Resolution Life Australasia Limited v AMP Limited; Munich Reinsurance Company of Australasia Limited v AMP Limited

1. [1]

   BELL CJ: I agree with the reasons of, and orders proposed by, Gleeson JA.

2. [2]

   GLEESON JA: These applications concern a pleading dispute about claims for statutory relief against the trustee of a superannuation fund under s 55(3) of the Superannuation Industry (Supervision) Act 1993 (Cth) (the SIS Act).

3. [3]

   By way of overview, s 55(3) is contained in Pt 6 of the SIS Act. The stated object of Pt 6 is to set out rules about the content of the governing rules of superannuation entities (s 51). Part 6, relevantly, specifies certain covenants by a trustee of a registrable superannuation entity (s 52(2)), deems those covenants to be included in the governing rules of a registrable superannuation entity, if the governing rules do not contain covenants to that effect (s 52(1)), imposes statutory obligations on trustees to comply with those covenants (s 54B(1)) and the governing rules generally (s 54C(1)), and provides a remedy for a person who suffers loss or damage as a result of the trustee’s failure to comply with those covenants (s 55(3)).

4. [4]

   The applicants, Resolution Life Australasia Limited (RLA) and Munich Reinsurance Company of Australasia Limited (Munich), seek leave to appeal from a judgment of Ball J delivered on 5 August 2024 in the Commercial List of the Equity Division: Munich Reinsurance Company of Australasia Ltd v AMP Limited [2024] NSWSC 950. By that judgment his Honour struck out part of RLA’s amended cross-claim which contained a claim for relief under s 55(3) of the SIS Act against NM Superannuation Pty Ltd (NM Super), the trustee of the AMP Superannuation Fund, and refused Munich’s application for leave to file a further amended statement of claim insofar as it included the equivalent claim for relief against NM Super. His Honour concluded that the pleadings by RLA and Munich assert a conclusion about causation between the alleged conduct of NM Super in contravention of the trustee’s covenants in the SIS Act and the losses claimed by RLA and Munich which is not arguable on the pleaded facts.

5. [5]

   Leave to appeal is required because the orders are interlocutory: Supreme Court Act 1970 (NSW), s 101(2)(e). Argument on the appeals was heard concurrently with argument on the applications for leave to appeal.

6. [6]

   In my view, his Honour erred in striking out (and not permitting) the claims against NM Super under the SIS Act. There should be a grant of leave to appeal in each matter and the appeals should be allowed. My reasons are as follows.

Nature of the case

1. [7]

   In the underlying proceedings, Munich brought claims against AMP Limited, AMP Services Ltd, AMP Services Pty Ltd, AMP Superannuation Pty Ltd (AMP Super) and NM Super (together, the AMP defendants) and RLA arising from a Quota Share Reinsurance Treaty (Treaty) between Munich, as reinsurer, and RLA, as reinsured, entered into on 27 October 2016 and amended in November 2016 and April 2017. The Treaty reinsured certain life insurance benefits under policies issued by RLA that were held by AMP Super and later, NM Super, through a series of overarching contracts known as Master policies. Up until about 15 May 2020, AMP Super was the trustee of the AMP Superannuation Savings Trust. On about 15 May 2020, there was a successor fund transfer of members of the AMP Superannuation Savings Trust and the assets supporting their benefits, by AMP Super to NM Super as trustee of the Super Directions Fund, which is now known as the AMP Superannuation Fund.

2. [8]

   The Treaty required a significant upfront payment by Munich. Commencing on 1 November 2016, Munich paid sums to RLA totalling $551 million for the business reinsured. In November 2017, when the Treaty was amended to increase the level of reinsurance that the business covered from a quota share of 50 per cent to 60 per cent, Munich paid RLA a further upfront commission of $145 million. Munich alleges that the payment of upfront commission reflected its expectation as to the longevity of the relationship, but that did not occur. Rather, between 2018 and June 2022, AMP Limited divested itself of its interest in RLA, which was known as AMP Life Limited until 18 November 2022.

3. [9]

   In August 2022 NM Super commenced a process of tendering the business falling under the Master policies and reinsured by the Treaty, by inviting life insurers to provide proposals for insurance of members of the AMP Superannuation Fund. RLA was unsuccessful in separate proceedings at first instance and on appeal in seeking to restrain NM Super from terminating the Master policies, or from procuring the replacement of RLA as insurer: Resolution Life Australasia Ltd v NM Superannuation Pty Ltd [2023] NSWCA 138.

4. [10]

   In January 2024 NM Super gave notice to RLA of its intention to terminate or cancel (or bring about the cancellation of) the insurance benefits under the Master policies. NM Super also gave notice that TAL Life Limited (TAL) was the successful tenderer and stated in a public announcement that “AMP appoints TAL as new default insurance provider”. RLA has since accepted the alleged repudiation of the Master policies and it is common ground that they have been terminated.

5. [11]

   In its further amended statement of claim, filed with leave, Munich has pleaded common law causes of action in contract against RLA for breaches of the terms of warranties given by it under the Treaty, and in tort against AMP Super and NM Super for intentional interference in contractual relations and causing loss by unlawful means, and statutory causes of action against RLA and five AMP defendants for misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law, s 1041H of the Corporations Act 2001 (Cth), and/or s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth). The impugned conduct included (i) representations made prior to entering into the Treaty as to the nature of the business reinsured, (ii) representations as to long-term alignment of interests between Munich and RLA, (iii) omissions regarding the nature of the business reinsured, and the existence of the Master policies, and (iv) representations as to the long-term nature of the business to be reinsured.

