Austin & Anor v The Commonwealth of Australia M10/2001 [2001] HCATrans 635 (10 December 2001)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M10 of 2001

B e t w e e n -

ROBERT PETER AUSTIN

First Plaintiff

KATHRYN ELIZABETH KINGS

Second Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

Defendant

Directions Hearing

HAYNE J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON MONDAY, 10 DECEMBER 2001, AT 9.31 AM

Copyright in the High Court of Australia

MR M.K. MOSHINSKY: If the Court pleases, I appear for the plaintiffs. (instructed by Allens Arthur Robinson)

MS M. SLOSS: If the Court pleases, I appear for the defendant. (instructed by Australian Government Solicitor)

HIS HONOUR: Now, before I call on you, Mr Moshinsky, as the parties have been informed, I, of course, know both plaintiffs. I have met Justice Austin on several occasions, both before and after his appointment to the Bench. I have not been to his home or had any other similar social contact with him other than at conferences of various kinds. I have, of course, known Master Kings for some years. As a judge of the Supreme Court of Victoria, I worked with her. I know her husband and on one or two occasions, now, I think, more than 10 years ago I may even have sought medical treatment from him. I have on more than one occasion in the past had dinner with Master Kings and her husband at their home.

Now, I do not consider that these matters embarrass me but I draw them to the attention of the parties and I understand that the Registrar has already mentioned them to the parties and I do so lest either side seek to make submissions about that matter.

Further, as both parties will be aware, I was a member of the Supreme Court of Victoria until appointment to this Court and I was appointed to this Court by commission dated 20 August 1997 with effect from 22 September 1997, on which day I was sworn to office. I do not understand the legislation, which is the subject of this action, to have relevant operation in my case. I will not dare to attempt to trace the legislative path that leads to that conclusion but, again, out of an abundance of caution I draw that to the attention of the parties in case either side wants to make submissions about that matter.

I do not necessarily ask for submissions on either matter now but I do not want there to be some misunderstanding about the matter. I draw these matters to attention in open Court so that the parties are on notice of them. If either desires to make submissions about them, then they should do so at the earliest convenient opportunity.

All that having been said, Mr Moshinsky.

MR MOSHINSKY: If your Honour pleases. The matter comes before your Honour today by way of a summons for direction filed by the plaintiffs dated 29 November 2001. This matter was commenced by writ of summons supported by a statement of claim on 25 January this year. A defence was filed by the defendant on 19 March 2001 and thereafter the plaintiffs propounded a draft case stated to the defendant on 4 September 2001.

The defendant has now provided its comments - very detailed comments on the draft case stated by way of a letter dated 6 December 2001 and an enclosed marked-up copy of the draft with suggested changes. The plaintiffs now need to consider the Commonwealth's comments, and that will obviously take some time.

HIS HONOUR: How long?

MR MOSHINSKY: The comments, I would hope, would be completed within a matter of weeks.

HIS HONOUR: This case has now been issued for a very long time.

MR MOSHINSKY: Yes, your Honour.

HIS HONOUR: Three months to respond to the case stated is a very long time. If it is now to be a matter of weeks, the matter will not come back before a single Justice until the New Year. This case has to be ready for hearing, in my view, no later than March or April next year. We have to know where this case is going and we have to know where it is going so that it is ready for hearing no later than March or April next year. Now, the parties are going to have to get on with it. Now, how long do you want, Mr Moshinsky?

MR MOSHINSKY: Yes, your Honour. In light of what your Honour has said, would your Honour just pardon me for one moment?

HIS HONOUR: Yes. You might focus your consideration rather more closely. My present inclination is to bring you back next Monday just to give some point to your discussions but perhaps you might seek instructions.

MR MOSHINSKY: If your Honour was minded to do that, on the plaintiffs' side, we would be able to get our comments within a matter of days.

HIS HONOUR: The Commonwealth have then to have time, through somewhat clogged arteries, it seems, to let the blood flow through to whatever part of the body makes the decision. Now, what are we going to do? Ms Sloss.

MS SLOSS: Your Honour has commented on the three months it took to respond to the case stated. Your Honour, may I say that the case stated is a matter which does require consideration as to whether the case is appropriate for a case stated.

HIS HONOUR: Exactly.

