New South Wales Supreme Court CITATION : Personalised Transport Services Pty Ltd v AMP Superannuation Ltd & Anor [2006] NSWSC 5 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 15/04/05, 15/06/05, 28/06/05, 12/07/05, 10/08/05, 24/08/05, 12/10/05, 19/10/05 JUDGMENT DATE : 31 January 2006 JURISDICTION : Equity Division JUDGMENT OF : Barrett J DECISION : Separate questions answered: see paragraph 14. CATCHWORDS : TAXES AND DUTIES - superannuation guarantee charge - persons in respect of whom payable - independent contractors - RESTITUTION - mistake - recovery of superannuation contributions paid by mistake LEGISLATION CITED : Superannuation Guarantee (Administration) Act 1992 (Cth), s.12(3) Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 CASES CITED : DP Excavation & Haulage Pty Ltd v Commissioner of Taxation (2005) 190 FLR 198 Personalised Transport Services Pty Ltd v AMP Superannuation Ltd [2005] NSWSC 396 Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537 Personalised Transport Services Pty Ltd - Plaintiff PARTIES : AMP Superannuation Limited - First Defendant Alan John Goode - Second Defendant FILE NUMBER(S) : SC 5475/03 Mr J.E. Armfield - Plaintiff COUNSEL : Mr M.R. Elliott - First Defendant Mr S.J. Richardson, Solicitor - Second Defendant Gells - Plaintiff SOLICITORS : Mallesons Stephen Jaques - First Defendant Vizzone Ruggero & Associates - Second Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J TUESDAY, 31 JANUARY 2006 5475/03 PERSONALISED TRANSPORT SERVICES PTY LTD v AMP SUPERANNUATION LIMITED AS TRUSTEE FOR AMP SUPERANNUATION SAVINGS TRUST & ANOR JUDGMENT 1 These reasons are concerned with three questions for separate determination in these proceedings. It is desirable that I state some background. I begin by quoting the first four paragraphs of my judgment of 29 April 2005 (Personalised Transport Services Pty Ltd v AMP Superannuation Ltd [2005] NSWSC 396): "1 The plaintiff carries on business as a freight courier and transport broker. In or about 1992, the plaintiff entered into an arrangement with the defendant (the trustee of a superannuation fund) under which the plaintiff paid to the defendant superannuation contributions for the benefit of persons working in the plaintiff's business. The plaintiff says that it paid over a total of $133,475.19 in this way by way of contributions between March 2000 and November 2001 in respect of certain persons for whom it believed it was required by Commonwealth law to provide superannuation. The plaintiff also says that that belief was incorrect because the persons in question were sub-contractors, not employees. The plaintiff therefore contends that the purpose for which the payment of $133,475.19 was made wholly failed; and that the moneys were paid under a mistake on the part of the plaintiff. 2 On the basis thus pleaded in its statement of claim, the plaintiff originally claimed, as against the defendant, a declaration that the moneys totalling $133,475.19 are held by the defendant on trust for the plaintiff and an order that the defendant repay those moneys. 3 The defendant, by its defence, denies liability as to moneys of two kinds. First, it says that it is not liable in respect of a total of $34,735.84 allocated to the accounts of beneficiaries and later paid out to those beneficiaries. Second, it says that it is not liable in respect of so much of the remainder of the total claimed as was applied by it as administration fees and in payment of insurance premiums to AMP Life Limited. Otherwise, the defendant, by the defence, did not admit the plaintiff's claims. 4 The plaintiff filed a reply to the defence by which it made it clear that it did not press its claim in respect of the sums paid out to beneficiaries and those applied as administration fees and insurance premiums. It was agreed at the hearing that those items together totalled $47,831.06, with the result that the plaintiff ultimately sought relief in terms of the statement of claim as to the balance of $85,644.13." 2 In that judgment, I held that the proceedings were not constituted in such a way as to enable the court to grant the relief the plaintiff sought. I gave the plaintiff an opportunity to re-constitute the proceedings. After a number of mentions, an order was eventually made by consent on 24 August 2005 joining Mr Goode as second defendant to represent 78 persons named in the order who were alleged by the plaintiff to be independent contractors and not employees. 3 Mr Goode, through his solicitor, subsequently took steps to contact all members of the class. As a result of those approaches, it became clear that two persons actively opposed the grant of the relief the plaintiff sought. In addition, Mr Goode's solicitor was unsuccessful in his attempt to contact five members of the class. When the matter came before the court on 12 October 2005, Mr Armfield of counsel, who appeared for the plaintiff, indicated that his client would not press its claim to recover from the first defendant moneys paid over by the plaintiff in respect of those seven persons, that is, the two who indicated opposition and the five who had not been contacted. 4 Also on 12 October 2005, the solicitor for Mr Goode indicated to the court that Mr Goode, for himself and, so far as he was able, for the members of the class other than the seven to whom I have referred, did not oppose the grant of the relief the plaintiff sought. Having previously reviewed the evidence, I said on that occasion that I would, in respect of all relevant persons other than the seven, make the orders the plaintiff sought upon delivery of an appropriate form of order to chambers. 5 Subsequently, however, the first defendant, which had previously flagged possible concerns arising from provisions of the Superannuation Industry (Supervision) Act 1993 (Cth), sought an order for separate determination of certain questions relevant to the first defendant's position and responsibilities under that legislation. This happened on 19 October 2005, before the form of order had been delivered. Without opposition from the plaintiff and the second defendant (Mr Goode), I then ordered, on the application of the first defendant, that the following questions be separately determined: "1. Whether the plaintiff paid Contribution Monies (as defined in the Amended Statement of Claim) to the first defendant in respect of the alleged sub-contractors the subject of these proceedings (other than the alleged sub-contractors identified in the schedule to these orders). 