6. [12]

   In its amended cross-claim, RLA has pleaded common law causes of action against NM Super in tort for intentional interference in contractual relations being the performance of the contracts the subject of the Master policies, and in contract for breach of the tripartite contracts between each member, RLA and NM Super, and a statutory cause of action against NM Super under s 55(3) of the SIS Act alleging that certain statutory covenants and contractual covenants in the governing rules of the AMP Superannuation Fund precluded NM Super as trustee of the Fund from taking the course that it did, being to unilaterally cease paying premiums and terminate the life insurance cover for members, without their instructions. It is alleged that this conduct, being in breach of NM Super’s statutory and contractual covenants and in contravention of the SIS Act, ss 54B(1) and 54C(1), caused loss to RLA in the form of the premiums that will no longer be paid to RLA under the cancelled life policies, and that this is recoverable by RLA from NM Super as loss or damage under s 55(3) of the SIS Act.

7. [13]

   Munich applied by motion for leave to file a further amended statement of claim to relevantly include a s 55(3) claim against NM Super. Munich relied on the amendment power, relevantly, in s 64(1)(b) of the Civil Procedure Act 2005 (NSW), which provides that the Court may order that leave be granted to a party to amend any document in the proceedings, at any stage of the proceedings.

8. [14]

   The power of the Court to grant or refuse leave to amend a pleading must be exercised in the way that best promotes the Court’s overarching purpose to facilitate the just, quick and cheap resolution of the real issues in the proceedings, as efficiently as possible, and in accordance with the dictates of justice: Civil Procedure Act, ss 64(2), 58(1)(ii)(a). As summarised at [s.64.10] of Ritchie’s Uniform Civil Procedure 2005 (NSW), the proposed amendment must be proper both as to substance and form, and not liable to be struck out if it appeared in an original pleading: Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2006] NSWSC 1073 at [10]-[11] (Barrett J).

9. [15]

   The AMP defendants applied by motion to summarily dismiss or strike out that part of RLA’s amended cross-claim against NM Super which sought relief under s 55(3) of the SIS Act, and opposed Munich’s application for leave to file a further amended statement of claim insofar as it included a claim for the equivalent statutory relief against NM Super (together the “SIS Act claims”).

10. [16]

    The AMP defendants relied on r 13.4(1)(b) or r 14.28(1)(a) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). Rule 13.4(1)(b) provides that, where no reasonable cause of action is disclosed, the Court may order that the proceedings generally or in relation to any claim in the proceedings be dismissed. The power to strike out a proceeding is an extreme one and will only be exercised in rare circumstances where the Court is satisfied that the plaintiff’s case clearly has no real prospects of success: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-130 (Barwick CJ); [1964] HCA 69.

11. [17]

    Rule 14.28(1)(a) provides that, where a pleading discloses no reasonable cause of action, the Court may order that it be struck out. The power to strike out a pleading or part of a pleading should only be exercised in a “plain and obvious case”: Davis v Commonwealth (1986) 61 ALJR 32 at 35 (Gibbs CJ); [1986] HCA 66.

12. [18]

    It is necessary to refer to the relevant statutory regime, the pleaded s 55(3) claims, and the argument on the motions before turning to the reasons of the primary judge, the question of leave to appeal, and the reasons for the conclusions I have reached.

The statutory regime

1. [19]

   The covenants specified in s 52(2) of the SIS Act to be included in the governing rules of a registrable superannuation entity, relevantly, include:

2. [20]

   The statutory obligations of a trustee to comply with those covenants and the governing rules of a superannuation entity are contained in ss 54B(1) and 54C(1), which provide:

3. [21]

   Section 55(3) provides:

4. [22]

   It is not in issue that the purpose of the trustee’s covenants is to provide protection to the members of a superannuation fund. That is plain from (i) the stated object of Pt 6 of the SIS Act (s 51), (ii) the effect of s 52(1) which ensures that where the governing rules of a superannuation entity do not contain covenants to the effect set out in s 52(2), the governing rules are taken to contain covenants to that effect, and (iii) the effect of s 55(3) which enables members to sue for loss or damage in certain circumstances where a covenant has been breached: see Explanatory Memorandum to the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Bill 2012, par 1.140.

The pleaded claims

1. [23]

   For the purpose of the motions before his Honour and the proposed appeals to this Court, the material facts relied upon by Munich and RLA are to be taken to be established.

2. [24]

   RLA: In summary, the amended cross-claim alleges that:

   1. (1)

      the product disclosure statements (PDS) and insurance fact sheets (IFS) issued to members of what is now known as the AMP Superannuation Fund set out the terms of the cover provided to members and did not provide for NM Super to cancel unilaterally a member’s insurance cover: to the contrary, the PDS and IFS contained covenants by the trustee to the effect that insurance cover would be provided under a policy issued by RLA (the Insurer Covenant), that premiums for that insurance would be deducted from the member’s account (the Premium Payment Covenant), and the insurance would continue until (relevantly) the member cancelled it (the Cover Covenant) (pars 28-31);

   2. (2)

      these contractual covenants are part of the governing rules of the AMP Superannuation Fund (par 32);

   3. (3)

      the relevant conduct of NM Super was, in broad terms, (i) issuing notices to RLA which purported to terminate or otherwise cease coverage under (including by way of the cessation of premium payments) the life policies issued by RLA, with the effect of cancelling insurance cover for members of the Fund en masse, without those members’ instructions, and (ii) appointing TAL to replace RLA as the member’s life insurer, without the relevant members’ instructions (pars 69, 73-75, 77, 79-80);

   4. (4)

      that conduct breached the statutory covenants prescribed by the SIS Act in s 52(2), relevantly, the skill and care covenant, the best financial interests covenant, and the fairness covenants (pars 76, 78, 81), and/or one or more of the contractual covenants otherwise forming part of the governing rules of the AMP Superannuation Fund (par 69), and was in contravention of ss 54B(1) and/or 54C(1) of the SIS Act (pars 70, 81);

   5. (5)

      by reason of the matters alleged in par 70 (being the pleaded conduct of NM Super in contravention of the contractual covenants), RLA has suffered loss defined as the “RLA Loss” (see [24(7)] below) “as a result of” the conduct of NM Super in contravention of s 54C(1) of the SIS Act (par 84);

