Supreme Court of the ACT|2005-03-04|Before: Higgins CJ

Cornwell v The Commonwealth of Australia [2005] ACTSC 14 (4 March 2005)

JOHN GRIFFITH CORNWELL v THE COMMONWEALTH OF AUSTRALIA

[2005] ACTSC 14 (4 March 2005)

NEGLIGENCE - Negligent misstatement - scope of duty to inform or encourage temporary employees to join Fund - whether defendant failed to adequately advise plaintiff of entitlement to participate in Fund - whether defendant disseminated to plaintiff incorrect advice - continuing breach - scope of independent advice sought.

STATUTORY DUTY - Breach of statutory duty - whether defendant under duty to cause Public Service Board (or Treasurer) to approve plaintiff for membership of the Fund.

BREACH OF CONTRACT - Implied term of employment contract - whether term made obligation on defendant to both inform the plaintiff of right to apply for membership of Fund and/or to seek certification resulting in offer of membership of Fund - loss suffered upon retirement of plaintiff.

DAMAGES - Difference between benefits now payable to plaintiff and benefit that would have accrued.

Shaddock & Associates v Parramatta City Council (No. 1) [1981] HCA 59; (1981) 150 CLR 225

Glass v The Commonwealth [2003] ACTCA 8, 31 March 2003

Rennie v Commonwealth (1995) 61 FCR 351

Scally v Southern Health and Social Services Board [1992] 1 AC 294

Legal & General Assurance Society Ltd v Stock (1993) 49 IR 464

Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514

Vulic v Bilinski [1983] 2 NSWLR 472

Gorton v Commonwealth of Australia [1992] 2 QdR 603

Murphy v Overton Investments Pty Ltd (2004) 78 ALJR 324; (2004) 204 ALR 26; [2004] HCA 3, 5 February 2004

Orica Ltd v CGU Insurance Ltd [2003] NSWCA 331, 11 November 2003

Mulcahy v The Hydro-Electric Commission (1998) 85 FCR 170

1. There be judgment for the plaintiff for damages to be assessed.

1. 1. This is a somewhat unusual claim but not one unknown to the law. The plaintiff was employed by the defendant as a spray painter in the Transport Section of the Department of the Interior, as it was then known, within the Bus Workshop. He was employed full time but was classified as a temporary employee. That employment commenced on 7 May 1962. In about 1994 his employment was transferred to the Australian Capital Territory from the Commonwealth of Australia. He retired on 31 December 1994. He had, since 24 March 1987, been a member of the Commonwealth Superannuation Fund (the Fund).

2. It is his contention that, though a temporary employee, he had, at an earlier date, become eligible for acceptance as a member of the Fund, but had been dissuaded from applying to become a member by reason of misleading advice negligently proffered to him by Mr Nelson Simpson, then Manager of the Transport Section.

3. The plaintiff's evidence was that in the mid 1960's he attended a meeting of workers of the Bus Workshop. Mr Joe Heaton, a leading hand mechanic, said to those present words to the effect,

We need to talk about Superannuation - we need to find out why we are not getting any Superannuation when everyone else is.

4. Mr Heaton was delegated by the meeting to speak to management concerning that issue. A few days later another meeting was called.

5. At that meeting, Mr Heaton reported to the following effect,

They [management] have said that we are not entitled to any Superannuation. We are not public servants, we are classed as industrial workers and are only temporary. Therefore we are not entitled.

6. The plaintiff accepted that this was an accurate report of what Mr Heaton had been told but, nevertheless, felt aggrieved about it. Consequently, he made an appointment to see Mr Simpson. He met with him at work during July 1965. He asked Mr Simpson,

I would like to know about the superannuation situation. I can't understand why we are not entitled to it.

That's right. You're not entitled because you are an industrial and temporary employee, but I will see what I can do.

7. That information was repeated several times at that meeting but Mr Simpson did not subsequently inform the plaintiff of any further developments.

8. It was not till 1987 that the plaintiff was accepted into the Fund. That followed his appointment on 24 March 1987 as a permanent officer (Foreman Panel Beater, Grade 3) with the then Department of Territories.

9. Mr Douglas Brian Kennedy, motor mechanic (retired) gave evidence that he had heard Mr Heaton, at the two meetings referred to by the plaintiff, convey similar information to that recalled by the plaintiff.

