Austin & Anor v The Commonwealth of Australia M10/2001 [2002] HCATrans 65 (28 February 2002)

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 THURSDAY, 28 FEBRUARY 2002, AT 9.34 AM

(Continued from 10/12/01)

Copyright in the High Court of Australia

MR G.A.A. NETTLE, QC: May it please your Honour, I appear with my learned friend, MR M.K. MOSHINSKY, for the plaintiffs. (instructed by Allens Arthur Robinson)

MS M. SLOSS: If your Honour pleases, I appear on behalf of the defendant. (instructed by Australian Government Solicitor)

HIS HONOUR: Mr Nettle.

MR NETTLE: If your Honour please, pursuant to the directions or observations which fell from your Honour on the last occasion, there has been a substantial degree of agreement upon the contents of the case stated. There is, however, one significant issue which remains outstanding. It is concerned with section G, which is the actuarial calculations to demonstrate the sort of liability which a judge would face by the end of his service and also, and perhaps more - - -

HIS HONOUR: Or her service, yes.

MR NETTLE: - - - or her service, of course, your Honour - and perhaps also more significantly observations of the Actuary which were contained in the stated case draft to the effect that actuaries acting in accordance with the principles properly would nonetheless be capable of and likely to reach different results the consequence of assumptions and variables which they chose. The former, I think, is likely to be agreed upon, although there is no agreement. The latter remains distinctly problematic.

What we would we like, if we may, is one further week in which to see if we can reach a resolution of that. If we cannot within that time, I suppose it falls to us, the plaintiffs, then to make a choice either to proceed without the benefit of it or, alternatively, to ask your Honour presumably to have that tried as an issue by a Supreme or Federal Court judge.

HIS HONOUR: Yes. What do you say, Ms Sloss?

MS SLOSS: Your Honour, the position is as Mr Nettle has outlined it. May I say in respect of the tables - and your Honour will recall on the last occasion there were four tables, two for Justice Austin and two for Master Kings - which set out the effect of pension entitlement on the retirement for Justice Austin at age 62, when he had performed 10 years service, and also at age 72, the retirement age; in the case of Master Kings at age 60 and, again, at age 70, which is the mandatory retirement age.

Those tables we took objection to because they were based on the parameters and I think I used the word "profile" on the last occasion but I am told the word is "decrements" and other parameters for a different fund and they have now been redone, we are instructed by my learned friends, on the basis of the assumptions adopted by the actuaries in New South Wales and Victoria who actually performed the actuarial valuation of the individual schemes.

Now, the figures that have been provided are substantially different from the first lot of tables and there has been some progress in that regard but, your Honour, I have to say we are still having some difficulty in understanding why, for example, in the first year for Justice Austin the surcharge or contribution reported by the Actuary in New South Wales was of the order of $100,000, yet in my learned friends' table 1 the amount is shown as $87,000. Now, it may be by some further discussion we can resolve those sorts of issues because the figures did reach - - -

HIS HONOUR: What is the constitutional significance of a particular number? Is not the fact that may or may not have constitutional significance the fact, if it be the fact, that actuaries may take one set of instructions and arrive at two or a range of answers, rather than identifying the particular number that one chooses rather than another?

MS SLOSS: Yes, and your Honour will recall on the last occasion I informed your Honour that we had in the case stated agreed that between actuaries properly applying the ruling there was scope for there to be some difference, and that remains our position. So, yes, the actual number is not - - -

HIS HONOUR: That again may - it may not - mask more than it reveals for it may not identify why there can be scope or the criterion, if there be a criterion, which admits of different answers. Now, the parties know much more about this than I do - I understand that - but I wonder whether the detail is being permitted to obscure the identification of what may be constitutionally relevant facts. Now, no doubt there may be debate between the parties about whether particular facts have any constitutional relevance.

I am not saying that the parties should agree themselves out of that sort of argument, but what is the criterion or circumstance to which either side points as bearing upon validity? That requires, it seems to me, to identify the challenge to validity, which it seemed to me the last draft stated case had done to some extent at least, but then what are the features of the legislation or the subordinate regulations or instruments made under legislation which are then said to have some constitutional significance?