MS SLOSS: That is right, and now that assessments have issued, your Honour, we can go forward. The comments have been given. They are detailed, as your Honour would see from the affidavit that my instructing solicitor has filed.

HIS HONOUR: Yes.

MS SLOSS: In my assessment, it will take my learned friends at least a week, if not longer, to understand the comments that we have made. In my submission, it would be impractical to come back next Monday. In any event, I am unavailable. My understanding is that the Solicitor-General is not easily available until mid-February to consider the revised case stated.

HIS HONOUR: Very well. Then we may have to fix a time in February to come back.

MS SLOSS: Yes, your Honour, that would be the timetable I would suggest. My instructions are that the Solicitor-General has several cases on in the first week of the sittings in February that start on 5 February. If we could have my learned friends' comments back by a date before then, I would hope we could get a response back to them by about 20 February.

HIS HONOUR: Yes. Well, it is a fearfully long time to do it but that would mean coming back on, probably, Monday 25 February.

MS SLOSS: That sort of timing, I think, your Honour, would - - -

HIS HONOUR: The parties are going to have to cut their cloth according to one fact: that we have to know where this case is going and we have to know whether it is going to be ready to go before a Full Court, in my view, no later than end Feb.

MS SLOSS: Yes, your Honour, I think that timetable would accommodate that but the critical question is whether it is appropriate to proceed as a case stated and, of course, we will not know that until my learned friends have come back with their comments.

HIS HONOUR: Yes. Well, there are some aspects of that about which I want to ask some questions presently. Well, if we work towards coming back on 25 February, can I, Ms Sloss, by reference to your marked-up document, ask some questions?

MS SLOSS: Yes, your Honour.

HIS HONOUR: If we take the draft case stated, page 2, paragraph 4, second-last line, is the expression "member" or is the expression "judicial pension scheme" an expression that is used in the Judges' Pensions Act?

MS SLOSS: The "judicial pension scheme" is not a term that is used, your Honour, and my recollection is that the word "member" is not actually used either.

HIS HONOUR: Yes. Is it intended in that paragraph to use those terms - and this may be a question you would prefer not to answer - with some meaning? If it is, what is the meaning? Why do we need that statement in the paragraph at all, if we are concerned only to identify at that point of the case stated the operation of the relevant State legislation? Those are questions that, no doubt, you will take to account.

MS SLOSS: Yes, your Honour. Perhaps if I can give you a preliminary response in answer to that question.

HIS HONOUR: No, I think it perhaps better if these are thought about. Page 5, paragraph 11: we have there reference to the accounting treatment of what are described as "unfunded State public sector superannuation" liabilities. The immediate relevance of that is not apparent to me. No doubt, when we return, if that is to remain in there, you will be able to explain it to me. Page 6, paragraph 13: again we have this question of the use of the terms "member" and "pension scheme" which are, I think - I stand subject to correction - not terms used in State legislation at all and, on one view of the matter, would appear to be a proposal to have the plaintiffs agree themselves out of some of the contentions that they desire to make.

Page 6, paragraph 15: we have there a quite complex description of the effect of the State legislation. I have not gone back to check it. Do we need in the case stated the parties' restatement of the way in which the Act operates or do we need simply reference to the relevant provisions? Page 7, paragraph 20: there is reference to the Department of Treasury and Finance bearing "the cost of superannuation" benefits. Subject to anything that the parties may later say, that seems to me to be a difficult concept. Departments bear no cost. Consolidated funds may suffer appropriation. To speak of departments bearing costs is, it seems to me, to inject into this notions of accounting treatment which may be apt. If they are apt, let it be made plain that we are speaking in accounting terms rather than legal terms. Again, there is reference to the cost of the schemes being reported in particular ways. The legal significance of that again is not self-evident. Perhaps it is something that the parties, or one of the parties, considers to be so.

Those kinds of comments carry on through paragraphs 21, 22, 23 and the like. Page 14, paragraph 39: again, "There is at least one member of the judicial pension scheme established by the Judges' Pension Act" seems to be a statement about the operation of Commonwealth legislation rather than a statement about the operation of State legislation, for I do not understand the State legislation to speak in terms of membership or of pension scheme. If it is a statement about Commonwealth legislation, then it would be as well to identify what the content of that statement is and why.