   6. (6)

      by reason of the matters alleged in pars 76, 78 and 81 (being the pleaded conduct of NM Super in contravention of the statutory covenants), RLA has suffered the RLA Loss “as a result of” the conduct of NM Super in contravention of s 54B(1) of the SIS Act (par 85); and

   7. (7)

      the “RLA Loss” is particularised under par 82 as:

3. [25]

   Munich: The proposed amendment to Munich’s further amended statement of claim against NM Super is in similar terms to RLA’s claim for equivalent relief under the SIS Act. In summary, the proposed amendment alleges that:

   1. (1)

      NM Super as trustee of the AMP Superannuation Fund is subject to contractual and statutory covenants (pars 14.9, 14.10, 14.19);

   2. (2)

      the conduct of NM Super (in broad terms, being the issuing of notices, without members’ instructions, and appointing TAL to replace RLA, without members’ instructions) was in contravention of those covenants (pars 14.11-14.17, 14.19-14.20);

   3. (3)

      such conduct was in contravention of ss 54C(1) and/or 54B(1) of the SIS Act (pars 14.18, 14.21);

   4. (4)

      “as a result” of the conduct of NM Super pleaded in par 14.21, Munich has suffered loss and damage which is particularised under par 14.22 as:

   5. (5)

      by reason of the matters alleged in par 14.18 (being the pleaded conduct of NM Super in contravention of s 54C(1)), Munich has suffered the loss particularised in par 14.22 “as a result” of the conduct of NM Super in contravention of s 54C(1) (par 14.23); and

   6. (6)

      by reason of the matters alleged in par 14.21 (being the pleaded conduct of NM Super in contravention of s 54B(1)), Munich has suffered the loss particularised in par 14.22 “as a result” of the conduct of NM Super in contravention of s 54B(1) of the SIS Act (par 14.24).

The argument below on the motions

1. [26]

   The essential issue debated on the motions was the objection by the AMP defendants that RLA and Munich lacked standing to seek relief under s 55(3) of the SIS Act for two interrelated reasons. These were: (1) the words “a person” in s 55(3) should be read down not to include third parties, such as Munich and RLA, because they did not have the benefit of the trustee’s covenants the subject of ss 54B(1) and 54C(1) of the SIS Act, and (2) causation of loss could not be established because Munich and RLA were not a person who had “the benefit of those covenants”.

2. [27]

   For the purpose of the motions, the AMP defendants accepted that Munich and RLA “will be able to show a factual connection between the alleged loss and the conduct said to contravene the trustee covenants”, but submitted that NM Super’s conduct could not be a legal cause of the alleged losses because:

3. [28]

   In oral argument, senior counsel for the AMP defendants put this causation argument as follows:

4. [29]

   Both Munich and RLA accepted before his Honour that s 55(3) contains a causal requirement:

The primary judge’s reasons

1. [30]

   His Honour rejected both limbs of the submission that Munich and RLA did not fit the standing requirement to seek relief under s 55(3) of the SIS Act. He found that it is at least reasonably arguable that s 55(3) should be construed broadly so that the reference to “a person” is read as a reference to any person, and that is not limited to a person who is entitled to the benefit of the covenants in s 52 of the SIS Act: at [26].

2. [31]

   Nevertheless, his Honour concluded that it was appropriate to strike out (or not permit) the relevant paragraphs pleading the SIS Act claims on the ground in UCPR, r 14.28(1)(b) that the pleading of those claims has a tendency to cause prejudice, embarrassment or delay in the proceedings: at [34].

3. [32]

   His Honour’s reasoning involved two steps: first, a determination of the nature of the causal requirement in s 55(3) of the SIS Act; and second, whether the SIS Act claims contained pleaded facts that could arguably provide the required causal connection.

4. [33]

   Causal requirement: His Honour found that s 55(3) is to be read as a compound provision which required a causal connection between the contravening conduct and the loss or damage, giving the following reasons:

5. [34]

   Munich and RLA challenge these findings.

6. [35]

   Material facts: His Honour found that the pleadings did not contain any pleaded facts that could arguably provide a causal connection between the alleged breaches of covenant and the losses claimed by MRA and RLA, giving the following reasons:

7. [36]

   Munich and RLA challenge these findings.

8. [37]

   In finding that the pleading of the SIS Act claims has a tendency to cause prejudice, embarrassment or delay in the proceedings, his Honour said (at [34]):

9. [38]

   Munich and RLA challenge this finding.

10. [39]

    Although his Honour said that it was not appropriate to give Munich and RLA leave to replead, he indicated that if they wished to do so, they should make an appropriate application: at [35].

Applications for leave to appeal

1. [40]

   The orders by his Honour involve a decision on a matter of practice and procedure which requires appellate restraint: Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 at 177; [1981] HCA 39; PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 at [3]-[6] (Bell P and Simpson AJA). The AMP defendants oppose a grant of leave, primarily on this basis. They argue that as the decision involves the exercise of a discretion, the principle of restraint in House v The King (1936) 55 CLR 499 at 504-505; [1936] HCA 40 should also be applied.

2. [41]

   This Court has frequently stated that it is generally only appropriate to grant leave to appeal concerning matters that involve issues of principle, questions of general public importance, or a reasonably clear injustice going beyond something that is merely arguable: see, for example, Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28].

3. [42]

   Ultimately, the standard of appellate review does not impact upon my conclusion. Although this is a pleading dispute, it is an important one in proceedings involving existing claims for very substantial damages and the questions concerning the exercise of the strike out and amendment powers raise issues which may result in substantial injustice to Munich and RLA in depriving them of the opportunity of a trial at which their s 55(3) claims can be litigated. Contrary to the submission of the AMP defendants, it is no answer to the injustice caused by the decision to point to Munich and RLA not having made a further application for leave to amend their pleadings. That ignores the constraint on any such application given his Honour’s decision. There should be a grant of leave in each matter.

