On 12 August 2024 the Commonwealth of Australia, which is the defendant in these representative proceedings, filed a Motion seeking relief in the following way:
"1. The Defendant has leave to rely on the Statements of Contentions set out in Tab 17 of Exhibit JWM-1 to the affidavit of Jason Willi Alexander Munstermann sworn 12 August 2024.
2. The Senior Referee may make directions related to the service by the Defendant of additional Statements of Contentions in respect of other group members that are the subject of assessment in the Reference.
3. The Defendant has leave to rely on Statements of Contentions it serves in accordance with such directions of the Senior Referee."
Alternative orders were sought, which referred to the possibility of amending Defences.
The background, in short, to this Notice of Motion is that by an order of 18 August 2023, this Court appointed a Senior Referee to conduct inquiries and prepare reports to the Court in respect of the remaining group members in the litigation on two questions. Those questions were:
"1. What is the value, if any, for each of the remaining group members of the lost opportunity to seek employment and earn income having obtained a Certificate IV qualification pursuant to the Training Contract whether within the Navy or outside the Navy.
2. The amount of damages (if any) payable by the defendant to the Remaining Group Member, including interest calculated in accordance with section 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16."
Those orders were made after a series of hearings in this Division and in the Court of Appeal; the most recent of which was Searle v Commonwealth of Australia (No 9) [2023] NSWSC 215. It will be convenient to refer to this judgment as "Searle (No 9)".
In Searle (No 9) I assessed damages in respect of nine different group members in the representative proceeding. In so doing, I dealt with a range of issues raised by the parties and set out in the course of that judgment the appropriate approach to be followed in an assessment of damages of the kind which arises in this proceeding.
Searle v Commonwealth of Australia [2024] NSWSC 1275 | Case summary | Zoe
I will not here repeat what I said in Searle (No 9), but I note that having established the appropriate approach to the assessment of the value of the lost opportunity to engage in work, whether within or else outside, the Navy with a Certificate IV in Engineering qualification, I would expect that any further assessment of the remaining claims would follow a similar methodology.
The Senior Referee, in consultation with the parties, set out a timetable by which the claims of the remaining group members could be assessed. With the agreement of the parties, various group members were divided into sample groups by reference to the expert stream which they were following. It was intended that the Referees deal with each of those sample groups first and then the parties would review the procedure to be followed for the balance of the group members.
The first sample group to have their claims determined are those group members from the electrical fitting stream. Those individuals have been referred to variously as either the Electrical Fitting Sample Group, (EFSG); or the Electrical Sample Group (ESG), either description is apt.
The Senior Referee and the parties had difficulty in the early part of 2024 in finding specific dates when the evidence of the EFSG group members could be taken and the dates upon which expert evidence could be taken. Ultimately, by 24 April 2024, the parties established a period of two weeks between 1 and 12 July 2024, when the evidence of the EFSG members could be taken. The parties have set aside time in October for the taking of evidence of the experts, who give opinions relevant to the claims of each of the EFSG members.
On 24 April 2024, orders were made that the claimants were to serve their lay evidence by 26 April 2024, which was later than an earlier agreed date but which order was complied with. It was anticipated that exchange of documents, by way of discovery, would have been completed by that time and indeed at a much earlier time. For reasons for which it is unnecessary to explore, the provision of documents by way of discovery occupied until about mid‑April 2024, although it must be said a substantial amount of that discovery occurred much earlier than that date.
At the meeting with the Senior Registrar on 24 April 2024, it was agreed the claimants would serve their expert evidence for the EFSG members by 15 May 2024; that the Commonwealth would serve its lay and expert evidence in response by 12 June 2024; and that the claimants would serve any reply evidence by 26 June 2024 - all of which preceded, but ultimately only by a few days, the time set aside for the oral evidence.
In the events which occurred, that timetable was not successfully complied with. The claimants relied on reports of Mr Hunter, which continued to be served up until 4 June 2024. Four of a total of 17 reports had been served by 15 May 2024, the fixed date. The Commonwealth's time for serving evidence in response was fixed at a month after the claimants' service.
The Commonwealth served its first three expert reports in reply on 1 July 2024, which was about six weeks or so after they received the claimants' experts' reports, and continued to serve the balance of the expert reports through to 12 July 2024.