Page 18, paragraph 52 is all cast in passive voice. It does not tell us who must obtain the services of an actuary. It simply says "The services . . . must be obtained". That may be a deliberate choice of the parties. It may be a wise choice of the parties, or one of them, to avoid reference to that, but again it struck me. Page 19, footnote 19 seemed at first sight to me to be incomplete. It simply read to "to his or her choice of:" and it was not immediately apparent to me where it went to.

Page 20, paragraph 57: there is a point again to which the parties may wish to give attention. It was not apparent to me how, if the introductory rubric is right, "Save for judges who were appointed prior to 7 December 1997", the case of Master Kings arose, for I thought the Master was appointed prior to 7 December 1997.

MS SLOSS: That is correct, your Honour.

HIS HONOUR: Again, these are perhaps matter that will become apparent if this case stated goes forward in this form or something similar on its argument. We then, from pages 23 to 26, have a list of interrogatories, a list of interrogatories which are cast in very particular terms that reflect arguments which it is understood that one or other of the sides wishes to advance. I simply ask the parties to consider whether the number of interrogatories is necessary and whether the complexity of the questions asked is essential.

Is not the essential question twofold: one, a question of statutory construction, whether the Commonwealth statutes on their true construction apply to arrangements, if I may use that as the most neutral of terms, made under the two State judicial pension legislation, so, "Who is a member? Is there a fund or scheme?", et cetera, those questions. Well, that seems to be capable of being reduction to one or two questions. Then I would understand there to be questions concerning validity. While I understand the desirability, and perhaps advantage, of including within the question some reference to the asserted basis of invalidity, do the parties want, are the parties entitled to general answers as to validity. So is the question, "Is name of Act invalid on the ground that (a), (b), (c) or (d) otherwise?"?

Now, it may be that that form of question is inappropriate, but if there is to be a case stated or section 18 reference, it is to end up coming back to a single Justice and it would be unfortunate if there then emerged some further asserted basis of invalidity only after reference to a Full Court. Now, underpinning all of those particular questions is the much more general consideration: what, if any, disputed question of fact is there in this case? Ms Sloss?

MS SLOSS: Your Honour, I believe at the moment there are probably some disputed questions of fact?

HIS HONOUR: What?

MS SLOSS: Well, the question that your Honour has raised about membership of a judicial pension scheme.

HIS HONOUR: That is not a question of disputed fact. It is a question, I would have thought, of the proper application of the Commonwealth legislation to the arrangements that are made under State legislation. Why is there a disputed question of fact?

MS SLOSS: Well, it appears to arise, your Honour, because my learned friends do not in their case seem to accept that there is at least one defined benefit member of each of the, according to the Commonwealth legislation, funds established by that Act.

HIS HONOUR: That requires the true construction, I would have thought, of the two Acts.

MS SLOSS: It does require construction, your Honour, but it may also turn on a factual matter because it requires - - -

HIS HONOUR: What possible factual dispute can there be between a group of judges, on the one hand, and the Commonwealth about the operation of judicial pension arrangements? I know the parties may think there are disputed questions of fact, but the parties are going to have to get together and realise that in truth that is unlikely, I would have thought, in the extreme to constitute a disputed question of fact. It is question of drafting.

MS SLOSS: I accept that, your Honour.

HIS HONOUR: Yes.

MS SLOSS: That seems to be the major difference between us and now that the assessments have issued, the proposal that my learned friends have for putting forward another actuary's version of what the payments under the pension scheme might be under tables 1 to 4 of their paragraph 50 of their case stated, which we have deleted. Now that the assessments have issued, that was the other area where there was a factual - - -

HIS HONOUR: Why does that warrant the deletion of those matters? I do not understand that for the moment. True it is the Commissioner may have said, "You owe us X dollars, or will owe us X dollars", but I thought the case against you was that the Commissioner had a range from which to choose.

MS SLOSS: No, I do not understand that it is put in quite that way, your Honour. My learned friends say that the procedure that is applied under superannuation contributions ruling 97/1 is arbitrary and capricious but the - - -

HIS HONOUR: Because it admits of more than one answer.

MS SLOSS: I assume that is what they say, your Honour.

HIS HONOUR: I thought these facts they had put on were directed to the proposition that, although you can give answer A, you can also give answer B, and maybe they go so far as to say you can give any of a number of answers between points A and B. I do not know whether they say that but, again, why do you say it is not open or not relevant or necessary for them to say that a range of answers is open?

