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Johnson v Kinetic Superannuation Ltd[2023] QDC 50

Johnson v Kinetic Superannuation Ltd[2023] QDC 50

DISTRICT COURT OF QUEENSLAND

CITATION:

Johnson v Kinetic Superannuation Ltd & Ors [2023] QDC 50

PARTIES:

AMBER CAROLINE JOHNSON

(plaintiff)

v

KINETIC SUPERANNUATION LTD (ABN 14 05614 056 917 303) AS TRUSTEE FOR KINETIC SUPERANNUATION FUND (ABN 98 503 137 921)

(first defendant)

and

SUNSUPER PTY LTD (ABN 88 010 720 840) AS TRUSTEE FOR SUNSUPER SUPERANNUATION FUND (ABN 98 503 137 921)

(second defendant)

and

HAYS SPECIALIST RECRUITMENT (AUSTRALIA) LTD (ABN 47 001 407 281)

(third defendant)

FILE NO/S:

BD 2265/2019

PROCEEDING:

Application

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

29 March 2023

DELIVERED AT:

Townsville

HEARING DATE:

2 March 2023

JUDGE:

Judge A J Rafter SC

ORDERS:

  1. The plaintiff’s application for leave to proceed is refused.
  2. The plaintiff’s claim is dismissed.
  3. The plaintiff pay the defendants’ costs of the application and the proceeding.

CATCHWORDS:

PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – GENERAL STATUTORY POWERS – TO STAY OR DISMISS ORDERS OR PROCEEDINGS GENERALLY – DELAY – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – TIME AND EXTENSION – COURT SUPERVISION – WANT OF PROSECUTION OR LACK OF PROGRESS – where the plaintiff applies for leave to take a further step in the proceeding pursuant to r 389(2) Uniform Civil Procedure Rules 1999 – factors relevant to the exercise of discretion to give leave to proceed – whether the plaintiff’s claim has reasonable prospects of success – whether the delay was caused by the plaintiff’s legal representatives – whether the defendants have suffered prejudice because of the delay

Uniform Civil Procedure Rules 1999, r 389(2)

Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529

Drake v PKF (Gold Coast) Pty Ltd [2023] QSC 45

Dukker v Challenge Recruitment Limited [2011] QDC 108

Fortuna Seafoods Pty Ltd v The Ship “Eternal Wind” [2008] 1 Qd R 429

Lilyville Pty Ltd v Colonial Mutual Life Assurance Society Ltd [1999] QSC 372

Oldmeadow v Trevorrow [2023] QSC 38

Perre v Apand Pty Ltd (1999) 198 CLR 180

Pittaway v Noosa Cat Australia Pty Ltd [2016] 2 Qd R 556

Tyler v Custom Credit Corporation Ltd [2000] QCA 178

United Super Pty Ltd v Built Environs Pty Ltd & Anor (2001) 80 SASR 513

COUNSEL:

M Horvath for the plaintiff

M May for the first and second defendants

S C Russell for the third defendant

SOLICITORS:

Taylors Solicitors for the plaintiff

McInnes Wilson Lawyers for the first and second defendants

Results Legal for the third defendant

Introduction

  1. [1]
    The plaintiff applies for leave to take a further step in the proceeding pursuant to r 389(2) Uniform Civil Procedure Rules 1999 (“UCPR”) after a delay of more than two years.
  2. [2]
    The plaintiff’s claim is for $279,600 which she says should have been payable to her for a total and permanent disability (“TPD”) under an insurance policy taken out by her superannuation fund.
  3. [3]
    In November 2015 the plaintiff and the third defendant (“Hays”) entered into Terms of Engagement whereby the plaintiff would be offered assignments on an as required basis.[1]  At about that time the plaintiff commenced an assignment as a receptionist at the Cooinda Clinic at the Buderim Private Hospital.
  4. [4]
    The plaintiff’s claim was filed on 27 June 2019.  The first defendant (“Kinetic”) is Hays’ default fund.  The second defendant (“Sunsuper”) took over as trustee of the fund when Kinetic merged into Sunsuper.  Kinetic transferred its members to Sunsuper in June 2018.  Under the agreement, Sunsuper accepted responsibility for previously acquired member benefits.[2]
  5. [5]
    As against Kinetic and Sunsuper, the plaintiff alleges breach of contract and breach of fiduciary duty.[3]  As against Hays, the plaintiff alleges negligence, breach of contract and breach of fiduciary duty.[4]  It is contended by the plaintiff that the central legal issues are whether those obligations arose and a construction of the policy.  The central factual issue is whether the plaintiff has a TPD.[5]
  6. [6]
    Hays filed a defence on 20 December 2019 and an amended defence on 8 December 2020.  Kinetic and Sunsuper filed a defence on 10 March 2020. The plaintiff filed a reply on 24 March 2020.  On 10 October 2022, the plaintiff served a notice of intention to proceed.
  7. [7]
    After receiving Hays’ amended defence, the plaintiff’s solicitor briefed counsel to advise whether an amended reply was necessary.  Counsel advised that the statement of claim should be amended.  An amended statement of claim (“ASOC”) was filed on 20 December 2022.  However, by that time the two year period had elapsed.  The plaintiff’s solicitor says that counsel miscalculated the two year period.  He says that in October 2022, counsel advised him to send a notice of intention to proceed and that the deadline to take the next step was 20 December 2022.[6]

Factual background

  1. [8]
    The Terms of Engagement stated that Hays places superannuation contributions into Kinetic Superannuation, but workers could nominate their own complying fund.  The plaintiff nominated “ANZ Smart Choice” as her nominated superannuation fund.[7]
  2. [9]
    Between 29 January 2016 and 22 July 2016 Hays made superannuation contributions on behalf of the plaintiff.
  3. [10]
    On 21 June 2016 the plaintiff sent Hays an email requesting a change to where her superannuation contributions were to be paid.[8]  It seems that there was an error in the details provided because the superannuation contributions that Hays attempted to make on the plaintiff’s behalf were rejected.  On 2 September 2016, 11 October 2016 and 25 November 2016 Hays requested that the plaintiff provide the correct details of her superannuation fund.  Having received no response from the plaintiff, Hays applied for her to become a member of the Kinetic Fund, which was its default superannuation fund option. 
  4. [11]
    Kinetic wrote to the plaintiff on 5 December 2016.  The letter stated that the sum insured for total and permanent disablement was $279,600.  The letter went on to state:

When cover starts: Your cover (insurance benefit shown above) is currently pending.  It is subject to us receiving an initial contribution from your employer within 180 days of the date you commenced work.  If we don’t receive a contribution or another payment we may treat your account as if it was never opened for you.”[9]

  1. [12]
    The group life insurance policy (“the policy”) maintained on behalf of members of the Kinetic Fund provides as follows:[10]

Date Joined Fund Means the later of:

  1. (a)
    the date the person commenced employment with an employer (where that date is known); and
  1. (b)
    the beginning of the period to which the first Participating Employer contribution relates.”
  1. [13]
    The spreadsheet maintained by Hays states that a superannuation contribution of $241.20 was paid to the Kinetic Fund on behalf of the plaintiff on 12 December 2016 in respect of the period 1 June 2016 to 30 June 2016.[11]
  2. [14]
    The policy provides for default cover in clause 4.2 as follows:[12]

“4.2Default Cover

4.2.1 An Eligible Person will be automatically accepted as an Insured Member for a level of cover provided on a default basis known as Default Cover unless either of the following apply:

  1. (a)
    We have been notified prior to the Changeover Date that they do not wish to be covered under this Policy; or
  1. (b)
    if the first Participating Employer contribution is received more than 180 days after the Date Joined Fund.

Where paragraph (a) or (b) applies that person will be deemed never to have been covered under this Policy until such time as they meet Our underwriting requirements described in condition 4.4.

4.2.2 Default Cover will begin for an Eligible Person who receives it under condition 4.2.1 from the later of:

  1. (a)
    the date the person commenced employment with their Participating Employer;
  1. (b)
    the beginning of the period to which the first Participating Employer contribution relates; and
  1. (c)
    where applicable the date We accept the Member for cover in writing.

4.2.3 The amount of Default Cover that an Insured Member obtains under this condition 4.2 is determined by condition 5.3.1.”

  1. [15]
    The policy provides for limitation on new cover and limited cover to new members in clause 4.3:[13]

Limitation on New Cover and application of Limited Cover to New Members

4.3.2 If an Eligible Person’s cover commences more than 180 days after the commencement of employment with:

(a)their Participating Employer; or

  1. (b)
    their employer who subsequently became a Participating Employer (if applicable);

then the cover the person will receive is Limited Cover until such time as the person meets Our underwriting requirements and We agree in writing to provide them with cover that is not Limited Cover.”

  1. [16]
    In relation to underwriting requirements, the policy provides as follows in clause 4.4:[14]

“4.4Underwriting

4.4.1 Where this Policy specifies the requirement for underwriting, it means We require information to assess whether or not we agree to provide cover or an increase in cover, as the case by be, in the form of medical and other information submitted to Us.  You may apply to Us for cover or additional cover in relation to a Member up to the Maximum Cover Limits if a personal statement that We have chosen for this purpose is submitted to Us.  Except for cover that begins through Default Cover or Automatic Acceptance, We may, after considering any information that We have received in relation to the Member, in Our absolute discretion either:

(a)accept the Member for cover under this policy; or

  1. (b)
    offer to cover the Member under this Policy on whatever terms, subject to whatever restrictions or with whatever premium loadings We may consider appropriate; or
  1. (c)
    refuse to cover that Member under this Policy.

4.4.2 When as a result of Our underwriting decision under condition 4.4.1 cover is subject to a condition, restriction or premium loading, it only applies to the part of the Member’s cover that was not automatically accepted.

4.4.3 Cover that comes into effect as a result of Our underwriting decision under condition 4.4.1 begins on the date We notify You in writing We have accepted the Member for cover.”

  1. [17]
    The plaintiff claims that on or about 3 July 2017 she suffered various symptoms caused by depression, post-traumatic stress disorder, borderline personality disorder and other causes.[15]  The plaintiff says that she was off work from on or about 3 July 2017 until about February/March 2018.[16]  The plaintiff says that she then returned to work but was unable to cope because of her illness and stopped working again.[17]  The plaintiff claims that at all times between 3 July 2017 and February/March 2018 and since that period, her illness prevented her from returning to her occupation as a medical receptionist with Hays and to any occupation.[18]
  2. [18]
    On 7 June 2019, the plaintiff’s application for a TPD payment under the policy was rejected. 
  3. [19]
    The plaintiff contends that Kinetic breached its fiduciary obligation to act in good faith by: (a) failing to advise her of the “account opening date within the time limit” or (b) by allocating or permitting the allocation of 1 June 2016 as the date she joined the fund and failing to allocate or cause the allocation of 5  December 2016 as the date she joined the fund.[19]
  4. [20]
    The plaintiff claims that Sunsuper became liable for the acts or omissions of Kinetic after becoming trustee of the fund.[20]  The plaintiff claims that Hays’ first payment to Kinetic outside the time limit constituted a breach of duty of care to avoid causing her foreseeable financial loss, a breach of an implied term in the contract of employment to avoid causing her foreseeable financial loss and a breach of fiduciary duty to avoid causing foreseeable financial loss.[21]  Alternatively, the plaintiff says that if she did became a member of the Kinetic Fund on 5 December 2006, Hays was in breach of its duty of care, the implied term of the contract and its fiduciary duty by allocating or permitting the allocation of 1 June 2016 as the date she joined the fund and failing to allocate or cause the allocation of 5 December 2006 as the relevant date.[22]

The contentions of the parties

  1. [21]
    All parties addressed the issues by reference to the factors identified in Tyler v Custom Credit Corporation Ltd.[23]
  2. [22]
    The plaintiff submitted that her claims have reasonable prospects of success; that the delay was two years seven days and in that period a notice of intention to proceed was given on 10 October 2022; the delay was caused by her legal representatives and that the defendants have not suffered any prejudice because of the delay.
  3. [23]
    Kinetic and Sunsuper submit that the plaintiff’s claim against them is “hopelessly weak” and that she significantly contributed to the delay by failing to take appropriate steps to insist that her lawyers pursue her case diligently.[24]
  4. [24]
    They submit that they will suffer prejudice because of the inevitable decline in the quality of justice that follows from delay and that any expert evidence obtained by them will be five years after the plaintiff suffered her injury.[25]  Kinetic also points out that it cannot be wound up until after this proceeding has been finalised.[26]
  5. [25]
    Hays submits that there is no reasonable explanation for the delay; the plaintiff’s prospects of success are poor and that it will suffer similar prejudice to Kinetic and Sunsuper if the claim is permitted to proceed.[27]

The applicable principles

  1. [26]
    Rule 389(2) UCPR provides:

389 Continuation of proceeding after delay

  1. (2)
    If no step has been taken in a proceeding for 2 years from the time the last step was taken, a new step may not be taken without the order of the court, which may be made either with or without notice.