10. In November 1974 Mr Kennedy became a permanent public servant, and so, a member of the Fund.

11. It was suggested to the plaintiff that Mr Simpson may have said that temporary employees were not entitled to join the Fund unless they had been certified as likely to continue to be employed fulltime for seven years and that Mr Simpson had told him, "you may not be senior enough, but I'll see what I can do". The plaintiff did not accept that those words (or their equivalent) had been used to him.

12. It now appears, from the departmental records produced on 27 July 1965, that there was a letter, written over the typed signature of Mr Simpson, to "Staff Clerk, Personnel Sub-Section" stating that the plaintiff would be employed for "an indefinite period". It appears to me that this would have been Mr Simpson's opinion at that time. That, as it happens, is inconsistent with the suggested reference by Mr Simpson to "seven years" future employment. I accept the plaintiff's stated recollection as substantially accurate.

13. This memorandum was not drawn to the plaintiff's attention. It appears to have been designed to support a submission seeking a ruling as to whether he might be eligible to join the Fund under s 4(5)(b) of the Superannuation Act 1922 (Cth).

14. That section had first been inserted into the Act in 1942. It then provided that temporary employees who had been continuously so employed for five years could be admitted to the Fund if their Permanent Head certified that they were likely to continue to be so employed for an "indefinite period". In 1945, "indefinite period" was deleted and "10 years" was substituted.

15. On 3 September 1946, a direction was issued to Department Heads that the likelihood of future employment "shall not be influenced by future possibilities arising from government policy". The intent of this seemed to have been to give guidance to timid Permanent Heads who found the predictive task difficult. They might turn out to be wrong and so declined to make the qualifying prediction. The actual practice may not have been so clearly defined. It did seem that Mr Ben Chifley, as Treasurer, was sympathetically disposed to temporary employees, who met or could be found to meet the statutory criteria, being invited to join the Fund.

16. On 20 June 1949, Treasury considered it necessary to request Departments to notify all temporary employees of their s 4(5) rights after completing five years continuous service.

17. Even so, on 20 April 1951, Treasury wrote to the Victorian section of the Department of Supply (then headquartered there) urging that "in the matter of certification [of future service], employees should be given the benefit of any reasonable doubt".

18. On 11 December 1951, the Act was again amended to reduce the qualifying period of service to three years and the likely future service to seven years. The Public Service Board (PSB) was designated as the certifying authority.

19. Then, on 2 September 1957, the PSB cautioned all Departments against inviting temporary employees to apply to join the Fund, pointing out that membership would not automatically be extended even if the employee could be admitted to the Fund. This clearly reversed the previous, more benevolent, trend.

20. That advice was qualified further on 22 July 1958 with the PSB advising all Departments that they "might invite" temporary employees' attention to s 4(5) once they had completed three years continuous service, but only by means of a pro forma letter.

21. Nevertheless, it appears that there was no widespread take-up of that advice nor any consistency in approach. For example, in 1962-63, the Western Australian branch of the PMG Department trialed a method of notifying employees of s 4(5) on engagement and then on completion of three years service only if they fell within a "quota". What the "quota" was or how it was determined was not explained.

22. In April 1963, Mr LG O'Sullivan, a legal officer, wrote to the PSB warning that whilst the PSB was legally responsible for certifying the eligibility of temporary employees to join the Fund, by reason of their future continuity of employment, the PSB inspectors had assumed delegated responsibility for that function and had developed formulae for acceptance or rejection of employees so as to avoid the need for individual inspectors to take responsibility for estimating the future seven year period of service for any particular employee. Mr O'Sullivan warned that those formulae, "may appear arbitrary to Treasury".

23. This practice seems to me to have been the genesis of the advice given to Mr Heaton and the plaintiff that blue collar temporary employees were, as a class, considered ineligible.

24. That opinion seems confirmed by an Inspector's memo of 20 October 1964 advising against adoption of the WA procedures because of the small number of s 5(4) applications with acceptance of applications being confined to "exempt staff", a reference to ex-Service personnel.

25. The plaintiff completed three years service on 7 May 1965. The plaintiff's consultation with Mr Simpson was noted by the latter on his "Bunch of Dates" desk calendar.

