Commonwealth of Australia v Cornwell [2006] HCATrans 596 (8 November 2006)

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Commonwealth of Australia v Cornwell [2006] HCATrans 596 (8 November 2006)

Last Updated: 8 November 2006

[2006] HCATrans 596

IN THE HIGH COURT OF AUSTRALIA

Registry No C10 of 2006

B e t w e e n -

COMMONWEALTH OF AUSTRALIA

Appellant

and

JOHN GRIFFITH CORNWELL

Respondent

GLEESON CJ
GUMMOW J
KIRBY J
HAYNE J
CALLINAN J
HEYDON J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 8 NOVEMBER 2006, AT 12.21 PM

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 appellant. (instructed by Australian Government Solicitor)

MR B.W. WALKER, SC: May it please the Court, I appear with my learned friends, MR R.J. DAVIS and MR J.R.C. GORDON, for the respondent. (instructed by Snedden Hall and Gallop)

GLEESON CJ: Yes, Mr Estcourt.

MR ESTCOURT: May it please it your Honour. Your Honours, the provision of exhaustively defined pension and retirement benefit to persons employed by the Commonwealth evolved over some 83 years from 1922, through the 1976 legislation and through the 1990 Commonwealth superannuation legislation and then, in a sense, became extinct when the 1990 scheme, which was a defined benefits scheme, was closed to new members on 30 June 2005 and was replaced by a commonly understood accumulation fund which was created by the Superannuation Act 2005. Your Honours, if the original 1922 Act scheme bore any resemblance to these now commonly understood accumulation schemes, then the 1976 and 1990 Acts bore no such resemblance.

The 1922 Act scheme was based on the purchase of units of pension. The number of units which a Commonwealth employee was to subscribe for was dictated by the employee’s salary and the amount of contribution for those units was based on the employee’s age at the date of entry into the scheme.

KIRBY J: Was this a wholly indigenous development of the law, or was it something copied from New Zealand or Britain or - - -

MR ESTCOURT: According to the second reading speech and the explanatory memorandum to the 1922 Act, your Honour, it appears to have been drawn from the United Kingdom as well as from New Zealand and to an extent some of the State schemes, in particular, New South Wales. It was, of course, different from some of those schemes in the sense that it was entirely unfunded by the Commonwealth. The employees’ contributions were the only sense in which the 1922 Act was funded.

The 1976 scheme and the 1990 Act schemes, however, were not based on units of pension. They were based on the concept of years of contributory service. So, for example, the first schedule to the 1976 Act provided tables. If one was to retire at age 65 or one was to retire at age 60, you could look at the amount of years of contributory service that you had had as an employee and read across and find the percentage of your final salary that would be paid to you as a pension for life. So all three schemes – the 1922, the 1976 and 1990 Act schemes – were defined benefit schemes, but the 1976 and 1990 Act schemes were based on this notion of years of contributory service.

Your Honours, we say that it was the failure below to appreciate this symbiosis between end benefits for pension and years of contributory service that caused error in the reasoning. If years of contributory service were lost as a result of being kept out of the 1976 fund, for example, by negligent advice, the end benefit under the Act was unavoidably and irreversibly reduced. You could never make up years of contributory service if you had not been a member of the fund.

Of course, under the 1922 Act scheme where one was purchasing units of pension, if one had not purchased units at an early age, one could always catch up and purchase units at a later age, albeit at a higher cost per unit, because the unit cost was based on age of entry. But once the 1976 Act scheme did away with this notion of purchase of units and introduced the concept of years of contributory service, you could never get back years that you had not served.

HEYDON J: So you say the damage was suffered the first contribution day after 1976 and the limitation period is six years from that point, do you?

MR ESTCOURT: Yes, your Honour, with this qualification, that because you could catch up under the 1922 Act, if the negligent advice was given to you while the 1922 Act was in operation, then the loss was contingent until 1976 when the 1976 Act scheme introduced this concept.

HEYDON J: Yes, that is what I said, that the point of loss is when the 1976 scheme comes into force?

MR ESTCOURT: Yes.

HEYDON J: But do you not have to take into account the fact that the employee paid out nothing from the date of the negligent advice until the moment of loss. Does that not have to be offset against the loss to see whether there is a net loss?

MR ESTCOURT: No, your Honour, it does not, for this very important reason. The employee’s contribution is completely irrelevant to end benefits. There is no such thing as the purchase cost of this pension because whatever happens when the benefits are taken the employee contributions and interest are repaid.

HEYDON J: Yes, I think mine is a different point. On your case, if there had been no negligent advice, the plaintiff would have entered the 1922 Act scheme, would he not?

MR ESTCOURT: Yes, your Honour.

HEYDON J: And would have had to have paid out money to acquire units from the time when he was treated non-negligently until 1976?

MR ESTCOURT: Yes, your Honour.

HEYDON J: Do you not have to work out what that benefit is worth in order to compare it with the loss that was suffered from the moment it began to be suffered in 1976 to see whether or not it is greater than that loss?

MR ESTCOURT: We would say not, your Honour, because when the 1976 scheme was introduced benefits under the 1922 Act were carried forward and at the end of the period of contribution under the 1976 Act all employee contributions, their equivalent and interest were repaid as a lump sum or as a pension.

HEYDON J: Damages have not yet been calculated, but what sort of figure is in play between the parties as a likely recovery if the plaintiff is successful?

MR ESTCOURT: There is no figure as between the parties, your Honour, because the assessment of damages is yet to be had.

HEYDON J: But there must be some idea between the parties of what the allegations are on either side?

MR ESTCOURT: I do not believe so, your Honour.

GLEESON CJ: Are there any particulars?

MR ESTCOURT: I stand to be corrected. No, your Honour, I think that our attempt at assessment of damages has been the only attempt to show how one might approach the problem.

HEYDON J: Are we talking about a million dollars or millions of dollars?

MR ESTCOURT: No, I do not believe so, your Honour.

HEYDON J: Would it not be relevant, for example, if the plaintiff had taken the money he did not spend on units and bought a lottery ticket and that lottery ticket had given him a $5,000,000 prize, would it not be relevant to take that prize into account and compare it with what he is now claiming to see which is greater?

MR ESTCOURT: No, your Honour, because he would still be, whatever his position was, short of the retirement benefits that he would otherwise have been paid cost free at the end of his period of service, so that would just be an additional loss.

HEYDON J: But the negligence saved him the money he did not have to pay out from the early 1960s to 1976. Is that not - and perhaps the product of that - an advantage that has to be weighed against the loss he is now claiming?

MR ESTCOURT: No, your Honour. We would say not because there was simply no purchase cost for this pension and one can treat the retained benefits as irrelevant. In fact, in the assessment that we have filed as an annexure to our written reply submissions, we have not taken into account purchase costs at all. The costs of contributions are completely irrelevant.

HEYDON J: But, in a way, the Commonwealth of Australia did the plaintiff a favour by being negligent, did it not? It saved him the cost of putting money in.

MR ESTCOURT: No, your Honour. We would say that it deprived him irretrievably and unavoidably of between 11 and 22 years of contributory service which reflected in a pension at the end of his years of service which he would lose no matter what else he did. We say that there was a present loss in 1976 which was not fully quantified. There was a present loss suffered but it remained to fall due in the future.

KIRBY J: Could you remind me – it is not entirely clear to me how procedurally the point was presented. Presumably, the claim was made on the statement of claim that we have. You pleaded in your defence the limitation period and what actually the Chief Justice did at first instance was to determine the issue of liability separately, did he, and in doing that dismiss your plea?

MR ESTCOURT: There was an agreed basis for the trial and that was that the trial as to liability be held first.

KIRBY J: But there has been no assessment of the damage to which the plaintiff is entitled on the determination of the issue of liability which has so far gone the respondent’s way?

MR ESTCOURT: There was an affidavit from a Mr Davis which is in the appeal book, your Honour, where Mr Davis deposed to the fact that the respondent would suffer some loss as a result of not having entered into the scheme earlier than he did. That was adduced by the plaintiff or by the respondent purely for the purpose of demonstrating that loss had been suffered for the purpose of making it the cause of action. There was nothing beyond that.

CALLINAN J: That is the trouble with separate trials - - -

MR ESTCOURT: Yes, your Honour.

CALLINAN J: - - - in tort cases where damages are the gist of the action. It often is not sufficient to say, “Well, we accept that there is some non-minimal damage that has been caused”. You really need to know what that damage is, when it began to be suffered, how it accumulated. They are often very relevant questions to liability.

KIRBY J: It is because I have come to share Justice Callinan’s distaste for this separation that I asked the question. I see the Chief Justice launches straight into the facts of the matter and does not really explain how procedurally the issue came up.

MR ESTCOURT: Yes. This Court sounded the strongest possible warning in Wardley about this very sort of thing. We would contend that on one scenario if it was critical to the Court of Appeal’s reasoning that one had to look at the relative value of the retained contributions during the lost years, then the Court of Appeal should have held that the Chief Justice had determined the point prematurely.

KIRBY J: If there is some damage and you do not, as I understand it, contest that there is some damage on the basis of the subject of the limitation point, the plaintiff would be entitled to recover for that damage whatever it may subsequently prove to be.

MR ESTCOURT: That is so, your Honour, but the evidence that was led on the trial as to liability going as to damage was entirely equivocal as to when the loss bit home. The evidence of Mr Davis was equally evident that the loss occurred in 1976 or earlier as a result of Mr Cornwell not having joined the fund. It cannot be asserted, we say, against us that we failed to discharge an evidential onus – that the respondent did not suffer loss when the evidence that is produced to show that loss was suffered for the purposes of making out the cause of action is not specific as to when the loss was suffered.

KIRBY J: You are treading on eggs here because if it proves – and this was raised, though not exactly this point, in the special leave hearing – that this not a suitable vehicle to present the issue Justice Hayne warned you in the most clear terms that you ran the risk that special leave might be revoked.

MR ESTCOURT: Yes, your Honour. Yes, I recall that well.

KIRBY J: The matter comes to us on the hypothesis that this is a suitable case in which to tender the question of when the cause of action commenced for the purpose of the Limitation Act.

MR ESTCOURT: Yes. But one of our grounds of appeal is quite specifically that if it was critical to the Court of Appeal’s reasoning, that one needed to look at the relative value of the retained contributions, then the Court of Appeal erred in failing to find that the question was not right for determination, so we have a specific ground of appeal in respect of which to date we have leave which contains a visitation element as well as the element of the issue of public importance that is carried by the question generally.

So, your Honours, we say that far from being a Wardley contingency, which was what the Chief Justice held and what the Court of Appeal held to be the case, the respondent’s legal position was unavoidably and irretrievably changed in 1976, the moment the concept of contributory service robbed him of these years which related directly to the amount of his end pension. We say that his loss was either an actual loss, a loss per se, or alternatively, a loss of chance to acquire a valuable economic benefit.

Had he joined the 1976 Act fund on the very first day it commenced, 1 July 1976, he would have opened his account in the fund 11 years short on contributory service. In fact, when he did join the fund in 1987, another 11 years later, his account opened in the fund 22 years short on contributory service as a result of the negligent misstatement made by the appellant. We say that that loss was immediate and actual loss, but it was not at that time fully quantified.

We need to meet the contention that the respondent’s eligibility to join the 1976 Act fund was not automatic; that is, that he did not have an entitlement as of right to join, that there was a discretion involved, that he would have had to undertake a medical examination, that he may have been required to pay into the provident account and not allowed to have joined the fund proper. We say if one takes into account those possibilities we might be driven to say this was a loss of a chance of a valuable economic benefit, not actualised loss per se.

KIRBY J: That issue of loss of a chance is a bit like Hamlet’s ghost, is it not? It has walked across many a case in this Court but we really have skirted around it a bit, I think. Is that a fair statement? That is my impression.

MR ESTCOURT: Yes, your Honour.

KIRBY J: Has the Court ever really come to grips with the question of loss of a chance?

MR ESTCOURT: Well, Justice Gaudron and Justice Callinan in Naxakis seem to accept that it had application in principle beyond purely commercial cases.

KIRBY J: The problem is that there is always a chance. It might be a one per cent chance. What do you have to have to make it an actionable loss of a chance?

CALLINAN J: I said something about that, I think, did I not, about the quantum of the chance, in effect. I was the only one who did, I think.

MR ESTCOURT: Yes, well, your Honour was the only Justice who saw that that possibility was still open. Her Honour Justice Gaudron went in a different direction in a similar way to the way she approached the question in Chappel v Hart.