Nature of the appeal

1. [43]

   The parties diverged as to the standard of appellate review. Munich and RLA said that as the decision involves the proper construction of a statute, the “correctness” standard should be applied. Reference was made to The Owners – Strata Plan No 84674 v Pafburn Pty Ltd (2023) 113 NSWLR 105; [2023] NSWCA 301 at [22] (Basten AJA, Ward P and Adamson JA agreeing). As indicated, the AMP defendants said that, as the decision is discretionary, the constrained standard in House v The King applied. That standard requires that it be demonstrated that the decision maker:

2. [44]

   The standard of appellate review directs attention to the nature of the decision the subject of the appeal. In Pafburn, Basten AJA observed that in accordance with the reasoning of the High Court in GLJ v Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32; (2023) 97 ALJR 857, the constrained standard in House v The King only applies where there is a range of answers which can be provided, rather than a binary outcome, as to which the “correctness” standard applies. And, even where there is a binary choice and the binary choice involves an evaluative judgment, the correctness standard applies: GLJ at [16] (Kiefel CJ, Gageler and Jagot JJ).

3. [45]

   Pafburn involved a challenge to a decision dismissing an application to strike out a defence which depended on the relevant statutory provisions in the Design and Building Practitioners Act 2020 (NSW). In finding that the correctness standard applied, Basten AJA had regard to the nature of the decision, being the proper construction of a statute for which there is only one correct answer, explaining (at [23]):

4. [46]

   In the present matters the decision is based, in part, on a statutory point and, in part, on an evaluative judgment of the “tendency” of the pleading to cause prejudice, embarrassment or delay in the proceedings. A statutory point determined on a strike out or amendment application involves a binary choice; it is not a discretionary decision: see, for example, HNOE Limited v Angus & Julia Stone Pty Ltd [2024] NSWCA 271 at [60]-[81]. On the other hand, it is generally accepted that the exercise of powers to strike out or amend pleadings involve discretionary decisions on a matter of practice and procedure, to which the constrained standard in House v The King should be applied: see, for example, Dank v Cronulla-Sutherland District Rugby League Football Club Ltd [2014] NSWCA 288 at [73]-[74]; Clarke v State of New South Wales [2015] NSWCA 27 at [14]-[15].

5. [47]

   In my view, nothing turns on whether House v The King is the correct starting point in the present case. Assuming the primary judge made an error of legal principle on the statutory point, the discretionary decision on the strike out and amendment applications would have miscarried, applying the constrained standard. Assuming no error of legal principle, the discretionary decision may have miscarried for other reasons: see [43] above. It is not necessary to address this point further. Whether the correctness standard or the constrained standard applies to the decision does not impact upon my conclusions.

Issues on appeal

1. [48]

   The challenge by Munich and RLA to the primary judgment focussed on two issues:

   1. (1)

      the nature of the causal requirement in s 55(3) of the SIS Act; and

   2. (2)

      whether on the facts, as pleaded (or proposed) by RLA and Munich, there is an arguable causal connection between the conduct alleged to be in contravention of the SIS Act and the losses claimed by RLA and Munich.

2. [49]

   Insofar as Munich separately challenged the adequacy of the reasons (ground 4), this complaint is misconceived. Plainly, his Honour’s reasons stated the essential grounds on which the decision rested concerning the causal requirement in s 55(3) and his assessment of the sufficiency of the pleading of the causal connection in the SIS Act claims. The challenge based on the asserted inadequacy of the reasons must fail.

3. [50]

   It is convenient next to address the alternative argument advanced by Munich and RLA concerning the pleadings, as in my view it is dispositive on the appeals.

Whether the pleadings contain an arguable causal connection

1. [51]

   Munich and RLA said that, even assuming that s 55(3) requires a causal connection between the contravening conduct and the loss or damage, as his Honour found, the decision to strike out (or not permit) the pleading of the SIS Act claims is erroneous. They contend that the pleading of the SIS Act claims contains sufficient material facts establishing an arguable causal connection between the contravening conduct and the loss or damage: Munich, ground 1, and RLA, grounds 1(a) and 2.

2. [52]

   The underlying proceedings were commenced by Munich by statement of claim filed in the Common Law Division, and subsequently transferred to the Commercial List of the Equity Division on 21 September 2023. Notwithstanding that Practice Note SC Eq – 3 applies to proceedings in the Commercial List, and pars 8, 9 and 12 of the Practice Note specify a nontraditional form of pleading, the Commercial List judge gave a direction on 29 September 2023 that the proceedings are to continue on pleadings.

3. [53]

   The purpose of pleadings is to furnish a statement of the case sufficiently to allow the other party a fair opportunity to meet it, and to define the issues for decision in the litigation and thereby enable the relevant admissibility of evidence to be determined at the trial; thus ensuring procedural fairness in the conduct of the proceeding: Dare v Pulham (1982) 148 CLR 658 at 664; [1982] HCA 70.

4. [54]

   Part 14 of the UCPR relates to pleadings. Without being exhaustive, a pleading must contain a summary statement of the material facts relied upon, must be as brief as the nature of the case allows, and must plead specifically any matter that, if not pleaded specifically, may take the other party by surprise (rr 14.7, 14.8 and 14.14). Under r 14.28(1)(b), the court may order at any stage of the proceedings that the whole or any part of a pleading be struck out where the pleading has a tendency to cause prejudice, embarrassment or delay in the proceedings.

5. [55]

   A pleading may be embarrassing where it is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense: Shelton v NRMA Limited [2004] FCA 1393; (2004) 51 ACSR 278 at [18] (Tamberlin J). But this is not an exhaustive list.

6. [56]

   A pleading may also be embarrassing if the pleading simply pleads a conclusion: Shelton v NRMA at [18], citing Bartlett v Swan Television & Radio Broadcasters Pty Ltd (1995) ATPR 41-434 (Carr J). Thus, a pleading of a conclusion drawn from unstated facts will be struck out. As Weinberg J said in McKellar v Container Terminal Management Services Ltd [1999] FCA 1101; (1999) 165 ALR 409 at [23]:

7. [57]

   Accepting that loss or damage suffered as a result of contravening conduct is an element of the cause of action under s 55(3) of the SIS Act, the material facts establishing the necessary causal link should be pleaded.

