwealth (No 2), I reject the defence of the Commonwealth that the claim for negligent misstatement is statute-barred. See Commonwealth v Cornwell (2007) 229 CLR 519.
Negligent misstatement
This cause of action has been described in Meredith v Commonwealth (No 2) (at [383]-[391]), and I rely on what I there said. I now refer, however, to the particular matters relevant to Mr Tobin’s case.
The Commonwealth submitted that neither conversation, that is, Mr Blake’s report of his conversation with Mr Bates and Mr Meredith’s conversation in the landcruiser, were of a kind that would give rise to and sustain a claim against the Commonwealth in negligent misstatement.
As to the initial conversation, it submitted that Mr Bates would not have had the necessary knowledge that the advice would be communicated either to Mr Tobin personally or as a member of an ascertainable class, in order to be used for a purpose which was known to Mr Bates when the advice was given. Reference was made to Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2003) Aust Tort Rep 81-692 at 63,653; [716].
There are, however, a number of indicia which make it clear, in my mind, that this was a serious inquiry that Mr Blake was making on behalf of other members of his gang. In the first place, Mr Blake used the word “we” at a time when the other members of his gang were outside the recreation room waiting for the daily briefing from Mr Bates. In my view, it would be reasonable to expect Mr Bates to understand that this was an inquiry being made on behalf of the other workers.
The evidence in Meredith v Commonwealth (No 2) makes it clear that this was one of a large number of inquiries that had been made of Mr Bates about this very issue. It must have been clear to Mr Bates that the forestry workers were interested in that issue and that any advice he gave them would be taken seriously by them.
Mr Bates was also aware that, with four exceptions, the forestry workers at the Uriarra depot were not members of a Commonwealth superannuation scheme.
The evidence is also clear that Mr Bates was aware that private insurance representatives attended at the Uriarra depot from time to time for the purpose of transacting insurance and superannuation business. Indeed, an inference can be drawn that forestry workers who made an inquiry about superannuation and were told by Mr Bates that they were not eligible were subject of a reference by Mr Bates to such insurance agents who, the inference could be drawn, were invited to speak to those workers.
It was also agreed that Mr Bates could not reasonably believe that private superannuation was as beneficial for an employee as membership of a Commonwealth superannuation scheme, which would strongly support an inference that such an inquiry would have a significance to the inquirer.
Mr Tobin gave evidence that he relied on the advice he had received from Mr Blake which he reasonably understood had been provided by Mr Bates and which Mr Blake said had been provided by Mr Bates.
He also said that he trusted what Mr Meredith had said, pointing out that “Wayne Meredith was a leading hand and higher up in the hierarchy than I was and I trusted the information that he provided to me.”
It is also significant that, without challenge, Mr Tobin’s evidence was that no other information, either from the Commonwealth or, indeed, from the Unions, was provided to him until a private insurance agent gave him some information in 1980.
In those circumstances, it seems to me that it was not unreasonable for Mr Tobin to rely on the information he had been given. The relative positions of Mr Tobin and Mr Bates was similar to that of the relevant relative positions of Mr Meredith and Mr Bates, which I described in Meredith v Commonwealth (No 2) at [393]-[404] and I consider that this also applies in this case.
So far as the conversation with Mr Meredith is concerned, the Commonwealth submitted that the position was, in the terms referred to by Barwick CJ in Mutual Life and Citizens’ Assurance Co Ltd v Evatt (1968) 122 CLR 556 at 571, that the statements were not actionable because they were an “utterance in the course of social intercourse with no thought of legal consequence”.
Having carefully considered the evidence given by Mr Tobin, I do not accept that either inquiries could reasonably be described as mere social intercourse and not for a serious purpose which, I accept, both Mr Bates and Mr Meredith must have known.
I also rely on the fact that, when Mr Tobin became a permanent public servant in September 1991, he joined the PSS relatively promptly. That may well have been compulsory at that time, though the evidence was not direct about that. Nevertheless, it appears from the evidence that he made a contribution that was in excess of the minimum contribution required of him.