…”

  1. [27]
    In Tyler v Custom Credit Corporation Ltd[28] Atkinson J, (with whom McMurdo P and McPherson JA agreed), set out a non-exhaustive list of factors that a court considering an application for leave to proceed would take into account:

“1. how long ago the events alleged in the statement of claim occurred and what delay there was before the litigation was commenced;

  1. how long ago the litigation was commenced or causes of action were added;
  1. what prospects the plaintiff has of success in the action;
  1. whether or not there has been disobedience of Court orders or directions;
  1. whether or not the litigation has been characterised by periods of delay;
  1. whether the delay is attributable to the plaintiff, the defendant or both the plaintiff and the defendant;
  1. whether or not the impecuniosity of the plaintiff has been responsible for the pace of the litigation and whether the defendant is responsible for the plaintiff’s impecuniosity;
  1. whether the litigation between the parties would be concluded by the striking out of the plaintiff’s claim;
  1. how far the litigation has progressed;
  1. whether or not the delay has been caused by the plaintiff’s lawyers being dilatory. Such dilatoriness will not necessarily be sheeted home to the client but it may be. Delay for which an applicant for leave to proceed is responsible is regarded as more difficult to explain than delay by his or her legal advisers;
  1. whether there is a satisfactory explanation for the delay; and
  1. whether or not the delay has resulted in prejudice to the defendant leading to an inability to ensure a fair trial.”
  1. [28]
    The exercise of discretion requires consideration of all relevant factors in the particular case.  After listing the 12 factors Atkinson J said:

“The court’s discretion is, however, not fettered by rigid rules but should take into account all of the relevant circumstances of the particular case including the consideration that ordinary members of the community are entitled to get on with their lives and plan their affairs without having the continuing threat of litigation and its consequences hanging over them.”[29]

  1. [29]
    In Oldmeadow v Trevorrow[30] Freeburn J, referring to the decision of Chesterman  J in Lilyville Pty Ltd v Colonial Mutual Life Assurance Society Ltd[31] said:

“In that case, His Honour approved the comments of Connolly J in Dempsey v Dorber that the proper approach is to identify the relevant factors, assess the weight to be given in the circumstances of the case to each of them, and then to determine whether, on balance, there is good reason for making the order. Chesterman J then went on to state:

Whether there is a satisfactory explanation for the delay in the prosecution of the action and whether the defendant will suffer prejudice if the action proceeds are always relevant factors. The discretion conferred to rule 389 is one to allow an action to proceed despite the general prohibition against an action continuing in which no step has been taken for three years. The applicant must satisfy the court that grounds exist for exercising the discretion in its favour. There is an evidentiary onus on the defendant to raise any consideration telling against the exercise of the discretion but the ultimate onus of satisfying the court that the action should be allowed to proceed remains on the applicant: see Brisbane South Regional Health Authority v Taylor(1996) 186 CLR 541 at 547; 139 ALR 1; 70 ALJR 866; per Toohey and Gummow JJ.”

Consideration

  1. [30]
    I turn then to address the factors identified in Tyler v Custom Credit Corporation Ltd which are relevant to the exercise of discretion to give leave to proceed under r 389 UCPR.

How long ago did the events occur and what delay was there before the proceeding was commenced

  1. [31]
    It is not contentious that the plaintiff commenced employment in November 2015.  The events surrounding the plaintiff joining the Kinetic Fund occurred in 2016.  The plaintiff developed symptoms in June 2017.  The plaintiff attempted to return to work in February 2018 but she suffered panic attacks, and the return-to-work program was abandoned.[32]
  2. [32]
    The plaintiff would have become eligible for a TPD payout under the policy in about August 2018.  She obtained medical evidence to support her claim in February 2019.[33]  There was no delay in the commencement of the proceeding. 

How long ago was the litigation commenced

  1. [33]
    The plaintiff’s claim was filed on 27 June 2019.