8. [58]

   In this case, pars 14.23 and 14.24 of Munich’s proposed further amended statement of claim, and pars 84 and 85 of RLA’s amended cross-claim, each plead a conclusion (see [24], [25] above), however, those paragraphs also plead material facts by incorporation of preceding paragraphs of the SIS Act claim.

9. [59]

   In Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215 at 222; [1987] FCA 122, French J said of the necessary material facts to establish the causal relationship between contravention and loss which is necessary to the cause of action under s 82 of the Trade Practices Act 1974 (Cth), that the pleaded “facts and circumstances should be set out leading to a reasonable inference that the conduct and the damage stood to each other in the relation of cause and effect”.

10. [60]

    And in Kernel Holdings Pty Ltd v Rothmans of Pall Mall (Australia) Pty Ltd (1991) FCA 557 at [7]; (1991) 217 ALR 171 at 173, French J said:

11. [61]

    These statements of French J direct attention to whether the SIS Act claims plead a conclusion drawn from unstated facts or are pleaded at too great a level of generality. That assessment needs to be undertaken in the context of the whole of the material facts pleaded by Munich and RLA. As the AMP defendants acknowledged before his Honour and in this Court, the pleaded material facts include:

12. [62]

    Munich and RLA accept that no conduct on their part forms a link in the chain of causation for their claims for relief under s 55(3). The chain of causation is as follows: first, conduct by NM Super cancelling members’ insurance benefits en masse, without their instructions; second, that conduct simultaneously repudiated a contract to which RLA was a party, and contravened the contractual and/or statutory covenants owed by NM Super to the relevant members; third, by its very nature, the contravening conduct of NM Super caused losses to Munich and RLA.

13. [63]

    Senior counsel for the AMP defendants said that no causative link is pleaded between the contravening conduct involving breaches of the covenants owed to members, and the losses to Munich and RLA:

14. [64]

    This submission is not in point; it is directed to a different issue being the standing requirement for a s 55(3) claim. The same submission was rejected by his Honour and there is no challenge to that finding: see [26]-[28], [30] above. Naturally, if the SIS Act claims are permitted to be pleaded, it remains open to the AMP defendants to argue at a trial that the pleaded facts are insufficient to establish legal causation because the damage alleged is “outside the contemplation of the statute”: Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at [102] (McHugh J).

15. [65]

    In seeking to uphold his Honour’s statement that a bare assertion of causation does not overcome the pleading problem (at [31]), the AMP defendants said that RLA’s pleading did not contain the “type of causative link” that his Honour said needed to be pleaded. Counsel described the “missing” causative link as the “counterfactual”:

16. [66]

    This submission should be rejected. First, his Honour did not say that the counterfactual position is the “type” of causative link that was absent from the pleadings. Second, the hypothetical posed by the AMP defendants misstates the counterfactual for the SIS Act claims. As RLA submits, the counterfactual for the SIS Act claims involves positing a hypothetical scenario identical to what in fact occurred, but in which the contravening conduct did not occur. Thus, in the counterfactual, RLA remains the insurer of the Master policies providing the members’ benefits, and Munich remains the reinsurer of that business under the Treaty, and that is the basis on which RLA and Munich suffered the pleaded losses they claim under s 55(3). Munich made a similar submission in oral argument.

17. [67]

    That Munich and RLA have not pleaded a different hypothetical – what would have happened if the members had provided their consent to NM Super cancelling the Master policies with RLA – is irrelevant and a distraction. That proposition is not part of the pleaded case which Munich and RLA seek to make. Nor is it relevant that the AMP defendants may ultimately seek to affirmatively plead and prove a different proposition in an answer to the causation of loss if the SIS Act claims are permitted to proceed.

18. [68]

    Turning to the form and substance of the pleadings, the relationship of the alleged contravening conduct to the losses, as particularised, is not obscure, or difficult to follow. Nor are the pleaded losses allegedly suffered by Munich and RLA unrelated to the alleged contravening conduct in terms of cause and effect: Bond Corporation at 222. As indicated, the conduct by NM Super cancelling members’ insurance benefits en masse, without their instructions, is alleged to have simultaneously repudiated a contract to which RLA was a party and contravened the contractual and/or statutory covenants owed by NM Super to the relevant members, and by its very nature, the contravening conduct of NM Super caused losses to Munich and RLA.

19. [69]

    There is an apparent rational and logical connection between the contravening conduct and the losses claimed by Munich and RLA. That connection arises from the legal relationships between NM Super and RLA, as the insurer under, and party to, the very contracts which NM Super unilaterally ended by the alleged contravening conduct, and Munich, as the reinsurer of RLA’s obligations to NM Super, under those very contracts. Given those relationships, RLA is not disinterested in, nor a stranger to, NM Super’s conduct which is alleged to be in contravention of the covenants owed to members; nor is Munich. The alleged contravening conduct of NM Super is to the direct prejudice of RLA by depriving it of its benefits under those very contracts, including the receipt of net premium income from NM Super. It also is to the direct prejudice of Munich by depriving it of its benefits under the Treaty, including the reinsurance premium with respect to the business under the Treaty, and the prospect of recovering the upfront commission from RLA over the life of the Treaty, together with expected future profits.

20. [70]

    In my view, the pleadings of Munich and RLA contain a causative connection or link between the alleged contravening conduct and the losses to Munich and RLA which is arguable on the pleaded facts. I respectfully consider that his Honour made an error of legal principle in concluding that the pleadings are embarrassing, or made a material error of fact in finding the absence of any pleaded causal connection between the alleged breaches of covenant and the losses claimed by Munich and RLA.

