Searle v Commonwealth of Australia (No.12)

1. [1]

   On 18 August 2023, I made orders which referred out, to a Referee, the assessment of the damages suffered by the Group Members.

Reports of Referee

1. [2]

   On 28 March 2025, the Referee provided a First Report containing the results of the reference at that time. Since then, either at the request of the parties, or the Court, the Referee has provided two further Reports: one of 7 April 2025 (with an addendum dated 11 April 2025) and one of 24 October 2025.

2. [3]

   The Reports to date refer to a subset of the Group Members that the parties have called the Electrical Fitters Sample Group. There were originally 17 members of that group identified to have their damages assessed. For various reasons, which do not need to be highlighted, the claims of one of those 17 people has not been able to be assessed.

3. [4]

   The Referee has assessed the claims of the remaining 16 members. Three of those members have, in accordance with the agreed scheme for reference, sought orders for review. That review process has not yet been finalised.

4. [5]

   Although the review process has not been finalised, it is clear that each of those three Group Members will be entitled to a monetary sum representing the value of their claims. Either that monetary sum will be the sum assessed by the Referee or, alternatively, the sum assessed after the review process is finalised.

5. [6]

   In respect of the remaining 13 Group Members, the parties are agreed on the sums for which judgment should be entered for 12 of those Group Members.

6. [7]

   The parties are agreed on most orders to be made. However, two matters remain in issue between the parties and require resolution.

7. [8]

   The first issue arises in the claim of the remaining Group Member, Mr Timothy Handford. The plaintiff submits, to this Court, that it should not adopt the figure fixed by the Referee but should, rather, find that that assessment is beset by error and that a larger figure should be found to be appropriate.

8. [9]

   The second issue which requires determination in the dispute between the parties is about the way in which an order for costs ought be framed.

Claim of Timothy Handford

1. [10]

   It is appropriate to first deal with the claim of Mr Handford. The Referee, in the First Report, dealt with the claim of Mr Handford between [161] and [177]. The Referee assessed Mr Handford's loss as $100,000. As with other assessments in the First Report, that figure has to be adjusted to reflect an entitlement for interest.

2. [11]

   The plaintiff submits that the Referee's assessment is erroneous, because it is readily apparent that the substance of the assessment allows for the proposition that Mr Handford has failed to mitigate his loss. The plaintiff submits that, in accordance with a previous judgment with respect to these sample Group Members, it was not open to the Commonwealth to put, and therefore for the Referee to accept, any argument to the effect that Mr Handford had failed to mitigate his loss.

3. [12]

   As well, the plaintiff submits that the figure assessed does not reflect any possible conclusion with respect to Mr Handford, or the findings which the Referee made. The plaintiff submits that a proper figure for Mr Handford's assessed value would be $180,000, rather than $100,000.

4. [13]

   The plaintiff's argument requires the Court to have regard to the evidence given by Mr Handford to the Referee, including the questions and answers that took place before the Referee, and the Referee's findings.

5. [14]

   The Commonwealth submits that there is no basis for a conclusion that the Referee has adjusted the sum assessed upon the basis of any failure of Mr Handford to mitigate his loss and, therefore, the sum assessed by the Referee is without error, on his part.

6. [15]

   As with all these claims, the value of the lost opportunity to obtain income if each Group Member had received the training and qualification which they were entitled to is an evaluative process. The plaintiff sets out, through expert evidence, a possible range of the incomes which each claimant could have received, had they had the requisite qualification. These various factual constructs are valued, and that value is adjusted to take account of the plaintiff's actual earnings. It is of the nature of these proceedings that, faced with the circumstances as they found them at the time, Group Members may, or may not, have made decisions about the way in which they should trace a future career.

7. [16]

   It follows, it seems to me, that it is a relevant area for exploration in evidence and in submissions to the Referee, as to what the claimants, in fact, did and whether what they, in fact, did as a result of the decision, had an impact upon the actual earnings which they received.

8. [17]

   It follows from that that, when the Referee is making an assessment of the value of the lost economic opportunity, they are entitled to, and must have regard to, submissions about what each claimant had, in fact, done and what the reasons for that were.

9. [18]

   I have read carefully the cross-examination of Mr Handford and the Referee's approach. If a defendant is to rely upon the failure of a claimant to mitigate their loss, the underlying proposition is that that individual, in all of the circumstances, has acted unreasonably. Any such proposition, before it could be accepted by the Referee, would have to be explored in cross-examination and in accordance with the ordinary rules of procedural fairness. Such a proposition would need to be put specifically to the claimant for any response or explanation.

10. [19]

    In the case of Mr Handford, no such cross-examination occurred. Rather, the possibilities of hypothetical scenarios were tested. The expressed reasons of the Referee, with respect to Mr Handford, do not include any reference whatsoever to any failure on the part of Mr Handford to mitigate his loss.

