Consideration
35 The new claims for relief are primarily based in allegations that from 1 July 2015 the Commonwealth had knowledge including that:
(a) the notional fortnightly income (or Assumed Fortnightly Income) was not the actual fortnightly income of any applicant or group member and was not referable to or indicative of actual income in any fortnight (paragraph 70A(e));
(b) the fortnightly income assumption (or Assumed Fortnightly Income) was therefore false (paragraph 70A(f));
(c) the entitlement to Social Security Payments was based upon actual fortnightly income and, because the fortnightly income assumption was false, it could not establish the entitlement (or disentitlement) of any applicant or group member to Social Security Payments in any fortnight (paragraph 70A(g));
(d) the Social Security Payment differential was therefore not an overpayment of Social Security Payments or a debt owed to the Commonwealth (paragraph 70A(h));
(e) no asserted Overpayment Debt or associated penalty in respect of any applicant or group member was or is a debt due to the Commonwealth within the meaning of s 1222A of the SS Act (paragraph 70A(i));
(f) the Commonwealth had and has no statutory or other power to raise and recover or seek to recover any Asserted Overpayment Debt, or impose any penalty thereon in respect of any applicant or group member (paragraph 70A(j)); and
(g) the Commonwealth acted unlawfully in determining and asserting against any applicant or group member any Asserted Overpayment Debt, or recalculation of it; requesting or demanding repayment by any applicant or group member of any Asserted Overpayment Debt or recalculation of it; and/or recovering from any applicant or group member and retaining any Asserted Overpayment Debt or recalculation of it (paragraph 70A(k)).
36 The Commonwealth's objections to the 2FASOC focussed on sub-paragraphs 70A(h)-(k) which contain the critical allegations of knowledge of unlawfulness, doing so on the presumption that there was no case for aggravated or exemplary damages without them.
37 Sub-paragraphs 70A(h)-(k) and the particulars provide as follows:
70A Further to paragraph 70, from 1 July 2015 the following matters were known to the Commonwealth:
(a)...
…
(h) the Social Security Payment differential was therefore not an overpayment of Social Security Payments or a debt owed to the Commonwealth;
PARTICULARS TO (g) and (h)
i. The Commonwealth knew that entitlement to Social Security Payments was based upon actual fortnightly income because it was responsible for administering, and did administer, the social security law, which set the entitlement to a Social Security Payment based upon the amount of income actually earned in the relevant fortnight, pursuant to Chapter 3 of the SSA [Commonwealth's Amended Defence par 46.6].
ii. The Commonwealth knew that the Social Security Payment differential was therefore not an overpayment of Social Security Payments or a debt owed to the Commonwealth because the following officers of the Commonwealth knew the matters set out below, and their knowledge pleaded below is the knowledge of the Commonwealth by reason of the positions held by those persons:
a. by 8 January 2017, Malisa Golightly, Deputy Secretary, Integrity Group, referred in an email to the 'fortnightly eligibility test requirement in the SS Act' but also that Robodebt-raised debts were 'automatically calculated' based on information from the Australian Taxation Office that was not referrable to a fortnight [CTH.2000.0001.8109 at .8110];
b. by 8 January 2017, Craig Storen, General Manager, Strategic Information, Compliance and Information Group, had been asked how many, and therefore knew that, Robodebt- raised debts had been raised 'automatically' on the basis of the fortnightly income assumption [CTH.2000.0001.8109 at .8109];