MS SLOSS: Yes, your Honour, I understand the point that your Honour has just raised. May I say that the situation is complicated by the fact that in the pleading we are dealing with assessments for the financial years ended 30 June 1997, 1998, 1999 and we accept in respect of the year 2000 for Master Kings and in the case of Justice Austin for the years ended 30 June 1998, 1999 and 2000.

Now, all of those assessment years are covered by the methodology in superannuation contribution rule in 97/1. For the subsequent financial years they are covered by the methodology in Schedule 1 to the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Regulations and it is a different formula and there is less scope for there to be any divergence between the actuarial opinion formed - and if your Honour will be assisted by me passing up some excerpts from the regulations, I could demonstrate this fairly readily, because it does produce a significant change when you are doing a forecast that is going forward.

HIS HONOUR: Assume that to be so, we are at the stage of attempting to agree a stated case. It seems to me that the critical features are there is some legislation, there is some subordinate legislation or other instrument which is said to bear upon it. The application of that legislation or that subordinate legislation or instrument fastens upon certain features. They are those features in the case of these plaintiffs can be identified as being, if they are capable of a singular answer, these features, or if they are capable only of a range of answers, why they are capable of a range of answers. But does it matter whether the result that is achieved is dollar value X or dollar value Y?

MS SLOSS: Your Honour, from my perspective I am trying to understand the arbitrary and capricious argument that my learned friends are putting forward. Now, when we are having a table for each of the judges which sets and predicates a scenario for the following 10 or so years and it is said to be based on the same actuarial valuation material that the New South Wales and the Victorian Actuary used, I, for my part, in consultation with the Actuary that we are using, cannot understand why there should be a significant divergence in any of the figures, because it is just for illustrative purposes. We have agreed that that is the basis on which it is being used.

Now, if we can resolve why there should be a difference in the figures, then we might be able to have some sort of table, but I am not going to agree to something until I can see that we are going to be permitted to run all of our arguments in respect of arbitrary and capricious. So that is my difficulty going forward in agreeing to a table unless I understand the basis on which the table is prepared and why there might be a divergence in the figures. So that is the sticking point on the tables.

When it comes to the explanation in part G as to areas for which there are differences in professional judgment, we accept the basic premise that under superannuation contribution ruling 97/1 it will of itself admit of some differences in professional judgment. I think on the last occasion I gave your Honour the example of a valuer valuing a property, both of them acting reasonably might come up with a valuation that is a difference of some small amount but they are still both correct valuations. We would say the same in respect of the actuarial activity being performed here: you can exercise professional judgment; you might get slightly different figures, but it should not be materially significant differences.

HIS HONOUR: Well, that seems to me to enter the debate at a point later than it should be being considered. The argument may be good; it may be bad. I simply do not know. But let us for the moment assume what is plain: the plaintiffs wish to say that the legislation is arbitrary or capricious in its operation. The answer which I would understand you would seek to make is that while there are different answers that may be given, they are no more than differences falling within a range defined as the range of reasonable professional opinion.

MS SLOSS: That is exactly so, your Honour.

HIS HONOUR: But that requires, does it not, the careful identification of those factors in respect of which professional opinion has to be applied and it may require, I do not know, some agreement that these are matters on which there is a recognised and accepted body of learning that can be described as reasonable professional opinion. I do not know. But I fear that the parties are getting hooked up on the detail rather than the principles which underlie them.

MS SLOSS: Your Honour, the part that you have just summarised is basically part G of the document which we are working towards identifying the areas where there could be differences in professional judgment. But the point I also make is that from the financial year ended 30 June 2000 onwards, under Schedule 1 of the Regulations, there is much less scope for there to be a difference in professional judgment because the Actuary is required to apply the figures that were used by the Actuary in the last valuation. So that once you have an actuarial valuation of the fund, going forward in the next year, the Actuary is required to adopt, in performing the valuation, the rates of decrement and other parameters that were used in the last actuarial review. So that if, for example, in the actuarial - - -

HIS HONOUR: Sorry, why does that help?