26. As I have noted, Mr Simpson, in apparent fulfilment of his promise to the plaintiff, on 27 July, 1965 wrote to the Staff Clerk, Personnel Sub-Section stating that the plaintiff was likely to be employed for "an indefinite period" as he was the only spray painter employed in the Transport Section.

27. It is clear that it was intended by Mr Simpson that this advice would, if accepted, satisfy s 4(5). It is equally clear that he had not caught up with the amendments in 1945 and 1951. Perhaps the memo was written on his instructions rather than by him personally. Nevertheless, it was with his authority and evoked a response in the form of a questionnaire, dated 6 September 1965, to be completed by him and returned. It appears that this did not happen. It is apparent to me that, for whatever reason, Mr Simpson overlooked completing the questionnaire sent to him. I have no doubt that, if he had done so, the plaintiff's application for superannuation would have been approved. This is made the more likely as it appeared that at a meeting of Inspectors on 1 November 1965, it was observed that the certifications of future employment had been "too stringent".

28. On 14 December 1965 the PSB's powers under s 4(5) were formally delegated to the Inspectors.

29. On 1 July 1976, the Superannuation Act was again amended to reduce the qualifying period under s 4(5) to one year and the future employment certification to three years.

30. The plaintiff did not find out that he had been an employee who met the conditions for membership of the Fund all along (or at least since 1965) until 1996/7.

31. These proceeding were commenced on 16 November 1999.

32. Mr Donald Brown was a witness for the defendant who was called to depose that he had been a Senior Inspector of Personnel and Services during the 1960s.

33. He moved to the Department of the Interior in about July 1968 and shortly thereafter spoke to employees about superannuation, including the potential entitlement of temporary employees. His recollection was that his talk did not seem to inspire any interest or, even, attention from the assembled employees.

34. It is certainly not apparent that the plaintiff was aware of, or heard Mr Brown's talk. It also appeared that, on Mr Brown's understanding of it, as at July 1965, subject to good health, the plaintiff would have been accepted into the Fund had he applied. That accords with the conclusion I have referred to above.

35. I would add that there was no reason to suppose that at any time between 1965 and 1987, the plaintiff would have failed a medical examination. He passed such an examination without any qualification in 1987.

36. Mr Howard Tankey was next called. He had worked with Mr Simpson. He described him as a caring and compassionate superior. This, no doubt, explains why, despite his pessimistic prognostication, Mr Simpson was, nevertheless, prepared to pursue the plaintiff's desire to be admitted to the Fund, if that was possible. Mr Tankey agreed that the plaintiff had been a diligent and "thoroughly proficient" employee.

37. Mr James Reay was next. He had been Assistant Manager, and thereafter Director of Transport, replacing Mr Simpson, from 1970 to 1977. He had, he said, reminded Union representatives from time to time that both temporary and exempt employees were entitled to participate in the superannuation scheme. He had himself recommended eligible employees to the PSB for admission to the Fund.

38. The difficulty for the defendant with this evidence is that not only does Mr Reay not suggest he spoke with the plaintiff to that effect, but he also indicated that he was the person who was to be approached on such issues (for whatever reason) rather than Mr Simpson. He also highlighted the difficulty in certifying to future employment. To quote him,

... since that involved an assessment of matters including the quality of the work of the particular employee, the scarcity of individuals of that employee's particular skills or qualifications, the relative mobility of individuals in the position of the particular employee between jobs or workshops, the relative order of discharge of employees within the relevant section or department, the likely departmental work loads in the relevant future period and government policies in relation to temporary, exempt or permanent employment.

39. Mr Reay also acknowledged that with the reorganisation of the Department of the Interior it was difficult to be confident of seven years continued employment. There was, during that period, a difference between employees with "Federal" functions as opposed to those with "municipal type functions" who were identified as "industrial employees", and not "Commonwealth Public Servants".

40. All of this seems to me to support the plaintiff's perception of what he was told by Mr Heaton and Mr Simpson and that Mr Simpson shared that perception. I accept that there were some attempts to qualify that overly pessimistic view of the prospects for temporary employees being accepted for membership of the fund. However, that did not, it seems to me, dispel the general impression that, generally, industrial employees would not be accepted. The genesis of that view, I accept, was based, not on any denigration of their status, but rather on the difficulty for management in certifying the prospective years of service for such employees in particular. Those who did not turn their minds to in-depth analysis of the possible reasons for non-eligibility of temporary employees would doubtless have gained the impression that it was a matter of general policy rather than of difficulty predicting, in a particular case, the longevity of future service.