CALLINAN J: Chappel v Hart, yes, she took a much different view.

MR ESTCOURT: Your Honour, to finish the answer to Justice Kirby’s question, if one goes back to the majority judgment in Sellars it is clear that the Court was there saying that once you accept that Malec v Hutton was about the assessment of possibilities and past hypothetical fact situations there was no reason to confine its application to any specific sort of case. We would say that the loss of a chance of an economic benefit has been so widely accepted, as in itself damage, that it would be beyond question now. But in any event, your Honours, whether the respondent’s loss was the loss of a chance to acquire a valuable economic benefit or whether it was actual loss, what it was not was a Wardley contingency.

Just before I come to that, your Honours, I should also mention that the loss of chance as the loss of a chance of a chose in action or a valuable right was also considered, I think, in Kitchen v Royal Air Forces Association by the Master of the Rolls in that case and that was certainly picked up in Sellars, if it was not by the majority judgment then by Justice Brennan.

We say it was not a Wardley loss. This was not a contingent loss. This Court dispatched a similar sort of argument very quickly in HTW Valuers v Astonland. It simply does not have any of the hallmarks of a contingency of the Wardley genesis. It is not a mere risk of loss. It is actual loss that has not yet been fully quantified or actual loss that fell during the future.

HAYNE J: In that regard, what, if any, significance attached to the method of termination of employment? In particular, what, if any, significance attached to retirement on grounds of health, termination on account of death, termination for cause, or other reasons?

MR ESTCOURT: Your Honours, the Chief Justice and the Court of Appeal fell on retirement due to age or disability as the trigger which crystallised the damages for the first time, but we would argue that if one has regard to the way in which the schemes work, then selecting retirement as a date for a trigger for loss is illusory because other events also trigger payments but, for example, if one were to receive invalidity benefits under the 1976 scheme and one is paid a pension for disability, that would not be a trigger that captures the full extent of a plaintiff’s loss - - -

HAYNE J: But your case is, is it not, that say one year after the commencement of the 1976 scheme Mr Cornwell could have brought action for the negligence that had occurred?

MR ESTCOURT: Yes, your Honour.

HAYNE J: At that point, what would his claim have been?

MR ESTCOURT: His claim would have been for the difference between the end benefit under the scheme he would have received had he been advised to join the fund when he asked to join, and the end benefit he would receive having joined the fund 22 years later when he became a permanent employee by dint of transfer to the ACT and then it is simply a matter of working out what that difference is.

HAYNE J: First you would discount that, would you not, for the chance of prior termination on account of death or ill health? You may discount it even for the prospect of termination for misconduct. One would assume that would be a minor discount. Would you take to account in making that computation as an offset the amounts that would have had to be outlaid in that 22 years?

MR ESTCOURT: No, your Honour, and that is what Chief Justice Higgins did exactly in the penultimate paragraph of his Honour’s judgment when he said there is to be judgment for damages to be assessed and the loss is the difference less the cost of the contributions, but the point we make is that the contributions - - -

HAYNE J: How can you determine that there is a net in favour of the plaintiff, for example, as at 12 months after commencement of the scheme without close attention to the particular calculation that would then have to be made? Unless it is net in favour of the plaintiff, why does the plaintiff then have a complete cause of action?

MR ESTCOURT: Your Honour, you ignore the contributions altogether because they were nothing more or less than enforced savings. They were the Commonwealth enforcing - - -

HAYNE J: You can put a tag on it of that kind but the tag simply masks the question, Mr Estcourt. Why do you not take account of the outlay that would have had to be made to arrive at the result?

MR ESTCOURT: Because it is not an outlay, your Honour. The pension is entirely unfunded. It has nothing to do with the contributions. It is all to do with years of service and final salary. It is not purchased in any sense.

HEYDON J: But if there had been no contributions, there would be no entitlement to anything.

MR ESTCOURT: Your Honour, the scheme might just as well have been run on the basis that there were no contributions.

HEYDON J: If the plaintiff had made no contributions, he would have had no entitlement, would he?

MR ESTCOURT: Under the way the scheme was structured, he was required to make contributions.

HEYDON J: So that is an expense, as Chief Justice Higgins says, the expense of contributing to it.

MR ESTCOURT: It is a commitment which no doubt has some tangible value but it is entirely refunded, 100 per cent refunded with no aspect of it being taken into account in the calculation of the pension.

HEYDON J: If the Commonwealth loses this case for some reason connected with fraudulent concealment, that line of country, then we will not expect to be hearing the damages part of the trial – any contention that the damages should be reduced, should we?

MR ESTCOURT: I am not sure that I understand your Honour’s question. There is no case of fraudulent concealment made against us.

HEYDON J: You are, at the moment, as it were, pushing up the damages. You are allowing to the plaintiff extensive damages, relatively. At the second stage of the hearing, if that ever comes to pass, you will not be wanting to push them down again by a contradictory argument, would you?

MR ESTCOURT: No, your Honour. The fact remains that contributions are refundable in full, 100 per cent, and they have no bearing on the cost of the pension. We would say that Chief Justice Higgins was entirely incorrect when he suggested that you had to reduce the respondent’s award of damages by the cost of acquiring the pension because there was no cost.

HEYDON J: But when he said “the benefits now payable to him”, did that phrase include the refunding of the contributions?

MR ESTCOURT: Your Honour, he actually said “paid or now payable”.

HEYDON J:

benefits now payable to him (or paid to him) - - -

MR ESTCOURT: Yes, I am sorry, I transposed the two - but went on to say that you needed to reduce that amount by the cost of the contributions. I could not be heard to say that under any circumstances that is correct because there was no cost of purchasing the pension.

HEYDON J: Did he get back those contributions that he made?

MR ESTCOURT: I cannot say without giving evidence, your Honour, but the way the scheme works, inevitably they would have been refunded to him either as a further indexed pension to the extent of 20 per cent and the balance in cash, or as an entire lump sum representing all his contributions and all the interest.

GLEESON CJ: With interest?

MR ESTCOURT: With interest, yes, your Honour.

GLEESON CJ: Is that a convenient time, Mr Estcourt.

MR ESTCOURT: Yes.

GLEESON CJ: We will adjourn until 2.15 pm.

MR ESTCOURT: Thank you, your Honour.

AT 12.49 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

GLEESON CJ: Yes, Mr Estcourt.

MR ESTCOURT: Yes, thank you, your Honour. Your Honour, I had hoped only to be about another 10 minutes, and not much longer, if at all, in reply. On that basis my learned friend, Mr Walker, and I expect that we could finish this afternoon.

GLEESON CJ: Thank you.

MR ESTCOURT: Your Honour, I was submitting before lunch that on any analysis of this case it is not a Wardley contingency case. We say that the loss, whether it was an actual loss, per se, in 1976 or a loss of a chance, it was a present loss, a present loss which fell due in the future. We say that there is no basis in principle for treating the loss as contingent and that the essential reasoning that underpinned this Court’s decision in Wardley is not engaged here. That reasoning was that there might be - - -

KIRBY J: Can I just go back to Justice Callinan’s question before lunch?

MR ESTCOURT: Yes, your Honour.

KIRBY J: In a sense, given that there have been dicta about the loss of the chance issue, the best way for this Court ever to receive a case on that would be where a judge has looked at that issue, considered it in the context of particular facts, decided it on that basis, identified what the chance was and what proportion it was and what it was worth and then it comes to us as a fully-rounded issued which we can then develop or consider a very important question which has been postponed on a number of occasions, rather than in this case where none of those things have been decided. This is relevant to the question of whether this is really an appropriate vehicle for us to be looking at that question.

MR ESTCOURT: Yes, your Honour, but what is thrown up in this case is whether the principles that underpin Sellars are confined to commercial cases or whether they do indeed embrace across the board a loss of a valuable right, be it a chose in action or be it a loss of an economic benefit.

KIRBY J: How in principle could such a principle which is a principle of damage be confined to commercial cases? What is a commercial case? If you are talking about economic loss, I can understand that, but how could it conceptually be restricted to a commercial case?

MR ESTCOURT: Your Honour, with respect, we would embrace that comment heartedly, we say that it cannot be, but it is said against us that the principle in Sellars is confined to a loss of a commercial benefit. That is why I made the submission I did before lunch.

KIRBY J: I just feel uneasy dealing with the question in this hypothetical factual situation without judicial evaluation of the evidence, considered opinion, reasons, coming up the stream in the normal way. We do not have any of that.

MR ESTCOURT: But, your Honour, the point is still made that this is a Wardley-type case because if the respondent brought his case or his action within six years of 1976, his action would fail or that he would be under-compensated because his damage simply could not be calculated. Notwithstanding the lack of that aspect of this case being considered by the ACT Supreme Court, we have demonstrated that in fact the loss of the defined benefits can be calculated and the annexure to our written submissions in reply demonstrate how a simple approach to that could have been taken.

Your Honours, the other point which needs to be made, albeit obvious, is that the policy of the law has favoured definite time limits for bringing civil claims and we have in this case a situation where parallel claims in contract and in negligence were brought, a finding was made against the defendant in both cases, but the limitation period had expired in respect of the claim in contract and not in negligence, so there is a tendency for an enormous disparity between two parallel rights in this case.

We make reference in that regard, your Honours, to the observations of Justice McHugh in Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541. I do not wish to take your Honours to any particular passage. The observations appear between pages 551 and 553 and his Honour reiterated those comments more recently in Woolcock Street Investments v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515 at 555 or paragraph 102.

Your Honours on the special leave application, Justice Gummow, drew attention to the House of Lords decision in Law Society v Sephton & Co [2006] UKHL 22; [2006] 2 WLR 1091. Echoing Justice McHugh in Woolcock Street Investments and Brisbane South Regional Health Authority, Lord Walker of Gestingthorpe in Sephton also noted the general inclination of the law to treat a cause of action as arising sooner rather than later.

GUMMOW J: Now, the limitation section we are looking at here is section 11(1) of the Limitation Act 1985 (ACT).

MR ESTCOURT: That is correct, your Honour.

GUMMOW J: It, in the simple terms, is not maintainable if brought at the end of the limitation period of six years running from the date when the cause of action first accrues, so we are not concerned with some of these very fancy limitation legislation that exists in various other jurisdictions now.

MR ESTCOURT: No, your Honour. There is no discoverability rule which affects the operation of that section.

KIRBY J: But does not the notice of contention raise a question of concealed facts?

MR ESTCOURT: The separate issue is raised of section 33 of that same Act which talks about “deliberate concealment” of a fact relevant to a cause of action. We say as to all of that, and we have said in our written reply submissions as to all of that, that it is dealt with by the House of Lords decision in Cave v Robinson Jarvis & Rolf [2003] 1 AC 385. In essence, your Honours, we say in our written submissions that before this decision of Cave there was English authority which we have referred to in the written submissions to the effect that any intentional act constituted, whether or not to the knowledge of the actor, a breach of duty of care, if it was unlikely to be discovered for some time, then it prevented the period of limitation beginning to run.

In Cave v Robinson, we rely heavily on the speech of Lord Millett with whom Lords Mackay and Hobhouse agreed and, in particular, in the speech of Lord Millett at paragraph 15 of his Lordship’s speech. He said:

The effect of Brocklesby v Armitage & Guest is to deprive a professional man, charged with having given negligent advice and who denies that his advice was wrong let along negligent, of any effective limitation defence. However stale the claim, he must defend the action on the merits, for he will not have the benefit of a limitation defence unless he can show that his advice was not negligent. This subverts the whole purpose of the Limitation Acts.

His Honour went on at paragraph 25 to develop that even further by saying, in essence, that for a section such as section 33 of the Limitation Act (ACT) to operate the person must take active steps to conceal his breach of duty or be guilty of deliberate wrongdoing and conceal or fail to disclose its circumstances where it might not otherwise be discovered for some time. We say that Lord Millett’s speech in that case is a complete answer to all of the submissions that are made against us on the limitation concealment point.

KIRBY J: I understand that submission but, on the other hand, as was put to you during the special leave hearing, for most people who are making a claim for a benefit such as this any wrong that has been done to them only really bites when they put in their claim and they find their benefit is negligible or non-existent. Therefore, it is at that time that one would think that the statute of limitations is activated because until that time the person has not really had to turn their attention to it.