21. [71]

    Given the above conclusion, RLA’s ground 2 does not strictly arise. However, I will indicate my views.

22. [72]

    RLA contends that his Honour erred in finding that RLA’s losses would have been sustained whether or not the trustee’s conduct contravened the relevant provisions of the SIS Act, when there was no allegation or evidence of that fact. This ground is directed to his Honour’s statement that “those losses would have occurred whether or not the conduct amounted to a breach of those provisions”: at [31]. Munich advanced a similar submission in oral argument.

23. [73]

    The parties diverged as to what his Honour meant by this statement. RLA said that if the “conduct” his Honour is referring to is the cancelling of insurance cover under Master policies issued by RLA to NM Super in respect of members, the factual basis for the statement is unstated and unclear. The AMP defendants respond that RLA’s submission mischaracterised his Honour’s statement. The AMP defendants said that his Honour found that the same loss would have ensued even if the trustee’s conduct were not “characterised as a contravention of those obligations”, and that there was no error in this analysis. I disagree.

24. [74]

    First, it is difficult to conceive that, in making the statement, his Honour had in mind conduct of NM Super other than the cancelling of insurance cover under the Master policies.

25. [75]

    Second, if the statement is to be understood, as the AMP defendants suggest, then it posed the wrong question, and his Honour erred in taking into account an irrelevant matter because if the same loss would have been suffered if the trustee’s conduct was not “characterised as a contravention of those obligations”, the pleaded SIS Act claims could not succeed for that reason. But that is not the basis on which the motions were to be approached: see [23] above. Rather, as the AMP defendants acknowledged for the purpose of the motions, the conduct of NM Super in cancelling the insurance cover for members under policies issued by RLA, without their instructions, is taken to be contravening conduct (see [61(b)] above).

26. [76]

    Third, the characterisation of his Honour’s statement suggested by the AMP defendants also suffers from the difficulty that it is not the counterfactual for the SIS Act claims which Munich and RLA seek to make.

27. [77]

    If it were necessary to decide, ground 2 is made out. The AMP defendants did not argue that if his Honour’s finding contained error, it was not material to his Honour’s exercise of discretion in striking out or not permitting the SIS Act claims.

28. [78]

    Given the above conclusions, the challenge to his Honour’s finding on the construction question does not strictly arise. Nevertheless, as the matter has been argued, I will indicate my views.

29. [79]

    In writing, Munich and RLA said of the causal requirement in s 55(3):

30. [80]

    Munich and RLA contend that his Honour departed from the language of s 55(3) because he discerned an “additional” requirement that the loss or damage be caused by “the contravention itself” (at [27]): Munich, ground 2, and RLA, ground 1(b). These grounds are directed to his Honour’s statement (at [27]):

31. [81]

    It is said that his Honour seems to be intending to draw a distinction between (a) conduct constituting a contravention, and (b) the “contravention itself”, and if there be a distinction, the former is a fact or event, and the latter is a legal conclusion characterising that event. It is also said that if this distinction was intended, it is erroneous because a legal conclusion is incapable of causing loss.

32. [82]

    This submission proceeds on a misreading of his Honour’s reasons. The submission reads the reference to the “contravention itself” (at [27]) in isolation from the way in which his Honour expressed the causal requirement (at [28]). His Honour is not to be taken as suggesting an “additional” requirement in s 55(3). On a fair reading, the reference to the “contravention itself” is a shorthand expression referring to conduct constituting a contravention; here, conduct of NM Super which breaches ss 54B(1) and/or 54C(1) of the SIS Act. That is clear from his Honour’s finding (at [28]) that the causal connection in s 55(3) must be between not simply the conduct and the alleged loss or damage, but rather a connection is required between conduct having the particular quality of breaching ss 54B(1) and/or 54C(1) and the alleged loss or damage.

33. [83]

    The submission also ignores that his Honour’s use of the expression “contravention” to describe conduct which contravenes a statutory norm is not unusual. The expression “contravention” has been often used that way by Courts: see, for example, Bond Corporation at 222 (French J); Marks v GIO Australia Holdings Limited (1998) 196 CLR 494; [1998] HCA 69 at [95] (Gummow J); Henville v Walker at [13] (Gleeson CJ); I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 41 at [57] (Gaudron, Gummow and Hayne JJ). The word “contravention” has also been used that way in legislation providing a remedy for breach of a statutory norm: see, for example, s 1317H of the Corporations Act 2001 (Cth), where reference is made to the requirement that “(b) the damage resulted from the contravention”.

34. [84]

    To the extent that Munich sought to gain assistance from the distinction in other areas between conduct and the characterisation of conduct as being in breach of a statutory norm, the analogy is misplaced. The remarks of Gageler CJ and Jagot J in Productivity Partners Pty Ltd v Australian Competition and Consumer Commission [2024] HCA 27; (2024) 98 ALJR 1021 at [79]-[83], concerning the knowledge element of an accessorial liability claim under the Australian Consumer Law, s 21(1) have no present relevance for the notion of causation in s 55(3) of the SIS Act.

35. [85]

    In oral argument, Munich and RLA (which adopted Munich’s submissions) went further and challenged his Honour’s finding that s 55(3) “must” be read as a compound expression so that the causal requirement is between the contravening conduct and the loss or damage. It is said that his Honour erred in finding that any other interpretation is “untenable”, because it is at least arguable that the text of s 55(3) should be read literally.

36. [86]

    According to the submission, if the two matters identified by his Honour at [27] are proven, namely, (1) Munich and RLA suffered loss as a consequence of NM Super’s conduct, and (2) that same conduct amounted to a breach of one or more of the trustee’s covenants, there is at least an arguable case for causation under s 55(3). Although this literal construction of s 55(3) does not seem to have been raised in argument before his Honour, the AMP defendants did not object to the point being raised on appeal.