41. Further evidence was called, without objection, by way of what was said to be an "admission" and rebuttal evidence. I do not consider that Mr Robert Brown's evidence is of much assistance in this regard. He explains the efforts he undertook to explain superannuation entitlements to employees. Whilst he deposes that few temporary employees were interested in joining the Fund, he cannot say why this was so, nor does he suggest that he said anything to the plaintiff about it. It is consistent with his evidence that all industrial temporary employees were convinced there was no point in seeking membership of the Fund.

42. The defendant also relied upon an affidavit of Mr Ian William Smith. Mr Smith had been a labourer employed in the Department of the Interior in 1967. In 1974 his wife, then an employee of the Superannuation Board, suggested he should join the Fund. His foreman told him he was not eligible; it was only for "white collar workers". However, he persisted and was granted membership. I assume he was probably classified as a temporary employee though his affidavit did not expressly say so.

43. All that can be drawn from Mr Smith's experience is that, assuming that little had altered between 1965 and 1974, if the plaintiff or Mr Simpson had persisted with the former's case to be granted membership of the Fund, it is likely that it would have been successful, at the latest, during 1966. That conclusion also follows from Mr Brown's evidence.

44. There was other evidence, which was somewhat equivocal, that certain other workers, notably Mr Heaton himself, who though temporary and industrial, had been already admitted to the Fund at the time the plaintiff was told he was ineligible. It is unnecessary to go into those cases further. The evidence does not, to my mind, cast doubt on the genuineness of the plaintiff's recollection of what he was told by Mr Heaton and Mr Simpson. Indeed, those that knew of Mr Heaton's prior acceptance into the Fund put it down to his war service (see affidavit of Darryl Malcolm Peckham sworn 25 August 2004). The relevance of that seems to have been that returned service personnel had priority in employment. They more readily, indeed almost automatically, satisfied the future employment test. However, other employees would have assumed that it was a privilege somehow bestowed on returned service personnel.

45. It seems to me, and I so find, that, as at the date the plaintiff potentially satisfied the then conditions of s 4(5) of the Superannuation Act, he had not been given any accurate advice as to his legal situation in that respect. Further, the general opinion, as conveyed to him up to that time, was that temporary and "industrial" employees were not eligible for membership. That opinion was confirmed both by the meetings called or, at least, addressed by Mr Heaton but, more particularly, by Mr Simpson.

46. The latter, I am satisfied, also probably believed that, though temporary clerical officers could be accepted to the Fund, industrial employees would not be accepted. I am also satisfied that he undertook the obligation, on the plaintiff's behalf to pursue his application for membership. Though he mistakenly believed that depended on certification of "indefinite" future service, it is clear that his advice, if conveyed to the relevant certifying authority, would have been sufficient to enable the PSB to certify that the plaintiff satisfied s 4(5)(c). Indeed, it is improbable that there would have been any other result.

47. That did not happen because, for whatever reason, and none but oversight seems likely to me, Mr Simpson did not ensure that the Personnel Section's questionnaire was completed and returned. Had it been so completed and returned, I am satisfied that the plaintiff's case would then have been referred to the PSB and that he would, almost certainly, have been accepted for membership of the Fund.

48. It is also apparent that, although genuine attempts were made by management to inform workers of their likely eligibility under s 4(5), those efforts were somewhat perfunctory and inadequate to inform workers, particularly in light of the negative perception in the workplace, that membership of the Fund was indeed open to temporary industrial employees.

49. Mr Hanks QC, pointed out that the plaintiff's claim was that he had been wrongfully dissuaded from joining the Fund on and from 8 May 1965.

50. This is so, but it would not preclude a finding that any wrongful preclusion occurred at a later date.

51. Nevertheless, Mr Hanks contended, whenever the relevant cause or causes of action accrued, they were now barred by s 11 of the Limitation Act 1985 (ACT). The causes of action, he contended, could only have arisen on and from July 1965 when Mr Simpson, so it is said, proffered his well-meaning but erroneous advice to the plaintiff and/or failed to carry out the task he had assumed of progressing the plaintiff's claim for membership of the Fund.