It is easy for the Commonwealth to come along and say they should have gone to court much earlier and pursued their claims, but in the reality of life most little citizens would only do that when the consequence of the fault has bitten on them which is when they do not get the benefit that they should have got. That is the other point of view that in a sense answers Lord Millett’s observation in a case such as the present.

MR ESTCOURT: We would answer that, your Honour, by saying that yes, it is true that the provisions of the superannuation Acts were enshrined in Acts of Parliament and easily found, but we appreciate the force of your Honour’s point. However, to allow section 33 to have such a broad interpretation would be to embrace the sort of discoverability rule which this Court rejected in Hawkins v Clayton and as Lord Millett says, it would deprive the Limitation Act of any effect at all if it were to apply to every negligent act and not one involving some deliberate conduct.

KIRBY J: Do findings of fact go so far as to find concealment? I got an impression reading the facts that they did not rise as high as actual concealment, they may have been careless or negligent or faulty, but - - -

MR ESTCOURT: In the instant case, your Honour?

KIRBY J: Yes.

MR ESTCOURT: Yes, the observation was that nothing rose above negligence, that there was no deliberate concealment, there were positive findings.

KIRBY J: There is no finding by Chief Justice Higgins that is yes, positive concealment?

MR ESTCOURT: To the contrary, your Honour, that there was no deliberate consent.

KIRBY J: That was my impression, on the facts.

MR ESTCOURT: Yes, that is so. So, your Honours, we sum up our case by saying that there are four points which lead inevitably, we would submit, to the conclusion that this is a case about actual loss or loss of a chance but not a case about a Wardley contingency. The first is the subject that was under discussion before lunch and that is we contend that contributions paid by a member of any of these schemes are totally irrelevant to the pension payable, they have no bearing on the pension payable.

The second is the corollary to that and that is that pension benefits are solely determined by years of contributory service. So contributions have no effect, contributory service has every effect. The third point is that lost years of contributory service can never be recovered. Once lost they are lost forever and their loss cannot be ameliorated or counteracted. Finally, that retirement is not a contingency in the context of these pension schemes. Pensions are payable for life and beyond, reversionary benefits are payable to spouses and children.

CALLINAN J: The benefit crystallises on retirement, though, does it not?

MR ESTCOURT: We say no, your Honour, with respect. We say that all retirement does is give you a better snapshot of it, that it allows you to assess it with less prediction but it is still the same assessment that might have been carried out in 1976 with just fewer imponderables. It does not really crystallise until death in the sense that you cannot capture the full extent of the loss until you know how long a retired member or a pension member is going to live.

CALLINAN J: You cannot access it until retirement though?

MR ESTCOURT: There are some very complicated provisions about all that but basically, no, it needs to be preserved if you retire under a minimum retiring age and preservation of benefits gives rise to the same set of pension entitlements as would arise if you continued to pay your contributions right through.

GUMMOW J: What does the word “contingent” mean in this universal discourse? It is used in various ways in the law in various circumstances.

MR ESTCOURT: Your Honours, we took in our written submissions simply the Shorter Oxford Dictionary definition.

GUMMOW J: But is there any explanation in the cases like Sephton and Wardley itself as to what the judges are taking the word to mean?

MR ESTCOURT: No, your Honour. It is a.....floating concept and if one look at the overseas cases there are some difficulties posed by this very question.

GUMMOW J: Because what is being construed is the statutory phrase which is from the old 1623 Act, is it not?

MR ESTCOURT: We say that if you talk about a Wardley contingency, you are talking about the mere risk or potential of loss.

GUMMOW J: What is the statutory language again, in the Limitation Act - “first accrues”?

MR ESTCOURT: First accrues.

GUMMOW J: Some gloss made on that which introduces notions of contingencies as the opposite to accrual. Is that not what is going on? It is all rooted in the statute somewhere. The statute is section 11(1) and that uses the phrase “first accrues”. Now, how do we then drift into contingencies other than - - -

MR ESTCOURT: The cause of action has not accrued because a necessary element of the cause of action in negligent is the suffering of damage beyond negligible and that if you have merely a contingent loss - that is, a mere potential or risk of loss in the future - it is not damage for the purposes of completing the cause of action. In fact, your Honours, it is thrown into very sharp relief by something that the Court of Appeal said in their own decision - - -

GUMMOW J: In this case?

MR ESTCOURT: - - - in this case. Their Honours are referring to a decision of Justice Hodgson in New South Wales Supreme Court Equity Division of Tanna v Deutsche Bank and this is at page 116 of your Honours’ appeal book where Justice Hodgson is quoted at paragraph 20 as saying:

In some future cases, it may be necessary to spell out in greater detail the relationship between the principle in Wardley and that in Sellars v Adelaide Petroleum. It would seem that, if one can characterise an economic disadvantage suffered by the plaintiff as involving the loss of a commercial opportunity which has some value, then that will be enough to constitute actual damage and complete a cause of action. However, if the economic disadvantage is no more than a contingency for future loss, then, unless and until the contingency occurs, there is no damage and no cause of action.

HAYNE J: When his Honour speaks of “has some value”, is his Honour to be understood to be speaking of “is marketable” or is his Honour focusing on “is capable of calculation”, or some combination of the two concepts which may be wrapped up in this notion of value?

MR ESTCOURT: We would say that it means capable of calculation.

GLEESON CJ: Is this the same idea of contingency as is reflected in accounting terms in the distinction between a contingent liability and a liability?

MR ESTCOURT: No, your Honour, it depends on shades of prediction. Justice Hodgson in another case, the name of which escapes me but I will have it found, summed this question up as the difference between a chance of a loss and a loss of a chance, chance of a loss obviously being nothing more than some potential or possibility of a loss in the future, the loss of a chance being the loss of a valuable right.

GUMMOW J: We are really talking about an action on the case, damage is the gist of the action on the case, when is that suffered and by what circumstance is it suffered?

MR ESTCOURT: That is it, your Honour, yes.

GUMMOW J: It does not really get much analysis beyond the accountancy notion of contingency.

MR ESTCOURT: Well, if one looks at factual situations such as in Wardley, then clearly there were things which had to happen before you could say that there was anything other the mere risk of a loss. In the instant case, we say that there was certainly more than a mere risk of a loss. There was an actual loss which had been immediately incurred, but it fell at a later date.

GLEESON CJ: There are degrees of ease or difficulty of calculation or ease or difficulty of computation of a loss. Is that relevant to deciding whether it is contingent?

MR ESTCOURT: I would have thought so, your Honour, yes, and we would submit so. There will be clear cases on either side. Much is to do with the nature of the transaction, of course. If, for example, Wardley had involved a guarantee instead of an indemnity, the outcome may have been different.

GUMMOW J: Another realm of discourse, Justice Hayne reminds me, is the notion of incurring outgoings for section 51 of the Tax Act.

HAYNE J: Ronpibon [1949] HCA 15; 78 CLR 47, that whole basket of joys.

MR ESTCOURT: Yes.

GUMMOW J: We had just a case on the CityLink in Melbourne earlier this year.

MR ESTCOURT: Your Honours, I can say, and we have a note that can be made available or at least the cases can be made available to your Honours, they shine no bright light on this problem, but the United States Supreme Court has not grappled with this issue. The court has tempered the effect of some harsh limitation periods in latent disease cases and in medical malpractice cases with a general discoverability rule. But otherwise the ordinary rule as just enunciated by Justice Gummow applies.

The Supreme Court in New Zealand has indicated that it would follow Wardley with close scrutiny being given to the nature of the transaction. The Canadian Supreme Court has not pronounced at all. I am sorry, neither has the New Zealand Supreme Court. New Zealand and Canada are both at the level of the Court of Appeal, but Canada has said that the loss is suffered when the transaction is entered into. In other words, embracing the wider interpretation that was placed on Forster v Outred before this Court declined to follow and Sephton has agreed was the correct approach. May it please the Court.

GLEESON CJ: Thank you, Mr Estcourt. Yes, Mr Walker.

MR WALKER: Your Honours, may I come straight to that part of the case. As we pointed out in our written submission, a difference between Wardley and our case is that ours is a case where somebody did not do something, that is, failed or omitted to do something which it is held as a matter of fact he would have done but for the appellant’s wrong.

Wardley, of course, is a case where by reason of the wrong, the State was induced to enter into a transaction to assume obligations which were real as matters of law at the time the ink was drying on that indemnity. It was against that background that, in our submission, if we can make good the proposition that Wardley is at all relevant to the present case, as the courts below have held it was, then ours is a case strongly a fortiori compared with the position in Wardley, principally for the reason that here there is nothing in the nature of an asset, a pre-existing or related asset, the value of which can be seen to have been diminished by reason of the wrong there and then, notwithstanding that the diminution and the value reflects the appreciation by those undertaking the estimation of the chance in the future of certain things happening.

That is the explanation given, both in the High Court in Wardley and in the House of Lords in Sephton for the unfortunate mother’s mortgage in the case whose name I keep forgetting, in Forster v Outred & Co because immediately it was said, perhaps not with much conviction in the revisiting of that case in Sephton, but the speeches suggest that the proper way to understand that case is that the fact that the title was previously unencumbered it is now encumbered, notwithstanding what will have to be paid pursuant to the encumbrance depended upon the whim of the son in his financial dealings and the position that the son’s creditors might take. It was nonetheless an instant, immediate effect in value, the size of which, the estimation of which, would depend upon chance, but that did not render it any the less actual.

GUMMOW J: What was the nature of the asset your client had or was going to have? Was it contractual or statutory or what?

MR WALKER: The asset analysis simply does not apply to this case. At most, it could be said that there would be obtained a set of rights – and the word “rights” may be highly tendentious – upon becoming a deemed employee. In fact, what the statute did - and I will come to the statute briefly - as at 1965 was by section 19 to impose an obligation of contribution on him and then if he survived to, or if events worked out so that he then acquired a particular character, the person who was disabled, invalid, a person who was retired, resigned, sacked for misconduct, et cetera, et cetera, including those that trail after him, such as widows and children, then certain, as at 1965, it was held out, in a political sense, that certain benefits would flow his way.

Now, at this point it is worth noting that the Commonwealth uses to no degree at all any element of just terms for the acquisition of property, 51(xxxi) in this case, so we are just looking at a statute which can ebb and flow. So there is no easy analysis of an asset - - -

GUMMOW J: There is no Georgiadis point, in other words?

MR WALKER: There is no Georgiadis point. There is no easy concept of an asset possessed or owned as to which one can suppose proprietary aspects of its character as at 1965 when, on the holdings of fact in this case, my client would have become a deemed employee. That is all he would have become, a deemed employee. Being a deemed employee he would have then had the obligations of an employee which involved compulsory contribution.

I am going to come back to the question of looking to the cost, worth or opportunities available with respect to compulsory contributions in order to assess the idea of a loss. If your Honours will permit me simply to continue on this question of the distinction between Wardley and this case and why there is no difference that ought to alter the application of the Wardley principle to this case.

HAYNE J: Before you embark on that can you state in a sentence or two what you say the plaintiff lost? The plaintiff claims damages. The plaintiff claims he lost something.

MR WALKER: Yes, we can.

HAYNE J: What?

MR WALKER: The plaintiff lost the retirement benefit which would have been his had he become a deemed employee in 1965 with the steps to his advantage which he would have taken at what turned out to be the statutory juncture points of 1976 and 1990.

CALLINAN J: Are you saying that it is established on the balance of probabilities that he would have chosen that?

MR WALKER: Yes. This case was - - -

CALLINAN J: So this is not a case about loss of chance or loss of opportunity?

MR WALKER: This was a case that was fought at every point imaginable. One only has to see the pleadings the defence has found in the supplementary book to see that the Commonwealth - - -

CALLINAN J: Accepting that that is what he would have done.

MR WALKER: - - - the Commonwealth admitted nothing. They denied loss.

KIRBY J: Could you just explain that to me? Why is that not loss of the chance – at least one way of looking at it – that he would have done these things at that time given that nothing is certain and that one way of categorising it is he lost the chance of doing it then.

MR WALKER: Yes, your Honour. Would you forgive me if I did that woven into some other matters to which I will come?

KIRBY J: Yes, of course.

MR WALKER: I certainly am going to address, I hope sufficiently directly for your Honours’ purposes - - -

KIRBY J: I just did not quite follow what Justice Callinan said.

MR WALKER: - - - the Sellars/Wardley tension. Yes. If I go back to Justice Callinan’s point, this was a case where we pleaded and particularised that our loss was the difference in the benefits we received as a consequence of being denied the opportunity to go into the fund in 1965. We are not frightened about words like “opportunity”. It was an opportunity we had given by law and by the proper exercise of a delegated treasurer’s discretion for us to become a deemed employee. We had no right to become a contributor. We had a right to be considered for the exercise of the discretion.

