Commonwealth of Australia v Cornwell

Commonwealth of Australia v Cornwell - [2007] HCA 16 - HCA 2007 case summary — Zoe

[22]

However, to show the existence of a completely constituted cause of action in negligence, a plaintiff must be able to show duty, breach, and damage caused by the breach; accordingly, in the ordinary case, it is at the time when that damage is sustained that the cause of action "first accrues" for the purposes of a provision such as s 11 of the Limitation Act[6].
In Hawkins v Clayton[7], which turned upon a provision of the New South Wales legislation[8] relevantly indistinguishable from the Territory legislation, this Court refused to place a particular gloss upon the statutory text. The Court rejected the proposition that, at least in the case of claims in negligence for economic loss, time does not run until the plaintiff discovers, or could on reasonable inquiry have discovered, that damage has been sustained[9].
Before Higgins CJ, the Commonwealth failed in its defence to the negligence claim based upon s 11. His Honour entered judgment for Mr Cornwell for damages to be assessed. An appeal to the Court of Appeal of the Supreme Court of the Territory (Crispin P, Connolly and North JJ)[10] was dismissed on 8 May 2006 and it is from that decision that the appeal is brought by the Commonwealth to this Court. That appeal should be dismissed. The next step in the litigation will be the assessment of damages by the Supreme Court, a matter beyond the scope of these reasons.
By notice of contention, the respondent seeks to rely upon s 33 of the Limitation Act to escape the possibility of any adverse operation of s 11 of that statute. Section 33 operates in two classes of case. The first is where "there is a cause of action based on fraud or deceit" (s 33(1)(a)). Higgins CJ held that par (a) could have no application here[11] and correctly did so. The second class of case is found where "a fact relevant to a cause of action or the identity of a person against whom a cause of action lies is deliberately concealed" (s 33(1)(b)). The section fixes upon the date the plaintiff discovers, or ought by reasonable diligence to have discovered, the fraud, deceit or concealment, and adjusts the limitation period accordingly. The respondent submits that, by reason of par (b) of s 33(1), the reckoning of the limitation period should be found to have commenced upon a date sufficiently late to bring him within the six year period otherwise stipulated by s 11. Higgins CJ made no apparent finding respecting par (b).
It will be necessary to return to the issue raised by reliance upon s 33. It is sufficient at this stage to note the following. First, in cases of "concealed fraud" courts of equity refused to apply by analogy statutes of limitation which operated upon actions at law. Secondly, this doctrine of "concealed fraud" did not furnish an answer on equitable grounds to a plea in a common law court of the 1623 Act or other limitation statute to, for example, an action in tort; it was not possible to plead by way of replication on equitable grounds that the existence of the plaintiff's cause of action had been fraudulently concealed from the plaintiff by the defendant[12]. Accordingly, in Metacel Pty Ltd v Ralph Symonds Ltd, Sugerman JA said[13]:

[44]

The appellant contends that the introduction on 1 July 1976 of the 1976 Fund and the closure of the 1922 Fund[24] brought about a decisive change in the legal situation. Before that date, any necessary damage to complete the respondent's cause of action in negligence had not occurred and had remained truly "contingent"; thereafter, so it is submitted, "the Respondent's loss was necessarily and irretrievably sustained" and s 11 of the Limitation Act must be applied from that date.
The 1976 Act resembled the 1922 Act in making provision for certain temporary employees to be classified as eligible employees for the 1976 Act (s 11(1)).
The 1976 Fund also was a defined benefits scheme. Again, members were required to make contributions (s 45). However, the 1976 Act provided for the calculation of benefits for "eligible employees" by reference to years of "contributory service" rather than by reference to contributions for pension units. The appellant emphasises that, whilst before the introduction by the 1976 Act of the concept of contributory service it would have been possible for a person in the position of the respondent to join the 1922 Fund later than 1965 and pay more for his units in the 1922 Fund, that was not possible after the commencement of the 1976 Act; the respondent, even if he had forthwith joined the 1976 Fund, could not have made up the quantum of his benefits to allow for his 11 years of service since 1965. Pensions under the 1976 Act were calculated as a percentage of final salary, the percentage being fixed by reference to the "period of contributory service"; the greater the number of complete years of contributory service, the higher the percentage of final salary paid as a pension.
The "period of contributory service" for the purposes of the 1976 Act was defined to commence on the "first day of service", this being fixed by reference to the day when a person became an "eligible employee" (s 3(1)). As the 1976 Fund was to be open to persons who were previously eligible to join the 1922 Fund, persons who were "employees" for the purposes of the 1922 Act at the time when the 1976 Act commenced, and who continued to be such, were defined to be eligible employees for the purposes of the 1976 Act by par (a) of the definition of "eligible employee" in s 3(1). Such persons who were members of the 1922 Fund were also defined to be "existing contributors" for the purposes of the 1976 Act.
Section 183(2) of the 1976 Act authorised regulations to be made "modifying this Act, or a provision of this Act specified in the regulations, in the application of this Act or that provision" to eligible employees. Regulations were later made pursuant to s 183(2) modifying the definition of "period of contributory service" so as to credit persons who commenced service prior to 1 July 1976 with a period of contributory service calculated by reference to the date the person commenced making contributions to the 1922 Fund[25]. The respondent, therefore, not being a member of the 1922 Fund, could not by recourse to these provisions make up the lost years of service.