With each of the expert reports, the Commonwealth served what it described as a "Statement of Contention". The Statements of Contention set out, in short form, the points which the Commonwealth wished to make by way of defence to the individual claims. Much of those Statements of Contention are not the subject of any complaint or issue before me. I interpolate here to say that the Statements of Contention seem to me to be a short summary of the submissions which the Commonwealth anticipates it would make at the conclusion of the evidence in respect of each claimant.
Whilst significant attention had been paid by the parties to all of the steps which should be taken to ensure these sample group claims were ready for a hearing, those steps did not include making any provision for a short form of pleading by way of points of claim and points of defence, or perhaps, a summary of the claimants' claim and a response by the Commonwealth of a kind that one might see in a piece of individual litigation in this Court.
Accordingly, as at 1 July 2024, the parties proposed that the Referees hear and determine the questions which had been referred to them and that the parties would lead evidence, and in due course make submissions, and the Referees would respond.
Against that background, and in light of the close proximity of the provision of the Statements of Contention by the Commonwealth to the claimants to their giving of evidence and having regard in particular to one component of the Statements of Contention, objection was taken by the claimants' lawyers to the Commonwealth relying on these Statements of Contention. Having regard to the significant investment of costs and the time set aside for the hearings, the parties sensibly agreed that those hearings should proceed and that the outstanding issues with respect to the Statements of Contention, and a similar issue, be brought before this Court for a determination by this Court, hence, the Commonwealth's Notice of Motion.
The particular issue which has caused objection to be raised is one which can fall under the description "failure to mitigate loss". Some examples can be identified from the Statements of Contention. In the case of Mr Ross, paragraph 6 of the Statements of Contention reads:
"Alternatively, Mr Ross failed to mitigate the losses that he has otherwise suffered:
(a) by travelling and working in the hospitality industry instead of seeking to maximise his income by pursuing employment using the skills, experience and qualifications he had obtained in the Navy;
(b) by not seeking the alternative employment identified in the Duncan report; and
(c) by not completing his Certificate III or Certificate IV in Engineering."
Another example is in the claim of Mr Green where the same paragraph pleads:
"Alternatively, Mr Green failed to mitigate the losses that he has otherwise suffered by not seeking the alternative employment identified in the Duncan report."
In the case of another claimant, Mr Doughty, paragraph 6 of the Statements of Contention is in the following form:
"Alternatively Mr Doughty failed to mitigate the losses that he has otherwise suffered by not continuing with his employment at Downer EDI."
A further example is to be found in the claim of Mr Handford, where the paragraph reads:
"Alternatively Mr Handford failed to mitigate the losses that he has otherwise suffered:
(a) by undertaking university study and relatively low paid employment instead of seeking to maximise his income by pursuing employment using the skills, experience and qualifications he had obtained in the Navy;
(b) by not seeking the alternative employment identified in the Duncan report; and
(c) by not completing his Certificate III or Certificate IV in Engineering."
The allegation of failure to mitigate losses was not contained in each of the Statements of Contention and was often described in words similar to those examples which I have set out above.
The claimants submit that a pleading of failure to mitigate losses is one which should be contained in the Statement of Defence and that in the history of these proceedings, the Commonwealth had previously sought relief to allow it to plead the mitigation of loss but that relief had been rejected.
The claimants submit that this was a case where once again at the very last minute, in effect, by way of, in effect, an amended pleading, the Commonwealth has sought to rely upon a failure to mitigate the loss which each claimant has sustained. The claimants submit they are prejudiced by that because it will be necessary for them to revisit each claimant's case to examine whether or not they will need to put on additional lay or expert evidence; and that would result in a good deal of cost, expense and consequential delay for the EFSG members in having their assessments determined.
They submit, contrary to the case advanced for the Commonwealth, that the Commonwealth could have and ought to have raised the matter much earlier. In that respect they rely upon the exchange of correspondence between the parties many months ago, drawing the Commonwealth's attention to the need for it to do so.
The Commonwealth submits that it should be entitled to rely with respect to the claim of the EFSG claimants and, as well, the balance of the remaining group members on an argument or submission that the claimants had failed to mitigate their loss. The Commonwealth submits that the notion of a failure to mitigate loss is a well-known legal conclusion to be drawn from conduct in which individuals engaged and the Commonwealth submits it is clear that the conduct upon which the assertion of failure to mitigate is made was well within the range of factual conduct to be considered by the Referees in the course of the hearing.
The purpose of the Court in a representative proceeding referring out questions to referees is to enable the issues between the parties to be determined with as much efficiency and speed as is possible and, generally, at a cost which is less than that which would be involved in a formal Court hearing.
