//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2026] QCA 50
mixed. Orders 1 and 3 were set aside; the appeal was otherwise dismissed, and the appellant was ordered to pay the respondent’s appeal costs.
A defendant's counterclaim does not lose the benefit of the limitation relation-back rule merely because it was filed late or irregularly under Queensland's procedural rules. If the underlying claim was still within time when the plaintiff started the main proceeding, s 42 LAA can treat the counterclaim as having started on that earlier date. A late counterclaim is a separate claim, not an amendment to the defence, and the court may decide whether to regularise its filing. Later amendments to the counterclaim are a different matter and may have to meet the UCPR's amendment restrictions.
AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.
11 cited instruments linked from this judgment.
2,374 words · generated 08/10/2026
This was an appeal about the interaction between limitation periods and the procedural rules for filing a counterclaim in Queensland. The appellant, Samantha Jane Anderson, had begun proceedings concerning a Helensvale home. The respondent, Sandra Mae Anderson, was the appellant's mother and the defendant in the principal proceeding.
The appellant commenced the proceeding on 16 February 2024, seeking equitable relief to recover the property. The background was that the appellant had apparently provided money towards its purchase in late August 2022, while the home was registered in the names of her late father and the respondent ([5]). The proceeding was not served until 8 May 2024 ([6]).
The respondent filed a defence on 5 June 2024. Among other things, it alleged that the Helensvale home had been given unconditionally to her and her late husband ([7]). She amended the defence on 20 June. On 22 July 2024, she filed a counterclaim with a further amended defence, without first obtaining leave ([8]).
The counterclaim concerned a different property, at Sunbury. The respondent alleged that she and her late husband had contributed money towards its purchase, although it was registered in the appellant's name. She said that the appellant paid her parents money in 2017 for their interest in the land, sold it in 2022, and used the proceeds towards the Helensvale home. The counterclaim alleged that the appellant breached trustee duties in connection with the Sunbury property and sought monetary compensation ([9]-[10]).
The critical limitation fact was that the claims in the counterclaim were not statute-barred when the appellant started her proceeding in February 2024. They would, however, have been out of time if brought as separate proceedings on 22 July 2024. The claims were said to have accrued in March 2018 ([11]).
The respondent later sought retrospective leave or other orders to regularise the filing. The primary judge granted relief on several alternative procedural bases, including s 16(2) of the Civil Proceedings Act 2011 (Qld), and rr 371(2), 367(1) and 7 UCPR ([12]-[16], [22]). The appellant challenged the result, arguing principally that s 42 of the Limitation of Actions Act 1974 (Qld) did not protect an irregularly filed counterclaim, and that the claim was time-barred by the time the court considered whether to allow it ([23]-[26]).
Brown JA, with whom Mullins P and Bradley JA agreed, held that s 42 applied and that the counterclaim could be regularised. The Court identified an error in treating the counterclaim as an amendment, but that error did not undermine the result because different procedural powers were available ([108]-[112]). The Court set aside orders 1 and 3 below, dismissed the appeal otherwise, and ordered the appellant to pay the respondent's appeal costs ([114]).
The Court began with the text of s 42 LAA. It provides that a claim by way of set-off or counterclaim is deemed to be a separate action and to have commenced on the same date as the action in which it is pleaded ([28]). The provision therefore supplies a relation-back date for limitation purposes.
The Court read that text in its statutory and historical context. The provision followed an earlier common law distinction: limitation time stopped running at commencement of the main action for a set-off, but for a counterclaim it continued until the counterclaim was pleaded ([29]-[30]). The legislative change aligned the treatment of counterclaims with set-offs. Its purpose was to avoid a plaintiff strategically commencing proceedings close to the expiry of a defendant's potential cross-claim, thereby depriving the defendant of an effective answer ([33], [69]-[73]).
A key limit was that s 42 does not revive claims already out of time when the principal proceeding began. The relevant counterclaim causes of action must have been within time on that date ([49], [66], [76]). Here, the parties did not dispute that the claims were still in time on 16 February 2024, though they would have been out of time by the date of the July filing ([11]).