[49]

The submission upon which the appellant placed great weight, that respecting the significance for the respondent's position of the commencement of the 1976 Act, should not be accepted. It is true that thereafter it was no longer open to the respondent to make up for his years of service since 1965 by paying more for units under the 1922 Fund arrangements so as to have his actual years of service count towards his "period of contributory service" for the purposes of the calculation of benefits under the 1976 Act. But his loss had not then been necessarily and irretrievably sustained, as the appellant would have it. Nor should the appellant's secondary contention in the grounds of appeal be accepted. This is that, until 24 March 1987 when he joined the 1976 Fund, the respondent "continued to accumulate loss and damage" but this then crystallised and the limitation period had closed on 23 March 1993.
Even if the respondent had joined the 1922 Fund in 1965, his pension entitlements thereunder would prior to the commencement of the 1976 Act still have been contingent upon meeting the statutory criteria set out earlier in these reasons. The respondent could have been assured that the amount of his actual contributions paid under the 1922 Act were secured to him by s 51(1) were he to resign or to be dismissed or discharged for any cause. But, beyond that, his entitlements were prospective and contingent upon the falling in at a future time of the statutory criteria. The same was true of the respondent's position under the 1976 Act after 24 March 1987 and before his retirement seven years later, subject to the qualification that the amount of his actual contributions would no longer have been paid to him unless the conditions of s 80 were met[28].
The respondent also correctly emphasised that his was not a "transaction case" where property was sold or acquired[29] at a disadvantageous price, or the opportunity was lost of the lucrative exploitation of contractual rights or of some other commercial opportunity. The appellant submitted that the respondent's loss was "necessarily and irretrievably sustained" when the 1976 Fund commenced and replaced the 1922 Fund in the manner described briefly earlier in these reasons. However, whether in 1976 the respondent would have been better or worse off had he invested elsewhere the contributions he otherwise would have placed for units under the 1922 Fund arrangements is a matter of speculation. He could not be said, consistently with remarks in Sellars v Adelaide Petroleum NL[30], in 1976 to have sustained loss of a commercial opportunity which had some value, as a matter of the degree of probabilities and possibilities.
On the issues raised by the appellant, the appeal should fail. There remains the respondent's notice of contention and reliance upon s 33 of the Limitation Act.

[70]