MS SLOSS: Well, your Honour, paragraph 50 of our case stated accepts there will be more than one answer I would think.

HIS HONOUR: Yes.

MS SLOSS: But the way my learned friends have prepared their tables 1 to 4, they were not based on the profile of either the judges' scheme in New South Wales or the masters' scheme in Victoria.

HIS HONOUR: I do not understand that. You will need to explain it to me.

MS SLOSS: Well, your Honour, I think my learned friends will accept that and concede it, but the reality is they were based on a pension scheme they contend similar to the Victorian scheme and similar to the New South Wales scheme but they were not based on the superannuation profile of either of those funds.

HIS HONOUR: That, I am sorry, is a term of art which means nothing to me. What do you mean "the superannuation profile"?

MS SLOSS: Well, under the superannuation contributions ruling 97/1, actuarial reviews are required to be conducted and if there has been no actuarial review of a fund, you have to do an actuarial review and then you have to review it within 12 months.

HIS HONOUR: And review what, for what?

MS SLOSS: Review the actual fund, its members, its claims history, its members to see whether, for example, in the case of female members, what age they die, whether they have children, what age their spouse was; in the case of male members, similar considerations, and for each of those funds it generates a profile which is part of the actuarial review.

HIS HONOUR: And you can do that on a population as small as - what would there be, say, in the Victorian fund, 35 people currently would there, 40?

MS SLOSS: Well, just going by the unfunded liability, your Honour, it is an unfunded liability of about $231 million. So there is obviously - - -

HIS HONOUR: It may be, but you were talking to me about profiles and it may be that I am neither entitled to know these things and perhaps should not know them, but you can make a useful inquiry about things like mortality and child bearing where you have a population of 40?

MS SLOSS: Your Honour, I am told an actuary can.

HIS HONOUR: My word, there is a skill for you.

MS SLOSS: And certainly the profile of different funds - there is the funds established under the Commonwealth legislation and the NSCF for those funds is different from the funds which have been reported in New South Wales, it is different from the funds reported in Victoria, and these are for the constitutionally protected schemes for judges and masters. Now, they do have a different profile and I assume in each case, because they have been certified by an actuary, that they have been prepared in accordance with the ruling. So, your Honour, that does tend to confirm that there is some disparity between the fund profile for each fund and I gather these tables 1 to 4 were prepared on different funds.

HIS HONOUR: Well, lying beneath that explanation would seem to be some, I would have thought, indisputable facts which the parties should be capable of identification and identifying and isolating. Those facts may or may not bear upon the point of validity which the plaintiffs seek to take. Am I right in understanding the plaintiffs' case to involve at least an allegation that runs something like because you can get more than one answer, this is not a tax. Is that a crude way of describing what you would understand to be part of the argument?

MS SLOSS: Well, certainly that is my understanding, your Honour, but I have no better information than your Honour has to form that view.

HIS HONOUR: Then it is not self-evident to me why the taxation Commissioner's assessment of an answer is the only relevant fact to be put before the Court if the plaintiffs' case is as we describe it. Saying, "I have got to answer X" does not mean that they are to be barred from saying, "There may be answers A to Z of which you have chosen X".

MS SLOSS: No, your Honour, paragraph 52 of our case stated expressly acknowledges that the methodology set out in the ruling requires the actuary performing the calculations to make a number of assumptions and exercise professional judgment in relation to a number of matters.

HIS HONOUR: Yes.

MS SLOSS: Your Honour, that is an acceptance that under the ruling different actuaries applying the ruling in the proper way in accordance with the actuarial standards that they are bound by may arrive at a different assessment. That is no different from saying a valuer might value property A at $5 million and another valuer might value it at $5.5 million, but that does not mean that the task is incapable of ascertainment or that it is wrong.

Now, I do not know how my learned friends are actually going to put their case but I infer, and the reason that paragraph has been left in, is that they will be saying as part of their case on the arbitrary and capricious argument that one actuary could come to one view and another actuary, acting properly and in accordance with the ruling, could come to another view, and the legislation itself seems to admit of that.

HIS HONOUR: Yes.

MS SLOSS: Now, if that is the point they want to make from tables 1 to 4, that point is already there in the case stated and, your Honour, I do not see the need for tables 1 to 4, which were hypothetical, to be part of the case stated, but it may be an area where there is a dispute between us.