Mrs Tobin’s evidence is also supportive of the fact that the information given to Mr Tobin was operative in his thinking and decision-making.
The Commonwealth further submitted that Mr Meredith’s statement, in fact, contained no relevant incorrect advice or information, as it simply confirmed an understanding that the four persons were the only permanent employees at the Uriarra depot. Finally, the Commonwealth submitted that Mr Meredith was only a Leading Hand and not an Overseer or in any other way “clothed with any semblance of an official role sufficient to impose upon him a duty of care”.
While the precise circumstances of the conversations are not entirely clear, it does seem to me that the evidence suggests clearly that superannuation was a significant issue of concern for forest workers, with many making inquiries and a number considering it unfair that they were unable to join a Commonwealth superannuation scheme.
Accordingly, it seems to me that neither Mr Meredith nor Mr Tobin could reasonably have understood that this was “idle chatter”, but understood it was an issue of significance at the depot and one where Mr Meredith was conveying information on which he would reasonably expect the others to rely.
Mr Meredith himself had made a number of inquiries and he was clearly passing on what he understood the results of those inquiries to be, to explain to his hearers their situation with respect to superannuation.
While the words Mr Meredith used may have been strictly correct, the words have to be seen not simply in the quotation of them by Mr Tobin, but in the context that the conversation related to the assertion that only permanent employees were eligible to join a Commonwealth superannuation scheme and that temporary employees were ineligible. The confirmation that those whom, it appears, were known to be members of a Commonwealth superannuation scheme were the only permanent employees was a confirmation of the incorrect information that temporary employees were ineligible to join such a scheme.
The clearly hierarchical nature of the arrangements at the Uriarra depot also makes it clear that Mr Tobin was reasonable in his reliance on what Mr Meredith had said, for the reasons that he expressed that I have set out above (at [118]).
Accordingly, it seems to me that the relevant duty applied to both conversations. If I am wrong about the conversation with Mr Meredith, it seems to me, in the circumstances, that the advice given by Mr Bates through Mr Blake is sufficient to satisfy the cause of action.
The Commonwealth further submitted that Mr Tobin did not alter his position as a result of the information he received. For example, he did not take out private superannuation at the time, nor did he even inquire about it.
Nevertheless, he did alter his position by failing to apply, at the time when he would have been eligible, to be admitted as a member of a Commonwealth superannuation scheme. It seems to me that this is evidence of adjustment reliance.
While, as asserted by the Commonwealth, an inference of some strength could have been drawn had Mr Tobin taken out a private superannuation policy, which he did not, it does not seem to me that this is essential as proof of reliance.
As noted in Meredith v Commonwealth (No 2) at [457]-[458], there is an important difference between superannuation as an incident of employment and superannuation as provision for retirement. The two can, of course, co-exist, such that proof of one is not necessarily inconsistent with the other.
Further, I note that while there was some cross-examination of related issues about Mr Tobin’s knowledge, it was never suggested to him that his failure to take out any kind of private superannuation following the statements on which he relied showed that he was not truly interested in superannuation.
In my view, on the whole of the evidence, I accept that Mr Tobin relied on the incorrect information he had been told by Mr Blake who had obtained the relevant information from Mr Bates reasonably so understood by Mr Tobin and which was confirmed by the statements made by Mr Meredith.
So far as the fact of Mrs Tobin joining a Commonwealth superannuation scheme on her employment, it was not suggested that there had been any relevant conversation about that between them. Indeed, Mr Tobin was uncertain about whether she had actually joined. It seems to me unlikely that Mr Tobin was not aware that she had joined but, as noted above (at [105]), I note that her circumstance was, in any event, different and in a relevant way.
Having carefully considered all the evidence, it seems to me that Mr Tobin did rely on the statements that had been made to him, that he was reasonable in so relying and that they were operative for the period until he joined the PSS.