Daily, actions are tried and damages assessed, before all of the contingencies have passed and the loss becomes perfectly ascertainable. Courts regularly estimate damages on the basis of likelihood or probability. In the result, inevitably over-compensation or under-compensation may occur, but experience recalls that there is no reason to suppose that the risk of one is greater than the other.
The sort of simple case in tort which comes repeatedly before the courts provides a ready and clear example. A plaintiff is negligently, personally and permanently injured. He may partially recover: his pain may or may not abate; he may never work again, or he may work in a less remunerative capacity; he may lose an opportunity of transfer or promotion, or of working to a greater age; he may, or may not lose the capacity to improve his qualifications by study; employment prospects in his calling might, in the ordinary course, have diminished, and he might have lost his position anyway. These are all contingencies bearing directly on the damages recoverable. They are contingencies which might take all of an ordinary adult lifetime to play out. But the courts do not await a lifetime. They assess damages, once and for all, on the basis of the probabilities, as to which cogent evidence is called. Indeed, the recent decision of this Court of Golden Eagle International Trading Pty Ltd v Zhang[51] is a case in point. There the Court was concerned with the proper choice of life expectancy tables, historical or current. The Court, not surprisingly, preferred the latter, never questioning for a moment that they provided useful evidence directly bearing on the plaintiff's damages, having regard to the contingency of the date of his death. There is no separate or different rule for economic loss. In Golden Eagle, the plaintiff's likely future earnings, but for his injuries, were entirely future unascertained "economic loss" arising out of his injury.
In Perre v Apand Pty Ltd[52] in which there were claims for statutory deceptive conduct, breach of contract, and in tort for "pure economic loss", the Court was asked to entertain a claim for past and prospective losses for a period of some years. In this Court, no assessment (or review of an assessment) was in fact required, as it was at first instance of the primary judge von Doussa J[53]. His Honour embarked upon the exercise of assessment, a purely conventional one, in the familiar way, and had no difficulty in weighing up the many contingencies or chances in play there, including the seasons and the markets, making judgments about them, and assessing damages accordingly in respect of the claim in negligence.
I do not accept that it is the law that it is only when a relevant, or as it is put here, the relevant statutory contingency, in this case, of retirement, falls in that a plaintiff (here, the respondent) becomes entitled to an ascertainable interest.

[74]

In assessing the respondent's damages in 1983 the court would have been able to proceed in an orthodox way. Evidence would have been led of the respondent's life expectancy, his health, his current earnings and entitlements, his prospects and his intentions. The court would then have applied the legislation to its findings to ascertain the value, at time of trial, of lost pension or part thereof payable as an income stream on the respondent's likely date of retirement for his probable remaining lifetime. It is not without irony that the judges have had no difficulty in making a finding about his intentions and related matters in 1965 and thereafter, but hold that the other contingencies deny evaluation and assessment before now. The respondent's own likely evidence in a notional trial, in, say, 1982, that he was in good health and intended to work until at least 55, can be seen now to have been borne out by events[54]. In other words, such evidence then would have been available, entirely credible, and likely to have been accepted. Why, on the issue of "assessment-defying contingencies", should regard not be had to this, when the whole foundation for the respondent's case is his evidence about his likely contemporaneous state of mind about joining a scheme in 1965?
Examples of comparable assessments that necessarily take account of contingencies can be multiplied. Even though the measure of damages in deceit is the amount required to put the plaintiff as far as possible in the position that he would have been in if he had not acted on the misrepresentation, there will still be cases in which, in order to assess that amount, notional future business profits or losses will need to be calculated[55]. That exercise will inevitably involve a consideration of the contingencies attendant upon any human activity or enterprise, and a determination as to the probability of the occurrence of each of them, just as it will in any case in which the present value of a future stream of net income has to be assessed. It is not uncommon for courts to be called upon to assess the value of land, not only in cases of contract, but also of tort. That will often require close attention to such contingencies as the obtaining or otherwise of a valuable planning approval[56] or permission to subdivide. Every one of these is a familiar curial task as to which it cannot be suggested that the courts do not have the capacity to perform it, or that the commencement and the resolution of litigation must be delayed until each of the contingencies occur or can be eliminated as a possibility.
All of this is entirely conventional. It shows that, by reference to established law, and well understood methodology of assessment of damages the respondent did in fact have a measurable valuable interest which he lost by 1977. There was, in short therefore, an assessable, irretrievable loss sustained by the respondent by 1977. The so-called "statutory contingencies", of incapacity or early death, or retirement, each giving rise to a different, but nonetheless better financial consequence for the respondent if he had not been misled in 1965[57], are no different in kind from the contingencies with which the courts necessarily deal all the time. Indeed, practically nothing is certain or can be guaranteed in life or human affairs. This is why courts must do the best that they can, and assess damages, well understanding that exactitude will usually be impossible. That it is not possible provides no excuse for failing to do it[58].
The relevant "statutory criteria" here are no different from other criteria in other cases for financial benefit or loss, for example, capacity to work, or perform a contract, changes in the economic climate, the obtaining of a permit or approval, the state of the market place, or indeed practically any event at all that might influence a monetary outcome. It was always open to the respondent from at least 1977 to prove the likelihood or otherwise of each of the relevant statutory contingencies[59].

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (131 paragraphs)

Parties

Legislation Cited (10)

Cases Cited (27)