All of that was held in our favour as a matter of fact on the balance of probabilities to make good our cause of action, that is, if the breach of duty, the negligence, had not occurred, we would have applied, we would have been accepted as a deemed employee as from some date in 1965.

CALLINAN J: At some convenient time you can just give me the reference to that. Are there concurrent findings about that?

MR WALKER: Yes, there are. Not all the findings of fact upon which the Commonwealth failed at trial were the subject of attack in the Court of Appeal. Some were. Many important ones were.

CALLINAN J: Give me the reference at some stage.

MR WALKER: I will have a note made.

GLEESON CJ: Is part of your case that the nature of a retirement benefit is that you lose it when you retire?

MR WALKER: Yes.

GLEESON CJ: Does that mean that your client could not have sued before he retired?

MR WALKER: On the facts as this happened, yes. The only qualification necessary is that we talk about retirement benefits but there is a whole host of other possibilities. You trip over and get disabled, you leave. You leave with a gold watch, you leave under a cloud. These are all different possibilities. They are all covered one way or another in the various permutations of the schemes – and that is plural schemes as my friend pointed out – to which my client would have had access - - -

CALLINAN J: Why could he not have sued for a declaration saying that he was entitled under the relevant provision?

MR WALKER: He probably could have except for the unkindness of trial judges in denying declarations which are merely hypothetical.

CALLINAN J: Is that right?

MR WALKER: Yes. They would have said - - -

KIRBY J: They read Bass.

MR WALKER: A trial judge – I am not saying that is what should happen but you would obviously be met with this problem: “Mr Cornwell, why do you need a declaration about the fact that you have been denied an opportunity when, for all we know, that opportunity will turn out to be something you are very glad to be rid of?” In any event, the fact that we could have sued for declaration says nothing about the accrual of a cause of action for negligence - - -

GUMMOW J: It has to be a declaration of right.

MR WALKER: I am sorry, your Honour?

GUMMOW J: It has to be a declaration of right.

MR WALKER: Yes, a declaration of right. Now, a modest declaration of right which it may be my learned friend when one contemplates this is what he is proposing should have happened, that is, my client would have gone off and read the statute according to his written submissions, and it is a very clear statute, is the subliminal message from the Commonwealth, and then he could have gone off for a declaration of rights so that these Treasury officials would not have denied him a mere industrial – and that is the ground upon which he was in the quota not to be notified and to be refused if you apply – and he could have got a declaration of right, but it would have been a modest declaration of right and it may not have done his prospects of continued employment as a temporary a lot of good, because it would have been a declaration of right that he was a person who was capable of seeking a favourable discretion under subsection 4(5) of the 1922 Act to which I will come.

Now, that is a trivial possibility. It certainly says nothing about the vesting, the accrual of a cause of action sounding in damages for negligence, that is, the cause of action the gist of which is the damage. Now, in our submission, one - - -

CALLINAN J: What happened to the contract claim? Sorry to interrupt you, Mr Walker, but there was a contract claim too, was there not?

MR WALKER: Statute barred because nominal damages upon breach of the duty and not pressed in the Court of Appeal.

CALLINAN J: So we do not have to worry? It was not pressed?

MR WALKER: All we have is the negligence claim and all the Commonwealth has is limitations. Now, we have an answer to the limitations, deliberate concealment, to which I will come at the end, but those are the only issues now. But everything else was in play at trial. A lot of it was in play at Court of Appeal, and I stress the primary position of the Commonwealth was, apart from the fact they had no duty, they had not been negligent, it was my client’s fault anyhow, was part of their claim was there was no loss, and then, if there was a loss, it was suffered in 1965, and then they had cascading possibilities going through I think to the 1990s. All that has shrunk now down to “your loss occurred, actual loss happened in 1976”.

Now, your Honours will recall the way in which my learned friend concluded his address this afternoon. A passage in his submissions appears, with great respect, to require the conclusion that that was an argument for the accrual of the cause of action in 1965, because from 1965 there was no going back. Now, I only draw that to attention not to criticise my friend’s submissions, but so as to draw to attention that we do not understand that to be the Commonwealth position, that is, we do not understand their written submission to be departed from in any way at all and the written submission is clear there is contingency in a Wardley sense which it is implied is a relevant sense between 1965 and 1976.

GUMMOW J: Where do you see that in your opponent’s written material, so we can just get it clear in our heads? Paragraph 16 or thereabouts - 26 maybe.

MR WALKER: Yes, that is right. There is another reference to true contingency to describe the position occurring in 1965 that I will draw to attention. That comes from the nature of the scheme as at 1965 which is referred to between paragraphs 15 and 22 of our learned friends’ written submissions.

GUMMOW J: Paragraph 15?

MR WALKER: Paragraphs 15 to 22 on pages 3 and 4.

GUMMOW J: He said there is - - -

MR WALKER: Yes, “(truly) contingent” – it has been staring me in the face, your Honours. Paragraph 25 on page 4, line 31.

GUMMOW J: Yes, that is right.

MR WALKER: Your Honours do not decide cases because counsel make a mistake in common and if that is not right then..... But, in our submission, the Commonwealth was right in taking that position for the reasons that we have tried to put in writing, for the reasons that the Court of Appeal expound in this case, and for reasons which I will briefly supplement in my address.

Could I go back to a question which is basal to the issue. We have a statute here, section 11 of the Limitation Act (ACT); the High Court had a statute, section 82(2) of the Trade Practices Act in Wardley. Is there something to be gained from the so-called principle in Wardley in relation to a cause of action accruing by reason of loss being suffered by the wrong which can be applied to the common law tort. In our submission, yes, in principle, exactly the same question is asked by the component or element of the cause of action in negligence; has loss been caused by the wrong and that which is called up by the terser formulation of the same requisite connection of wrong and consequence in section 82(2) of the Trade Practices Act.

As it happens, in Kenny & Good, Justice Gaudron and Justice Gummow both expressly observe the applicability of the Wardley principle to the common law position. The references are [1999] HCA 25; 199 CLR 413 at 447, paragraph 86, for Justice Gummow and at page 424, paragraph 15, for Justice Gaudron. We do not understand that there is any contention against the applicability. We add what, in our submission, is the highly persuasive and, if I may put it this way, enthusiastic endorsement of the application of the Wardley principles in the common law context of negligence by the House of Lords, all their Lordships, in Sephton’s Case. So that the first step we need to make good about contingency being a relevant concept is made good in that fashion. Otherwise, we rely upon our written submissions concerning that.

It is for those reasons that, with great respect, Justice Gummow’s question to the effect why do we get into talk of contingencies, this is a statutory question, arises by those stages of reasoning. The causes of action covered by section 11 which must accrue so that you can ascertain the date when it first accrues so as to start the time running include negligence, action on the case. That has as one of its components the suffering of loss caused by the negligence. That means actual loss not contingent loss on the authorities in the common law. That, in particular, requires attention to the difference that my learned friend, with respect, neatly encapsulates with his quotation of the difference between a lost chance and the chance of a loss. To put it another way, being placed at risk of damage is not the same as suffering damage.

I am still going to, if I may, studiously avoid moving to the Sellar’s question, not because it is not important – it clearly is intentioned with a lot of this – but simply, if I may, go on to complete what we want to say about the contingent nature of the matters in this case.

The first step is to observe that the interest in question, that is that which was the subject of the dealing between the late Mr Simpson and Mr Cornwell in the office, the 26-year-old spray painter and the manager of the transport section, the interest in question was my client most prudently looking forward to his retirement – I do not mean eagerly awaiting it; I mean seeking to anticipate the financial needs it might bring – and asking, as it happens, on the facts, as your Honours have observed, notwithstanding the union delegate had already reported back that management said the temporary industrials were not eligible and saying, “I don’t understand why we are not entitled. Why can’t we get into the scheme?”

He was therefore asking his superior placed in a managerial position over him the means by which he accessed the rest of the public service, the Public Service Board, the Treasury, which no doubt, unbeknownst to him, are called up by the 1922 Superannuation Act. He was asking about something, a set of events, the detail of which he probably did not know, but the most obvious one of which was retirement. Now, there are alternatives to retirement, as the facts make clear, but that is what he was asking about.

That is the starting point and, in our submission, a very good starting point when one in particular considers the way in which this Court analysed the matter in Wardley. That is the starting point for the argument that when one looks to understanding loss for the purpose of making good the cause of action for wrong advice about that entitlement then one will be looking for a very close relation between the loss, that is, the state of affairs of being worse off than you would otherwise have been, with the retirement benefit, with all its alternatives, injury, invalidity, resignation, that he was asking about.

That is why our pleaded and particularised case was simply that having lost the chance of going in in 1965, it turns out by the combination of how long he stayed at work, what position he attained at work, how his salary increased at work, and it happens, his contribution history – I am not talking about arithmetic relations between contributions and payments; I am talking about the fact that he had contributed – if that had all happened, from 1965 he would have retired with a certain benefit. As it happens, he had only that which flowed from joining in 1987 when, significantly, he ceased to be temporary, that is, he then became, not by a deeming, he actually became permanent and obliged to contribute under the then regime.

That is an analysis which, in our submission, says that there is nothing unfair, there is nothing that would offend Justice McHugh’s reference to the social policy of and the policy of the law in relation to limitations periods which are of course statutory. There is nothing that offends any of that in the notion that the loss is not to be described until one can say, “You are worse off with respect to that about which you are inquiring – retirement benefits – than you would have been had they given you the right advice.”

That, really, in our submission, is enough entirely to satisfy those dictates of balance between the certainty of closing the period early, the framing of the issues in the case according to the interest at stake between the parties and the difficulty of proof if you sue too early, that is, proof of damage, all of which were considered by the High Court in the passages that your Honours have had cited and quoted to you repetitively in the written submissions. That was, of course, taken up in the House of Lords.

In our submission, those are matters which very strongly support the importance of preserving for application in cases just like the present one the requirement that the loss be actual in the sense that you know it is a loss. That is, you know that somebody is worse off, not you know they might turn out to be worse off or might turn out, that is, to have suffered a loss. In short, a risk of loss is not a loss.

Now, we have tried to give some examples in our written submissions. I do not wish to return to them. Examples remote from the case have obviously a reduced utility. One of the examples we have given in two variations is in our paragraphs 32 and 33 which was designed to bring up not only factual matters but also matters to do with the possibility of legislative adjustment or change. That, in our submission, is a matter that your Honours will have noticed is entirely and signally lacking from any recognition in the written reply to us and, in our submission, needs to be confronted.

One cannot look at the fat books your Honours have been given of the legislative provisions, one cannot look at the appendix to the appellant’s written submissions and one cannot see the relevant parts of the trial judgment in particular, without it being an overwhelming characterising fact of the Commonwealth superannuation arrangements that they always had the potential to be changed, and they did change.

It is ironic perhaps that it is the fact of one of those changes, the 1976 change, which is seized upon by the Commonwealth to say, “Here is your loss crystallised because matters became irretrievable and irrevocable at that point”. But that, in our submission, is to commit the egregious fallacy of saying that there are certain legislative enactments which it can be said when they come into effect are never going to be altered, at least to the detriment of those they purport to benefit, hence the significance of there being no 51(xxxi) in this case. That is simply impossible to appreciate, particularly in this area of superannuation benefits of public servants.

It is not a proposition capable of being pronounced from a Bar table as if it were legal in content, but everything that your Honours have seen in the evolution of arrangements for its employees by the Commonwealth in the nature of superannuation has been to the benefit of those employees, however one understands that notion of benefit, whether it be by way of compulsory saving or any other label to be attached to it.

So it was always the case that for somebody who was out of it – the so-called lost years as they are described in the argument – it will always be the case that somebody who is out of it and is therefore spared the obligation to make contributions, which is an obligation – it is not a by the way, it is not something irrelevant and cannot be put to one side – there is always the possibility that come the end point about which the advice had been sought, namely, “Can I get into a scheme which will look after me when I want to stop working”, come that end point it might turn out that by the negligence he has been spared a pretty bad investment, namely, Commonwealth superannuation. It might be – and this is our case – that he would have been deprived of a splendid way, unfunded by himself, of having his retirement provided for by a grateful employer, that is, by the body of taxpayers, and that is what we complain about.