The appellant argued that s 42 only applied to a counterclaim properly filed under r 179 UCPR. The Court rejected that proposed condition. It found no such requirement in s 42, and held that the language could apply to a counterclaim regularised by court order. It also considered the UCPR's description of a counterclaim as a separate claim consistent with the statutory treatment of it as an action within the principal proceeding ([60]-[67]).
The relationship between procedural regularity and limitation was important. Filing outside r 179 was an irregularity, not a nullity. The existence of an irregularity did not mean the pleading could never count as a counterclaim or could not be regularised. The Court said that the court could make an order under r 371(2), and that it was open to extend time under r 7 ([64], [89]-[90], [110]-[112]). The court's discretion remained important: s 42 did not entitle a defendant to have a late counterclaim accepted automatically. A court would still consider whether regularisation was appropriate, including any prejudice arising from the delay ([80], [111]).
The Court also distinguished a counterclaim from a true defence. A true defence does not assert an independent claim for relief and is not subject to a limitation period in the same way. A counterclaim, by contrast, is a cross-claim that could be pursued separately ([54]-[59]). That distinction matters because s 42 concerns claims, not every matter pleaded in answer to a plaintiff's case.
Finally, the Court held that the counterclaim was not an amendment to the defence. The UCPR requires a counterclaim to be included in the same document as the defence, but the counterclaim remains a separate pleading and claim ([61]-[62], [108]). Consequently, the amendment restrictions in s 16 CPA and rr 375-376 UCPR did not govern the initial filing of this counterclaim. A later attempt to add a new cause of action to an existing counterclaim would be different and could be subject to r 376(4) ([110]).
Before the relevant statutory change, the common law treated set-offs and counterclaims differently for limitation purposes. The judgment explains that time stopped running for a set-off when the main action commenced, while a counterclaim's limitation clock continued until it was pleaded ([29]-[30]). That distinction could produce an unfair result where a plaintiff delayed commencing proceedings until shortly before the limitation period for a defendant's cross-claim expired.
Section 28 of the UK Limitation Act 1939 altered that approach by deeming set-offs and counterclaims to have commenced on the date of the principal action. Queensland adopted the same basic approach through s 42 LAA ([30], [33]). The Court treated prevention of strategic timing and protection against the loss of a potential cross-claim as the provision's central purpose ([69]-[73]).
The judgment also sets out a separate history relating to amendments. The rule in Weldon v Neal was a practice rule that generally prevented an amendment adding a cause of action that had become time-barred, except in very peculiar circumstances ([39]). Queensland decisions, including Adam v Shiavon and Draney v Barry, considered the extent to which statutory and procedural amendment powers displaced that strict practice rule ([40]-[43]).
But this appeal did not require the Court to settle the continued application of Weldon v Neal in Queensland. Brown JA considered it doubtful that the rule remained applicable in light of s 16 CPA and rr 375-376 UCPR, but expressly left that question undecided ([44]). The reason was that the late filing here was not an amendment. The governing questions were instead the construction of s 42 and the powers to regularise a procedural irregularity ([108]-[112]).
The judgment's distinction is therefore central to its account of the law after the decision. Filing a counterclaim late is not the same as amending an already-filed counterclaim to add a new cause of action. The first is governed by the counterclaim and irregularity rules, alongside s 42. The second may engage the amendment regime, including r 376(4) where the new cause of action is out of time ([110]).
At [63], the Court said: “There is no requirement or statutory pre-condition in s 42 LAA that the counterclaim be filed in accordance with the UCPR.” In plain English, the limitation statute does not say that a defendant must have complied perfectly with the filing rule before the relation-back rule can apply.
At [67], Brown JA explained that the words “shall be” could accommodate either a counterclaim already filed or a prospective counterclaim later regularised by a court order. This means the statutory wording was not confined to a counterclaim that had been validly filed at the outset.
At [73], the Court said the appellant's construction would add a gloss to the purpose of s 42 that was unsupported. The practical point was that s 42 identifies the date used to calculate limitation for a counterclaim. It does not erase the court's separate role in deciding whether an irregular filing should be regularised.
At [80], the Court rejected the idea that this interpretation opened the door to adding counterclaims at any time as of right. Even if the counterclaim is not statute-barred under s 42, the party seeking to rely on it still needs the court to exercise its discretion to regularise the filing.