52. He rejected the proposition that the Commonwealth had imposed upon it, presumably by s 4(5) of the Superannuation Act and/or the relationship of employer/employee, any duty to inform or encourage temporary employees to join the Fund.

53. Mr Hanks also submitted, rightly I think, that whatever damage the plaintiff had suffered, on any view of it, crystallised upon his retirement when his accrued superannuation rights became payable were less than would have been the case had the plaintiff applied before 1987 to join the Fund. His retirement was in December 1994.

54. The relevance of 1987 was that, insofar as any cause of action might be supported by the notion of continuing breach (see, eg, Hawkins v Clayton Utz (1988) 164 CLR 539), there was no breach after 1987.

55. It is important, as Mr Hanks correctly submits, to analyse the particular causes of action relied upon by the plaintiff. These were,

(i) Negligent advice by Mr Simpson, as agent of the defendant, as to the plaintiff's ineligibility to join the Fund;

(ii) Negligence on the part of the defendant generally in failing adequately to advise the plaintiff, as a temporary employee, of his entitlement to participate in the Fund and/or to disseminate to him correct advice as to that entitlement.

(iii) Estoppel, as a result of the incorrect advice given to the plaintiff, knowing that he would act in reliance upon it to his detriment, thereby causing him loss.

(iv) Breach of Statutory Duty in that the defendant was under a duty to have caused the PSB (or the Treasurer) to approve the plaintiff for membership of the Fund.

(v) Breach of Contract in that there was to be implied into the plaintiff's contract of employment with the defendant, an obligation on the defendant to both inform the plaintiff of his right to apply under s 4(5) for membership of the Fund and/or otherwise to obtain or seek to obtain the certification that would result in an offer of membership of the Fund.

56. In answer to those allegations, the defendant makes a number of responses,

(1) each claim is barred as from "some 28 years before the proceeding was commenced",

(3) Mr Simpson exceeded his authority in giving the allegedly erroneous advice,

(4) the plaintiff had not acted reasonably in acting on Mr Simpson's advice,

(5) the plaintiff did not rely on that advice, but,

(7) the defendant had no duty to facilitate the plaintiff's membership of the Fund,

(8) none of the servants or agents of the defendant, responsible for the administration of the Act, was unaware of or confused as to the rights of a temporary employee,

(9) the defendant took reasonable steps to ensure that the plaintiff, as a temporary employee at Kingston Depot, was informed as to his potential superannuation entitlements,

(10) the alleged estoppel was legally and factually without foundation,

(11) the defendant had no statutory duty towards the plaintiff of the kind alleged,

(12) the alleged negligence was not a breach of the plaintiff's contract of employment,

(13) any loss or damage suffered by the plaintiff was a consequence of his own failure to make proper enquiries and read relevant material available to him.

57. Some of those contentions can be disposed of, being contrary to the evidence as I have accepted it to be.

58. I have already concluded that the plaintiff was advised, incorrectly, that he was not eligible or would not be accepted for membership of the Fund (2). I do not agree that Mr Simpson lacked authority to advise his subordinates of their rights. He was "the boss". Further, his assistant, Mr Reay, considered that it was his function to give such advice. It cannot be contended that Mr Reay's immediate superior lacked that authority (3). It follows that it was reasonable for a person in the position of the plaintiff to rely on Mr Simpson's advice (4) and I am satisfied he did so (4). It was to the plaintiff's detriment that he did so. Otherwise, he would have been entitled to contribute to the Fund, and would have done so from late 1965 or early 1966, depending on the progress of his application (5).

59. I do not accept, nor is there any support for the view that, even if, as I have found, the plaintiff relied on his Section Head's advice, he should have further checked upon it. With whom? The Secretary? He had already checked on Mr Heaton's advice to him by asking Mr Simpson. I do not accept that it was reasonable to expect that he would go further.(6).

60. The question of a duty of care is one of law. I will address that matter later (7).

61. I simply do not accept that responsible servants or agents were not "confused". Mr Simpson was. Mr Reay may or may not have been. Mr Brown was not. In any event, the lack of confusion of immediately responsible officers renders the advice Mr Simpson gave to the plaintiff the more egregiously wrong and the more likely to have been corrected had they been put in a position to do so (8).