c. by 23 January 2017, Malisa Golightly was in receipt of a Commonwealth document which listed debts of recipients described as 'alleged' and which also described different amounts for those same recipients as 'legitimate' (Debts Spreadsheet) [CTH.0009.0001.0311 at .0315];
d. by 24 January 2017, Annette Musolino was in receipt of a version of the Debts Spreadsheet [CTH.2001.0006.3278];
e. by 25 January 2017, Craig Storen, General Manager, Strategic Information, Compliance and Information Group, and Ms Golightly, were in possession of Commonwealth data that showed 4,884 of 5,629 Robodebt-raised debts had 'subsequently been reassessed', resulting in a decrease to the debt [CTH.0009.0001.0323 at .0326];
f. on or around 1 March 2017, Minister Tudge had received a brief cleared by Ms Golightly which stated that 33% of Robodebt-raised debts 'were changed to $0 on review/reassessment' [CTH.0009.0001.0535 at .0541];
g. on 15 March 2017, Ms Golightly and Ms Musolino became aware of a draft recommendation by the Ombudsman in relation to the Online Compliance Intervention system that the Commonwealth 'should … give further consideration as to how to mitigate the risk of possible over-recovery of debts' and never sought to dispute or qualify that recommendation [CTH.2001.0005.3244, CTH.2001.0005.3245 at .3275];
h. by 7 April 2017, Ms Golightly and Ms Musolino either themselves agreed or were aware that the Commonwealth agreed to the Ombudsman's recommendation set out above [CTH.0009.0001.1801];
i. by around 24 April 2017, Minister Tudge became aware of the same recommendation and never sought to dispute or qualify it [CTH.0009.0001.1801];
j. by 22 April 2018, Ms Musolino had become aware of criticism by Professor Terry Carney of the legality of Robodebt-raised debts [CTH.2001.0009.7055];
k. by 18 September 2018, the Minister for Human Services and Digital Transformation, the Hon Paul Fletcher MP, was told that the Social Security Payment differential was not an overpayment because 'the basis of the ATO data collection is the Income Tax legislation and is therefore required for the financial year, not for lesser periods' [CTH.0009.0001.1104].
The Applicants otherwise refer to and repeat the particulars subjoined to subparagraphs (e) and (f).
(i) no Asserted Overpayment Debt or associated penalty in respect of any Applicant or Group Member was or is a debt due to the Commonwealth within the meaning of section 1222A of the SSA;
(j) the Commonwealth had and has no statutory or other power to raise and recover or seek to recover any Asserted Overpayment Debt, or impose any penalty thereon, in respect of any Applicant or Group Member;
PARTICULARS TO (i) and (j)
i. The Commonwealth knew that an Asserted Overpayment Debt or associated penalty was not a debt due to it within the meaning of section 1222A of the SSA because:
a. it was responsible for administering, and did administer, the social security law, which by section 1223 of the SSA provided that a debt is owed by a person who obtains the benefit of a Social Security Payment but 'was not entitled for any reason to obtain that benefit';
b. however, an Asserted Overpayment Debt was not capable of being a payment to which the Applicant or Group Member 'was not entitled', by reason of the matters subjoined to subparagraphs (e) to (h).
ii. The Commonwealth knew that it had no statutory or other power because it was responsible for administering, and did administer, the social security law, which did not contain any provision empowering it to raise and recover or seek to recover any Asserted Overpayment Debt, or impose any penalty thereon.
(k) the Commonwealth acted unlawfully in:
(i) determining and asserting against any Applicant or Group Member any Asserted Overpayment Debt, or recalculation of it;
(ii) requesting or demanding repayment by any Applicant or Group Member of any Asserted Overpayment Debt, or recalculation of it; and/or
(iii) recovering from any Applicant or Group Member and retaining any Asserted Overpayment Debt, or recalculation of it.