At [108], the Court said that adding a counterclaim under the UCPR “is a separate action”, not an amendment of a pleading. This explains why the Court disagreed with the primary judge's characterisation, while still upholding the result on other grounds.
At [110], Brown JA summarised the procedural position: a counterclaim filed contrary to r 179 is an irregularity, not a nullity. In plain English, the filing defect does not automatically make the counterclaim legally nonexistent; the court can decide how to deal with it.
The decision is most directly engaged where a defendant has a potential cross-claim that was still within limitation when the plaintiff began the principal proceeding, but becomes time-barred before the defendant files the counterclaim. If the counterclaim is then filed outside the UCPR timetable, the case indicates that s 42 may still provide the relation-back date, provided the claim is genuinely a counterclaim and the court regularises the procedural defect ([63], [66]-[67], [89], [110]-[112]).
The distinction between claims and defences is also important. A pleading that merely defeats or undermines the plaintiff's claim may be a true defence rather than a counterclaim. A demand for independent relief, capable of being brought in a separate action, is more likely to fall within the reasoning about counterclaims and s 42 ([54]-[59]).
The decision does not assist with reviving a claim that was already statute-barred when the plaintiff commenced the principal proceeding ([49], [76]). Nor does it determine the treatment of a later amendment to an existing counterclaim that adds a new, time-barred cause of action. The judgment says that such an amendment may have to satisfy r 376(4) ([110]).
The decision also does not make regularisation automatic. The court's discretion remains, and prejudice caused by non-compliance may be relevant ([80], [111]). In the Anderson appeal, the primary judge had considered the delay, the explanation, the overlap between the claim and defence, the procedural stage, and prejudice; the appellant did not challenge the exercise of that discretion on appeal ([20]-[21], [112]).
The material supplied is the judgment itself, delivered on 24 March 2026. It does not include later decisions applying, distinguishing, or otherwise treating Anderson v Anderson. The later-treatment history therefore cannot be established from this source alone.
The judgment does discuss how earlier courts treated the relevant statutes and procedural doctrines. It relies on R v A2 for the approach to statutory construction ([50]-[53]); on Stockley Furlong v Hyde to distinguish a true defence from a countervailing claim ([55]-[59]); and on Australian decisions including Adam v Shiavon and Draney v Barry in discussing amendments and Weldon v Neal ([40]-[44]). It also considers Ure v Robertson, which had applied s 42 to a counterclaim filed outside r 179, while noting that the issue had received limited analysis in that case ([85]).
Anderson itself presents its conclusion as a construction of s 42 and the Queensland procedural rules. Any account of how subsequent courts have used that reasoning would require later judgments not reproduced in the supplied material.
The principal expressly unresolved question is whether the rule in Weldon v Neal continues to have any application in Queensland. Brown JA said it was doubtful, and identified a strong argument that the Queensland position was likely to resemble New South Wales, but said it was unnecessary to decide the point ([44]). The judgment's holding does not depend on resolving that issue because the late counterclaim was not an amendment.
The decision also leaves the boundaries of the court's discretion under rr 7 and 371(2) to be worked out in future cases. It confirms that procedural prejudice may be relevant, but does not provide an exhaustive list of factors or a general outcome for different types of delay ([80], [89], [111]). The primary judge's discretionary assessment in this case was not challenged, so the Court of Appeal did not review it on its merits ([21], [112]).
Another boundary is the distinction between an irregularly filed counterclaim and an amendment to a counterclaim already on the record. The Court states that an amendment seeking to add a new cause of action must be assessed under s 16 CPA and rr 375-376, including r 376(4) where applicable ([110]). The precise operation of those provisions will depend on the proposed amendment and whether the new cause of action arises from the same or substantially the same facts as a cause of action already claimed.
Finally, the judgment is grounded in Queensland's particular combination of s 42 LAA and the UCPR. It notes that other jurisdictions have differently worded limitation statutes and procedural rules ([31]-[34], [82]-[88], [94]-[107]). Its reasoning should therefore not be treated as automatically determining the position under another jurisdiction's legislation.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on or relying on this analysis, have it checked by a qualified Australian lawyer.