Prospects of success 

  1. [34]
    The plaintiff’s prospects of success is just one of many factors to be considered: Pittaway v Noosa Cat Australia Pty Ltd.[34]  Mr Horvath for the plaintiff emphasised the observations of Morrison JA that any assessment of prospects is necessarily provisional, as the issue will be determined without the evidence that would be adduced at trial.
  2. [35]
    Mr Horvath submitted that where the plaintiff’s prospects are identified as limited, the question becomes whether the case is unarguable or doomed to fail.[35]  However the context in which Pittaway v Noosa Cat Australia Pty Ltd was decided is that the primary judge had placed undue emphasis on the plaintiff’s failure to give a detailed response to the defendant’s affidavit material.  The court found that there was tension between the primary judge’s findings that the plaintiff had an “arguable case” and that his prospects of success could not be considered strong.[36]
  3. [36]
    A defendant is not required to show that the plaintiff’s claim will certainly fail.[37]
  4. [37]
    According to the plaintiff’s solicitor the “central issue” is whether 1 June 2016, being the date the defendants say the plaintiff joined the fund is a “clerical error” when in reality she joined the fund on 5 December 2016.[38] At the hearing Mr Horvath advanced the argument that the date 1 June 2016 “does not make sense for any of the date permutations”.[39] It was submitted that the date 1 July 2016, which is the start of the first quarter of the financial year when the fund was opened is a date that “does make sense”.[40]
  5. [38]
    The meaning of the expression “Date Joined Fund” is defined by the terms of the policy.[41]  The relevant date is the later of the date when the plaintiff commenced employment in November 2015 and the beginning of the period to which the first participating employer contribution relates. The superannuation payments were generally made towards the end of the month following the relevant period. It is clear that in respect of the payment on 12 December 2016, the beginning of the period to which the payment relates is 1 June 2016. The date 1 June 2016 is not the result of a clerical error, but rather arose from the terms of the policy and the factual circumstances. There is no basis upon which it can be concluded that 1 July 2016 is the relevant date. The problem arose after the plaintiff’s request made on 21 June 2016. The first participating employer contribution was paid on 12 December 2016, which is more than 180 days after 1 June 2016.  As a consequence, clause 4.2.1(b) of the policy[42] applied, and the plaintiff was “deemed never to have been covered under this Policy until such time as [she met the insurers] underwriting requirements described in condition 4.4.”  The plaintiff did not apply for underwritten cover pursuant to the policy.[43]
  6. [39]
    In those circumstances, the plaintiff was not covered for TPD under the terms of the policy taken out by Kinetic.  As previously mentioned, the plaintiff was advised by letter dated 5 December 2016 that her cover was pending.[44]
  7. [40]
    The plaintiff’s prospects of success should be considered by having regard to the ASOC filed 20 December 2022.
  8. [41]
    As against Kinetic, the plaintiff claims:

The first defendant’s breach

  1. The first defendant has breached its obligations to the plaintiff by:
  1. (a)
    failing to advise the account opening date within the time limit;
  1. (b)
    alternatively, if the plaintiff became a member of the Kinetic Fund on 5 December 2016:
  1. (i)
    allocating, or permitting the allocation of, 1 June 2016 as the ‘date joined fund’ date;
  1. (ii)
    failing to allocate, or cause the allocation of , 5 December 2016 as the ‘date joined fund’ date.
  1. [42]
    As against Sunsuper, the plaintiff claims that it acquired the liability for any of Kinetic’s acts or omissions prior to the transfer.[45]
  2. [43]
    As against Kinetic and Sunsuper the ASOC pleads as follows:

Causation – first and second defendants

  1. Had the plaintiff made an application for total and permanent disability with Colonial Mutual, it would have accepted the application.
  1. As against the first and second defendants, the failure to advise of the plaintiff’s superannuation account opening date within the time limit resulted in the plaintiff not having cover under the policy for total and permanent disability.
  1. Had the plaintiff been advised of the superannuation account opening date by the first defendant within the time limit, the plaintiff would have required the third defendant to make the first payment within the time limit and the third defendant would have done so.

39A. Alternatively, had 1 June 2016 not been allocated as the ‘date joined fund’ date, the 180 days would not have started to run from that date, the first payment would have been made within the time limit and the plaintiff would have been entitled to default total and permanent disablement cover.

39B. Alternatively, had 5 December 2016 been allocated as the ‘date joined fund’ date, the first payment would have been made within the time limit and the plaintiff would have been entitled to default total and permanent disablement cover.

  1. [44]
    As against Hays, the ASOC pleads as follows:

The third defendant’s obligations

  1. The third defendant, as a result of its relationship as employer of the plaintiff and its statutory obligation, owed the plaintiff:
  1. (a)
    a duty of care to take reasonable care to avoid causing foreseeable financial loss to the plaintiff;
  1. (b)
    an implied term under the contract of employment (‘the contract’) to avoid causing foreseeable financial loss to the plaintiff;
  1. (c)
    a fiduciary duty to avoid causing foreseeable financial loss to the plaintiff.

The third defendant’s breaches

  1. The payment of the first payment outside the time limit was:
  1. (a)
    a breach of the duty of care;
  1. (b)
    a breach of the implied term of contract;
  1. (c)
    a breach of the fiduciary duty.

30A. Alternatively, if the plaintiff became a member of the Kinetic fund on 5 December 2016, the third defendant was in breach of its duty of care, the implied term of contract and its fiduciary duty by:

  1. (a)
    allocating, or permitting the allocation of, 1 June 2016 as the ‘date joined fund’ date;
  1. (b)
    failing to allocate, or cause the allocation of, 5 December 2016 as the ‘date joined fund’ date.
  1. [45]
    The plaintiff’s causation pleading against Hays is expressed as follows:

Causation – third defendant

  1. Had the plaintiff made an application for total and permanent disability with Colonial Mutual, it would have accepted the application.
  1. As against the third defendant, making the first payment outside the time limit resulted in the plaintiff not having cover under the policy for total and permanent disablement.
  1. Had the third defendant made the first payment within the time limit, the plaintiff would have had cover for total and permanent disablement under the policy.

42A. Alternatively, had 1 June 2016 not been allocated as the ‘date joined fund’ date, the 180 days would not have started to run from that date, the first payment would have been made within the time limit and the plaintiff would have been entitled to default total and permanent disablement cover for the illness.

42B. Alternatively, had 5 December 2016 been allocated as the ‘date joined fund’ date, the first payment would have been made within the time limit and the plaintiff would have been entitled to default total and permanent disablement cover for the illness.

  1. [46]
    Having regard to the nature of those issues and the fact that the plaintiff has the onus of satisfying the court that the proceeding should be allowed to continue, it is surprising that the written submissions in relation to her prospects of success simply state:

“24. An employer can be liable for failing to pay an employee’s superannuation on time: Dukker v Challenge Recruitment Limited [2011] QDC 108 at [60] (Farr SC A/DCJ).