We say, because you have to wait and see, it turns out that things including the 1976 change have had the effect – factual as it happens, not legal – the factual effect of enabling us to say in the first phase of this unfortunately split trial there is some loss, not negligible, and we hope if it comes to this that we will therefore then be able to demonstrate in money terms what that translates to after calculations have been performed.

CALLINAN J: Does that not put him in a much better position than a person who makes in 1965 an informed choice?

MR WALKER: No, it puts him in precisely the same position. If he had made the informed choice in 1965, he would have gone into the scheme.

CALLINAN J: Say somebody had made an informed choice not to go into the scheme?

MR WALKER: I am sorry, your Honour, by “informed” do you mean without there being any negligent misstatement?

CALLINAN J: Yes.

MR WALKER: Well, of course, there is no cause of action then for such a person. That person has weighed up the chance or risk or contingency of whether they are better off looking after themselves now or spending the money now, rather than worrying about their old age. Lots of people no doubt make that choice. But that is not a relevant comparator for a person whose cause of action depends upon it being demonstrated that they have suffered a loss and whose answer to the limitations defence depends upon showing that that loss did not occur until less than six years before action brought.

CALLINAN J: I am just not too sure that if you were to succeed – and nothing may turn on this – that your client may not be put in an anomalously superior position.

MR WALKER: Not superior, your Honour, to those people who with good advice – I should not say good advice – with non-negligent dealing went into the scheme in 1965. He is not in a better position by the damages I have talked about – and this goes back to Justice Heydon’s questions to my learned friend at the outset of the addresses today – because of course we have to give credit for how we have been able to deal with the money we did not contribute.

Now, perhaps that underlay Justice Callinan’s questions. We certainly do not seek to evade giving credit not only for what we in fact got from the scheme – because we did get from the scheme what our 1987 and onwards membership gave us. So we obviously give credit for that. We do not claim simply the figure that we would have got from 1965. It is the difference between the position we are in and the position we would have been in which is the measure of our damage. The position we are in is that we have our 1987 membership benefit and we have had the use of money that would have been contributed between 1965 and 1987.

HAYNE J: Let me explore that question a little further with you. First, we must recognise that computing the damages is a separate and distinct task from determining whether there is damage.

MR WALKER: Yes.

HAYNE J: Let us focus on computing the damages for a moment. Can I take you to paragraph 35 of your written outline?

MR WALKER: Yes, your Honour.

HAYNE J: The first sentence:

Until such an entitling event occurred –

that is, entitling to payment of superannuation –

there was no point of reference from which to identify, still less calculate, a loss.

The point to which I want to ultimately direct your attention will be “no point of reference from which to identify . . . a loss”. Can I come at it through calculation?

MR WALKER: Yes, your Honour.

HAYNE J: Calculation is a comparative exercise.

MR WALKER: Yes.

HAYNE J: The comparison contains at least these hypotheses: one, the plaintiff would have taken superannuation or would have participated in the retirement arrangements at the time of first inquiry.

MR WALKER: Yes.

HAYNE J: A further hypothesis is that he would have taken the steps necessary to come in under the two successive legislative variants and that he would have been permitted to do so.

MR WALKER: Yes.

HAYNE J: The proposition that you cannot identify a loss without knowing what the entitling event is and when it occurred is a proposition I can understand if it is limited to identifying the quantum of loss. Why is it right to say that you cannot identify the fact of loss?

MR WALKER: Because for the same reasons as quantum will be impossible - - -

HAYNE J: Why? Why can you not test it against each of the closed class of triggering events and saying if he had been sacked what would he have got, if he had retired hurt what would he have got, if he had died, et cetera? Why can you not make that kind of comparison and determine whether on some or all of those he is better or worse off?

MR WALKER: Your Honour is asking a question which would not be applicable only at some post-1976 position such as what we have put in paragraph 34 which relates to what we have said in paragraph 35, namely, 1980 I think I chose; it would go back to 1965.

HAYNE J: It is taking the Commonwealth at face value when it says that 1976 marks the passage from contingency, but up until 1976 it is purely contingent, but 1976 is important because of lost years notions.

MR WALKER: Your Honour, I need to make it crystal clear. I am not saying it is a matter of logic or mere legal argument that would make the fact of loss not identifiable. I am saying that bearing in mind the way this case was run – and I mean this point was run, they had the onus by the Commonwealth – they adduced no evidence by which one could have, for example, said, “Right, we will ring the bell at June 1966. Are you worse off or better off?” That is, loss or not.

Now, being worse off or better off is obviously a quantification, it is a comparison of numbers, ultimately, and you have to be worse off for it to be a loss. If you are better off, it is not a loss. So you identify a loss by saying in the comparison there is a minus figure rather than a plus figure. So that is why there is an integral relationship which can never be severed between quantification – I am not now talking about difficulties of estimation; I am just talking about quantification, the mental exercise – and identifying whether there is a loss.

HAYNE J: I understand them to say against you that they did that by fastening on 1976 and pointing to the significance of lost years. Maybe you tell me that is not the case you had to meet or, if it is the case that you had to meet, that there is the answer to it. But that is at the moment where I am at.

MR WALKER: It was not a case we were called to meet factually. That is there was no evidence put on by the Commonwealth to show that at this, we say, utterly irrelevant date, July 1976, or August 1976 – I am not quite sure which one they are picking – an early time after the 1976 possibilities came in, they did not show by evidence that we would have been worse off.

HAYNE J: Was it a matter for evidence or was it a matter for reading the 1976 Act?

MR WALKER: No, it was always a matter for evidence because we had not been contributing. The authorities say this is a matter of evidence, that this is factual, you prove it factually. They are the ones who wanted the limitation point decided. The Commonwealth pleaded and wanted the limitations point decided notwithstanding what my friend correctly observes was, as it were, the death’s head warning about this in Wardley. Furthermore, they did it notwithstanding we had called evidence saying, compared with what he retired with, Mr Cornwell has suffered significant loss. They did not object to the word “significant” and there it was, finding of fact.

That is how the parties, for reasons which are almost certainly not known to everybody here and that must have appeared good to enough of the people to have this happen, that is how they decided to run the case. They wanted to say, “You are statute barred”, and they maintained it at trial, I have to emphasise, primarily on the basis that “Your first loss happened when you forever lost the status of having been a contributor, the first pay period after the hypothesised entry into the scheme had we not been negligent in 1965”.

As the various forensic dealings we have drawn to attention in writing make clear, they simply refused to deal with the matter in a fallback fashion and taking into account the judicial concern that theirs was an argument that treated as utterly irrelevant that my client kept his money and no doubt did something useful with it, and if he had done something sufficiently useful, if mirabile dictu a private person could invest his own money better than the Commonwealth could, then there would be no loss.

HEYDON J: Mr Walker, annexure A to their submissions in reply include that on 2 July 1976 the damages would have been $3,885. Is your present point that if there had been no negligence the plaintiff would have been paying for 11 years whatever had to be paid under the 1922 Act and it is not shown that what he would have had to have paid is less than $3,885?

MR WALKER: Yes. Could I just - - -

HEYDON J: Is that a point?

MR WALKER: Yes, it is. Could I simply hand up a document which is far more elaborate than it needs to be for the purpose it serves and perhaps its nature is best reflected in the warning at its foot, “The figures may not reflect reality”. Well, they certainly do not, but they are of exactly the same character, particularly in that regard, as what Justice Heydon has just drawn to attention in the appellant’s material. I stress as strongly as I can, this is for the purpose of argument. I mean, the arithmetic can be looked at, but this was really only highlighting the fact – and my learned with great frankness made this clear today in his address – that the Commonwealth has ploughed a course that says “To identify loss” – and they are just trying to discharge the onus here – “To identify loss we never had to pay any regard to the fact that the plaintiff has more in his pocket or his bank account, or less in his mortgage, because he was not giving us contributions. We do not have to take that into account.” Now, in our submission, that is legally perverse that a defendant would put the matter thus.

HEYDON J: What do you say about footnote 18 to annexure A which makes the point that Mr Estcourt was making this morning, namely, that he would have got it all back on retirement so it is the same on both sides of the equation in effect?

MR WALKER: Well, that does not mean you ignore what we would have done with it. For a start, that is redolent with the assumption that no individual could have done better than the Commonwealth promulgated from time to time interest equivalent. Well, that is not something that this Court would take as judicial notice and it is avowedly not a legal proposition.

HEYDON J: So you say that he might not have won the lottery but he might have done better?

MR WALKER: Yes. Lots of people do better than the Commonwealth’s investment. Now, he says, “But you not only get that back, you get this terrific pension”. Well, we are suing because we did not get the pension. It turns out, yes, it would have been better for us to be in the scheme. We would not be here otherwise. But you could not at an earlier stage, until the time came for us to turn up and say, “I am now retired – that is my trigger event. I am not being invalided out. I am not resigning. I have not been sacked. My trigger event, the one I was asking about at the workshop in 1965, retirement. Here I am.” And they give you your entitlement and then it is discovered how much less that is given the facts that have happened, including the political facts of the various statutory schemes that have been closed, altered, transitional, grandfathered, all of that, which goes into the factual tracing of causation which is not in question in this case – we succeeded on those issues.

Now, for my first answer to the point that Justice Heydon has raised with me and to the arguments my learned friend put about this is that it seems to depend upon some tendentious labelling, saying that the contributions are not a cost of the benefit or are not a price or that they are not bought. One thing to be said about the contributions is that they were something that would have to have been paid had the negligence not occurred and what we pleaded and proved happened, namely, we joined the scheme. So it is an essential financial matter to be taken into account in analysing the different position we would have been in and the position we are in. You cannot leave it out.

Now, when he says, “But you would get it back”, all he is really saying is – and it is difficult to see this as a terrific advertisement for the benevolence of the employer – all they are really saying is, “This scheme will give you more than it will cost you”. That is all it is saying. The same is true when you buy land, you hope. You hope you will get something that may turn out to be worth more than you have paid. It does not mean that when damages are being calculated by reference to your being induced to buy land or part with your money that you do not take into account the movement of the money. Of course you do. If it is on both sides, then it is on both sides.

If he is, as a matter of law, correct that however you do the sums you will always get more than what my client may have been left with had he never made the contributions, then they win. But he cannot do that as a matter of law. Now, there are at least two reasons for that. It may be that there are more than two but the two that deserve repetition, because I think they are already in writing, are these.

First, the contingencies which existed at the time of the negligence included the doubt as to whether my client would live as long as he has, retire when he did, survive the vicissitudes that might result in resignation, invalidity, or dismissal. It cannot be said that when you look at all of those contingencies, which are exactly the same as the contingencies that applied between the State of Western Australia, Rothwells and Wardley, Rothwells up and down like a rollercoaster in terms of prosperity. Was that ever going to cost the State of Western Australia? In hindsight everyone knows, but that is not the test, with respect.

The contingencies are judged at the time when somebody says, “You’ve suffered a loss”, and Western Australia says, “Well, why have I suffered a loss? No one’s called on the indemnity. Who knows? Mr Connell may save everyone’s bacon”.

CALLINAN J: Mr Walker, what do we make of the pleading at page 14 where the particulars of loss and damage are stated in this way:

The plaintiff lost the opportunity of joining the Commonwealth Superannuation Fund on and from 8 May –

It seemed to be saying that is the loss and the loss of an opportunity - - -

MR WALKER: That is what I put earlier, your Honour. It is the words that follow that that are important.

CALLINAN J: Is not “and in consequence” a matter of quantification of the kind that Justice Hayne put to you?

MR WALKER: No, your Honour, that is the real loss. The first part is the detriment, to use the language that one finds in Wardley itself, which in that case was immediately accomplished by Western Australia executing the indemnity. Whether that detriment, in our case the lost opportunity, would result in actual actionable loss depended upon contingencies. It did in Wardley and it does in this case.

CALLINAN J: That just makes the task of quantifying the damages very difficult but courts constantly say, “We don’t shrink from doing that”.

MR WALKER: Can I deal with that last point in particular this way, your Honour. It is put against us in reply that it is wrong for us to call in aid, as in fact this Court called in aid in Wardley, the invidious nature of the quantification exercise. We have a number of answers. First, this Court did not consider that a wrong or irrelevant matter in Wardley. Second, the kind of case that my learned friends are referring to there are cases where the once and for all rule in cases not for pure economic loss force the Court to estimate that which common law courts have long said are of course not capable of measurement financially but, because your cause of action for negligence which resulted in a severed leg and blighted employment prospects, because that has led to a trial at which there is a once and for all common law rule for determination of loss, the choice was between giving a man no compensation at all, because who knows whether he would have stayed in a job, and doing the best one can with vicissitudes. The common law, not surprisingly, bearing the balance between wrongdoer and victim, chose the latter route.