Source: Queensland Judgments (Supreme Court Library Queensland) (www.queenslandjudgments.com.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF QUEENSLAND
CITATION: Anderson v Anderson [2026] QCA 50
PARTIES: SAMANTHA JANE ANDERSON / (appellant) / v / SANDRA MAE ANDERSON / (respondent)
FILE NOS: Appeal No 15392 of 2024 / SC No 1913 of 2024
DIVISION: Court of Appeal
PROCEEDING: General Civil Appeal
ORIGINATING COURT: Supreme Court at Brisbane – Unreported, 16 October 2024 (Hindman J)
DELIVERED ON: 24 March 2026
DELIVERED AT: Brisbane
HEARING DATE: 11 March 2025
JUDGES: Mullins P, Brown JA, Bradley JA
ORDERS: Orders 1 and 3 be set aside. The appeal is otherwise dismissed. The appellant pay the costs of the respondent of the appeal.
CATCHWORDS: STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – GENERAL APPROACHES TO INTERPRETATION – GENERALLY – where the respondent filed her defence, and then 10 weeks later sought to file a counterclaim and further amended defence outside the time permitted by r 179 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) – where the claim the subject of the respondent’s counterclaim was outside the statutory limitation period when filed, but within time at the date the principal proceeding was commenced – where the respondent was granted leave to file her counterclaim under s 16(2) of the Civil Proceedings Act 2011 (Qld) or on alternative bases, her counterclaim was declared to be effectual or time was extended under r 7, r 367(1) or r 371(2) UCPR – where the primary judge found that s 42 of the Limitation of Actions Act 1974 (Qld) (LAA) applied to deem the date the counterclaim was filed, for limitation purposes, as the date the principal proceeding was commenced – whether the primary judge used the accepted approach to statutory construction in construing s 42 LAA – whether s 42 LAA applied to the counterclaim when it had not been filed in accordance with r 179 UCPR / PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – CROSS-CLAIMS: SET-OFF AND COUNTERCLAIM – COUNTERCLAIM – PROCEDURE – where the primary judge considered the respondent’s counterclaim an amendment – where the primary judge did not apply r 376(4) UCPR and allowed the amendment as the counterclaim was not statute-barred due to the operation of s 42 LAA – whether the primary judge erred in allowing the counterclaim as an amendment without reference to r 376(4) UCPR – whether the primary judge erred in not applying the rule set out in Weldon v Neal (1887) 19 QBD 394 to the exercise of power under the UCPR – whether a counterclaim filed outside of the time provided in r 179 UCPR is an irregularity – whether the primary judge erred in declaring the counterclaim effectual under r 371(2) UCPR – whether time could be extended under r 7 UCPR – whether r 376 UCPR applied / Acts Interpretation Act 1954 (Qld), s 14A / Civil Procedure Act 2005 (NSW), s 65 / Civil Proceedings Act 2011 (Qld), s 16(2), s 16(3) / Justice and Other Legislation (Miscellaneous Provisions) Act 2002 (Qld), s 67 / Limitation Act 1935 (WA), s 46 / Limitation Act 1939 (UK), s 28 / Limitation Act 1969 (NSW), s 74 / Limitation Act 1974 (Tas), s 35 / Limitation Act 1980 (UK), s 35(1) / Limitation Act 1981 (NT), s 8 / Limitation Act 1985 (ACT), s 51 / Limitation of Actions Act 1958 (Vic), s 35 / Limitation of Actions Act 1974 (Qld), s 42, s 43A / Rules of the Supreme Court (Qld), O 32 r 1 / Rules of the Supreme Court 1965 (UK), O 15 r 2, O 20 r 5(1) / Rules of the Supreme Court 1971 (WA), O 21 r 5(5) / Supreme Court of Queensland Act 1991 (Qld), s 81 / Supreme Court Rules (ACT), O 32 r 1 / Supreme Court Rules 1970 (NSW), Pt 20 / Supreme Court Rules 1987 (NT), r 10.02(1) / Uniform Civil Procedure