PARTICULARS
i. The Commonwealth knew of these matters (including their unlawfulness) because:
a. it was party to Administrative Appeals Tribunal reviews in which Asserted Overpayment Debts had been set aside on the basis that the fortnightly income assumption could not lawfully support the existence of a debt, and which it elected not to appeal or have reviewed (AAT Unlawful Debt Decisions), including the 76 decisions of:
i. [Here followed a list of 76 decisions of the AAT constituted by various different members from 17 February 2017 until 3 December 2019]
…
b. section 8(f) of the SSA provided that in administering the social security law, the Secretary was to have regard to the need to apply government policy in accordance with the law and with due regard to relevant decisions of the Tribunal, which included the AAT Unlawful Debt Decisions;
c. it had conducted analysis of these decisions described by Mr Storen on 5 June 2018 [CTH.2000.0008.1516];
d. on or around 27 November 2019 it consented to orders and declarations, and agreed to a statement of facts upon which these orders and declarations were made, in the Federal Court of Australia (Davies J) in Amato v Commonwealth of Australia VID611 of 2019;
ii. The Commonwealth also knew of these matters (including their unlawfulness) because the following officers of the Commonwealth knew the matters set out below, knowledge of such persons being knowledge of the Commonwealth by reason of the positions held by those persons:
a. by 4 April 2018, Mr Storen had become aware of criticism by Professor Terry Carney questioning the legality of Robodebt-raised debts [CTH.2000.0007.5561];
b. by 13 April 2018, Deputy Secretaries and Ms Musolino had become aware of criticism by Professor Carney questioning the legality of Robodebt-raised debts [CTH.2001.0009.6833];
c. by 22 April 2018, Ms Musolino and Mr McNamara had become aware of further criticism by Professor Carney questioning the legality of Robodebt-raised debts [CTH.2001.0009.7055];
d. on 15 May 2018, Ms Musolino chaired a meeting with the Ombudsman in which the 'issues raised in the article by Professor Carney' were discussed' [CTH.2001.0009.8585];
e. on 19 December 2018, Mr McNamara, Mr Storen and Ms Musolino had become aware of an article by Professor Carney in which the Robodebt system was described as 'unlawful' [CTH.2001.0012.1134, CTH.2001.0012
38 I reached the conclusion that it was appropriate to grant leave to amend in the form of the revised 2FASOC for the following reasons.
39 First, I do not accept that the application for amendment was made too late, or contrary to the overarching obligation in s 37M of the Federal Court of Australia Act 1976 (Cth) or the principles in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175. The applicants did not press any such argument in relation to the 2FASOC but when the application for leave to file and serve the first proposed 2FASOC was before the Court on 31 August 2020 the Commonwealth opposed leave on the basis that the pleading raised new and significant legal and factual issues only weeks before trial, without any explanation as to why the substantial additional claims and allegations were proposed to be included in the proceeding.
40 I have no difficulty in accepting that the 2FASOC raises new and significant factual and legal issues. The allegations that the Commonwealth had knowledge that its automated system for identifying overpayments and raising, asserting and recovering Asserted Overpayment Debts based on income averaging from ATO income data was unlawful are serious matters. There was, however, little merit in the contention that the application was brought very late and without explanation given the matters set out below.
41 This is a large and complex proceeding, only commenced in November 2019, which was brought on for final hearing with expedition, with the agreement of both parties. The proceeding involved a substantial and expedited discovery process, including disputed claims for legal professional privilege and public interest immunity, and discovery was still proceeding as the hearing date approached. The preparations for trial were also affected by the Sars-CoV-2 related restrictions in Victoria (being Stage 3 restrictions from March to 1 July 2020- and Stage 4 restrictions from 2 August 2020), and there was a question as to whether the Chief Justice would determine the case to be urgent or priority such that it could proceed while Stage 4 restrictions remained in place. That meant that there was a risk that the 21 September trial date would not be viable, through no fault of either party. Indeed, in the circumstances as they existed it is a credit to the parties that the proceeding is in the state of readiness that it is. This is not a case like Aon where there was a lack of reasonable diligence on the part of the moving party such as to justify refusal to grant the amendment.
42 Senior counsel for the applicants said at the 16 June 2020 case management hearing that the applicants intended to file an amended pleading by mid-August 2020 in which they would advance a claim for exemplary damages. Senior counsel said, responsibly in my view, that the applicants preferred to wait for discovery to be complete before finalising their pleading. Senior counsel for the Commonwealth said he was not "overly concerned" about an expansion of the case to include a claim for exemplary damages, although he would have concerns if the case was expanded to include a claim of misfeasance in public office. In the circumstances the Commonwealth could not have been surprised by addition of the claim for exemplary damages in the 2FASOC and it should not have submitted that the application was brought too late and without explanation.