62. I accept that the defendant took some steps to inform employees of their potential entitlements. Whether there was a duty to do more, given those steps were, in fact, ineffective, is a question of law (9).

63. The question of whether there is any estoppel is a further question of law (10). So also are questions (11) and (12).

64. As to (13), I do not consider that the plaintiff is shown to have acted unreasonably in failing, after 1965, to find out that Mr Simpson's advice had been wrong. The plaintiff did not know that Mr Simpson had put his application in train but had failed to follow it through. I do not consider that any allegation of contributory negligence can be substantiated.

65. The first question is whether any of the pleaded causes of action can be found to have arisen.

66. It is true, as the defendant submits, that the 1922 Act, as it stood in 1965, conferred a right to superannuation on permanent employees only. The plaintiff, once he had been employed full-time and continuously by the defendant for three years and had been certified by the PSB as likely to continue to be so employed for at least seven years, was eligible to be deemed by the Treasurer to be an "employee". Hence, he would become a person liable and able to contribute to the Fund.

67. Nevertheless, it was, so far as can be ascertained, the policy of each Treasurer since (and including) Mr J B (Ben) Chifley, to extend superannuation benefits to qualified employees.

68. The legal prerequisites for a cause of action for negligent misstatement commence with the statement by Barwick CJ in MLC Ltd v Evatt [1968] HCA 74; (1968) 122 CLR 556, 571,

... the circumstances must be such as to have caused the speaker or be calculated to cause a reasonable person in the position of the speaker to realize that he is being trusted by the recipient of the information or advice to give information which the recipient believes the speaker to possess or to which the recipient believes the speaker to have access or to give advice, about a matter upon or in respect of which the recipient believes the speaker to possess a capacity or opportunity for judgment, in either case the subject matter of the information or advice being of a serious or business nature. It seems to me that it is this element of trust which the one has of the other which is at the heart of the relevant relationship. I should think that in general this element will arise out of an unequal position of the parties which the recipient reasonably believes to exist. The recipient will believe that the speaker has superior information, either in hand or at hand with respect to the subject matter or that the speaker has greater capacity or opportunity for judgment than the recipient. ...

Then the speaker must realize or the circumstances be such that he ought to have realized that the recipient intends to act upon the information or advice in respect of his property or of himself in connexion with some matter of business or serious consequence. ...

Further, it seems to me that the circumstances must be such that it is reasonable in all the circumstances for the recipient to seek, or to accept, and to rely upon the utterance of the speaker. The nature of the subject matter, the occasion of the interchange, and the identity and relative position of the parties as regards knowledge actual or potential and relevant capacity to form or exercise judgment will all be included in the factors which will determine the reasonableness of the acceptance of, and of the reliance by the recipient upon, the words of the speaker.

69. Whatever may have been the case had the reliance in question been on the utterances of Mr Heaton to the general body of industrial workers at the Kingston Depot, there can be no doubt that Mr Simpson's utterances, directed to the specific position of the plaintiff, entitled the plaintiff to consider that the utterance was one that he could accept as applicable to him. The position of Mr Simpson was vastly superior in Public Service terms to that of the plaintiff. The former was both senior and experienced, he certainly should have known what the truth of the situation was. If he did not, he could very simply have asked colleagues in the PSB.

70. It is apparent that he did make some enquiries as to the process to be followed though he neglected to update himself on the substance of it and, regrettably, failed to follow it through.

71. That the statement of Barwick CJ applies equally to omissions to provide correct advice as to misstatements is clear from Shaddock & Associates v Parramatta City Council (No. 1) [1981] HCA 59; (1981) 150 CLR 225.

72. In truth, the present matter is relevantly indistinguishable from the situation in Glass v The Commonwealth [2003] ACTCA 8, 31 March 2003 (see also Rennie v Commonwealth (1995) 61 FCR 351).

73. It is unnecessary, in my view, to determine whether it was an implied term of the plaintiff's employment contract that he would be given accurate and updated information concerning his rights to apply for superannuation benefits even absent an express statutory obligation. There cannot be any doubt that an employer does undertake not to cause damage to an employee, whether physically or otherwise, by negligent misstatement or other act or omission in breach of a common law or other lawful duty of care.

