Commonwealth of Australia v Cornwell [2006] HCATrans 464 (1 September 2006)

--

Commonwealth of Australia v Cornwell [2006] HCATrans 464 (1 September 2006)

Last Updated: 4 September 2006

[2006] HCATrans 464

IN THE HIGH COURT OF AUSTRALIA

Registry No C7 of 2006

B e t w e e n -

COMMONWEALTH OF AUSTRALIA

Applicant

and

JOHN GRIFFITH CORNWELL

Respondent

Application for special leave to appeal

GUMMOW J
KIRBY J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 1 SEPTEMBER 2006, AT 9.33 AM

Copyright in the High Court of Australia

MR S.P. ESTCOURT, QC: May it please the Court, I appear with MS K.L. BENNETT for the applicant. (instructed by Australian Government Solicitor)

MR J.R.C. GORDON: May it please your Honours, I appear with MR R.J. DAVIS for the respondent. (instructed by Snedden Hall & Gallop)

GUMMOW J: We would be assisted from hearing from the respondent first but we would like initially to know what the attitude of the Commonwealth would be to the cost situation if there were to be a grant of leave.

MR ESTCOURT: Yes, your Honour. We have instructions as of yesterday to consent to a grant of special leave if it is made on the basis that the Commonwealth pay the respondent’s cost of the appeal and leaves the costs order in the courts below undisturbed.

GUMMOW J: Thank you. Yes, we will hear from the respondent.

MR GORDON: May it please your Honour.

KIRBY J: Well, you say the decision below is right.

MR GORDON: Yes, we do, your Honour.

KIRBY J: But even if it is right, it affects, we are told, 400 cases, or at least 289 cases, and $198 million. So why is it not suitable for this Court to have a look at it? If it is right, you walk away without any burden and you get your costs paid in any event. What could be more generous of the Commonwealth?

MR GORDON: It is nice to observe, your Honour, but those figures, we would suggest, are somewhat speculative. The real figures seem to be more in the nature of recognition of the fact that only four other claims have been issued and the Commonwealth has made provision over four years for the sum of $40 million, which is somewhat less than the sorts of figures that were speculated - - -

KIRBY J: But even $40 million is a lot of taxpayers’ money and the issue is one of public importance. So, normally, as the final court with a matter of that importance affecting federal law we would probably have a look at it.

MR GORDON: Well, indeed, your Honour, if that was the view of the Court, it would be hard for me to dissuade your Honours, other than to indicate one of the views that are put about the speculative nature of the ongoing consequences but, as your Honour says, there are likely to be some on the evidence.

KIRBY J: Do you say the point is unarguable?

MR GORDON: We think that the authorities to which we have referred in our submissions, your Honour, Wardley, Murphy v Overton and Kenny & Good v MGICA are powerful supports for the position taken by the learned trial judge in the Court of Appeal below.

HAYNE J: Now, to what extent do those views depend upon an understanding of the particular nature of the superannuation or pension regimes in question? That is, are there unexpressed assumptions about those regimes, about whether, for example, they are defined benefit regimes, accrued sum regimes, regimes that depend upon length of service in any relevant respect, or the like?

MR GORDON: Your Honour, those matters which were canvassed in the Court of Appeal to some extent really are matters that impact upon the ultimate conclusion, that is, has a loss been suffered at the date of retirement by comparison not just with the sum that would have been received but for the negligence but also taking into account the question on the other side of the ledger, as it were, as to whether or not the use of the money that the respondent had over the period from 1965 to 1989 that would otherwise have been committed by way of contributions to his superannuation created a sum greater than the amount that is said to be a loss.

That matter – and this is the reason, I think, we would say this is not the vehicle to test the point if there are other cases in the wings – is that as the Court of Appeal found the applicant failed to discharge its onus of proving causation and loss at the trial of this matter. It did not demonstrate by any evidence and did not cross-examine the respondent’s expert, Mr Davis, as to whether or not it was inevitable, as it puts it now, that in 1976 by reason of the operation of the statute that came into being at that time that there would inevitably be upon retirement a loss that was adverse to this - - -

GUMMOW J: Is that a matter of fact or a matter of understanding the regime?