43 Second, it is appropriate to consider the Commonwealth's complaints regarding the 2FASOC in the context of the other measures adopted to ensure that the parties understand the opposing case, and are not ambushed at trial. The pre-trial timetable provides for the parties to put on witness statements well in advance of trial, to prepare a Court Book identifying the documents that are to be adduced in evidence, the agreement of a joint list of factual and legal issues to be filed with the Court, and for opening and closing written submissions based on an agreed template which follows the joint list of factual and legal issues. As observed in Barclay Mowlem (at [5]), such processes leave very little opportunity for surprise or ambush at trial and it is appropriate to approach the pleadings in that context and therefore in a robust manner. Having regard to that, I consider the 2FASOC sufficiently defines the issues for trial, puts the Commonwealth on notice as to the case it must meet, and advances claims which cannot properly be described as unarguable. There was no real suggestion by the Commonwealth that it did not understand the case being put.
44 Third, the Commonwealth contended that sub-paragraphs 70A(h)-(k) have what it described as a 'temporal problem' in that the various matters alleged to have been known to the Commonwealth are alleged to have been known from 1 July 2015 (chapeaux to 70A), yet the only meaningful particulars provide that such knowledge arose at the earliest in 2017. It argued that it is no answer to say that the applicants' case is one of knowledge accumulating over time as that is not what is pleaded and it would be irrelevant in any event.
45 Initially this argument held some attraction but in the finish I concluded that the Commonwealth overstated the position. The main purposes of pleadings are to put the other side on notice of the case it is required to meet so as to avoid surprise to that party, to define the issues at trial, and to enable an assessment as to whether they give rise to an arguable cause of action or defence. In my view the allegations of knowledge of unlawfulness in the 2FASOC meet those purposes.
46 The period over which the 2FASOC alleges that the Commonwealth had knowledge of the relevant matters is clearly expressed and there could be no suggestion of ambiguity or uncertainty as to the time period. The Commonwealth did not really press an argument that it was untenable to allege that the Commonwealth knew of the various matters from 1 July 2015. Rather, its submissions boiled down to the proposition that for the period from 1 July 2015 until early 2017, the applicants failed to properly support or particularise the claim of knowledge of unlawfulness. The Commonwealth relied upon the fact that subparagraphs 70A(h)-(k) and their particulars, being the primary allegations in regard to knowledge of unlawfulness, referred only to matters from January 2017 onwards.
47 But the allegations of knowledge of unlawfulness are not restricted to the matters only in sub-paragraphs 70A(h)-(k). For example sub-paragraph 70A(f)(i) alleges that the Commonwealth knew that the fortnightly income assumption was false because it was arithmetically inherent that averaging from a longer period to a shorter period would not yield the actual income for the shorter period actually worked. Sub-paragraph 70A(h)(i) alleges that the Commonwealth knew that the Social Security Payment differential was not an overpayment of Social Security Payments or a debt owed to the Commonwealth because the Commonwealth knew that entitlement to Social Security payment is based upon actual fortnightly income, rather than upon notional fortnightly income or Assumed Fortnightly Income. This is a claim that it should be inferred from the (asserted) obviousness of the fact that notional fortnightly income is not actual fortnightly income that the Commonwealth knew that its automated system for raising, asserting and recovering Asserted Overpayment Debts based on income averaging from ATO income data was unlawful.
48 Essentially, the applicants contend that it was obvious to anybody that a social security recipient's notional fortnightly income was not the same as their actual fortnightly income; and an earlier version of the pleading alleged it was so obvious that it was self-evident that the Commonwealth knew it was unlawful. That might be criticised as a weak basis for asserting knowledge of unlawfulness on the part of the Commonwealth in the period from 1 July 2015 until the particularised dates that senior Commonwealth officers are alleged to have had such knowledge, but it is maintainable. The 2FASOC makes sufficiently clear the case the Commonwealth must meet.