Rules 1999 (Qld), r 7, r 177, r 179, r 181, r 367(1), r 371(2), r 375(1), r 376(1), r 376(4) / Adam v Shiavon [1985] 1 Qd R 1, considered / Adeva Home Solutions Pty Ltd v Queensland Motorways Management Pty Ltd (2021) 9 QR 141; [2021] QCA 198, cited / Archie v Archie [1980] Qd R 546, considered / Australand Corporation (Qld) Pty Ltd v Tang [2009] QSC 221, considered / Beer v Australand Corporation (Qld) Pty Ltd [2010] QSC 369, considered / Draney v Barry [2002] 1 Qd R 145; [1999] QCA 491, considered / DRD Australasia Pty Ltd v Mostert [2008] WASC 71, distinguished / Fong Consultants Pty Ltd v ATI Management Pty Ltd (1992) 108 FLR 140; [1992] NTSC 45, distinguished / Hassan Khan & Co v Al-Rawas; Hassan Khan & Co v Al-Shanfari [2017] 1 WLR 2301; [2017] EWCA Civ 42, considered / Henriksens Rederi A/S v THZ Rolimpex “The Brede” [1974] QB 233, considered / Imam v Life (China) Co Ltd [2023] QCA 19, distinguished / JFS (UK) Ltd v Dwr Cymru Cyf [1999] 1 WLR 231, considered / John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503; [2000] HCA 36, distinguished / Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jaques (No 2) [2018] 3 Qd R 28; [2017] QSC 251, considered / Lloyds Bank Plc v Wojcik, unreported, Court of Appeal, UK, CA Transcript No 2122 of 1997, considered / Mao v Bao [2021] NSWSC 1096, considered / Maronis Holdings Ltd v Nippon Credit Australia Ltd [2000] NSWSC 482, distinguished / MAM Mortgages Ltd (in Liq) v Cameron Bros; Piesse Investments P/L v W R Mortgage Services P/L [2002] QCA 330, considered / Maxwell v Murphy (1957) 96 CLR 261; [1957] HCA 7, distinguished / Mayfair Property Holdings Pty Ltd v Southland Packers Pty Ltd (No 2) [2016] QSC 145, considered / McDonnell & East Ltd v McGregor (1936) 56 CLR 50; [1936] HCA 28, considered / McGee v Yeomans [1977] 1 NSWLR 273, considered / O'Neill v Foster (2004) 61 NSWLR 499; [2004] NSWSC 906, considered / Pacific National Pty Ltd v Aurizon Network Pty Ltd [2016] QSC 218, considered / Pingel v Toowoomba Newspapers Pty Ltd [2010] QCA 175, considered / R v A2 (2019) 269 CLR 507; [2019] HCA 35, considered / Reynolds v Aluma-Lite Products Pty Ltd (No 2) [2010] FCA 914, distinguished / Roberts v Gill & Co [2011] 1 AC 240; [2010] UKSC 22, considered / Sanders Bros v Marshall [1996] 2 Qd R 534; [1995] QCA 475, considered / Sistrom v Rangott [2004] ACTCA 14, distinguished / Stimpson v O'Toole (2022) 12 QR 27; [2022] QCA 194, considered / Stockley Furlong (A Firm) v Hyde (2023) 17 QR 116; [2023] QCA 203, considered / Ure v Robertson [2010] QSC 483, considered / Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5, cited / Weldon v Neal (1887) 19 QBD 394; [1887] UKLawRpKQB 161, considered / Westpac Banking Corporation v Commissioner of State Revenue [2005] QCA 327, distinguished / Young v National Australia Bank Ltd (2004) 29 WAR 505; [2004] WASCA 298, considered
COUNSEL: G J Handran KC, with M A Goldsworthy, for the appellant / C J Crawford for the respondent
SOLICITORS: Morgan Mac Lawyers for the appellant / Attwood Marshall for the respondent
MULLINS P: I agree with Brown JA.
BROWN JA: In this matter, the primary judge ordered that the respondent could file a further amended defence and counterclaim. The counterclaim had not been filed with the original defence as required by r 179 of the Uniform Civil Procedure Rules (UCPR). The court identified a number of bases permitting the counterclaim to be filed. The appellant contends that the trial judge erred in allowing the counterclaim in circumstances where it was statute barred by the time it was filed. The respondent contends that the counterclaim was not statute barred and it was open to the primary judge to exercise her discretion to allow the counterclaim.