Nevertheless, any hearing before a referee must be conducted by the parties and the referee in a way which ensures that the questions referred for consideration and determination are addressed fully and, at the same time, that they are addressed in a way which is procedurally fair between the parties. That is not to say that a referee hearing and determination of a reference must follow precisely exactly what occurs in a courtroom. If that were so, then there would be little point in making references out to referees. The referee has the discretion to mould the procedure in a way which achieves the aims of the reference but remains procedurally fair to all parties.
In the events which occurred here, and I specifically refrain from allocating any fault to one party or the other, but rather I prefer to consider that what occurred here was a genuine attempt by the parties to keep dates for hearings which were difficult to find and to address any procedural issues later, the claimants have been confronted with a significant late allegation by way of a legal defence in their individual cases, namely, that they failed to mitigate their loss in the ways pleaded.
Having regard to the contents of Searle v The Commonwealth of Australia [2018] NSWSC 105 it is obvious that this is not the first time that the Commonwealth has thought about advancing an argument under the legal rubric of failure to mitigate loss. The consequence of the February 2018 decision in Searle is that the Commonwealth was on notice that any such allegation needed to be raised and notified in a timely way. The reason that such an allegation needs to be raised and notified in a timely way is that it is an allegation to which further evidence of a claimant may be relevant, and the claimants need an opportunity to consider the allegation, determine how they will respond, and then engage in the response.
In the circumstances which have happened here, I am satisfied that the notice given of such an allegation, as it was very close in time to the hearing of the claimant's evidence, was insufficient to enable the Commonwealth to fairly rely upon such legal argument. Accordingly, in the cases of the EFSG members, I would not permit the Commonwealth to rely upon any paragraph of the Statement of Contention which is generally the final paragraph in the Statements Of Contention where the Commonwealth raises a failure to mitigate losses on the part of the claimant.
However, there is absolutely no reason why such an allegation cannot be made with respect to any other group member, and the claims being advanced by any other group member where applicable, in the assessment of the individual claims for damages provided that adequate and timely notice is given. It would be appropriate for the parties to invite the Referee to formulate directions which would enable the timely setting out by the claimant of what they contend for in their case, and for the Commonwealth to be given an opportunity, in a timely way, to respond. That way there can be no offence to any question of procedural fairness.
However, my ruling with respect to those paragraphs of the Statements Of Contention should not be understood to preclude the Commonwealth from including in any submission with respect to the EFSG claimants the matters referred to in the subparagraphs upon which it relies as a failure to mitigate loss which are matters of fact and which would be available, subject to relevance, for the Referee to take into account as one or more of the integers relevant to the assessment by the Referee of the value of the lost opportunity as set out in Question 1 of the reference.
To be clear, using the Statements of Contention with respect to Mr Samuel Ross, the matters set out in 6(a) and 6(b) which I have quoted above, are matters of fact which, subject to any contrary submission, would be available to be considered by the Referee as integers to be taken into account and considered in forming an assessment of the value of the lost opportunity referred to in Question 1.
I note that there is an argument to be advanced by the claimants that the content of the expert report of Mr Duncan in respect of each claimant, insofar as it deals with what is described between the parties as "Issue 2 of the Duncan report", is irrelevant.
This judgment should be understood in this way: The judgment does not prevent the Commonwealth from advancing as a relevant integer the matters known as "Duncan Issue 2". This judgment does not prevent the claimants submitting to the Referee that "Duncan Issue 2" is wholly irrelevant to their assessment of the value of the lost opportunity. Whether or not, and the extent to which that part of Mr Duncan's report is in fact relevant or carries weight in the consideration of the assessment or else is of no weight and is wholly irrelevant to the assessment, is a matter to be determined by the Referee as part of the assessment. The determination of that matter will involve weighing up the competing contentions of the Commonwealth and the claimants as to the relevance and weight of the evidence given by Mr Duncan with respect to "Duncan Issue 2".
Insofar as the Commonwealth seeks to rely upon the balance of its Statements of Contention, leaving aside the matters which I have already discussed, there seems to me to be no reason why they should not be so entitled, and it will be necessary to make an order confirming that.
I should add that, given that there is now an inability on the part of the Commonwealth to assert in respect of the EFSG members that any of them have failed to mitigate their loss, and given that, as I understand it from submissions from counsel, subject to that issue, the evidence of the claimants has been taken in full and has concluded, I am not in a position to determine whether allowing the Commonwealth to rely upon the Statements of Contention to the extent that I have would require any further evidence from or on behalf of a claimant.