11. [20]

    I am not at all persuaded that there has been any error in the assessment reached by the Referee on the basis that the sum assessed is the product of a conclusion that Mr Handford failed to mitigate his loss.

12. [21]

    The plaintiff also submits that the Court should take the view that the assessment, generally, was in error because such findings, as were made, did not reflect particular unchallenged evidence.

13. [22]

    The plaintiff submits that there is an inconsistency in the way in which the Referee has expressed their conclusion. The first counter-factual in Mr Handford's case was that he would have remained in the Navy for 10 years, at least from his date of enlistment, which would mean he would have left the Navy in 2021, or else, arguably, 10 years from when he would have otherwise qualified, which would be 2025.

14. [23]

    It is unclear, in the sense that there is no specific finding, as to when but for the Commonwealth's breach of contract, Mr Handford would otherwise have left the Navy.

15. [24]

    The counter-factual scenarios were valued, in Mr Handford's case, as ranging between $380,000 and $450,000. Those figures might properly be described in a shorthand way, as being the full value of the loss, but of course an assessment of a lost opportunity involves an evaluation of what the chance of one or other of those opportunities falling in, and approaching the assessment of loss in rather a global way, particularly where there are a range of counterfactual scenarios.

16. [25]

    One complicating issue in Mr Handford's case was that, after he left the Navy, finally, on 19 February 2016, he determined upon a career change so that he took up a career in the health sector. He completed a Bachelor of Health Sciences Degree at the University of Sydney. He was employed at Royal Prince Alfred Hospital and, by the time of the assessment, had embarked upon studying a Diploma of Nursing, with a view to graduating as an enrolled nurse. Prior to enlisting in the Navy, Mr Handford had completed a university degree in agricultural science.

17. [26]

    The Referee was confronted, in their assessment, with an individual of obvious intelligence. After all, at the time of the assessment, he had two university degrees and was embarking upon a nursing diploma course. Those degrees were in disparate areas – agricultural science and the health sector. Mr Handford’s training in the Navy was for a certificate in engineering. Again, an entirely different subject matter to his first degree and his post-discharge degree. This was a complex picture for the Referee to assess, particularly as Mr Handford was an individual who was comfortable with changing careers and areas of the workforce in which he might be interested.

18. [27]

    Whilst the figure of $100,000 is significantly less than the full value of the counterfactuals proffered by the evidence of the expert, Mr Hunter, when one stands back and looks at the range of possibilities with which the Referee was presented by the evidence, in Mr Handford's case, it may be said that the figure assessed by the Referee was surprisingly low.

19. [28]

    I am not prepared to find that there has been any error of a kind with respect to the assessment of Mr Handford which would justify interference by this Court. Put differently, in the range of conflicting arguments with which the Referee was confronted, in the case of Mr Handford, in my view, on the facts as presented to me, it was open to the Referee to come to the decision which he did and, in those circumstances, I do not regard it as appropriate to interfere with that finding.

Costs

1. [29]

   As to costs, the parties are agreed on, largely, how the Court should make the order. The dispute arises in this way. Although the fact is that the Commonwealth, because it is in breach of contract, is ultimately responsible for the costs of the reference as a whole, the orders affect costs assessment of the Group Members' claims within that entire reference, in which there may be some particular features which would mean that the Commonwealth should not have to pay some of the costs. One such feature is to be found in the current Electrical Fitters Sample Group, where three of the members, as I have earlier indicated, have applied for a review of the award, in accordance with the reference scheme which the parties have agreed. They may be successful in their review. They may not be successful in their review. The Commonwealth seeks to preserve the position with respect to costs, with respect to those three group members, until it is known whether the review has been successful or not. Accordingly, the Commonwealth submits that the costs of the application for review, in respect of those three group members, should be reserved. The plaintiff accepts that such exception should be made.

2. [30]

   The real difference between the parties is one which seems, to me, to be one of timing. As at today, the assessments for the next sample group by the Referee have largely taken place. All evidence has been heard, submissions-in-chief by both parties have been provided, and there is perhaps a small remnant of that reference process to be concluded by way of some submissions in reply.

3. [31]

   The Commonwealth points to the fact that, in respect of seven claimants in the second sample group, its submission to the Referee, which is one the Commonwealth describes as properly based on the evidence, is that there should be no value assessed for their lost opportunity. In other words, differently put, that the assessment of the Referee is that the value of their lost opportunity should be zero.

4. [32]

   The Commonwealth submits, in respect of those group members, the costs ought be reserved because if the Commonwealth's submission is accepted, the Commonwealth should not have to pay the costs of and associated with an assessment with respect to those claimants. The plaintiffs point to the complexities of carving-out the costs of the reference relating to the two groups, one from each other, and the difficulties of assessment where some claims are allowed and some claims are not.

5. [33]

   I accept that there are real practical difficulties in the way in which costs can be assessed in representative proceedings where claims are being individually assessed, and a particular claimant may not be able to establish any entitlement. Of course, it may be that, in due course, when the Referee provides a further report, he does not accept the Commonwealth's submissions and that a sum of money is assessed for those claimants.