49 Nor is January 2017 the earliest of the particulars which identify named Commonwealth officers as having knowledge of unlawfulness. Sub-paragraph 70A(f)(ii) alleges that the Commonwealth knew that the notional fortnightly income was not the actual fortnightly income through several identified senior officers of the Commonwealth, commencing with the allegation that on 26 May 2016 Annette Musolino, Chief Counsel, Legal Services Division, along with other senior officers of the Commonwealth, was present at a meeting with the Commonwealth Ombudsman where the Ombudsman raised "the common practice of employers default reporting for the period June to July when the employee has been employed for a shorter period". That does not expressly plead knowledge of unlawfulness but knowledge that notional fortnightly income is not actual fortnightly income because employers commonly reported to the ATO that income had been earned over a full year notwithstanding that the employee worked for a shorter period or periods, coupled with the asserted obviousness that notional fortnightly income could not be understood to be equivalent to actual fortnightly income, might be capable of supporting an inference that Ms Musolino had knowledge that a debt asserted on the basis of notional income had no proper legal foundation. Whether it is appropriate to draw such an inference is a matter for determination on the evidence and at final hearing.
50 Fourth, the Commonwealth argued that sub-paragraphs 70A(h) and 70A(k) have the deficiency that the particulars name certain Commonwealth officers whose knowledge the applicants contend was the knowledge of the Commonwealth, but the limits of what the applicants particularised those people as having known is information that was set out in documents sent or received by those people. It contended that information does not give rise to the broader allegation of knowledge of unlawfulness that the sub-paragraphs allege the Commonwealth had through these people.
51 As an example the Commonwealth points to sub-paragraph 70A(h)(ii) (as set out above) which alleges that the identified senior officers "knew of the matters set out below" and because of this the Commonwealth "knew that the Social Security Payment differential was therefore not an overpayment of Social Security Payments or a debt owed to the Commonwealth." It argued that this ultimate conclusion is a conclusion of law as to whether a debt is owed yet the knowledge identified of the relevant people does not rise anywhere near this level. For example, Craig Storen, General Manager, Strategic Information, Compliance and Information Group is alleged to have been asked how many Robodebt-raise debts had been raised 'automatically' on the basis of the fortnightly income assumption and therefore knew that (70A(h)(ii)(b)) and to have been "in possession of Commonwealth data that showed 4,884 of 5,629 Robodebt-raised debts had 'subsequently been reassessed' resulting in a decrease to the debt (70A(h)(ii)(e)).
52 The Commonwealth contended that it is 'impossible' that this constituted knowledge by Mr Storen that "the Social Security Payment differential was therefore not…a debt owed to the Commonwealth", and that none of the other examples rise to that level either. It contended that if the applicants were intending to assert a case of aggregated knowledge that was not explicable from the pleading.
53 Again, the main purpose of pleadings is to put the other side on notice of the case it is required to meet so as to avoid surprise to that party, to define the issues at trial, and to enable an assessment as to whether they give rise to an arguable cause of action or defence. In my view these parts of the 2FASOC meet those purposes. The applicants' case is against the Commonwealth, and not against the five senior officers of the Commonwealth who are pleaded to have had the knowledge from which the knowledge of matters imputed to the Commonwealth may be inferred. The applicants submitted, and I accept, that the pleading invites the Court to make findings in respect of allegations that:
(a) the Commonwealth, through Ms Musolino, Minister Tudge and Malisa Golightly, the Deputy Secretary of the Integrity Group, had knowledge that the notional fortnightly income was not actual fortnightly income (because of the particulars to sub-paragraphs 70A(e) and (f));
(b) the Commonwealth, through Ms Golightly, Mr Storen, Ms Musolino, Minister Tudge and Minister Fletcher, had knowledge that the alleged overpayments were not debts owed to the Commonwealth (because of the particulars to sub-paragraphs 70A(g) and (h));
(c) the Commonwealth, through Ms Musolino, Mr Storen and Jason McNamara, Deputy Secretary of the Integrity Group, had knowledge that the Commonwealth acted unlawfully (because of the particulars to sub-paragraphs 70A(k)); and
(d) the Commonwealth, through Ms Golightly, Ms Musolino, Mr Storen, and Minister Tudge had knowledge that levying and enforcement of Asserted Overpayment Debts would cause significant concern, stress, anxiety and stigma and significant financial hardship for the applicants and group members (because of the particulars to sub-paragraphs 70A(l) and (m)).