37. [87]

    The causal requirement in s 55(3) raises a constructional choice. This directs attention to the text of the statute, whilst at the same time, having regard to its context and purpose: SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 at [14]. Further, where the norm is a statutory one, as in the present case, “notions of ‘cause’ … are to be understood by reference to the statutory subject, scope and purpose”: Allianz Australia Insurance Limited v GSF Australia Pty Limited (2005) 221 CLR 568; [2005] HCA 26 at [99] (Gummow, Hayne and Heydon JJ). Gleeson CJ spoke to similar effect in Travel Compensation Fund v Tambree (2005) 224 CLR 627; [2005] HCA 69 at [30].

38. [88]

    It has been said that a strike-out application which seeks to have the Court determine, at a preliminary stage, and without a full factual context, a complex and novel question of statutory construction, such as whether the losses claimed to have been suffered are within the contemplation of the relevant statutory provisions, faces a substantial hurdle: Impiombato v BHP Group Limited (No 2) [2020] FCA 1720 at [139]-[143], [149] (Moshinsky J), affirmed on appeal: BHP Group Limited v Impiombato (2021) 286 FCR 625 at [97]-[104]; [2021] FCAFC 93. I agree with that statement.

39. [89]

    There is a further consideration in the present case. As Kirby P observed in Wickstead v Browne (1992) 30 NSWLR 1 at 5-6; [1992] NSWCA 272, common experience teaches that it is usually more efficient and just to consider the viability of a cause of action when the facts said to support it are reduced and the suggested action can be judged with the full understanding of all the relevant evidence. And, as noted by Bell P (Macfarlan and White JJA agreeing) in Bakewell v Anchorage Capital Master Offshore Ltd [2019] NSWCA 199; (2019) 372 ALR 349 at [37], the observations of Kirby P were endorsed on appeal to the High Court by Deane, Toohey and Gaudron JJ in Wickstead v Browne (HCA, Deane, Toohey and Gaudron JJ, 30 April 1993, unreported); (1993) 10 Legal Rep SL 2.

40. [90]

    In circumstances where his Honour was dealing with strike-out and amendment applications, I respectfully disagree with his Honour’s view that any other interpretation of the causal requirement in s 55(3) is “untenable”. To the contrary, it should be accepted that the causal requirement in s 55(3) is a debateable and contentious point of law, which is unsuitable for summary determination on a strike-out or amendment application. The following considerations support that conclusion.

41. [91]

    First, there is no authority directly in point and the single authority drawn to this Court’s attention does not assist. The obiter remarks of the Victorian Court of Appeal in Shimshon v MLC Nominees Pty Ltd (2021) 66 VR 277; [2021] VSCA 363 at [59]-[67] were limited to analysing the applicant’s s 55(3) claim in a class action involving group members who were, for the purposes of the claim, either members of the superannuation fund, recipients of payments on account of a deceased such member, and persons who had received a transfer from such a member pursuant to an order made in a family law proceeding. Shimshon did not concern a s 55(3) claim by a person in the position of a participant in the operation of the superannuation system, such as the insurer members’ benefits or the reinsurer of those benefits.

42. [92]

    Second, Munich and RLA put their s 55(3) claims as a person who is neither disinterested in, nor a stranger to NM Super’s conduct in repudiating the Master polices without the members’ instructions, which is said to be a contravention of the covenants owed to members, and who suffered loss as a result of that conduct in their position as the insurer of members’ benefits (RLA) or the reinsurer of those benefits (Munich).

43. [93]

    There is novelty in the notion of cause in s 55(3) for which Munich and RLA primarily contend insofar as it relies on a literal construction of s 55(3). That is because textually there is some force in his Honour’s view that s 55(3) should be read as a compound expression. In addition, the authorities on s 82 of the Trade Practices Act, a provision in similar terms to s 55(3), support his Honour’s view of the causal requirement: see Wardley Australia Limited v Western Australia (1992) 175 CLR 514 at 525; [1992] HCA 25; Marks v GIO at [95] (Gummow J); I & L Securities at [33] (Gleeson CJ), [57] (Gaudron, Gummow and Hayne JJ); however, the analogy with other legislative provisions can only go so far and is not determinative, given that the legislative schemes have different objects: cf SIS Act, ss 3(1) and 51, and the object of the Trade Practices Act, s 2, which is repeated in the Competition and Consumer Act 2010 (Cth), s 2.

44. [94]

    Third, his Honour’s statement (at [32]) that his view of s 55(3) does not depend on any factual findings concerning the relationship between the parties and the members of the fund and their conduct, was made in the context of the construction adopted by his Honour. By contrast, on the literal construction of s 55(3) for which Munich and RLA primarily contend, the scope and purpose of the covenants in the SIS Act and the remedial provision in s 55(3) need to be considered in light of the circumstances. Those circumstances include the relationships between the parties and the fund members, which cannot be assessed in the absence of evidence.

45. [95]

    In RSD Chartered Accountants v Bolitho [2014] VSCA 186; (2014) 102 ACSR 528 at [17]-[18], Nettle JA (Ashley JA agreeing) said of an application for leave to amend a statement of claim, where there was no authority on the point and the construction for which the respondent (plaintiff) contended was at least arguable:

46. [96]

    Those remarks apply here. It is not appropriate to decide whether the boundaries of causation under s 55(3) are limited in the manner determined by his Honour, thus excluding the literal construction of s 55(3) for which Munich and RLA primarily contend, in the absence of evidence of the nature of the relationship between the parties and the members of the fund, and their conduct.