6. [34]

   The Court is really in a position of having to decide whether it is easier to make a single order now subject to exceptions, or whether an order is made ruling out the costs of the entire second group, awaiting the outcome of the next Referee's report. No one set of orders contended for by either the Commonwealth, or the plaintiffs, is ideal or perfect, and it may be that, ultimately, through sensible negotiation between the solicitors, matters of difficulties of assessment can be overcome.

7. [35]

   In all of the circumstances, however, it seems to me that the appropriate order is a blend between the orders sought by the Commonwealth and the orders sought by the plaintiffs.

8. [36]

   In my view, in broad terms, the orders sought by the plaintiffs should be made with the two exceptions to which I have referred: namely, insofar as there is any application for review by a Group Member, the costs of the applications for review ought be reserved.

9. [37]

   Insofar as there are seven identified Group Members in the second sample group, in respect of whom the Commonwealth contends they have suffered no loss, the costs of the reference relating to those seven people should also be reserved.

10. [38]

    Insofar as Mr Handford is concerned, the plaintiffs have appropriately calculated the sum for judgment in respect of Mr Handford, in respect of either of the options, so that the order which will be made in favour of Mr Handford is in the sum which represents the lesser of the two options.

Orders

1. [39]

   I make the following orders:

   1. (1)

      Pursuant to rule 20.24(1)(a) of the Uniform Civil Procedure Rules 2005 (NSW), the Report of the Honourable G J Bellew SC, Senior Referee, and Mr J B Turnbull SC, Referee, dated 27 March 2025 (Principal Report), the Addendum Report of the Senior Referee dated 11 April 2025 (Addendum Report) and the Further Addendum Report dated 24 October 2025 (Further Addendum Report), be varied as follows:

   2. (2)

      Pursuant to rule 20.24(1)(a) of the Uniform Civil Procedure Rules 2005 (NSW), the Principal Report, the Addendum Report, and the Further Addendum Report, as varied by Order 1, be adopted, save in respect of the group members Aidan Kimber, Corey Milne, and Ryan Somes (whose claims are subject of an application for reconsideration under clause 12 of the terms of reference).

   3. (3)

      Pursuant to rule 20.24(1)(a) or (d) of the Uniform Civil Procedure Rules 2005 (NSW), determine that Question 2 of the Questions for Referral be answered in relation to the group members named in the below Schedule in the manner set out in the Schedule.

   4. (1)

      Pursuant to rule 20.24(1) of the Uniform Civil Procedure Rules 2005 (NSW) and/or s 177 of the Civil Procedure Act 2005 (NSW), give judgment to the following group members in the following amounts:

   5. (1)

      Subject to Order 6, the defendant is to pay the costs of the plaintiff and group members incurred to date in the reference process, and of this motion. Such costs once agreed or assessed are to be paid forthwith.

   6. (2)

      The following costs are reserved:

   7. (1)

      The amount of damages payable by the defendant to Travis Goddard is $79,200.00 plus interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 from 13 October 2015 until the date of judgment.

   8. (2)

      The amount of damages payable by the defendant to Thomas Anderson is $69,300.00 plus interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 from 5 December 2015 until the date of judgment.

   9. (3)

      The amount of damages payable by the defendant to Timothy Handford is $99,000.00 plus interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 from 18 July 2015 until the date of judgment.

   10. (4)

       The amount of damages payable by the defendant to Samuel Ross is $123,760.00 plus interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 from 13 October 2015 until the date of judgment.

   11. (5)

       The amount of damages payable by the defendant to William Doughty is $118,800.00 plus interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 from 30 January 2016 until the date of judgment.

   12. (6)

       The amount of damages payable by the defendant to Luke Edwards is $148,500.00 plus interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 from 12 September 2015 until the date of judgment.

   13. (7)

       The amount of damages payable by the defendant to Steven Green is $94,050.00 plus interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 from 18 July 2015 until the date of judgment.

   14. (8)

       The amount of damages payable by the defendant to Hao Yang Lin is $179,000.00 plus interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 from 20 June 2015 until the date of judgment.

   15. (9)

       The amount of damages payable by the defendant to Nathan Parker is $99,000.00 plus interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 from 31 January 2015 until the date of judgment.

   16. (10)

       The amount of damages payable by the defendant to Clinton Hamblin is $59,400.00 plus interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 from 13 October 2015 until the date of judgment.

   17. (11)

       The amount of damages payable by the defendant to Jayden Meyer is $123,760.00 plus interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 from 29 October 2016 until the date of judgment.

   18. (12)

       The amount of damages payable by the defendant to Armen Woskanian is $44,550.00 plus interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 from 12 June 2016 until the date of judgment;

   19. (13)

       The amount of damages payable by the defendant to Brendan Holmes is $158,400.00 plus interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 from 15 August 2015 until the date of judgment.