  1. A trustee of a superannuation fund can also be liable for failing to advise a member that her insurance cover is in jeopardy and in not taking any steps to prevent the lapse of cover: United Super Pty Ltd v Built Environs Pty Ltd & Anor (2001) 80 SASR 513 at [62], [65]-[67] (Gray J).
  1. The defendants are denying any obligation to advise of the 180 day time limit and any responsibility for such failure.  Further, the third defendant denies any responsibility for not making payments within the 180 day time limit.”
  1. [47]
    There are a number of things that should be noted about those submissions.  First, the submissions fail to address the substance of the pleaded case and the issues raised by the defendants.  Second, Dukker is not authority for the proposition stated.  In that case, the employee’s claim for TPD benefits was refused by the insurer because she had failed to disclose a change in her occupational status.  The plaintiff claimed damages for negligence, breach of fiduciary duty and breach of contract.  The plaintiff alleged that the defendant expressly or impliedly represented that the relevant forms had been sent to the superannuation fund for the purpose of arranging insurance cover that she had requested.  The judge said that the matter depended heavily on whether the plaintiff fell within the definition of being totally and permanently disabled in the product disclosure statement.[46]  The judge concluded that the plaintiff’s disability did not fall within the relevant definition.  His Honour was not persuaded that the plaintiff’s illness wholly prevented her from engaging in regular remunerative work for the relevant period.[47]  As that was the threshold issue the plaintiff’s case failed.[48]  In obiter remarks the judge commented that he accepted that an employer has a duty to act reasonably to avoid foreseeable financial loss to an employee.[49]  Mr Horvath accepted that the decision in Dukker did not assist the plaintiff’s case.  Third, the proposition that a superannuation fund can be liable for failing to advise a member that their insurance cover is in jeopardy based on United Superannuation Pty Ltd, is not the plaintiff’s pleaded case.  The facts in United Super were quite different.  In that case, a worker was accepted as a member of a superannuation scheme of which United Super was the trustee.  The worker was a sub-contractor to Built Environs which made annual payments of the premiums to the trustee of the superannuation scheme for a period of more than five years.  The worker became totally and permanently disabled and sought benefits under the superannuation scheme.  The trustee denied liability claiming that the policy required the payment of monthly premiums  (rather than annually).  At the trial in the Magistrates Court, the trustee was found liable as it had acquiesced in the receipt of annual premiums and had been in breach of its obligations in failing to inform the worker that the premium was required to be paid monthly.  The trustee’s appeal to the Supreme Court was dismissed.  It was held that the trustee had failed to advise the worker that Built Environs was following a practice of paying premiums annually which put his entitlements in jeopardy.  The trustee had failed to act with the utmost good faith when it was obliged to do so.[50]
  1. [48]
    The plaintiff’s claim that Kinetic breached its duties by failing to advise her of the “account opening date within the time limit” is difficult to comprehend.  Kinetic’s records show that the plaintiff’s member account was opened on 5 December 2016 by Hays making an entry in its online portal.[51]  The date the plaintiff joined the Kinetic Fund is governed by the terms of the policy.  It is apparent that the circumstances that led to the plaintiff joining the fund did not occur until Hays paid the first contribution on 5 December 2016.
  2. [49]
    The plaintiff’s case that the allocation of 1 June 2016 as the joining date or the failure to allocate 5 December 2016 as the joining date is based on a fundamental misapprehension that Kinetic could exercise control over such matters.  The “Date Joined Fund” arises from the terms of the policy and the clear facts.
  3. [50]
    The plaintiff faces considerable obstacles in her case against Kinetic based on breach of fiduciary duty and breach of an obligation to act in the good faith.  As was pointed out by Mr May for Kinetic, the scope of recognised fiduciary obligations are: (a) not to have any conflict of interest, and (b) not to profit or benefit without full disclosure.[52]
  4. [51]
    In relation to the contention that Kinetic breached its obligation of good faith, the fact that the plaintiff did not have TPD coverage arises from the clear facts and terms of the policy, and not because of any discretionary exercise of power by Kinetic.  The plaintiff has failed to articulate any basis upon which it can be concluded that Kinetic failed to act in good faith.
  5. [52]
    In those circumstances the plaintiff’s prospects of success against Kinetic and Sunsuper are poor.
  6. [53]
    The plaintiff’s case against Hays has similar difficulties.  As previously mentioned, the date the plaintiff joined the fund is a consequence of the terms of the policy and the fact of payment.
  7. [54]
    In Fortuna Seafoods Pty Ltd v The Ship “Eternal Wind”[53] McMurdo P carefully analysed the authorities on the existence of a duty of care to avoid pure economic loss.  As her Honour explained, it is not the law that one person owes to another an absolute duty to take care not to cause reasonably foreseeable financial harm.  The law recognises that there must be some intelligible limits to keep the law of negligence within the bounds of common sense and practicality.[54]  Referring to Perre v Apand Pty Ltd[55] and Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad”[56] her Honour said:

[5] Caltex and Perre suggest that the determination of whether a defendant owes a claimant a duty of care not to cause mere economic loss will depend on a combination of factors including the reasonable foresight of the likelihood of harm; the defendant's knowledge or means of knowledge of an ascertainable, determinate class of persons who are at risk of foreseeable harm; the claimant's vulnerability or whether they are unable to protect themselves from the foreseeable harm; whether the implication of a duty would impair the defendant's legitimate pursuit of autonomous commercial interests including the existence of any contracts between the claimant and defendant; whether the damage flowed from the occurrence of activities within the defendant's control; the closeness of the relationship between the parties and the existence of any other special circumstances justifying compensation.”[57]

  1. [55]
    Mr Russell for Hays correctly submitted that the trend of authorities is against the proposition that in the absence of some special feature, an employer owes a duty of care to protect an employee from pure economic loss.[58]
  2. [56]
    The plaintiff does not advance any basis for the existence of an implied term in the Terms of Engagement requiring Hays to avoid causing her foreseeable financial loss.
  3. [57]
    Similarly, the plaintiff advances no basis upon which it can be concluded that an employer has a fiduciary duty to avoid causing the employee financial loss.
  4. [58]
    The plaintiff has not articulated an arguable case against Hays and accordingly her prospects of success appear to be poor.  This factor weighs very heavily against the grant of leave to proceed. Further, the plaintiff’s counsel did not suggest in the course of the hearing that the case could be further developed in a manner which addresses the fundamental legal difficulties which confront it.

Disobedience of court orders or directions

  1. [59]
    There has been no disobedience of court orders or directions.