54 For example, sub-paragraphs 70A(g)-(h) allege that the Commonwealth knew that entitlement to Social Security Payments was based upon actual rather than notional fortnightly income as it was administering the Social Security system. It alleges that the Commonwealth knew that the Social Security Payment differential was not an overpayment of Social Security Payments or a debt owed to the Commonwealth by reference to the knowledge of senior officers of the Commonwealth. In relation to Ms Golightly, for example, it is alleged that:
(a) on 8 January 2017 she sent an email stating that Robodebt-raised debts were 'automatically calculated' based on information from the ATO that was not referable to a fortnight;
(b) on 23 January 2017 she received a Commonwealth document which listed the debts of some Social Security recipients as "alleged" and others as "legitimate";
(c) on 15 March 2017 she became aware of a draft recommendation by the Commonwealth Ombudsman recommending that the Commonwealth "should…give further consideration as to how to mitigate the risk of possible over recovery of debts" and did not seek to dispute or qualify that recommendation; and
(d) on 7 April 2017 she either agreed or was aware that the Commonwealth agreed to the Ombudsman's recommendation.
55 That can be criticised as a weak basis for asserting knowledge of unlawfulness on the part of Ms Golightly, and through her the Commonwealth, but it is not 'impossible' or 'hopeless' to argue that it should be inferred that by drafting and reading the relevant documents Ms Golightly must have become conscious of the (as asserted) obvious implication that, without more, the differential between a person's notional fortnightly income and the level of social security payments the person received could not constitute an overpayment of Social Security benefits and a debt to the Commonwealth. Now is not the appropriate time to determine the inferences that might or should be drawn as to Ms Golightly's knowledge of unlawfulness from the relevant documents, particularly when the Court has not seen any of the documents, heard evidence from Ms Golightly or heard other evidence which might throw light on the proper inferences to be drawn, if any.
56 Nor is it 'impossible' or 'hopeless' to argue that it should be inferred that the Commonwealth must have known that it was acting unlawfully in its automated system for identifying overpayments and raising, asserting and recovering Asserted Overpayment Debts based on income averaging from ATO income data, because it was a respondent to 76 AAT decisions from February 2017 to December 2019 in which the Asserted Overpayment Debts were set aside by various different members of the AAT on the basis that the fortnightly income assumption could not lawfully support the existence of a debt, and which the Commonwealth elected not to appeal or have reviewed (sub-paragraph 70A(k)(i)). That allegation is coupled with the allegation that Mr Storen analysed those decisions on 5 June 2018. I am not persuaded that it is hopeless or unarguable to contend that it is appropriate to infer from the AAT decisions and from Mr Storen's analysis of the decisions that he was conscious of the unlawfulness alleged. The same goes for the other pleadings and particulars in relation to the other identified senior officers, and it is unnecessary to go through them seriatim.
57 Fifth, the Commonwealth contended that the 2FASOC has "an attribution and purpose problem". It argued that the particulars at their highest assert that "certain people knew certain things and then assert that therefore this means the Respondent knew something more significant." It submitted that the logic of that is not apparent and, moreover, it is not identified how the knowledge of different people in different roles at different times is said to be aggregated, or why these other relevant people for the purpose of attributing knowledge. The Commonwealth argued that while the particulars identified the positions of the five senior officers it did not identify the role that those people are said to have played in relation to the administration of the automated system at the relevant point in time or what decision or task they undertook that is said to have been done with knowledge.
58 In my view this contention can be put aside. The 2FASOC does not allege that by reason of each identified senior officers' knowledge, taken together and aggregated, the Commonwealth had knowledge. It alleges that the Commonwealth, through the five senior officers, had the knowledge alleged in the relevant sub-paragraphs. That is, that each of those officers knew the matters alleged in relation to that officer, and that through them the Commonwealth knew.