CONTRIBUTORY NEGLIGENCE
The Commonwealth claimed that Mr Tobin’s failure to join a Commonwealth superannuation scheme was caused or contributed to by his own negligence.
Although pleaded, this claim did not play any real part in the proceedings. Nevertheless, applying the principles set out by Pullin JA in Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management (2012) 42 WAR 287 at 348; [324], I need to consider this matter of defence.
I pointed out in Knight v Commonwealth [2013] ACTSC 238 at [116]-[119] the circumstances under which contributory negligence applies in these circumstances. I adopt what I said there.
There were two matters on which the Commonwealth relied in support of its pleaded claim in contributory negligence. The first was that Mr Tobin, in referring to the conversation in the landcruiser with Mr Meredith, of which he was a part, added in his evidence that he probably should have made further inquiries, saying “going back thinking about it, I should have pressured, should have went further”
It seems to me, however, that this is frank hindsight by Mr Tobin.
While it is clear that the expectation created by the statements made to Mr Tobin cannot survive contrary information, it seems to me that what Higgins CJ said in Cornwell v Commonwealth (2005) Aust Torts Rep 81-779 at 67,211; [87] is apposite. His Honour said as follows:
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.
It does seem to me that the receipt of the kind of statements, of which there is evidence in these proceedings, negates any obligation on Mr Tobin to make further inquiries in the circumstances. Further, it does not seem to me that his frank recognition that he could have made further inquiries imported an obligation such as to reduce any damages by any amount to represent his contributory negligence.
The second complaint of the Commonwealth was that “egregiously”, Mr Tobin signed an application acknowledging that he had received conditions of service failing to take up the offer of the clerk to take away pamphlets available to him.
Mr Tobin was not cross-examined as to whether he had noted that he was acknowledging receipt of any documents. Most significantly, he said that he did not receive any documents and I accept, having heard him, that this was the position.
Further, there was no suggestion that the clerk was making any suggestion that it was particularly worthwhile, much less that it was important and certainly not obligatory, that Mr Tobin take any such pamphlets. The contents of those pamphlets were entirely unexplained. Indeed, there was no evidence that any of the pamphlets to which reference was made would have contained any information about Mr Tobin’s eligibility for superannuation. I do not consider that, in the circumstances, any claim for contributory negligence has been made out.
DAMAGES
Mr Tobin was negligently and culpably misinformed about his eligibility to join a Commonwealth superannuation scheme. I have further held that this caused him not to join and, as a result, I must determine whether he is entitled to damages and, if so, the amount of those damages.
Because of changes to the superannuation legislation, Mr Tobin, though at the time he commenced employment with the Commonwealth in 1974, would have required three years continuous service before becoming eligible, would have become eligible to join a Commonwealth superannuation scheme on 1 July 1976. At that time, a temporary employee had to have been a temporary employee, or a temporary employee and a permanent employee, of the Commonwealth for an immediate past period of one year and to have satisfied the Commissioner for Superannuation that he or she was likely to be a temporary employee 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. See s 11 of the Superannuation Act 1976 (Cth).
Causation
The Commonwealth submitted that Mr Tobin had failed to establish that, as a matter of causation, any application he made to join a Commonwealth superannuation scheme would have been successful. In particular, it was submitted that no evidence established that, as at 1 July 1976, Mr Tobin would be more likely than not to have obtained the necessary certification of three years future employment.
I accept that the eligibility criteria cannot be assumed, but it seems to me the evidence is sufficient to allow me to make findings.
For example, I set out in Meredith v Commonwealth (No 2) at [632]-[633], some of the material that addressed the future employment criterion within the public service. That showed that, by 1971, the future employment criterion had become somewhat of a formality. Indeed, it showed further that the number of applicants rejected on this ground was very small.
The evidence to which I have also referred in Meredith v Commonwealth (No 2) at [634]-[640] was that good workers were likely to be continuously employed for long periods. It is clear that Mr Tobin was, himself, employed for a long period. Despite employees such as Mr Bates, Mr Padovan, Mr Reardon, Mr Bateup and Mr Ritherdon being temporary employees, they had all been employed for very long periods.
