Date: Fri, 20 Apr 2007 05:57

From: Neil Foster

Subject: When damage occurs - negligent superannuation advice

In Commonwealth of Australia v Cornwell [2007] HCA 16 the High Court (by 6-1, Callinan J dissenting) upheld an award of damages to a former public servant who was wrongly advised by one of his supervisors in 1965 that he was not eligible to join a particular superannuation fund. It turned out that in fact he had been eligible. He later joined the fund in 1987, and then retired from employment in 1994, and subsequently discovered the wrongful advice. He had lost his entitlement to a large amount of money by not being a member from 1965. He succeeded in an action against the Commonwealth on the basis of the negligent advice in 1965, and was awarded damages for economic loss, being the amount he would have received from the fund if he had joined in 1965 (less of course contributions to the fund he would have made over the years).

Not ground-breaking, but an interesting application of the rule that an action in negligence only accrues (for the purpose of limitation acts) when the damage is sustained - see para [5]. Here the majority agreed with the lower courts that no damage was actually sustained until the worker retired and then "crystallised" his entitlement at the lower amount. As the majority put it at [19]:

What was only in prospect until the falling in of one or more of various contingencies, matured into actual loss only at the end of the respondent's service and upon the falling in of one or more of the statutory contingencies which had to be met for the respondent to be entitled to a statutory benefit.

Also a good illustration for students of the value of concurrent claims in tort and contract - the contract breach (implied term of some sort such as not misleading an employee about superannuation rights) occurred many years ago and hence could no longer be sued on. Harold Luntz has noted that this decision continues a recent trend in the High Court favouring litigation over limitation: see Smith v ANL Ltd [2000] HCA 58; (2000) 204 CLR 493; Air Link Pty Ltd v Paterson [2005] HCA 39; (2005) 223 CLR 283; Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38; (2005) 223 CLR 251; State of Queensland v Stephenson; Reeman v State of Queensland [2006] HCA 20 (17 May 2006); (2006) 227 ALR 17; Davison v State of Queensland [2006] HCA 21 (17 May 2006); (2006) 227 ALR 1; Stingel v Clark [2006] HCA 37 (20 July 2006); (2006) 228 ALR 229; but see to the contrary Blunden v Commonwealth of Australia [2003] HCA 73; (2003) 218 CLR 330 and the harsh decision in Batistatos v Roads and Traffic Authority of New South Wales; Batistatos v Newcastle City Council [2006] HCA 27 (14 June 2006); (2006) 227 ALR 425.

Regards
Neil Foster

Neil Foster
Newcastle Law School
Faculty of Business & Law
University of Newcastle
Callaghan NSW 2308
AUSTRALIA
ph 02 4921 7430
fax 02 4921 6931

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