HIS HONOUR: Again, what is the triable issue, if any, that there is between the parties? Now, I do not expect you to give an answer that binds your client now. Of course you cannot whilst the case stated remains in negotiation. But when the parties come back, if they have not agreed on a case stated, I tell you now you will be required to explain in the most careful and simple language what is the triable issue that has to be tried, because the notion that these two sets of litigants should go to trial on things that are capable of agreement is, at the last, unfortunate. Now, where are we going to go to from here, Ms Sloss.

MS SLOSS: Your Honour, we have noted your observations and we will attempt to deal with them in the course of any comments we might have on the revised case stated. If my learned friends can send their comments on the revised case stated to us by the end of the Court year - my learned friend says he can do it by Christmas - we will respond and have our comments back to them by the 20th. It may be that we need to have - - -

HIS HONOUR: By the 20th of - - -?

MS SLOSS: Of February.

HIS HONOUR: If you require until 20 February, you may have it. It is a very long time.

MS SLOSS: Your Honour, I have explained. The Solicitor-General is in two cases in the first week of the Court sittings, which I start on the 5th. I think one of them is the Mobil Case and I think there is another case as well.

HIS HONOUR: Yes.

MS SLOSS: Assuming that I will be able to meet with him in the following week, we will endeavour to get our comments prepared. It may be helpful that there even be some conference between - - -

HIS HONOUR: Exactly, and that has to be under way in late January.

MS SLOSS: Your Honour, the reality is the Solicitor-General will not be here, so the practical reality is it will not happen until the second week of February.

HIS HONOUR: Yes, very well.

MS SLOSS: We will endeavour to have our comments finalised and back to our learned friends, hopefully in consultation with them, by 20 February.

HIS HONOUR: Yes.

MS SLOSS: If it can be done sooner, your Honour, it will be done sooner, but I think the practical reality is it cannot.

HIS HONOUR: Yes. What I am minded to do is to stand it over for further directions on Thursday, 28 February at 9.30 or such other time as may be directed. I would not propose to make any formal direction about the course of exchange that should now occur between the parties but, Mr Moshinsky, you should understand that I would expect that your comments would be available to those advising the Commonwealth no later than close of business on Monday, 18 December.

MR MOSHINSKY: Yes, your Honour.

HIS HONOUR: And, Ms Sloss, I would expect that your response would be available to those advising the plaintiff no later than close of business 22 February, which is a Friday. If we come back then on 28 February, in the meantime I will reserve the costs and certify for the attendance of counsel. Is there any other matter that counsel wish to raise?

MS SLOSS: Yes, your Honour.

HIS HONOUR: Mr Moshinsky, sorry?

MR MOSHINSKY: Your Honour, I wonder if by consent you would order that the plaintiffs have leave to file and serve an amended statement of claim in the form of exhibit PAN-2 to the affidavit of Ms Neskovcin sworn 29 November 2001.

HIS HONOUR: Now, is that opposed, Ms Sloss?

MS SLOSS: No, your Honour, it is not opposed. We just simply seek our costs thrown away as a result of the amendment.

HIS HONOUR: Yes. What is to then happen about amending the defence? Do you need time for that?

MS SLOSS: Yes, your Honour, we do because the changes that we wish to make now as a result of the commutation legislation in New South Wales having been passed the other day, I will have to get some instructions about that. I think if we could do that by the same date that we return our case stated, it would be convenient.

HIS HONOUR: Yes. Can you resist an order for the costs thrown away, Mr Moshinsky?

MR MOSHINSKY: No, your Honour.

HIS HONOUR: The orders will be:

1. Plaintiffs have leave to file and serve forthwith an amended statement of claim substantially in the form of exhibit PAN-2 to the affidavit of Penelope Anna Neskovcin sworn 29 November 2001;

2. Defendant have leave to file and serve its amended defence on or before 22 February 2002;

3. Plaintiffs pay defendant's costs thrown away by reason of the amendment;

4. Adjourn the summons for directions to 28 February 2002 at 9.30 am in Melbourne or such other time as may be notified to the parties;

5. Otherwise reserve costs;

6. Certify for counsel.

Do counsel wish to be heard about the form of those orders?

MR MOSHINSKY: No, your Honour.

HIS HONOUR: I will adjourn.

AT 10.08 AM THE MATTER WAS ADJOURNED