This appeal raises a question of whether s 42 of the Li**mitation of Actions Act 1974 (LAA), which deems a counterclaim “to have been commenced” on the same date as the action in which the counterclaim is filed, applies to a counterclaim which was not filed in accordance with r 179 UCPR. It is a “prospective counterclaim” insofar as it can only proceed by an order of the Court. A further question arises as to what power the Court exercises in considering whether to allow a counterclaim filed outside the requirements of r 179 UCPR, and in particular whether the introduction of a counterclaim after a defence is filed constitutes an amendment to a document under Chapter 3, Part 10 of the UCPR.
Given the decision the subject of the appeal was interlocutory and procedural, an appellate court would generally not interfere unless the errors said to have occurred could, if not corrected, cause substantial injustice.1 However the appellant contends that the present decision involves substantial errors involving principle and she would suffer substantial injustice given the effect of the decision below is to deprive her of a complete defence that the claims, the subject of the counterclaim, are statute barred.
Background
The appellant filed a claim for the sale of a Helensvale home on 16 February 2024. The appellant apparently provided monies in late August 2022 to purchase the Helensvale property. The house was registered in the name of her now late father and her mother. Her mother is the respondent to this proceeding. The appellant seeks equitable relief against the respondent to recover the property.
The claim was not served until 8 May 2024.
The respondent originally filed her defence to the claim on 5 June 2024, which pleaded, amongst other things, that the Helensvale home was an unconditional gift from the appellant to her parents. The respondent amended her defence on 20 June 2024.
On 22 July 2024, the respondent filed a counterclaim, together with a further amended defence, without leave of the court.
The counterclaim relies on earlier dealings between the appellant and her parents in relation to a property at Sunbury. It is alleged that the appellant and the respondent and her late husband are said to have contributed monies for the purchase of land at Sunbury which was registered in the appellant’s name. The Sunbury property was bought in 2001. In 2017, the appellant paid her parents a sum of money said to be for their interest in the land. In 2022, the appellant apparently sold the Sunbury land for a large sum and bought the Helensvale home.
The respondent alleges in the counterclaim that the appellant breached her duty as a trustee when purchasing her parents’ beneficial interest in the Sunbury land and claims monetary compensation.
At the time the appellant issued her proceedings in February 2024, the causes of action that are subject to the counterclaim were not statute barred. However, it is uncontentious that the causes of action the subject of the counterclaim would have been statute barred if they had been brought as a separate action on 22 July 2024, having accrued in March 2018.
The respondent sought leave to file a further amended defence and counterclaim nunc pro tunc on 13 September 2024. That application was subsequently heard on 16 October 2024, and orders were made in the respondent’s favour.
The proceedings below
In the court below, the respondent raised a number of alternative bases upon which leave to file the counterclaim should be granted or the filing otherwise regularised. The respondent contended, amongst other things, when seeking leave that adding the counterclaim was an amendment to a document but was not an amendment adding a cause of action which was out of time because s 42 LAA deemed the claim to have been made at the date of the proceeding. She contended also that the Court could grant leave to amend the document under s 16 of the Civil Proceedings Act 2011 (CPA), excuse the non-compliance with r 179 UCPR under r 367(1) UCPR, declare the filing of the counterclaim to be effectual under r 371(2) UCPR despite non-compliance with r 179 UCPR or extend time for filing the counterclaim under r 7(1) UCPR.
The appellant denied that the Court had power to grant such leave on any basis, as the causes of action, the subject of the counterclaim, were statute barred.
The primary judge, in reasons given ex tempore, accepted that the filing of the counterclaim was irregular because it had not been filed in accordance with r 179 UCPR. The primary judge considered the various alternative bases upon which the application was made and stated that:2
“It does not matter significantly, to my mind, by what path the regularisation of the irregularity is sought. By all paths, [b]ar rule 376, there exists a general judicial discretion to be exercised, as was summarised in the case of Mayfair Property Holdings Pty Ltd v Southland Packers Pty Ltd (No 2) [2016] QSC 145.”
The primary judge considered that the effect of s 42 LAA was to deem the defendant’s counterclaim to have been commenced on 16 February 2024, the day the proceedings were issued by the appellant, and that the counterclaim was not an amendment which was statute barred (although not served). Her Honour followed the decision of Justice Ann Lyons in Ure v Robertson.3 As the counterclaim was not statute barred, the primary judge found that r 376 UCPR did not apply.