Whether the litigation has been characterised by periods of delay

  1. [60]
    There is a single period of delay of two years, seven days from the time when Hays’ amended defence was served on 5 December 2020 and when the ASOC was filed on 20 December 2022.  A notice of intention to proceed was given on 10 October 2022.[59]

Whether the delay is attributable to the plaintiff, the defendants or both the plaintiff and defendants

  1. [61]
    The plaintiff relies on the fact she left it to her legal representatives to prosecute her claim, that counsel miscalculated the two-year time limit by seven days and her solicitor did not check the time period.[60]  Kinetic and Sunsuper accept that the extent to which the delay can be attributed to the plaintiff is diminished by the failure of her lawyers to progress her claim promptly.  A party may rely on their legal representatives to pursue their claim but by commencing the claim the plaintiff impliedly undertook to the court and the other parties to proceed in an expeditious way.[61]
  2. [62]
    The delay is not attributable in any way to the defendants.

Whether the impecuniosity of the plaintiff has been responsible for the pace of the litigation

  1. [63]
    The plaintiff’s solicitors are acting on a speculative basis, so this is not a relevant factor.[62]

Whether the litigation would be concluded by striking out the plaintiff’s claim

  1. [64]
    The plaintiff submits that her claims in contract and negligence have six year limitation periods from when the causes of action arose.[63]  It is submitted that the issue of whether the limitation period has expired can only be determined when factual findings are made.[64]  It is also submitted that the equitable breaches have no time limitations.[65]
  2. [65]
    The expiration of any applicable time limitation is a factor that may weigh against dismissing a proceeding, but that is to be balanced against all other relevant considerations.[66]
  3. [66]
    The context in which this factor was relevant in Tyler v Custom Credit Corporation Ltd[67] is that there was a counterclaim by the appellant so that even if the respondent’s claim was dismissed, the proceeding would nevertheless continue.  The trial of the issues raised by the counterclaim would cover many of the same facts in issue in the claim.[68]
  4. [67]
    The dismissal of the plaintiff’s claim in the present case will bring this proceeding to a conclusion, but according to the plaintiff’s submission that would not necessarily preclude a further claim being commenced.  Having regard to the very limited submissions on this issue, I proceed on the basis that dismissing the plaintiff’s application may bring an end to her claim, thus denying her the prospect of pursuing her claim for TPD coverage.  The issue of whether any fresh proceeding based on the same set of facts would constitute an abuse of process would depend upon an assessment of all relevant circumstances.[69]

How far has the litigation progressed

  1. [68]
    I have already outlined the steps taken in the litigation.[70]
  2. [69]
    The parties have completed disclosure.  The plaintiff has indicated that she proposes to amend the statement of claim, presumably in the terms of the ASOC filed out of time on 20 December 2022.  It is submitted that the matter can then proceed to mediation or trial.[71]
  3. [70]
    The position is that pleadings have not closed and Kinetic and Sunsuper have indicated that they propose to obtain expert evidence if the matter is to proceed.[72]  In those circumstances if the proceeding is to continue, it is likely that it can proceed reasonably quickly, although there will be some delay while Kinetic and Sunsuper obtain expert evidence.

Whether or not the delay has been caused by the plaintiff’s lawyers being dilatory

  1. [71]
    The delay is largely attributable to the failings of the plaintiff’s lawyers.  In Tyler v Custom Credit Corporation Ltd[73] Atkinson J said that the dilatoriness for which lawyers are responsible “will not necessarily be sheeted home to the client but it may be.”
  2. [72]
    The issue of responsibility for the delay is discussed further in considering the explanation for it.[74]

Whether there is a satisfactory explanation for the delay

  1. [73]
    The plaintiff submits that she left it to her legal representatives to pursue her claim[75] and that the delay has been explained as completely as it can.[76]
  2. [74]
    The plaintiff’s legal representatives’ responsibility for the delay does not necessarily mean that the delay cannot be attributed to the plaintiff personally.  The plaintiff impliedly undertook to proceed expeditiously.[77]
  3. [75]
    After the plaintiff’s solicitor’s first affidavit was filed on 20 February 2023, the solicitors for Kinetic and Sunsuper requested further information in relation to the issue of delay.[78]  One matter upon which clarification was sought related to the plaintiff checking the progress of her claim during the two year period.  In his first affidavit Mr Taylor said: “The delay is not attributable to the plaintiff herself; it falls on the lawyers as explained below.  The plaintiff checked with me during the two-year period what was happening with the claim and I told her that counsel was preparing amended court documents.”[79]  Mr Taylor said that the plaintiff maintained privilege in relation to her legal communications except to the extent necessary to provide an explanation for the delay.”[80]
  4. [76]
    In view of the vague assertion that the plaintiff checked on the progress of the matter during the two year period and the absence of an affidavit from the plaintiff, it is not surprising that the solicitors for Kinetic and Sunsuper sought clarification on the issue.
  5. [77]
    The further details contained in Mr Taylor’s second affidavit reveal that a copy of the brief to counsel to advise on whether a reply should be prepared was sent to the plaintiff on 17 February 2020 (the same day counsel was briefed).  Mr Taylor says that after that there was no communication with the plaintiff until 26 April 2022 when the plaintiff sent him an email seeking an update on her claim.[81]  On 28 April 2022 Mr Taylor spoke to counsel who advised that the statement of claim should be amended and that it would be sent within 21 days.  Mr Taylor advised the plaintiff that he was awaiting counsel’s advice about reviewing the pleadings.[82]
  6. [78]
    Mr Taylor did not receive the amended statement of claim from counsel within the 21-day period and followed up on 26 May 2022.[83]  On 7 October 2022 counsel advised Mr Taylor to send a notice of intention to proceed.[84]  The notice of intention to proceed was sent on 10 October 2022 on the mistaken understanding that the deadline was 20 December 2022.[85]  The amended statement of claim was received on 19 December 2022 and filed on 20 December 2022.[86]
  7. [79]
    Therefore, after counsel was briefed on 17 December 2020 to consider whether an amended reply was necessary, there was a delay of more than 16 months before the plaintiff sought an update on her claim.  The plaintiff does not seem to have done anything to progress her claim.  Mr Taylor did not advise the plaintiff of the two year time limit for taking a step in the proceeding until after he was notified about the issue by the solicitors for the defendants.[87]
  8. [80]
    The plaintiff’s legal representatives are primarily responsible for the delay, but the plaintiff contributed to the lack of progress and her own delay is unexplained. However, Mr Horvath stated that the plaintiff suffers a psychiatric condition and is in receipt of NDIS benefits.[88] The plaintiff had not been told of the two year time limitation for taking a step in the proceeding. Although there is no evidence that the plaintiff’s medical condition affected her ability to progress her claim, in the circumstances, her personal responsibility for the delay is not a factor that weighs against the grant of leave.
  9. [81]
    In Drake v PKF (Gold Coast) Pty Ltd[89] Cooper J said:

“[66] As the High Court observed in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd, speed and efficiency, in the sense of minimum delay and expense, are essential to a just resolution of proceedings. Delay will almost always impede the proper disposition of any case that does not come to trial promptly in circumstances where, due to the passage of time, memories fade and records may be lost.  Similarly, the passage of time will often diminish the significance of known facts or circumstances because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose.”

  1. [82]
    The present case will not necessarily be affected by fading memories and lost documents, but it is nevertheless essential that a case proceeds promptly.  The delay is largely attributable to the failings of the plaintiff’s legal representatives. This factor would weigh in favour of granting leave to proceed.

Whether the delay has resulted in prejudice to the defendants leading to an inability to secure a fair trial

  1. [83]
    Kinetic and Sunsuper submit that they will suffer prejudice if leave to proceed is granted.  They rely on the inevitable decline in the quality of justice and the fact that any expert evidence will be obtained some five years after the time when the plaintiff claims to have suffered her illness.[90]  Kinetic also points out that it cannot be wound up until after the proceeding has been finalised.[91]
  2. [84]
    Hays submits that it will suffer similar prejudice to Kinetic and Sunsuper if the plaintiff’s claim is permitted to proceed.[92]
  3. [85]
    The plaintiff submits that the policy is in writing, the surrounding events are documented and the plaintiff’s medical condition is contained in medical reports.[93]  The plaintiff points out that none of the defendants have previously sought to have her medically examined and she is available for any such examination.[94]  The plaintiff submits there is no relevance in the delay in Kinetic being wound up because that has no bearing on whether a fair trial can be secured.[95]
  4. [86]
    In my view there is specific prejudice which arises from the fact that any medical evidence sought to be obtained by the defendants will occur more than five years after the plaintiff claims to have suffered her injury.  The plaintiff’s expert evidence was obtained within 12 months of her ceasing work.[96]  Any expert medical evidence obtained by the defendants will necessarily be long after the relevant events. There is also the factor that any available cover under the policy would in any event have been “limited cover” which is defined to include TPD arising from an illness that first became apparent or an injury that first occurs on or after the date cover commenced. As Mr Russell, for Hays, submitted this gives rise to "an important unpleaded factual controversy” because the plaintiff would be required to allege and prove not only that her illness arose during the relevant period but that it first arose at that time.[97]
  5. [87]
    Although the delay in the winding up of Kinetic has no relevance to whether there can be a fair trial, it is nevertheless a relevant consideration. A factor to be taken into account is that members of the community are entitled to plan their affairs without the consequences of ongoing litigation.[98]  The adverse consequences of delays in litigation extend to corporate defendants.[99] The prejudice to the defendants weighs against granting leave to proceed.

Conclusion

  1. [88]
    Balancing all relevant factors, I conclude that the plaintiff has not shown that leave to proceed should be granted.  The delay beyond the two year period is not substantial and is largely due to the failings of the plaintiff’s lawyers. However, having regard to the plaintiff’s poor prospects of success and the prejudice to the defendants, I consider that the application should be refused.
  2. [89]
    In those circumstances the application for leave to proceed should be refused.  The plaintiff’s claim should be dismissed.
  3. [90]
    Unless any party submits otherwise, the plaintiff should pay the defendants’ costs of the application and the proceeding.

Footnotes

[1]  Terms of Engagement cl 2.1, exhibit DAT-1 to the affidavit of David Anthony Taylor filed 20 February 2023 “Mr Taylor’s first affidavit”.

[2]  Mr Taylor’s first affidavit at para 22.

[3]  Mr Taylor’s first affidavit at para 36.

[4]  Mr Taylor’s first affidavit at para 37.

[5]  Mr Taylor’s first affidavit at para 38.

[6]  Mr Taylor’s first affidavit at para 51.

[7]  Defence of Hays filed 20 December 2019 para 4(a); reply to defence filed 23 March 2020.

[8]  Mr Taylor’s first affidavit, exhibit DAT-1 at p, 11.

[9]  Mr Taylor’s first affidavit, exhibit DAT-1, p 23.

[10]  Mr Taylor’s first affidavit, exhibit DAT-1, p 88.

[11]  Mr Taylor’s first affidavit, exhibit DAT-1, p 10.

[12]  Mr Taylor’s first affidavit, exhibit DAT-1, pp 66-67.

[13]  Mr Taylor’s first affidavit, exhibit DAT-1, p 67.

[14]  Mr Taylor’s first affidavit, exhibit DAT-1, p 68.

[15]  ASOC at para 31.

[16]  ASOC at para 31A.

[17]  ASOC at para 31B.

[18]  ASOC at para 32.

[19]  ASOC at para 23.

[20]  ASOC at para 26.

[21]  ASOC paras 29 and 30.

[22]  ASOC para 30A.

[23]  [2000] QCA 178 at [2].

[24]  Outline of Submissions for Kinetic and Sunsuper at para 1.

[25]  Outline of Submissions for Kinetic and Sunsuper at paras 53-54.

[26]  Affidavit of Andrew Orr filed 1 March 2023 at para 7.

[27]  Outline of Submissions for Hays at para 3.

[28]  [2000] QCA 178 at [2].

[29]  [2000] QCA 178 at [2].

[30]  [2023] QSC 38 at [48].

[31]  [1999] QSC 372

[32]  Mr Taylor’s first affidavit at para 21.

[33]  Mr Taylor’s first affidavit at para 34.

[34]  [2016] 2 Qd R 556 at 569 [23] (per Morrison JA; Douglas and North JJ agreeing)

[35]  Outline of submissions for the plaintiff at para 23 citing Pittaway v Noosa Cat Australia Pty Ltd at [30].