There was little evidence to assist me in suggesting that there was a significant turnover amongst temporary employees though, no doubt, there was some turnover.
There was further evidence suggesting that there was a need for employees in ACT Forests.
There was no suggestion that Mr Tobin had a bad work record and, indeed, he had every reason, because of the medical needs of his son, to want some stability in employment, especially as he had re-located from Sydney for that purpose.
I am satisfied that Mr Tobin would have met the eligibility criterion for future employment.
Although there was a somewhat vague suggestion that, because of his financial situation, Mr Tobin would have been unable to contribute to a Commonwealth superannuation scheme, the whole of the evidence does not support that. Mr Tobin was able to save, even when he was paying the costs of medical treatment for his son.
I note, also, that, before being admitted to the PSS, he undertook a medical examination, and no issues arose from that.
I note further that there is a discretion to be exercised by the Commissioner of Superannuation as to whether an employee would be admitted to a Commonwealth superannuation scheme. Nothing was put to me as to any likelihood that such a discretion would not be exercised in favour of Mr Tobin. Indeed, the evidence showed that very few applicants were denied admission, and there is nothing in the evidence to suggest that Mr Tobin would have been one of those persons.
Accordingly, I am satisfied that Mr Tobin would have been admitted to a Commonwealth superannuation scheme had he applied on 1 July 1976.
Quantum
The next issue, then, is the amount of damages payable to Mr Tobin for the negligent misstatement which deprived him of reasonable access to a Commonwealth superannuation scheme.
Damages payable for the loss occasioned by a tort are, as Taylor and Owen JJ said in Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185 at 191, assessed by reference to
the general principle upon which compensatory damages are assessed, whether in actions of contract or of tort. That principle is that the injured party should receive compensation in a sum which, so far as money can do so, will put him in the same position as he would have been in if the contract had been performed or the tort had not been committed: Livingstone v Rawyards Coal Co [(1880) 5 App Cas 25 at 39].
In order to assist with the assessment of the damages, both the Commonwealth and Mr Tobin presented reports from actuaries who calculated the damages said to be payable.
Mr David Heath, an actuary from Cumpston Sarjeant Pty Limited, Consulting Actuaries, gave evidence for Mr Tobin. 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 two reports, though each used the same basic methodology. In his second report, he updated the date to which the loss would be recoverable. He also made some adjustments, because in his earlier report he had assumed that Mr Tobin would have been able to contribute to the CSS at 3%, whereas, in fact, he would have been required to contribute at 5%. He also updated the date to which the losses were taken.
Mr Martin prepared four calculations based on scenarios which depended on various factors of which there was no certainty in the material before him.
Mr Heath prepared only one scenario which equated with one of those prepared by Mr Martin though there were some differences between the two comparable calculations.
Considering these reports, there were a range of factors that were relevant to the calculation of the quantum of damages payable. Some of those factors were uncontroversial and some were controversial, in the sense that there were different views about what the evidence would show in relation to some of them. I shall deal with each and, where I need to do so, decide what the evidence shows as to the controversial factors.
(a) Uncontroversial matters
Mr Tobin was born in 1947 and commenced employment with the Commonwealth on 7 January 1974. He became eligible to apply to join a Commonwealth superannuation scheme on 1 July 1976. He joined the PSS on 26 September 1991 and accepted a redundancy on 6 July 2001.
(b) Controversial matters
There are a number of factors which need to be decided before an appropriate method can be used to calculate the loss. Some of these arise from the differences between the calculations made by Mr Heath and Mr Martin, which need to be addressed. I will deal with these separately.
(i) Retirement or Redundancy
As has been noted (at [172] above), Mr Tobin accepted a redundancy on 6 July 2001. He indicated that, had he been a contributor to a Commonwealth superannuation scheme since he was first eligible, he would have remained employed.
This evidence was given in his affidavit and also orally. It was supported by the evidence of Mrs Tobin, who was not cross-examined.