Those cases have nothing to do with the proposition where there has not been an actual loss by the severed leg. There is no once and for all rule forcing you to estimate how you would have done under your future employer’s future superannuation 40 years hence. You do not have to do that. The question here is the anterior question: have you suffered a loss? If one goes back to 1965, we lost the opportunity to go in there. There is no question about that. That was a detriment we suffered there and then. Was that ever going to result in actionable loss? That is what Wardley says you have to then ask because if we had left our employment, we got a better job offer from a private firm six weeks later, we would not have suffered any loss.

CALLINAN J: It is not the way it is put in the pleading. It is put as the loss or damage. I understand what you say, Mr Walker, but you do not use the word “detriment” or anything of that kind.

MR WALKER: No, loss of opportunity, as I put when - - -

CALLINAN J: As the loss or damage.

MR WALKER: Your Honour, all I can say is that this case was fought at trial and on appeal on the basis that the lost opportunity to enter the fund caused a loss actionable for the purposes of the tort of negligence upon his retirement in 1994. That is the way the case was run at trial and on appeal.

CALLINAN J: No non-minimal loss of any kind before then.

MR WALKER: That is right, that is, it was not possible to know whether you were going to lose until your retirement came along and then you saw what is the then statutory state of affairs bring about because why would one say in August 1976 that there was not going to be a succession of statutory changes between then and the retirement which could either have ameliorated or rendered entirely moot the position about which there may have been a grievance in relation to my client.

CALLINAN J: Another thing that worries me about this, and I tell you frankly, I have not worked it out yet, Mr Walker, but the idea that the loss depends upon a succession of enactments, not only as to quantum, perhaps, but also perhaps as to entitlement, I do not think that is right, is it?

MR WALKER: There is no doubt - - -

CALLINAN J: I do not know what the answer to that is but it just worries me and I do not know how we deal with that.

MR WALKER: There is no doubt that our argument raises as the spectre that demonstrates the true contingencies analogous with the possibility that Rothwells would not fall over which is part of the contingency in Wardley that Parliament was not bound to keep any particular form of superannuation scheme in place or indeed to keep any at all. Indeed, the second reading speech for the 1922 Act that your Honours have in the material before you notes that precursors in Australia had included State schemes which had started out bravely and had stopped.

CALLINAN J: Subject to the acquisitions on just terms - - -

MR WALKER: That is why I have - - -

CALLINAN J: - - - provision, every time you deal with the Commonwealth you take a risk.

MR WALKER: Put not your faith, et cetera in princes or republicans. Your Honours, it is not to the point, to use a phrase again from Wardley, that some may consider that factually it is virtually certain that there will be something functionally equivalent to a superannuation scheme by the time a person comes to retire any more than it was virtually certain that the indemnity would be called upon to the financial loss of Western Australia. In particular, unlike actuarial calculations as to survival, statistical material as to participation in the workforce, which are applicable to the common law doing the best you can when the once and for all rule requires you to look into the future for a physically injured plaintiff, unlike those matters, no court sensibly or, as we put it, with respect, respectably entertain looking ahead any particular time but particularly, in this case, 22 years or more, and say there is a 25 per cent chance that the Commonwealth will have a more/less, strike out whichever is not applicable, generous scheme for superannuation than the people could have done privately for themselves. You cannot do that.

CALLINAN J: There is also this, as I understand it. The fund invest or the trustees invest in all sorts of commercial investments, I think they may own a lot of shopping centres, I am not sure about that. But say they had a huge financial disaster and one does not know, we are talking about a period of 40 years.

MR WALKER: Or a depression and everyone salaries except the judges is reduced, your Honour.

CALLINAN J: I do not raise that spectre, Mr Walker, if you do not mind.

GLEESON CJ: Or a drought.

MR WALKER: Or a drought. In other words, the notion that something is forever in the sense that it is irrevocable or irretrievable is no more acceptable legally or factually when one is talking about things getting better or staying just as good as when one contemplates them getting worse. If I could try and attend to the other aspect of Justice Callinan’s concern. We do not have a case that presupposed in advance any particular state of the statutory landscape; far from it. We say who knows what it was going to be. That was the contingency.

We say, looking back from our retirement, we can now prove on the probabilities, its history, what was the position available to a person like us who would have been in a position, it can now be seen, of financial benefit. In other words, we can say these were the statutes and entitlements flowing from them which were in force. We proved that as a matter of fact. So we are not asking a court to look over the horizon and assume the statute law concerning Commonwealth public servants’ superannuation is in any particular state of affairs. We say wait and see, and that is the whole contingency point which, in our submission, is unanswered by the appellant’s arguments.

GLEESON CJ: Mr Walker, obviously the question when damage is suffered depends upon the kind of damage you are talking about.

MR WALKER: Yes.

GUMMOW J: And the nature of that which is damaged.

GLEESON CJ: Yes. Are there some forms of future loss which, even though they may be predictable and quantifiable to the point of certainty or as much certainty as exists in life, are of their nature such that they will not be suffered until a future time?

MR WALKER: Well, we would say one of them is retirement benefits.

HAYNE J: Well, so too, then, entry of a life policy.

MR WALKER: That may depend whether, like the fire policy example, the premium paid for a bad fire policy, whether the - - -

HAYNE J: Not fire; life.

MR WALKER: I know, your Honour, but I am simply raising - - -

HAYNE J: Something which will happen.

MR WALKER: No, I am sorry, I am not talking about death here. I am talking about the fact that if you are talking about buying a policy which is worse than the one you wanted, it may be that the nature of the life policy is such that you have an actual loss there and then after your first premium; I do not know. It depends on the terms of the policy.

HAYNE J: But if you lose the opportunity through negligent advice to take up a life policy from a commercial entity which is subject to all of the vicissitudes of life in the real world of commerce - - -

MR WALKER: You may never suffer a loss, depending upon a number of things, but particularly including the nature of the policy you were after.

GLEESON CJ: But when you have taken the life policy, you have taken up something that is redeemable normally. You have taken up an asset that has a value.

MR WALKER: That is one of the points I was trying to make to Justice Hayne. It may be that you have suffered actual loss there and then.

GUMMOW J: Well, can we look at what Justice Brennan said in Wardley?

MR WALKER: Yes, your Honour.

GUMMOW J: Which no one ever seems to do. At page 536 at about point 6, four or five lines down the second paragraph:

A plaintiff may suffer economic loss or damage in a number of ways –

Now, his Honour has thought very carefully about this, with respect. At about 10 lines from the bottom of the page:

But if a benefit is acquired - - -

How does his Honour’s reasoning fit in with the analysis you have been giving to my colleagues? While you are thinking about that, also can you look at 533 in the joint judgment at about line 12:

It is unjust and unreasonable to expect a plaintiff to commence –

et cetera.

MR WALKER: Yes.

GUMMOW J: Now, are not those the considerations from Wardley we have to be thinking about?

MR WALKER: Yes.

GUMMOW J: That leads me to the question, what was it that your client acquired, a contract, some statutory rights or what, statutory rights inherently defeasible?

MR WALKER: No, but your Honour is asking surely about what my client did not acquire?

GUMMOW J: Yes, should have acquired.

MR WALKER: As I said in opening, one of the differences between us and Wardley is in Wardley the State - - -

GUMMOW J: That is the facts in Wardley. I am worried about the reasoning of Justice Brennan.

MR WALKER: But they actually did something which eventually caused them loss but immediately imposed an obligation on them of a contingent type. In our case, we did not do something hence the reference to lost opportunity. Certainly, that was not an opportunity which could be sold, to go back to an earlier inquiry by Justice Hayne about value and marketable, which I will come to in Sellars, and it is not something which could lend itself to anything sensibly actuarial, if you take it pay packet by pay packet.

GUMMOW J: An opportunity to what?

MR WALKER: To become a deemed employee.

GUMMOW J: No, that is a statutory definition.

MR WALKER: Yes, your Honour. To become a member of a class upon whom in due course a benefit would flow.

GUMMOW J: Benefits being of what nature?

MR WALKER: A financial benefit triggered by whichever one of a number of different contingencies happened in the future.

GUMMOW J: No. If those contingencies were still enlivened by the statutory regime from time to time.

MR WALKER: Yes, I am sorry. With an overall contingency being assuming that any of them would still bring benefits. As it happens, the history - - -

GUMMOW J: Just stop for a minute. Therefore, there is an argument that your client is not going to acquire any property within the meaning of 51(xxxi). There are a whole line of cases about that for these reasons.

MR WALKER: That is right. Quite, yes. We assume that is why there has been no mention of it.

GUMMOW J: Yes.

MR WALKER: So that means that there is no problem about the Commonwealth becoming less generous or simply saying, “Sorry, can’t afford it.” Unfunded pensions is not something any modern nation can have. For example, all you can do is get your contributions back. Well, if it is getting your contributions back with some Commonwealth fixed rate of interest then there was the need for the Commonwealth to prove by facts that we had suffered a loss at some earlier time. How could you do that?

To go back to the first part of Justice Gummow’s question, that passage about if a benefit is acquired by the plaintiff is of course talking about the case, where it is what I think in the House of Lord’s is called a transaction case, where you have entered into a transaction because of the wrong, you have paid some money out or you have had imposed upon you some obligations and the question is is whether what you have got back, either there and then or progressively, is worth at least as much or perhaps more than what you have exposed yourself to or have put out, hence, of course, the valuation cases.

That is not directly applicable to our case. I have to say that the Wardley principle applies to our case because of what it says about contingencies which determine whether somebody is worse off or not at the relevant time. I have tried to cover the “at the relevant time” point by saying when you are talking about getting into a retirement scheme well, it is retirement.

GLEESON CJ: Mr Walker, these days, are what are sometimes called entitlements under superannuation schemes divisible under the Family Law Act?

MR WALKER: Yes, by special statutory provisions which were necessary, I submit.

GLEESON CJ: Does that proceed upon or does it not proceed upon an assumption that there are some rights of property?

MR WALKER: No, it by statute treats them as if there were – makes them. The statute was necessary - - -

GUMMOW J: It deems them within section 79, in effect.

MR WALKER: The statutory scheme was necessary because of the perceived social mischief that things which really did end up being very valuable were treated as if they were wills-o’-the-wisp for the purposes of section 79 applications in the Family Court which offended, obviously, many people’s sense of justice. But the statutory steps that were taken really bespeak the fact that they are, at least the statutory ones, entirely dependent upon the caprice of the King in Parliament.

Now, when one looks at that catalogue on the second half of page 536, there is certainly no matter there that tells against our case. They are, of course, examples which are apt to the position of a transaction case. We are a, if you like, “no transaction” case and a “no transaction” case obviously produces a state of affairs which is very difficult to describe as property or impaired property. It is for those reasons that ours, as I say, is a stronger case than Wardley.

CALLINAN J: There is a third type of case too, you know, the case in which the negligent conduct itself deprives the victim of an opportunity of saying how much he or she has suffered or, indeed, of saying whether he or she suffered anything at all. It has two consequences. That is what I was really talking about, I think, in Naxakis because that was within that third category.

MR WALKER: Yes. Your Honours, can I now try and confront the Sellars question?

GUMMOW J: Are you going to take us to the statute at some stage? You tantalised us a bit and then went away.

MR WALKER: I am content to do that now, if your Honours please. In the first of the volumes that have been assembled for your Honours could I take you to the 1922 Act – this is, after all, I suppose the exercise that my client was meant to undertake – at page 15 of the print, section 19 which imposes in dense language an obligation on an employee to contribute. One would then need to know to go back to page 4 of the print to see the definition of an “Employee”. It relevantly “means a person employed in a permanent capacity”, et cetera. Then on page 6 of the print, subsection (5), which had been something added in 1942. It had been amended in - - -

HEYDON J: Which subsection?