2. If the answer to 1. is yes, whether the plaintiff was obliged by the terms of the Superannuation Guarantee (Administration) Act 1992 (Cth) or otherwise to make those payments. 3. If the answer to 1. is yes, whether those payments were made by the plaintiff by mistake." 6 The schedule to the orders names the seven persons to whom I have already referred. I shall refer to the persons, other than those seven, in respect of whom the plaintiff made superannuation contributions as "the relevant drivers". 7 I now proceed to consider the questions for separate determination. In doing so, I refer to the affidavit of Mr Graham, a director of the plaintiff, deposing to the nature of the plaintiff's business and its practice of using in that business both the services of employees and the services of independent contractors. He explained that the number of employees tends to remain fairly constant while the number of independent contractors fluctuates with demand. Annexed to Mr Graham's affidavit is a copy of the form of agreement under which the plaintiff retains contractors. It contains the following central passage: "I further acknowledge that I work as a casual sub-contractor only, and as such, I understand that it is my prerogative to work when and if I so desire, I also acknowledge that PTS Pty Ltd are under no obligation to supply work to me on a regular basis. It is also my prerogative to accept or reject whatever work is made available." 8 The form of agreement goes on to specify how rates for work, based on the nature of the contractor's vehicle and the nature of the particular delivery. 9 On Mr Graham's evidence as to the basis on which the relevant drivers were retained, the nature of the work done and the circumstances in which it was done, I am satisfied that their position is the same as that of the courier drivers considered by the Court of Appeal in Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537. I am therefore also satisfied that none of the relevant drivers was an "employee" of the plaintiff within the statutory definition applicable for the purposes of the Superannuation Guarantee (Administration) Act 1992 (Cth), including the aspect of the definition in s.12(3): "If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract." For reasons discussed in Vabu , that provision does not catch courier drivers retained in the circumstances applying to the relevant drivers in this case. 10 Because, on Mr Graham's evidence, the relevant drivers were not "employees" for the purposes of the Superannuation Guarantee (Administration) Act, payment of superannuation contributions in respect of them was not something that the plaintiff was, in a practical sense, required to do in order to avoid the imposition of "charge" under the Superannuation Guarantee Charge Act 1992 (Cth). I use the words "in a practical sense" since the superannuation charge legislation does not, in terms, impose an obligation to make superannuation contributions in respect of employees. An employer is free to decline to make such contributions but, if the employer takes that course, the "charge" is exacted by reference to contributions not made. This is a brief description of the statutory system I had occasion to examine in greater detail in DP Excavation & Haulage Pty Ltd v Commissioner of Taxation (2005) 190 FLR 198 at [13] to [20]. 11 The plaintiff was accordingly not obliged by the terms of the Superannuation Guarantee (Administration) Act 1992 or otherwise to make to the first defendant (or any other superannuation provider) the payments in respect of the relevant drivers that it in fact made to the first defendant. 12 Mr Graham's evidence makes it clear that, in making payments into a superannuation fund for the benefit of the relevant drivers, the plaintiff acted in the belief that such action was required of it in the practical sense to which I have referred. Mr Graham refers to a discussion he had had with a trade union representative who visited the plaintiff's premises. In the course of that discussion, the union representative referred to the obligation of an employer to make superannuation contributions in respect of not only employees as such but also independent contractors. That statement might well have been an accurate statement in relation to certain types of independent contractors but, for reasons I have stated, it was not an accurate statement in relation to the particular independent contractors retained by the plaintiff. The plaintiff, through Mr Graham, nevertheless took the statement at face value and, in a desire to do the right thing, began making payments accordingly. I am satisfied that the plaintiff, when it made the payments in question in respect of the relevant drivers, did so under a misapprehension to the effect that it would become liable to pay superannuation guarantee charge if it failed to make the payments. The payments were, in other words, made by mistake. 13 Since the decision of the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, the right of a payer to recover a payment made by mistake has been recognised as available regardless of whether the mistake was a mistake of fact or a mistake of law. Principles of unjust enrichment are the source of the right. In the present case, the payee, being the trustee of a superannuation fund, was not, in any personal sense, "enriched" by the payment. But there was enrichment of the fund of which the payee was the trustee – or, more precisely, the relevant drivers for whose benefit moneys were paid into the fund. Because of the mistake under which the plaintiff was labouring (and even though that mistake was not known to or shared by either the payee or the beneficiaries), the payment will be recoverable unless the money has been on-paid or there has been some other change of position in consequence of the payment: Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662. On the evidence before me, the money remained with the payee for the benefit of the beneficiaries and none of them changed its position in any way after and by reference to the receipt. There is accordingly no injustice to the payee or any such beneficiary if, in this case, an equity of the payer to recover on the basis of mistake is recognised. Restitution should therefore be ordered. 14 For the moment, however, I need deal only with the specific questions for separate determination. They are answered as follows: Question 1: Yes. Question 2: No. Question 3: Yes. ********** 31/01/2006 - Wrong judgment - Paragraph(s) Whole judgment - Paragraphs 1 to 14 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.