Notwithstanding the oral evidence he gave, Mr Tobin was not cross-examined on his assertion that he would not have accepted the redundancy payment if he had been continuously a member of a Commonwealth superannuation scheme since becoming eligible. Nevertheless, the Commonwealth submitted that this was a “nebulous claim”. I do not accept that. It is clear that Mr Tobin was thoughtful about his financial situation and somewhat conservative.
In my view, it should be accepted that, had Mr Tobin been a member of a Commonwealth superannuation scheme from 1 July 1976, he would not have accepted a redundancy payment on 6 June 2001 but would have continued until age sixty. His damages, therefore, would include a membership of a Commonwealth superannuation scheme until he would have retired.
(ii) Retirement Age
Mr Tobin asserted, again without challenge, that he would work until he was sixty. In the circumstances, this appears a reasonable assertion, having regard to his particular circumstances, and I accept that he would have retired at age sixty.
(iii) Transfer to the PSS
I have found that Mr Tobin would have joined the CSS on 1 July 1976 had he not been incorrectly advised as to his eligibility.
On 1 July 1990, members of the CSS had an option to transfer to the PSS. I have set out the background to this issue in Meredith v Commonwealth (No 2) at [666]-[678].
There is little direct evidence about whether Mr Tobin would have transferred to the PSS. In any event, such evidence is, of course, hypothetical and with the benefit of hindsight.
Perhaps the most significant evidence is the flexibility of contribution on which Mr Tobin relied when he did join the PSS. He reduced and then re-increased his contributions from time to time to meet his needs for cash. That flexibility was not available in the CSS. While there may have been some overall benefit to Mr Tobin in remaining in the CSS, and I have suggested that other forestry workers may well have also remained in the CSS, it seems to me that what Mr Tobin actually did and the benefit that he saw, particularly after years of what, if he had joined, would have been a relatively high rate of contribution (5% in the CSS), are more likely than not to have led Mr Tobin to have transferred to the PSS.
(iv) Reversionary Pension
Mr Heath included in his calculation an amount for the reversionary pension that may be payable to Mrs Tobin, should Mr Tobin pre-decease her.
That is contingent upon Mr Tobin’s death and, although I understand he is ill, that contingency has not yet arisen.
As was pointed out by the Commonwealth, Mrs Tobin is not a party to the present proceedings and any loss of a reversionary pension is a loss suffered by her and not by Mr Tobin or his estate.
In my view, any value of a reversionary pension is not a damage payable to Mr Tobin.
(v) Differences between the expert’s reports
Member and Productivity Account at Retrenchment
There were differences between the calculations made by Mr Heath and Mr Martin as to Mr Tobin’s potential member account at retrenchment and potential productivity account at that date.
Given the findings I have made above, this may not be relevant, but the basis of the difference was that Mr Heath assumed that Mr Tobin would have elected to contribute to the CSS at the same rate he actually contributed to the PSS. That is not possible under the terms of the CSS. In any event, as noted above, I have taken the view that as at 1 July 1990, Mr Tobin would have joined the PSS.
Treatment of lump sum rollover
Again, there are differences but, since I have assumed that Mr Tobin would not accept a redundancy in the circumstances, this issue need not be considered further.
Again, should it be necessary to decide, it seems to me that Mr Martin’s approach was consistent with the rules of the CSS and consistent with Mr Tobin’s actual behaviour and I prefer his approach.
Past Pension Payments
The difference here again is irrelevant in the circumstances, and seems to relate to the application of pre-judgment interest, which simply depends upon the date up to which the calculation is made.
Future Pension Payments
There is a difference in the annuity factors used by Mr Heath and Mr Martin. Mr Heath assumed an annuity factor of 16.163 and Mr Martin assumed an annuity factor of 15.066.
There was little discussion of the basis of the annuity factor in the reports of Mr Heath and Mr Martin.
I have addressed the issue of annuity factors in Meredith v Commonwealth (No 2) at [695]-[703].