74. However, whatever the duty or the failure to comply with it, so far as it continued, it was complied with in 1987 when the plaintiff was admitted to the Fund.

75. In any event, the relevant negligence, in my opinion, is that of Mr Simpson, for which the defendant is vicariously liable. He represented to the plaintiff that, so long as he remained an industrial and temporary employee, he would not qualify for superannuation. That was wrong. It could have been remedied had Mr Simpson followed up his original memorandum of 27 July 1965. He did not. Nor did he inform the plaintiff of what he had done, or failed to do.

76. That has resulted in economic loss to the plaintiff. His retirement benefit was worth less than it otherwise would have been, though, of course, he did not suffer the loss of the contributions he otherwise would have been liable to or might have chosen to make.

77. That the loss so generated, though economic, is a recoverable loss is apparent from both Glass and Rennie (supra).

78. The plaintiff's vulnerability to such loss was obvious. The cause of action for negligent misstatement is therefore established.

79. There having been a breach of the common law duty to avoid negligent advice, it is not necessary further to consider a statutory duty. I note that the then Treasurer, Mr J B Chifley, when introducing the amendment resulting in s 4(5), made it clear that long-term temporary employees were all to benefit, and that was, from time to time, official policy. However, there came a time when policy dictated merely reacting to an employee's request. Nevertheless, if Mr Brown represented "the" official view, then the Transport Section of the Department of the Interior was in breach of it.

80. The negligence complained of, as I have found it to be, was also a breach of an implied term of the plaintiff's contract of employment (see Scally v Southern Health and Social Services Board [1992] 1 AC 294.

81. The loss is the difference between lower superannuation benefit actually received and that which otherwise would have accrued (see also Legal & General Assurance Society Ltd v Stock (1993) 49 IR 464.

82. The defendant has, of course, pleaded that it has the benefit of s 11 of the Limitation Act 1985 (ACT). Section 11 (1) imposes a general limitation (unless otherwise provided for) of six years from the date the relevant cause of action first accrues.

83. By way of a general answer to that plea, the plaintiff relies on s 33 of that Act, which provides,

(a) there is a cause of action based on fraud or deceit; or

(b) a fact relevant to a cause of action or the identity of a person against whom a cause of action lies is deliberately concealed;

the time that elapses after a limitation period fixed by or under this Act for the cause of action begins to run and before the date when a person having (either solely or with other persons) the cause of action first discovers, or may with reasonable diligence discover, the fraud, deceit or concealment, as the case may be, does not count in the reckoning of the limitation period for an action on the cause of action by him or her or by a person claiming through him or her against a person answerable for the fraud, deceit or concealment.

(2) Subsection (1) has effect whether the limitation period for the cause of action would, apart from this section, end before or after the date mentioned in that subsection.

(3) Without limiting subsection (1), deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty.

(4) For subsection (1), a person is answerable for fraud, deceit or concealment if, but only if--

(a) he or she is a party to the fraud, deceit or concealment; or

(b) he or she is, in relation to the cause of action, a successor of a party to the fraud, deceit or concealment under a devolution from the party occurring after the date when the fraud, deceit or concealment first occurs.

(5) If property is, after the first occurrence of fraud, deceit or concealment, purchased for valuable consideration by a person who is not a party to the fraud, deceit or concealment and does not, at the time of the purchase, know or have reason to believe that the fraud, deceit or concealment has occurred, subsection (1) does not, in relation to that fraud, deceit or concealment, apply to a limitation period for a cause of action against the purchaser or a person claiming through him or her.

84. In my view, that section does not assist the plaintiff. Whilst I accept that the defendant both offered negligent advice and failed, negligently, to pursue the plaintiff's request for superannuation in 1965 and failed, negligently, thereafter to correct its negligent advice and omission, it did not amount to fraud or deceit. Nor, indeed, does the pleading rise beyond an allegation of negligence.

85. It is clear law that a cause of action in breach of contract accrues when the breach is committed. That was July 1965. Even if the breach continued giving rise to ever-diminishing disadvantage, and I do not positively so find, that ended in 1987.