If there is to be such evidence arising from the Statements of Contention outside of the failure to mitigate loss, which can be established to arise from the arguments set out in those Statements of Contention, then the parties ought to address that matter by making provision for the service of any further evidence and hearing dates for the taking of any further oral evidence on those matters.
The parties may formulate orders to give effect to that proposition, keeping in mind that such evidence may be necessary to avoid any procedural unfairness.
The consequence of this decision on the issues is, I hope, clear. If I may attempt to summarise it: the matters of fact and opinion sought to be relied upon by the Commonwealth, which are presently subsumed in a pleading of failure to mitigate loss, can be relied upon as integers in the assessment process to be undertaken by the Referees subject, in the case of Duncan Issue 2, to a determination by the Referee as to the relevance and weight to be given to such issue.
Secondly, insofar as the members of the EFSG are concerned, the Commonwealth is not permitted to advance any argument that anyone or other claimant or member of that sample group, has failed to mitigate their loss. In respect of all future group members, it is open to the Commonwealth, providing it gives timely notice, to advance an argument that the individual claimant has failed to mitigate their loss.
To give effect to all of these conclusions, I invite the parties to confer and provide an agreed form of order and, if not, the orders for which each of them contend.
Insofar as it was thought prudent by the Commonwealth, as an alternative relief, to seek leave to file an Amended Defence, in my view that is not the appropriate course to follow. The Defence to the relevant Statement of Claim is a pleading of generality to the representative action. The representative action has reached the stage of assessing the claims of individuals. Issues will be particular to those individuals and a course not of formal or strict pleading but, rather, of notification of the claimant's case and the Commonwealth's response to that case, should be instituted and followed.
[2]
Addendum
After delivery of these ex tempore reasons, the parties agreed to the orders set out below. They have been made.
[3]
Orders Agreed by the Parties:
1. Pursuant to rule 20.17(1)(c) of the Uniform Civil Procedure Rules 2005 (NSW), the Court gives the following instructions in relation to the reference being conducted pursuant to the orders made on 18 August 2023:
1. the Commonwealth is not permitted to submit that any of the Electrical Fitter Sample Group Members failed to mitigate his losses;
2. the Commonwealth is otherwise entitled to rely upon the Statements of Contention it has served in relation to the Electrical Fitter Sample Group Members, (including by making submissions that the matters of fact referred to in the failure to mitigate contentions are matters which are relevant to take into account in assessing the value of the relevant group member's lost opportunity), without prejudice to the ability of the Electrical Fitter Sample Group Members to submit that the matters contended in those Statements of Contention are irrelevant or otherwise inconsistent with the principles set out in Searle v Commonwealth of Australia (No. 9) [2023] NSWSC 215;
3. the Commonwealth is not precluded from relying upon any failure to mitigate defence in relation to other Remaining Group Members (as defined in Annexure A to the orders made on 18 August 2023), provided that such defences are notified to the Remaining Group Members in a procedurally fair way; and
4. the Senior Referee may make directions in relation to the exchange of points of claim and defence, or similar statements of the respective parties' positions, for the claims of the other Remaining Group Members.
1. The Commonwealth's notice of motion filed on 12 August 2024 is otherwise dismissed.
2. The Commonwealth file and serve any submissions in relation to the costs of its notice of motion, of no more than three pages, by 4pm on 18 October 2024.
3. The plaintiff file and serve any submissions in relation to the costs of the Commonwealth's notice of motion, of no more than three pages, by 4pm on 25 October 2024.
For the purpose of these orders:
'Senior Referee' have the meanings given to those terms in order 1 of the orders made by Garling J on 18 August 2023 in these proceedings.
'Electrical Fitter Sample Group Members' means the following 17 group members: (1) Aidan Kimber, (2) Thomas Anderson, (3) William Doughty, (4) Nathan Parker, (5) Clinton Hamblin, (6) Travis Goddard, (7) Ryan Somes, (8) Jayden Meyer, (9) Cory Milne, (10) Luke Edwards, (11) Steven Green, (12) Brendan Holmes, (13) Timothy Handford, (14) Hao Yang Lin, (15) Armen Woskanian, (16) Ryan Grima, and (17) Samuel Ross.
[4]
Amendments
29 January 2025 - Addendum
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Decision last updated: 29 January 2025