For the reasons there set out, I prefer the approach adopted by Mr Heath and I would accept that.
As to the discount rate, I am persuaded that, as the pension is linked to movement in the Consumer Price Index and the actuary to the CSS applies the rate of 3.5%, this is the rate that should be applied.
Saved member contributions
Mr Tobin would, of course, have had the use of the money that he would otherwise have contributed to a Commonwealth superannuation scheme had he been a member from 1 July 1976. Accordingly, a discount to the damages must be applied for the value he retained.
The two experts used different approaches. Mr Heath assumed that Mr Tobin would have invested the saved member contributions in building society deposits. Mr Martin assumed average mortgage rates.
While it is true that Mr Tobin invested in properties from time to time, he was keen to pay cash where he could and, accordingly, it seems to me that the appropriate approach would be to use the interest obtainable on building society deposits.
Application of actual PSS benefit
Again, this is probably not relevant on the scenario that I have found most likely to have occurred.
Mr Martin based his accumulated value of Mr Tobin’s actual PSS benefit on the accumulated rollover benefit at retrenchment, the two lump sum withdrawals and the notional interest at mortgage rates. Whilst I would use the building society rates, the difference appears to result from a negative crediting rate used by Mr Heath. There was no evidence to explain that and it does not seem to me to be appropriate. Accordingly, should it be necessary, I prefer the approach of Mr Martin.
(c) Consideration
Unfortunately, neither expert produced a calculation that was consistent with the findings I have made. Accordingly, it will be necessary for further calculations to be made using the findings in these reasons for judgment.
In summary, the scenario would be as follows:
(a) Mr Tobin would have joined the CSS on 1 July 1976;
(b) he would have transferred to the PSS on 1 July 1990;
(c) he would have continued in employment until age sixty;
(d) he would have, when he joined the PSS, made the actual contributions that he did make;
(e) the approach to calculations should be in accordance with the findings I have made above; and
(f) there would be pre-judgment interest in accordance with the Court Procedures Rules 2006 (ACT) to the date of judgment.
TAXATION
The question of whether the damages would be taxed was a live issue, whether as a capital gain or as income. Both parties made submissions about this, the Commonwealth submitting that the damages were not taxable on either basis and Mr Tobin submitting that they would be taxable. Mr Tobin 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 Tobin on his claim in respect of negligent misstatement.
So far as damages are concerned, however, I shall invite the parties to provide me with appropriate material on which I can quantify the damages in accordance with these reasons. That would, desirably, be a report from an appropriately qualified actuary. Each party may wish to retain their own and provide separate reports. If so, I would wish that the actuaries confer to see if they could agree or, at least, narrow the extent of any disagreement.
The parties may prefer, however, simply to make submissions. Indeed, they may be able to agree on the quantity of the damages flowing from my decision.
Accordingly, I shall relist the matter in a few days to give the parties the opportunity to make submissions on how they wish to proceed.
I shall, also, hear the parties as to costs, though this may have to await the quantification of the damages.
DELAY
I sincerely regret that the pressure of business of the Court has delayed the delivery of judgment in this matter. Nevertheless, I have read carefully the entire transcript and the exhibits tendered at the trial as well as my contemporaneous notes. I have also had detailed and comprehensive written submissions from the parties which I have also carefully read. These have resulted in a good recall of the proceedings and of the witnesses giving evidence, notwithstanding the passage of time.
I certify that the preceding two hundred and twelve (212) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Refshauge.
Associate:
Date: 2013
Counsel for the plaintiff: Mr R Davis & Mr J Gordon
Solicitor for the plaintiff: Snedden Hall & Gallop
Counsel for the defendant: Mr S P Estcourt & Mr C Dowsett
Solicitor for the defendant: Australian Government Solicitor
Date of hearing: 18, 19, 23-26, 30 November 2009, 1-3, 8-11, 14 December 2009, 9-11 February 2010
Date of judgment: 16 December 2013
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