[36]  [2016] 2 Qd R 556 at 572 [31]-[32].

[37] Hood v State of Queensland [2002] QSC 169 [136] (Ambrose J).

[38]  Mr Taylor’s first affidavit at para [18].

[39]  Date permutations set out in exhibit 1.

[40]  T1-5: 37-43.

[41]  See [12] above.

[42]  See [14] above.

[43]  Affidavit of Andrew Orr filed 1 March 2023 at para 4(n).

[44]  See [11] above.

[45]  ASOC at para 26(b).

[46]  [2011] QDC 108 at [32].

[47]  [2011] QDC 108 at [52].

[48]  [2011] QDC 108 at [53].

[49]  [2011] QDC 108 at [60].

[50]  (2001) 80 SASR 513 at 533-535 [58]-[62].

[51]  Affidavit of Andrew Orr filed 1 March 2023 at para 4(g); exhibit AO1 at page 70.

[52]  Outline of submissions for Kinetic and Sunsuper at para [43] citing Chan v Zacharia (1984) 154 CLR 178 at [198]-[199].

[53]  [2008] 1 Qd R 429; [2005] QCA 405.

[54]  [2008] 1 Qd R 429 at 436 [4].

[55]  (1999) 198 CLR 180.

[56]  (1976) 136 CLR 529.

[57]  [2008] 1 Qd R 429 at 437 [5].

[58]  Outline of submissions for Hays at para 43. See for example Meredith v Commonwealth of Australia (No 2) (2013) 280 FLR 385; [2013] ACTSC 221 [563].

[59]  Mr Taylor’s first affidavit at paras 40-42.

[60]  Outline of submissions for the plaintiff at para 30.

[61] UCPR r 5(3).

[62]  Outline of submissions for the plaintiff at para 31.

[63]  Limitation of Actions Act 1974, s 10.

[64]  Outline of submissions for the plaintiff at para 32.

[65]  Outline of submissions for the plaintiff at para 34.

[66] Drake v PKF (Gold Coast) Pty Ltd [2023] QSC 45 at [54]-[55] (Cooper J).

[67]  [2000] QCA 178.

[68]  [2000] QCA 178 at [39].

[69] UBS AG v Tyne (2018) 265 CLR 77 at 96-97; [2018] HCA 45 at [46].

[70]  See [4],[6] and [7] above.

[71]  Outline of submissions for the plaintiff at para 35.

[72]  Outline of submissions for Kinetic and Sunsuper at para 56 (e).

[73]  [2000] QCA 178 [2].

[74]  See [73]-[82] below.

[75]  Outline of submissions for the plaintiff at para 30.

[76]  Outline of submissions for the plaintiff at para 37.

[77] UCPR r 5(3).

[78]  Affidavit of David Anthony Taylor filed 27 February 2023 (“Mr Taylor’s second affidavit”), exhibit DAT-2.

[79]  Mr Taylor’s first affidavit at para 43.

[80]  Mr Taylor’s first affidavit at para 52.

[81]  Mr Taylor’s second affidavit at para 12.

[82]  Mr Taylor’s second affidavit at para 13.

[83]  Mr Taylor’s second affidavit at para 14.

[84]  Mr Taylor’s second affidavit at para 15.

[85]  Mr Taylor’s second affidavit at para 15(a).

[86]  Mr Taylor’s second affidavit at para 15(b).

[87]  Mr Taylor’s second affidavit at paras 17-18.

[88]  T1-12: 5-15.

[89]  [2023] QSC 45 at [66] (footnotes omitted).

[90]  See [24] above.

[91]  See [24] above.

[92]  See [25] above.

[93]  Outline of submissions for the plaintiff at para 39.

[94]  Outline of submissions for the plaintiff at para 41.

[95]  Outline of submissions for the plaintiff at para 42.

[96]  Affidavit of Andrew Orr filed 1 March 2023 at para 6(a).

[97]  T1-23: 31-47.

[98] Tyler v Custom Credit Corporation Ltd [2000] QCA 178 at [2].

[99] Drake v PKF (Gold Coast) Pty Ltd [2023] QSC 45 at [72] (Cooper J).

Close

Editorial Notes

  • Published Case Name:

    Johnson v Kinetic Superannuation Ltd & Ors

  • Shortened Case Name:

    Johnson v Kinetic Superannuation Ltd

  • MNC:

    [2023] QDC 50

  • Court:

    QDC

  • Judge(s):

    A J Rafter SC

  • Date:

    29 Mar 2023

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541
1 citation
Brisbane South Regional Health Authority v Taylor (1996) 70 ALJR 866
1 citation
Brisbane South Regional Health Authority v Taylor (1996) 139 ALR 1
1 citation
Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529
2 citations
Chan v Zacharia (1984) 154 CLR 178
1 citation
Drake v PKF (Gold Coast) Pty Ltd [2023] QSC 45
4 citations
Dukker v Challenge Recruitment Ltd [2011] QDC 108
6 citations
Fortuna Seafoods Pty Ltd v The Ship "Eternal Wind"[2008] 1 Qd R 429; [2005] QCA 405
5 citations
Hood v State of Queensland [2002] QSC 169
1 citation
Lilyville Pty Ltd v Colonial Mutual Life Assurance Society Ltd [1999] QSC 372
2 citations
Meredith v Commonwealth of Australia (No 2) (2013) 280 FLR 385
1 citation
Meredith v Commonwealth of Australia (No 2) [2013] ACTSC 221
1 citation
Oldmeadow v Trevorrow [2023] QSC 38
2 citations
Perre v Apand Pty Ltd (1999) 198 CLR 180
2 citations
Pittaway v Noosa Cat Australia Pty Ltd[2016] 2 Qd R 556; [2016] QCA 4
3 citations
Tyler v Custom Credit Corp Ltd [2000] QCA 178
8 citations
UBS AG v Tyne [2018] HCA 45
1 citation
UBS AG v Tyne (2018) 265 CLR 77
1 citation
United Super Pty Ltd v Built Environs Pty Ltd (2001) 80 SASR 513
3 citations

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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