In her Honour’s reasons, the primary judge recognised that the construction she adopted meant that s 42 LAA applied to a counterclaim irregularly filed, with the consequence that a counterclaim could be brought outside of r 179 UCPR at any time after the commencement of the proceeding, provided it was not statute barred at the date the proceeding was commenced and leave was given. The primary judge observed however that that grant of leave was still subject to the exercise of a general judicial discretion, where the interests of justice will ultimately be paramount.
The primary judge considered that the policy reasons behind s 42 LAA were plain: parliament intended that if a plaintiff commenced a claim against a defendant, that defendant should be permitted to raise against the plaintiff any claim that could have been brought against the plaintiff at the date of the commencement of the proceeding. The appellant’s proposed construction, whereby a defendant would only have one opportunity to file a counterclaim and could only take the benefit of s 42 LAA if it complied with r 179 UCPR, a procedural rule, was an unlikely construction in the primary judge’s view.
Her Honour considered that her construction was consistent with decisions in other Australian states and territories, Mao v Bao4 and Fong Consultants Pty Ltd v ATI Management Pty Ltd.5
The primary judge considered that the general judicial discretion, which applied in determining whether the counterclaim should be allowed, arose under any number of different pathways under the UCPR. Her Honour proceeded to outline a number of factors which she considered relevant, including that: the application should not be approached on the basis that simply because of s 42 LAA, the respondent was entitled to raise a counterclaim as an arguable claim subject to costs;the discretion is to be guided by the purpose of the UCPR, namely the just and expeditious resolution of the real issues in dispute at a minimum of expense. In particular, her Honour noted that had the counterclaim been filed with the original defence on 5 June 2024, there would have been compliance with r 179 of the UCPR. The delay of the defendant seeking to bring a counterclaim was about 10 weeks after the original defence was filed. The parties had not otherwise progressed the matter. No reply had yet been filed by the plaintiff;the counterclaim had some crossover with the facts pleaded in the defence;the applicant provided an adequate explanation for not filing the counterclaim with the defence;that while the alleged trustee arrangements dated as far back as 2000, one of the relevant participants was now deceased and the alleged breach occurred in 2018, those were not matters of great significance given s 42 LAA. In any event, her Honour did not consider that those matters deprived either party of a fair trial and no prejudice had otherwise been shown by the respondent’s delay of 10 weeks;there otherwise was no real prejudice to the progression of the proceeding; andthat the proposed counterclaim on its face raised a reasonable cause of action.
Pursuant to section 16(2) of the Civil Proceedings Act 2011 (Qld), the defendant has retrospective leave to file the further amended defence and counterclaim.
Pursuant to rule 371(2)(d) of the Uniform Civil Procedure Rules 1999 (Qld) ('Rules'), it be declared that the further amended defence and counterclaim is effectual despite non-compliance with rule 179 of the Rules.
Pursuant to rule 367(1) of the Rules, the defendant's non-compliance with rule 179 of the Rules is excused.
Pursuant to rule 7(1) of the Rules, the time for filing the Counterclaim is extended.
Principal contentions
In a complex argument, the appellant contends that the primary judge erred principally in three respects. First, the appellant contends the primary judge did not use the accepted approach to statutory construction in regarding s 42 LAA as applying to the counterclaim such that it had the benefit of the relation back day deeming provision when it had not been filed in accordance with r 179 UCPR. Secondly, insofar as the primary judge regarded the counterclaim as an amendment, the primary judge was in error in not applying r 376(4) UCPR when at the time of the court’s determination the cause of action was statute barred. Thirdly, given that the action was statute barred, the primary judge erred in not applying the settled rule of practice as espoused in Weldon v Neal7 to any power under the UCPR to refuse the application to allow a statute barred cause of action. The appellant also complains that the primary judge did not provide adequate reasons as to the pathways of discretionary power available under the UCPR to grant the relief sought.