MR GORDON: A question of fact, your Honour. There would need to be evidence, as this Court observed in Sellars, for instance, to prove causation and loss if you are to make out a loss of opportunity claim, and there was
none. There was an assertion that the Act had certain consequences but whether that would inevitably have resulted in a loss, as is now contended, as a result of the operation of that Act at the time of retirement, there was no evidence. The Court of Appeal found a failure to discharge the onus.

GUMMOW J: Is this a loss of opportunity case?

MR GORDON: That is the way it is now put, your Honour, by the applicant. It now asserts that what was lost in 1976 was a loss of opportunity. We never put it on that basis. We said it was an economic loss case that became extant at the time of retirement, on the happening of a contingency, just as in Wardley or - - -

GUMMOW J: That is right, and there has been some recent consideration of Wardley by the House of Lords in a case called Law Society v Sephton [2006] UKHL 22; [2006] 3 All ER 401. If there were to be a grant of leave, that would merit some attention, I think. Yes, go on.

MR GORDON: So, your Honour, it is now put that this is a case – that is that there was a loss of opportunity of him to retrieve benefits by reason of the 1976 Act. If that was correct, then there needs to be evidence to show that there was causation and loss that would have inevitably occurred at that time. Without that evidence, that proposition cannot, in our respectful submission, be maintained. Therefore, this is not a vehicle for the consideration of these important issues. If it please your Honours.

GUMMOW J: Yes, Mr Estcourt. What do you say on this question of appropriate vehicle and the way in which the case is framed?

MR ESTCOURT: Yes, we say that it is an appropriate vehicle, that it is not appropriate to say there are other cases in the wings because so long as this Court of Appeal decision stands about this defined benefits scheme all of the other cases will follow the same course on their way up. It needs to be corrected by this Court. It is a loss of opportunity case, your Honours.

KIRBY J: But can one interpret the Court of Appeal decision as resting on the state of the evidence in the light of what you failed to provide so that in another case, where the evidence of loss of opportunity was clearer, the decision might in law follow differently and present a better vehicle than this case? That is what is said to us. We would not want to be all assembled and sitting there and solemnly looking at this scheme and find that the facts of this case do not really present the issue.

MR ESTCOURT: We understand that, your Honour, and we say there is nothing in the onus point that is made against us. As Justice Hayne observed, this really is a question of how this particular scheme operates. It is totally different to any other sort of superannuation scheme and it can indeed be demonstrated simply from the provisions of the Act that it could never have been the situation that the respondent was better off by not having contributed for 21 years while he was kept out of the fund.

HAYNE J: One of the consequences of describing it as a lost opportunity case, as you have maybe, Mr Estcourt, that if when we get into this it looks as though the vehicle is not appropriate, leave might be revoked and the Commonwealth would pay for the privilege of taking it to that point. That is always on the cards, if there were to be a grant.

MR ESTCOURT: Yes. Your Honour, we say that we will not be caught up with questions of fact in this case, as has been the case in the past with Wardley and Murphy v Overton. We say that you can plainly see, without any evidence at all, that it is utterly implausible to suggest there could be no loss by not having made contributions. The way this scheme works, because no matter how you get out of the Commonwealth Public Service, at the end you get your pension, which bears no relationship to your contributions, and then on top of that you receive a return of your contributions plus interest, and then on top of that a productivity benefit.

Now, it is completely arbitrary, we say, to choose retirement as the date at which a loss crystallises, because retirement does not determine how much pension will be paid. It is paid for the life of the employee and then it is paid beyond that at a slightly lesser percentage for the life of any spouse or partner, and then beyond that it is capable of being paid so long as there are children under 25 in education, even if both parents are dead. So it is completely arbitrary to say that retirement is the date of crystallisation. All that demonstrates is that the damage at the time of the close of the period of lost years back in 1976 or 1987 is the same damage as at retirement, as at death, as at the death of a spouse. It is simply easier to assess the quantum as you get further along.

KIRBY J: You will recollect that the Court of Appeal in paragraph 16 said, picking a comment in Wardley, that the outcome which had been favoured by Chief Justice Higgins was one which appeared better to advance justice. Now, do you have any answer to that?

MR ESTCOURT: Yes, your Honour. What underpinned the majority reasoning in Wardley was this very notion of the injustice of compelling claims to be brought early, because if they are brought early - - -

KIRBY J: Does that not apply on the facts of this case?