MR WALKER: Subsection (5). It has been amended in various ways. Where one sees that there is a capacity for the Treasurer to direct that a “person be deemed to be an employee within the meaning of this section”, presumably meaning section 4, presumably, therefore, meaning that it operates in section 19, and that that comes from a combination of possibilities. To be in this class, you have:

(a) a person employed by the Commonwealth otherwise than in a permanent capacity is by the terms of his employment required to give the whole of his time to the duties of his employment –

that fitted my client –

(b) that person has been so employed for a continuous period of not less than three years –

that three had been altered from time to time –

(c) the Public Service Board –

it has delegates –

or, on appeal from the Public Service Board, the Treasurer, certifies that that person’s employment is likely to be continued for a period of at least seven years –

When first brought in it was, I think, an indefinite duration – 1942; 1945, 10 years; and by the time my client was affected by it it was seven years. That became colloquially known in the papers as the employment test and that was the subject of the evidence that your Honours have seen considered by Chief Justice Higgins whereby, notwithstanding those provisions are addressed to an individual discretionary judgment for people about whom there may be such a direction, the system described and to a degree denounced by Chief Justice Higgins went something like this.

It being difficult to achieve consistency in relation to the so-called employment test and there being some resistance to taking into account specific facts, that is, there is disagreement or controversy within the public service as to how to do that, certain people who were described in stereotyping fashion – and my client belonged to one of those class, the so-called industrials – would not be considered eligible for the favourable exercise of this discretion to the chagrin of the industrials and their organisers but, nonetheless, there it was. That is what they were told by the people in authority over them by acting for the Commonwealth.

Now, it is obviously not correct and the papers discovered by the Commonwealth to which Chief Justice Higgins went showed that the Commonwealth knew it was not correct and knew that the categorising, including by a system called quotas, was not something that might pass muster. We have drawn to attention the self-confessed description of this approach as being something that Treasury might regard as arbitrary.

It led to the question: do you tell these people about this possibility? There was resistance, as Chief Justice Higgins traces – I do not have time to go to the chapter and verse, but it is set out in our written submissions – there was resistance within the bureaucracy to notifying everybody. Some people said notify them at engagement and other people said, no, notify them only after they have served the initial period that the section requires – the three years in this case – but then notify only those people who have a chance of a favourable outcome, so do not notify the industrials, and, by the way, says one of the documents to which we draw attention in our written submissions, if anybody applies without an invitation, that is, anybody who was not notified applies, knock them back.

CALLINAN J: When was that, Mr Walker?

MR WALKER: This is in a period between 1949 and 1965. That last one is 1963 and is found in the supplementary book in document 8 on the last of its pages, page 3, at between point 2 and 3 of the page.

CALLINAN J: Mr Walker, is this right, that your case is that a negligent misstatement of law – and that is what it was, was it not?

MR WALKER: Yes. “Am I eligible to join the scheme?” Answer: “No” - - -

CALLINAN J: Which is a statement as to the law, not as to facts.

MR WALKER: It was partly at least a statement – because we do not attack the good faith or honesty of - - -

CALLINAN J: No, I just want to characterise it.

MR WALKER: At least from what your Honour has just said, we say it was partly also a statement about a practice of knocking back industrials on the so-called employment test.

CALLINAN J: But the actionable statement was a misstatement of law.

MR WALKER: Yes.

CALLINAN J: Well, your case is that a negligent misstatement of law only sounded in damages by reason of changes in the law?

MR WALKER: No. No, we do not say - - -

CALLINAN J: Well, why did it not sound in damages in 1965 then?

MR WALKER: Your Honour, I am happy to deal with that. We have never said it sounded in damages because of changes in the law, ever. That is what the Commonwealth says.

CALLINAN J: Or quantifiable as a result of changes in the law?

MR WALKER: No, your Honour, that is what the Commonwealth says. The Commonwealth says, “We, the Commonwealth, crystallise the loss we had caused by enacting something as it happens in 1976”. We say we would have still suffered a loss only upon retirement, if that is the relevant contingency that had fallen in, whether the law had been exactly the same as it was in 1965 or had gone through different or more permutations.

GUMMOW J: That is what I want to understand. Justice Callinan has the same trouble I think. Assume the law had never changed.

MR WALKER: Yes, and I have not addressed that yet.

GUMMOW J: I know.

MR WALKER: I accept that is the question to be addressed, certainly. But may I make it crystal clear, we do not rely at all on alterations of the law. Factually we proved them when it comes to showing that we are worse off.

CALLINAN J: Non-minimal loss.

MR WALKER: Factually we prove it because obviously on our own argument, if the scheme had been abolished the week after, then we would not be suing, because the statutory history as a matter of fact would show you are not worse off. Now, we proved the statutory changes not because as statutory changes they crystallise loss but, as I have said before, because factually that is the means by which one calculates, just as one looks to my client’s age, my client’s years of service, my client’s salary, they are all just factual matters that produce, like a sausage machine, a calculation of what the pension would have been.

You can rejig a sausage machine, replace components in it, their identity does not matter so long as they produce something which, as our experts said, was a significant loss by comparison with what he did get. That is what we proved in this first stage of this, as I say, unfortunately split case, and the Commonwealth did not challenge that. For the purposes of their limitations, they are now saying, “Well, in fact you suffered it for the first time in 1976”, and, as I said when I stood up this afternoon, they are not saying that they suffered it in 1965.

Once upon a time they said that, but they are not maintaining that in this Court, because they say that in 1965 what my client was exposed to by not being in the scheme was truly contingent in the Wardley sense, truly contingent because whether he would ever have been worse off would depend on all sorts of things: how long would he be in the scheme, what would he get compared with how he would go with his contributions, could he have caught up? They point out correctly that under the 1922 scheme, as it was in 1965 and I think as it was until 1976, there were catch-up provisions.

CALLINAN J: Mr Walker, say he had joined in 1965, there had been no negligent advice, and in 1967 the Commonwealth legislated to take away entirely any benefits at all. Would he have had an action for acquisition of property, rather like ANL v Smith, for example?

MR WALKER: Your Honours, I think I am forbidden to go into that area by section 78B. I submit, no, but I hope I have not - - -

CALLINAN J: I only ask it to provide another perspective as to what he may or may not have possessed or would have possessed had he entered the scheme in 1965. Would he have possessed something of value which, for example, he might have received compensation for if it were taken away?

MR WALKER: We submit not. That is, it was not caught by - - -

GUMMOW J: Section 37 gave an entitlement to a pension, did it not?

MR WALKER: Yes, and that is upon a contingency.

GUMMOW J: On or after obtaining the maximum age of retirement.

MR WALKER: That is our whole point.

GUMMOW J: And the pension you found in section 42. It was all worked out with units.

MR WALKER: Yes.

GUMMOW J: But you say you could never tell he would attain the maximum age, and there are other wrinkles too.

MR WALKER: Yes. There are all the other possibilities, but 37 is the main one and it bespeaks the contingent nature of the benefit. So in order to know that you are suffering a loss you have to know that the benefit you have not got is greater than what you have in fact been left with.

CALLINAN J: Why could you not call an actuary who would just say, having regard to all the sorts of statistics that actuaries use and apply every day, “We calculate this loss. He is likely to have retired at such-and-such an age. He would have survived, on the tables, until that age and on present entitlements, present values, allowing for all other factors, this is what he would have received and this is what he would have paid or foregone in the meantime”?

MR WALKER: Actuaries, whatever the subject matter they are dealing with, are ultimately dealing with pooled statistical data and in this case that would have to extend to the extent of what people of his age and his occupational capacities do in relation to taking up better jobs in private enterprise. That will have a big effect on the benefit.

CALLINAN J: Those are exactly the sorts of calculations that actuaries make for their insurer employees every day – life insurer employees.

MR WALKER: Your Honour, I do not doubt that for a moment, just as accountants make assessments for their clients or employers as to the possible losses they may be going to suffer in the future for which allowance ought to be made at present in their accounts. The authorities do not treat that as the suffering of a loss simply because the possibility is taken up in accounts and something is not a loss simply because an actuary predicts that a person in the subject’s position belongs to a class where there is a greater chance of one thing happening than another. That does not mean you have lost; it means there is a chance of a loss and, as your Honour, with respect, correctly says - - -

HAYNE J: To put that in statutory terms, you could not tell whether section 37 would be engaged, or 45 or 46 would be engaged or, most relevantly, 51(1).

MR WALKER: Correct.

HAYNE J: And 51(1) is bare return of what you put in and it is the fact that you do not know whether 51(1) will be engaged.

MR WALKER: Yes. All of that, of course, is the Court of Appeal’s reasoning. We can go further with examples in answer to Justice Callinan. One could, unquestionably, derive statistics from liquidations and the material all publicly available in relation to them as to the chances of Rothwells turning turtle when Western Australia signed that indemnity.

You could get that information but it does not mean that all you have done, elaborately or otherwise, is to estimate the size of the risk, but that does not mean it has happened, that is, you have not suffered the loss. It means you should be really worried.

CALLINAN J: Why could not evidence be called? The contributor says, “I want to stay in the job”. Could he not prove by other evidence that it is unlikely on the balance of probabilities that he would be dismissed or discharged?

MR WALKER: But, your Honour, you have to prove on the balance of probabilities that there was actual loss, that is, you are worse off – not will be; are worse off. To prove that on the balance of probabilities, it will never be enough to show that it is possible you will be worse off. So you then have to point to matters which rationally convert that possibility into something which is a probability so as to treat it as a fact. That cannot be done any more with pure economic loss than it can be with a personal injury which you have not suffered. Of course one can do the chances.

Again, these are public statistics. You can do the chances on being injured on the road but the probabilities can be estimated now. It does not mean that as soon as we are negligently put into a motor car by someone that we have suffered a loss because there and then it is possible to say, “You are at this probability of being injured”. You wait and see whether you are. I think that is the best answer I can give to that approach.

Briefly if I may, going to Sellars, I simply wanted to draw to attention that the famous passage at [1994] HCA 4; 179 CLR 332 at 355, about point 5, which throws up the phrase that Justice Hodgson was considering in the passage from Tanna v Deutsche Bank quoted by the Court of Appeal in this case, emphasises by the typography the proving on the balance of probabilities the plaintiff has “sustained some loss or damage”, can show some loss or damage:

by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities -

then in the last sentence making it clear that you do not lose because that assessment comes at less than 50 per cent.

One, in our submission, should be careful before treating that as the enunciation of a principle applicable to circumstances beyond the facts of that case and travelling outside the expression of it as an abstraction. It is of significance that they talk about a commercial opportunity because those are the kinds of things, whether they be choses in action or connections, as businessmen sometimes call them, which can be turned to account financially.

Just as one values land by ascertaining the probabilities or possibilities and assessing them accordingly of, for example, lucrative exploitation of it, so you can do so with a contract such as was complained of as having been lost, that is entry into it not occurring, in Sellars. That is a universe away from the position in this case where I stress we are not a transaction case and we are not in the position of being able to say that in 1965 we would have had anything that anybody could have valued, particularly given the fact that we had our contributions still in hand. Are you better off two pay packets after entry into this scheme than you would have been had you never entered into the scheme? Nobody could have said, “Yes, you are better off”. All they could say is, “It’s a good idea just in case”. It is for those reasons, in our submission, that everything in the reasoning of the Court of Appeal is orthodox and supported by authority.

I should have given a reference in Sephton’s Case. I will not take your Honours to it. My learned friend called in aid Justice McHugh’s rationale for the policy behind having limitations periods and in particular referred to the tort and contract contrast. Lord Mance pays some regard to that contrast in [2006] UKHL 22; [2006] 2 WLR 1091 at 1115, paragraph 80.

Your Honours, very briefly may I then say in relation to section 33 of the Limitation Act that the deliberate concealment, which is the first of the alternatives we plead upon, comes about from the facts as follows. It is clear from the correspondence into which the late Mr Simpson entered, concerning my client, that he knew of the possibility of being accepted, because the questionnaire came back to him announcing that was what its purpose was, namely to see whether such a person could be accepted.

It is clear also, as a matter of inference, that he knew of the system by which an employment test was to be applied although his reference to the indefinite period which would apply to my client is clearly an anachronistic reference to what had happened when, in wartime, the possibility was first introduced, the period between 1942 and 1945. The test was that it was of indefinite duration.

So there is no doubt that the man who said, in effect, “You as an industrial are not eligible but I will see what I can do” - there is no doubt that the knowledge available to him there and then meant that that was not to his knowledge a complete version. It certainly misled my client because my client accepted that he was not eligible. We, therefore, do not have to worry about composite knowledge points for deliberate concealment. He told my client something which it can be seen from the contemporaneous records – and I am referring in particular to what you will see from the appeal book pages 75 and 76 - - -

KIRBY J: Concealment does not import a notion of deliberate?