47. [97]

    Fourth, and related to the previous point, whilst it is not beyond the court’s power on a strike-out (or amendment) application to resolve a question of statutory construction (HNOE Limited v Angus & Julia Stone Pty Ltd was such a case), it has been said that where a court determines on such an application that certain claims ought to proceed (or where there is no challenge to certain claims), the court will “hesitate before [striking out another claim] notwithstanding that the legal basis for it may be doubtful or problematic in circumstances where the Court will nevertheless be required to hear and determine substantially the same factual matters in respect of the remaining cause[s] of action”: Imobilari Pty Ltd v Opes Prime Stockbroking Ltd [2008] FCA 1920; (2008) 252 ALR 41 at [19] (Finkelstein J) referring to Johnson Tiles Pty Ltd v Esso Australia Ltd (No 2) (2000) 97 FCR 175; [2000] FCA 12 at [4] (appeal allowed in part, but this statement of principle was unchallenged: see (2000) 104 FCR 564), citing Wickstead v Browne (1992) 30 NSWLR 1 at 5-6 (Kirby P); [1992] NSWCA 272, affirmed by the High Court in Wickstead v Browne (HCA, 30 April 1993, unreported); (1993) 10 Legal Rep SL 2.

48. [98]

    In the present case, RLA’s common law claims against NM Super will proceed, as will Munich’s common law and statutory claims for misleading conduct against NM Super and AMP Super, and some of the issues on RLA’s s 55(3) claim otherwise arise on the existing pleadings. The AMP defendants seek to answer this point by drawing attention to his Honour’s finding (at [25]) that the issues raised by the defence are substantially different from those raised by the cross-claim and the proposed further amended statement of claim. Relevantly, his Honour said (at [25]):

49. [99]

    Although this finding is not challenged, there remain significant issues on RLA’s s 55(3) claim which otherwise arise on the existing pleadings. One is that the alleged breach of the three contractual covenants said to form part of the Fund’s governing rules, on which RLA’s claim for breach of s 54C(1) of the SIS Act is based, forms the basis of RLA’s defence that NM Super could not lawfully unilaterally cease members’ cover under the Master polices (S/C par 3.16B), and its claim in tort that NM Super interfered with contractual relations between RLA and certain members, and its claim in contract that NM Super breached the tripartite contracts between itself, RLA and certain members (cross-claim, pars 62, 68).

50. [100]

    Another is that RLA’s s 55(3) claim based on the proposition that NM Super was wrong to cancel members’ chosen insurance without their instructions, as this repudiation was in contravention of the trustee’s covenants, is also integral to RLA’s separate contractual claim against NM Super that, in acting unilaterally, it repudiated the Master policies under which that insurance was issued (cross-claim, pars 47-61). In addition, the damages which RLA claims under s 55(3) are the same as the damages claimed in respect of several of its other causes of action, specifically, for repudiation of the Master policies, the economic tort and the breach of the trustee’s contractual covenants said to form part of the Fund’s governing rules (cross-claim, pars 82, 83).

51. [101]

    Although the degree of overlap of the factual issues raised by the existing pleaded claims and RLA’s s 55(3) claim is not as extensive as that referred to by Finkelstein J in Opes Prime Stockbroking, the overlap referred to above is a compelling consideration against not striking out RLA’s s 55(3) claim. It was not suggested by the AMP defendants that a different outcome should follow in relation to granting leave to amend to Munich to include its s 55(3) claim, if RLA’s claim was permitted.

52. [102]

    Fifth, to the extent that the AMP defendants seek to uphold his Honour’s construction of s 55(3) as being consistent with the purpose of the provision, this ignored that his Honour’s brief reference to the statutory purpose assumed the correctness of the constructional choice already determined: that s 55(3) is to be read as a compound expression. That was the context in which his Honour went on to say (at [28]) that any other view of the causation requirement is untenable because it would mean that a person would be entitled to claim damages that were “unconnected with the relevant contravention” (emphasis added), and it is plain that that is not what the legislature intended. To be fair to his Honour, the brevity of this analysis reflected the way in which the parties argued the motions focussing on the standing requirement in s 55(3). But his Honour’s reasoning implicitly disregarded whether a literal construction of the causal requirement in s 55(3) is at least arguable.

53. [103]

    In my view, if it were necessary to decide, the constructional choice as to the causal requirement in s 55(3) is not so “plain and obvious” (Davis v Commonwealth at 35) that the power to strike out part of RLA’s amended cross-claim containing its s 55(3) claim or refuse an amendment to Munich’s further amended statement of claim to include a s 55(3) claim, should have been exercised applying the construction of s 55(3) preferred by his Honour.

54. [104]

    Rather than remit the strike-out and amendment applications, this Court should re-exercise the discretion. No different or further arguments were advanced by the AMP defendants on the appeal, other than the complaint that the SIS Act claims do not plead the counterfactual identified by the AMP defendants. As explained above that complaint is mistaken.

55. [105]

    As to RLA’s amended cross-claim against NM Super, the appropriate order is to set aside orders (1) and (2) made on 5 August 2024.

56. [106]

    As to the amendments to Munich’s further amended statement of claim, the appropriate order is to set aside order (3) made on 5 August 2024. Leave should be given to Munich to file a further amended statement of claim in substantially the form of Annexure A to Munich’s notice of motion filed on 5 July 2024.

57. [107]

    Costs: Order (4) made on 5 August 2024 was in the usual form with respect to the costs of an amendment to a pleading. It should remain in place. Order (5) made on 5 August 2024 should be set aside. The costs of the motions before his Honour should follow the event, taking into account the different outcome on the appeals.

58. [108]

    There is no reason why the costs in this Court should not follow the event: UCPR, r 42.1.

Orders

1. [109]

   I propose the following orders in each appeal (2024/318377; 2024/322184):

   1. (1)

      Grant leave to appeal.

   2. (2)

      Direct the appellant to file a notice of appeal within seven days in the form of the draft notice of appeal in the White Book and dispense with service.

   3. (3)

      Appeal allowed.

   4. (4)

      Set aside orders (1), (2), (3) and (5) made by the primary judge on 5 August 2024 and, in lieu, make the following orders:

   5. (5)

      The first to fifth respondents to pay the appellant’s (RLA) costs in this Court (2024/318377).

   6. (6)

      The first, third, fourth, fifth and sixth respondents to pay the appellant’s (Munich) costs in this Court (2024/322184).

2. [110]

   MITCHELMORE JA: I agree with Gleeson JA.