59 The Applicants' Opening Submissions appear to confirm this, as they do not advance an argument based upon aggregation of knowledge. For example in relation to Ms Golightly the Applicants' Opening Submissions state (at [115]) that she knew that income averaging led to assertions of debt that were incorrect and before me the applicants submitted that allegation arises directly from the terms of sub-paragraph 70A(e)-(h).
60 Sixth, the Commonwealth contended that there is a difficulty with the claim for aggravated damages as it appears to make a claim for the same damages that are claimed for the stress, anxiety and stigma alleged to have been suffered by the applicants and group members as a consequence of the Commonwealth's negligence. It argued that there is no explanation in the pleading as to what the difference is, how aggravated damages function together with 'ordinary' damages for negligence, when if at all the claim for aggravated damages has any work to do, or, in this respect, what the Court is being asked to determine.
61 I do not accept that the 2FASOC is defective or objectionable because it does not include an explanation of the nature of the claim for aggravated damages in negligence, or how it meshes with the claim for general damages. The classic description of aggravated damages is that of Windeyer J in Uren v John Fairfax & Sons Pty Limited [1966] HCA 40; (1966) 117 CLR 118 at 149, where his Honour said:
...[a]ggravated damages are given to compensate the plaintiff when the harm done to him by a wrongful act was aggravated by the manner in which the act was done: exemplary damages, on the other hand, are intended to punish the defendant and presumably to serve one or more of the objects of punishment - moral retribution or deterrence.
Aggravated damages are said to compensate for intangible injuries being awarded for 'injury to the plaintiff's feelings caused by insult, humiliation and the like': Lamb v Cotogno (1987) 164 CLR 1 at 8 (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ). They are compensatory in nature, and the methodology employed by courts ordinarily involves consideration of whether compensatory damages should be enlarged to include an additional component for the aggravated circumstances associated with the relevant wrongful conduct: see Gray v Motor Accident Commission (1998) 196 CLR 1 at [101] (Kirby J). As noted in Gray the conduct or affront said to justify an award of aggravated damages or an award of exemplary damages may coincide and overlap, but with aggravated damages any award is for "an additional element in the plaintiff's compensatory damages" for the affront.
62 The 2FASOC makes it clear that the applicants rely upon the same conduct in their claim for aggravated damages as they do for exemplary damages. Thus the claim is founded in allegations that the Commonwealth had knowledge of the vulnerabilities of some of the applicants or group members; knowledge that the automated system for identifying overpayments and raising, asserting and recovering Asserted Overpayment Debts based on income averaging from ATO income data led to the assertion of debts against the applicants and class members for amounts which may not and in many cases were not actually owed; knowledge that it had no statutory or other power to seek to recover such debts; and knowledge that it was acting unlawfully in asserting such debts.
63 The test for whether the claim for aggravated damages can be pleaded are settled; and such a claim is maintainable unless it has no reasonable prospect of success. Some doubts have been expressed as to whether aggravated damages are available under Australian law in a negligence action: see Hunter Area Health Service v Marchlewski (2000) 51 NSWLR 268 at [110] (Mason P with whom Stein and Heydon JJA agreed); Crump v Equine Nutrition Systems Pty Ltd [2006] NSWSC 512 at [308] (Hoeben J). But the issue is a matter for full argument which I did not have the benefit of. Further, notwithstanding that the claim may be difficult or problematic, it is appropriate to be cautious before exercising the discretion to refuse to allow the claim to be pleaded when the Court will be required to hear and determine the same factual matters in relation to the claim for exemplary damages. It will be more efficient and just to determine the availability of a claim for aggravated damages in negligence at trial: see Johnson Tiles Pty Ltd v Esso Australia Ltd [1999] FCA 1645; (2000) ATPR 41-743 at [61] (Merkel J): Wickstead v Browne (1992) 30 NSWLR 1 at 5 (Kirby J) and on appeal to the High Court (1993) 10 Leg.Rep page SL 2.