MS SLOSS: I will tell you why, your Honour, because it is - - -

HIS HONOUR: If the first is random, perpetuation of random does not seem to advance things.

MS SLOSS: The first is not random, your Honour.

HIS HONOUR: But there is the point, is it not?

MS SLOSS: I do not think my learned friends say that the first is random. If they do say that, then I had not understood that from their existing part G. I do not think that is the sort of difference there is between us. But we are genuinely endeavouring to accommodate those difference and we hope that within a week or so we might be closer towards a case stated that is agreed between the two of us.

HIS HONOUR: Yes. Well, the March sittings begin next week. The earliest I would be able to deal with the matter would be - I could deal with it on Friday, the 15th in Melbourne. Otherwise, I think it would have to go over to Wednesday, 20th, in Melbourne. Unless the parties were anxious to fly to Canberra and do it before Court one morning, I could do it then, of course, but on the assumption that that is not the preferred outcome, either Friday, 15 or Wednesday, 20, I think, is the best at the moment I could offer.

MS SLOSS: I know that I am in Sydney on the 20th and I know the Solicitor-General is unavailable that day. We would both be available on the 21st, if that was a possibility.

HIS HONOUR: Yes, all right. I will stand it over to the 21st. Does the Solicitor-General have to be here?

MS SLOSS: If we have not reached agreement, your Honour, it might be required.

HIS HONOUR: Yes. What about the 15th, Ms Sloss? Not a possible?

MS SLOSS: I do not think it is. I have not brought my diary with me to Court unfortunately, but I do not think the 15th is available.

HIS HONOUR: Yes, 21 then. Mr Nettle, what is your client's - - -

MR NETTLE: I think we can accommodate the 21st, your Honour, if it suits you. If your Honour pleases.

HIS HONOUR: Yes. How the parties deal with this of course is ultimately a matter for them but we have to get to a final position about this by the 21st. I thought I had made plain to the parties that I expected the parties to have finalised this matter by today. It is unfortunate that the parties have not. I am not concerned to identify whose fault that is. No doubt, everybody would have something to say about that. But by the 21st this thing has to be sorted out and it cannot be that litigation between judges and the Commonwealth should founder for want of agreement on objective facts. That there should be want of agreement on contested facts, reasonably contested facts, I can well understand, but at the moment it is not self-evident to me these are not matters capable of being the subject of agreement if attention is focused upon those facts which the parties say have constitutional significance.

With those words ringing in the ears of the parties, in the vain hope that they may go back to those whose instructions they depend on, the matter will be stood over until 9.30, 21 March 2002 in Melbourne or such other date as may be directed, costs will be reserved and I will certify for the attendance of counsel.

Ms Sloss, there is something else you wish to add?

MS SLOSS: Yes, your Honour. My instructing solicitor was contacted by the Registry and asked if we had a preference for any of the three dates 18, 19 and 20 June. I have spoken to the Solicitor-General and our preference would be for 19 and 20 June.

HIS HONOUR: Yes. Well, as you might gather, the Court is ordering its affairs on the assumption that this case will go forward by way of case stated and it will go in for hearing on those days.

MS SLOSS: That is understood, your Honour.

HIS HONOUR: Yes. Mr Nettle, does your side have preferences about those hearing days?

MR NETTLE: Each of those three days is satisfactory for us, your Honour, very satisfactory.

HIS HONOUR: I would ask the parties to contact the Senior Registrar direct. I will also contact her. But if the parties would be good enough to talk to Ms Rogers, that may avoid any suggestion that the communication from this end went astray. In other words, the blame will rest with you.

MR NETTLE: If the Court pleases.

HIS HONOUR: That being said, then the orders will be as I have described. I will adjourn.

AT 9.53 AM THE MATTER WAS ADJOURNED

UNTIL THURSDAY, 21 MARCH 2002