MR WALKER: I have to make good deliberate. I do not have to make good anything else - just deliberate. Now, by telling someone a message “you are not eligible” when it is known that the statute does permit exercise of discretion, hence the correspondence to which I have referred, no attempt to correct, notwithstanding the months that passed, in our submission, there ought to have been a finding of deliberate concealment, that is, it is concealed because that which is known and which is relevant to the very heart of the matter – “Can I join the scheme?”, the answer should have been “You might be able to get into the scheme. It depends upon a discretion being exercised”. He chose his words and he chose to say no, while at the same time carrying out a dealing which, as it happens, graphically demonstrates that he knew that was not the whole story. That is enough on our submission.

The provisions one finds set out on page 93 in the appeal book. I have just covered what I wanted to add to our written submissions with respect to paragraph 33(1)(b):

a fact relevant to a cause of action –

obviously being that the advice was wrong. Under subsection (3) that is extended into the:

deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment –

In our submission, this was the deliberate commission of the breach of duty so long as it not be necessary that Mr Simpson had a subjective understanding that the common law imposed on the Commonwealth vicariously liability as a matter of law for his relations or dealings on this occasion with my client.

Now, in our submission, the statute would not be interpreted so as to require something so bizarre and remote from ordinary expectation that a non-lawyer would understand what the common law does by way of vicarious liability. Once that is removed, then it is quite plain that he intended to do exactly what he did and he knew that what he was telling this mere industrial was not what the statute in fact provided about industrials.

The material to which Chief Justice Higgins went in some detail also adds relevant background with respect to the system set up – we have given the references in our written submissions – so as to ensure that people in Mr Cornwell’s position were not notified of their right and, furthermore, that having belonged to the class not to be notified, if they did apply they would be knocked back. In our submission, all that adds up to a very clear position which, if there be any necessary flavour of unconscionability or unfairness – and we have referred to this in our written submissions - that would have been well and truly made out in this case.

Now, the way in which the judge dealt with this is not to have dealt with it. My learned friend said there was a finding of no concealment. Well, between the lines there might be such a conclusion, but not in terms. At page 93 from paragraphs 82 to 84, the matter is dealt with. His Honour concludes just before paragraph 85 that the matter “did not amount to fraud or deceit”. We did not allege it did. It clearly does not arise beyond the allegation of negligence. That is also correct. But he had of course already noted our plea by way of answer – see the beginning of paragraph 83. So it can be seen that the trial judge made no adverse findings against us as a matter of fact about deliberate concealment. He simply did not deal with it, and he should have.

HEYDON J: But there are some findings, are there not, on page 88, paragraph 27, that may not go the whole way, but do they not help you to some extent? Mr Simpson says, “I will see what I can do”, during July.

MR WALKER: Yes.

HEYDON J: On 27 July, in fulfilment of that promise, he wrote:

stating that the plaintiff was likely to be employed for “an indefinite period” . . .

27. It is clear that it was intended by Mr Simpson that this advice would, if accepted, satisfy s 4(5) -

et cetera.

MR WALKER: Yes. So we had Mr Simpson knowing of the possibility but having told my client the opposite. That is all I depend on. In our submission, that should have been deliberate concealment. We do not suffer on a notice of a contention there being a finding of fact against us about it not being a deliberate concealment.

HEYDON J: I do not know that there is a finding of fact against you. There is simply a finding of fact it “did not amount to fraud or deceit”.

MR WALKER: No, quite, that is what I am saying.

HEYDON J: There is no finding of fact against you.

MR WALKER: The conclusion he comes to at 93 is a non-sequitur; that is, it did not apply. We did not plead that it was a cause of action based on fraud or deceit. That had nothing to do with it. We did plead (b) as well as subsection (4), but his Honour does not make a conclusion about it. Now, for those reasons, in our submission, this was, one would hope, one of those rare cases, but nevertheless a clear case, where the very conduct in question was precisely calculated to induce us not to take any steps and so long as that inducement remained effective, as it clearly did for a long time, the defendant claims the benefit of the limitations period, and we submit that is exactly what section 33 was enacted to prevent. May it please your Honours.

GLEESON CJ: Thank you, Mr Walker. Yes, Mr Estcourt.

MR ESTCOURT: May it please, your Honour. Just as to that last point in terms of the findings of fact that Chief Justice Higgins made on the subject of deliberate concealment, I do not suggest that this forecloses the argument my learned friend was making, but the Chief Justice dealt with section 33 at page 93 as your Honours have just observed and at the end of paragraph 84 on page 93 of the appeal book, he talks about the conduct not amounting to fraud or deceit. His Honour later picks up that thread on page 94 of the appeal book in paragraph 95 when his Honour said:

In my opinion, therefore, the cause of action in negligence now relied upon was not complete until the plaintiff retired, that is 31 December 1994. I do not consider that there was any “deliberate concealment” of the plaintiff’s rights at that or any earlier time.

I simply draw attention to that, your Honour.

GUMMOW J: What happened in the Court of Appeal on this question?

MR ESTCOURT: Nothing is the answer, your Honour. There was no finding.

HEYDON J: It was not necessary for either the Chief Justice or the Court of Appeal to deal with it in view of the other reasoning.

MR ESTCOURT: Exactly, your Honour, yes. Your Honours, whilst we are on page 94 of - - -

GUMMOW J: Should we send it back or what do we do about it?

MR ESTCOURT: That would be a course which would be open if the Court arrived at that point, yes.

KIRBY J: Wait a moment. There is a negative finding:

I do not consider that there was any “deliberate concealment” - - -

HEYDON J: It is not the statutory test to start with and it is unsupported by any reasoning.

MR ESTCOURT: No, and it becomes a question of whether that argument was foreclosed to my learned friend on a notice of contention. We would not submit that it necessarily is.

KIRBY J: That is right. This is put forward to us on the notice of contention that we should, in a sense, override what Chief Justice Higgins concluded, but that would be a very bold submission, I would have thought.

MR ESTCOURT: It does not rise to a cross-appeal. Your Honours, whilst on page 94, can I just draw attention to the fact that the defendant in the litigation, the Commonwealth head raised at trial the argument about loss of opportunity and that appears at paragraph 88 of Chief Justice Higgins’ reasons for decision.

At paragraph 89 his Honour in determining that Wardley applied took the view that the plaintiff’s superannuation benefits might have been so altered by the time of his retirement that the net result at the end of the plaintiff’s period of service was no loss and that is for the first time we see the notion that the law changing may impact on this case. We would submit that there is a difference between what we say was a contingent event in 1976 when the concept of years of contributory service was introduced in determining when the respondent’s - - -

HAYNE J: As to the 1976 Act we went through with Mr Walker the relevant provisions of the earlier Act. Are the equivalent provisions of the 1976 Act, 55, the entitlement to age retirement benefit; 59, entitlement to early retirement; 66, entitlement to invalidity. There is, no doubt, a death benefit in there somewhere but, relevantly, 80, where if you are not eligible under one of the earlier provisions what you get back is your accumulated contributions.

MR ESTCOURT: They each of them change, your Honour, and they each of them are canvassed in annexure A to our written submissions dealing with the transition to the 1976 Act and the 1976 Act. There is no direct equivalent to section 55(1)(b), for example, but the changes are many and complex and we have endeavoured to canvass them in some detail in that annexure.

CALLINAN J: Mr Estcourt, could I just ask you this question. If I draw your attention to 83 in the book at paragraph 4(a), Mr Davis was an accountant who was called by the respondent, is that right?

MR ESTCOURT: Yes, your Honour.

CALLINAN J: He says that:

On the basis of the above information it is my opinion that:

a) The earlier Mr Cornwell became a member of the Commonwealth Superannuation Scheme the greater his entitlements would have been on retirement -

Why is that not a way of saying at any time as and from the negligent advice he was suffering non-minimal loss?

MR ESTCOURT: We say it is, your Honour, and that is why we made the submission.

CALLINAN J: On his own case.

MR ESTCOURT: That is why we made the submission in our written reply that this evidence is entirely equivocal as to when the loss bit home. It could well have been Mr Davis saying that it bit home in 1976; it does not foreclose the argument against us.

CALLINAN J: Why is he not saying that it bit home earlier because he says expressly:

The earlier Mr Cornwell became a member of the Commonwealth Superannuation Scheme the greater his entitlements would have been -

He could have become a member of the scheme as and from about the time of the negligent advice.

MR ESTCOURT: That is correct, your Honour, and Mr Davis’ opinion may well embrace that proposition but we cannot make that argument because we concede that the respondent could have ameliorated his position under the 1922 Act by coming in later and paying more for the units. It was only in 1976 when units were replaced by years of contributory service that he was locked out of ever ameliorating his position.

CALLINAN J: In any event, on any view, you say that as and from, therefore, 1976 at the latest, as it were, it was true “the greater his entitlements would have been on retirement”, to adopt Mr Davis’ words.

MR ESTCOURT: Absolutely true, your Honour, yes. We say that Mr Davis’s opinion - - -

CALLINAN J: That is non-minimal loss.

MR ESTCOURT: Yes, your Honour.

HAYNE J: If the relevant hypothesis is retirement.

MR ESTCOURT: If, yes, your Honour.

HAYNE J: That is the contingency.

MR ESTCOURT: That is right.

HAYNE J: Does he – no, there is a knife in the napkin, Mr Estcourt. Do not mistake it. The contingency is that he retires. That is all Davis speaks about. If he does not retire, that is, if he terminates early, he suffers nothing. His loss comes home if and only if he retires or one of the other benefit events occurs.

CALLINAN J: Why would there not have been an onus on him to say that he would have retired earlier or would not have retired?

MR ESTCOURT: His case was that he would - - -

CALLINAN J: The case was - - -

MR ESTCOURT: That he would work forever - - -

CALLINAN J: Exactly.

MR ESTCOURT: - - - and that he liked the job. Mr Davis may have intended – just to answer Justice Hayne’s question more fully – to say that but he did say the greater his entitlements would have been on retirement or termination - - -

GUMMOW J: Yes, but we are mixing up the facts, you see. This is a statutory regime.

MR ESTCOURT: Absolutely, and he also goes on to talk about - - -

GUMMOW J: Not “absolutely” because it does not help you. A statutory regime has to be considered. It has these words on retirement - - -

MR ESTCOURT: I am sorry. I thought your Honour was making an observation that Mr Davis was mixing up facts.

GUMMOW J: What Mr Davis would or would not have done does not much matter. The question is whether the statute would operate.

MR ESTCOURT: The only point we make is that Mr Davis’ evidence does not foreclose any argument against us, that it is equivocal at best. Your Honours, we rely on our written reply submissions in relation to the Sellars loss of chance point that my learned friend, Mr Walker, addressed and to the questions of the wider breach of duty and the question of any deliberate concealment in the application of section 33.

Just as to the Sellars point, I did mention this morning, your Honours, the reference to Kitchen v Royal Air Force Association.

GUMMOW J: That is Lord Evershed’s decision. That is a long while ago in another country.

MR ESTCOURT: Yes, your Honour, but it was cited with approval by Justice Brennan in Sellars.

GUMMOW J: It was, that is right.

MR ESTCOURT: I simply make that point and draw to your Honours’ attention that that quotation appears at page 362 of Sellars. I was about to say in relation to the contingency of changing laws that there is a difference between our position that 1976 brought about years of contributory service which crystallised the respondent’s loss as an historical fact and the proposition that the loss remains contingent indefinitely into the future on the basis that the law might change in the future. We would submit that that latter proposition will cause great difficulties of application.

The final matter, your Honours, that I wished to touch on was my learned friend’s calculation which he handed to your Honours. It compares two things: the total damages awarded as calculated by us in our annexure A to our reply submissions, and the total benefit of retained contributions which notionally invested at 5 per cent would have brought in
a greater sum. When we made our assessment, that annexure to our reply talks about the loss of defined benefits and that is all. The retained contributions are altogether in a different category. If the respondent had been suing for loss of interest on the contributions that he was unable to make by being kept out of the fund, that calculation would be relevant. It is not relevant at all in determining what his loss of defined benefits was. May it please the Court.

GLEESON CJ: Thank you, Mr Estcourt.

MR WALKER: Your Honour, do I assume that we should supply a note in response to Justice Callinan’s question? I have some references in answer to that question.

GLEESON CJ: Yes, thank you. We will reserve our decision in this matter and we will adjourn until 10.00 am tomorrow.

AT 4.23 PM THE MATTER WAS ADJOURNED