MR ESTCOURT: No, your Honour. We say that you could bring this claim in 1977 and deal with it in exactly the same way as courts deal with
the assessment of lost earning capacity and lost superannuation every day - - -

KIRBY J: But do people normally do that? They normally do it when it bites and that is when they have retired.

MR ESTCOURT: The flipside, your Honour, insofar as justice is concerned is that it will not be all cases of negligent misstatement where the negligence goes undiscovered as happened here. If plaintiffs are not compelled to bring their claims early, they could actually choose, for forensic advantage as well as for the better or more precise assessment of damages, to delay bringing claims.

KIRBY J: It is hard to see forensic advantage. The Commonwealth can mutter about forensic advantage, but we are talking about an ordinary citizen. Going to court is a big deal and an expensive and stressful thing to do.

MR ESTCOURT: Yes, your Honour. Well, I simply answer your Honour’s question by saying that the considerations that underpinned Warley, the injustice of bringing claims early, does not apply in this case either as to the prospect of the claim failing or as to the prospect of under compensation resulting.

KIRBY J: Well, I am not really convinced of that at this stage but that does not necessarily stand in the way. I mean, there have been known to be federal statutes which are unjust.

MR ESTCOURT: Yes, your Honour. I have addressed Justice Gummow’s questions.

GUMMOW J: Yes, thank you.

MR ESTCOURT: Did you wish to hear me further?

GUMMOW J: Do you say anything in response to what has just been said?

MR GORDON: If I might, your Honour, very briefly. We think that justness is at the heart of this matter and we have said so at each level as we have gone up. It would be unjust to compel Mr Cornwell, who did not know of his rights until 1996/1997, to say that he lost his right of action in 1976 because of the operation of a statute which he knew nothing about when the negligence was still operative. We think that the matter is entirely unjust.

Secondly, your Honour, in relation to the evidence, there is no doubt that, as the Court of Appeal found, the applicant failed to discharge its onus in relation to the evidence of proof. That was a finding that was made and it was appropriately made. His Honour Justice Brennan said in Wardley at page 536:

A transaction in which there are benefits and burdens results in loss or damage only if an adverse balance is struck.

In our respectful submission, the applicant did not attempt to adduce evidence of the adverse balance. It adduced one side of the ledger, that is, the loss of an opportunity it said occurred. It did not adduce evidence of the actual loss that occurred taking into account the use that the respondent had of the funds for the 11 years prior to that invested in other circumstances and for those reasons - - -

KIRBY J: Well, you heard what Justice Hayne said, that if we came to the view on the hearing of an appeal if special leave were granted then it may be that special leave would be revoked if it turned out on closer analysis that the matter was not a suitable vehicle. You have made some telling points about the injustice of the Commonwealth’s submission but, on the other hand, we all know of federal statutes that are not particularly just so - - -

MR GORDON: With respect, your Honour, it is not the operation of the statute that we complain of specifically but the fact that the Commonwealth now seeks to devise a claim different from the one that was put and say, “You are put out of court forever because we have considered or construed the statute in this particular way without adducing evidence to show that an actual loss was suffered”. We see it as a considerable injustice, if it please your Honour.

KIRBY J: We think you have landed a few blows on that score.

GUMMOW J: There will be grant of special leave in this matter. The grant has attached to it a condition which we understand is accepted by the Commonwealth, namely that the Commonwealth in any event will pay the costs of the respondent in this Court and that the Commonwealth will not seek to disturb the costs order of the Court of Appeal which appears at page 49 of the application book.

KIRBY J: And of the Chief Justice. I thought you agreed that the costs below would not be disturbed; is that correct?

MR ESTCOURT: That is so, your Honour.

GUMMOW J: That is what I have said, the order at page 49. The matter will be a one-day matter, gentlemen.

MR ESTCOURT: I should not think it would take any longer, your Honour.

GUMMOW J: Yes. We will expect assistance as to the intricacies of the legislation of the superannuation schemes, preferably in the written submissions so that we can come into Court with it in our heads. I have indicated the House of Lords decision that might require some consideration in dealing with Wardley and you have heard what my colleagues have said about the potentiality of revocation. Solicitors should be aware that the matter may require some advancement in preparation for the appeal for the potential listing in November or December.

AT 9.50 AM THE MATTER WAS CONCLUDED