86. Any cause of action in contract is statute-barred.

87. There is no "cause of action" created by any estoppel. Insofar as it might have some impact, it is merely an evidentiary aid. 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.

88. The defendant does not accept that the cause of action in negligence was not complete as soon as the negligent advice and omissions were perpetrated. It submits that the "lost opportunity" is the damage suffered. That loss, however, though it could continue to be suffered since it first occurred, became product of actual loss only in July 1995 when the plaintiff retired.

89. The fallacy, to which the defendant's argument succumbs, is that the loss is but potential until the plaintiff retired. Even in 1987, it could have been the case that superannuation benefits might have been so altered by the time of his retirement that the net result at the end of the plaintiff's period of service was "no loss". In any event, the loss could not be quantified until the plaintiff's retirement (see Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514 (indemnity - no loss until the indemnity is called on)).

90. In Vulic v Bilinski [1983] 2 NSWLR 472, for example, a solicitor's failure to file an application in time was held productive of loss only when the defendant pleaded a limitation defence. Perhaps an analogous case would be Gorton v Commonwealth of Australia [1992] 2 QdR 603 - failure to inform plaintiff of a war service related disability so that he might earlier have applied for a pension. That decision is not explained on the basis of fraud, but, rather, on the basis that the loss is suffered only when the benefit accrues.

91. Murphy v Overton Investments Pty Ltd (2004) 78 ALJR 324; (2004) 204 ALR 26; [2004] HCA 3, 5 February 2004 was a case of misrepresentation. A lease entered into in consequence resulted in higher fees being incurred by the tenants than had been represented (lease 1992 - proceedings 1999). At [55], the Court (McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ) stated,

... Here, therefore, the appellants suffered no loss as a result of undertaking the obligations they did unless and until the contingency which the misrepresentation hid ... was first realised. That was a contingency in the sense that the adverse risk might never have eventuated. ... [T]his Court's decision in Wardley requires the conclusion, on the evidence in this case, that it was only when the contingency came to pass that the appellants sustained loss or damage. It follows that no limitation defence was available.

92. A similar situation arises in relation to asbestos-related disease. The inhalation of fibres may cause immediate damage, such as psychological damage even before a tumour develops. However, a tumour will take many years to become apparent, say 30 or 40 years, but injury only then arises and the tort giving rise to that injury is then and only then complete (see Orica Ltd v CGU Insurance Ltd [2003] NSWCA 331).

93. In my opinion, the negligence of Mr Simpson was not causative of other than potential loss. That loss was suffered only when the plaintiff retired, not when he joined the Fund in 1987. Even when he joined that Fund, though his benefits therefrom could be calculated, they could not be taken as immune from future change which might lessen his potential loss.

94. I note that this approach is consistent with the decision of Heerey J in Mulcahy v The Hydro-Electric Commission (1998) 85 FCR 170. The difference in that case was that it was the loss of the right to contribute which was complained of.

95. In my opinion, therefore, the cause of action in negligence now relied upon was not complete until the plaintiff retired, that is 31 December 1994. I do not consider that there was any "deliberate concealment" of the plaintiff's rights at that or any earlier time.

96. The six-year period therefore expired on 31 December 2000. As this action was commenced in 1999, it is unnecessary further to consider that issue.

97. The plaintiff is entitled to damages representing the difference between the benefits now payable to him (or paid to him) and the benefit that would have accrued, less the expense of contributing to it, had he joined the Fund in 1965 or 1966 (certainly in the 1965/66 financial year).

98. I will hear the parties as to the quantification of that loss.

99. There will be judgment for the plaintiff for damages to be assessed.

I certify that the preceding ninety-nine (99) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Chief Justice Higgins.

Counsel for the Plaintiff: Mr R Davis and Mr J Gordon

Counsel for the Defendant: Mr P J Hanks QC with Mr C S Ward

Solicitor for the Defendant: Australian Government Solicitor

Date of hearing: 30, 31 August 2004, 1, 2 September 2004

Cornwell v The Commonwealth of Australia [2005] ACTSC 14

At a glance

Court

Decision date

Before

Source

Judgment (160 paragraphs)

Cornwell v The Commonwealth of Australia [2005] ACTSC 14 (4 March 2005)

Parties

Cases Cited (9)