According to the appellant, the current legislative regime in Queensland operates to prevent a plaintiff from shutting out a defendant from raising an effective answer to the claim and balances the competing interests by:Rule 179 UCPR and s 42 LAA operating to afford a defendant the opportunity to bring a counterclaim so long as the rights of any action included were not time-barred when the claim commenced;ensuring that a prospective defendant to a counterclaim:is not left with “a cause of action hanging over him, like the sword of Damocles, for an indefinite period”; andotherwise retains the substantive rights afforded by the LAA and the protective limitations on future amendments to any validly brought counterclaim offered by r 376(4) UCPR.
The appellant contends that the counterclaim is not an amendment under s 16 CPA or within r 375 and r 376 of the UCPR and that s 42 LAA only operates in relation to a counterclaim which has been filed and properly made. According to the appellant, s 42 LAA does not apply to a ‘prospective counterclaim’ such that if the counterclaim is filed outside of the circumstances provided in r 179 UCPR and is out of time when filed, the counterclaim is statute barred unless it is characterised as an amendment adding a new cause of action to which r 376(4) UCPR applies or the Court is persuaded that peculiar circumstances as recognised in Weldon v Neal apply. If the counterclaim was not an amendment, the appellant submits that absent compliance with r 179 of the UCPR, there was no power for the Court to permit a counterclaim being commenced where the cause of action was out of time.
The respondent contends that s 42 LAA does apply to the counterclaim where the causes of action were within time when the proceedings were issued. To the extent that the adding of the counterclaim was an amendment, the respondent contends that it was an amendment of a document to which r 376(4) UCPR did not apply. Leave was therefore only subject to the court’s exercise of its discretion. The rule in had no application to the present application and her Honour did not err in determining to grant leave.
Section 42 of the Limitations of Actions Act
“For the purposes of this Act, a claim by way of set-off or counterclaim shall be deemed to be a separate action and to have been commenced on the same date as the action in which the set-off or counterclaim is pleaded.”
In O'Neill v Foster,8 Campbell J (as his Honour then was) discussed the history of the New South Wales equivalent to s 42 LAA, s 74 of the Limitation Act 1969 (NSW). His Honour noted that prior to the enactment of the Limitation Act 1969, the application of limitation periods to causes of action relied upon by way of a defence of set-off differed from the application of limitation periods to causes of action relied upon by way of a counterclaim. This distinction had been discussed by Dixon J in McDonnell & East Ltd v McGregor9 in relation to a set-off. At that time, the limitation period for a set-off claim raised in a defence stopped running at the date of the issue of the writ, whereas in the case of a cause of action relied upon as a counterclaim, time did not stop running until the date the counterclaim was pleaded.
The common law position was first changed in the United Kingdom by the introduction of s 28 of the Limitation Act 1939 (UK), which abolished the distinction between counterclaims and set-offs as to when time stopped running. The applicable limitation period for a claim brought by way of counterclaim was aligned to that of a claim brought by way of set-off. As Campbell J stated in O'Neill v Foster:
“… Its operation was explained in M Franks, Limitation of Actions (1959) London, Sweet & Maxwell, at 271–272:
‘The 1939 Act provides (s 28) that for its purposes any claim by way of set-off or counterclaim shall be deemed to be a separate action and to have commenced on the same date as the action in which the set off or counterclaim is pleaded. It is therefore necessary to look at the date of issue of the writ in the action to see whether the claim was made in time. Where the action is not governed by the 1939 Act the pre-1940 rule will still apply, viz, with regard to set-off time ceased to run on the action being commenced (Walker v Clements (1850) 15 QB 1046), but with regard to counterclaim only when it was pleaded (Lowe v Bentley (1928) 44 TLR 388).’”10
“… That provision adopted the English 1939 position concerning limitation periods for cross-claims, with one modification. The New South Wales Law Reform Commission at par 341, explained the modification thus:
‘Section 28 of the Imperial Act of 1939 provides amongst other things that a claim by way of set-off or counterclaim is to be deemed to have commenced on the same day as the action in which the set-off or counterclaim is pleaded. In some cases a defendant may counterclaim against a person who is not a party to the original action: in such a case it is not right that the running of the limitation period should be stopped by the commencement of proceedings to which he is not a party. Section 74 provides that, in that case, the action against the new party is not to be taken to have been brought until he is made a party to the claim.’”11
Similar provisions were introduced in the Northern Territory, Tasmania and Victoria.12 In the Australian Capital Territory and New South Wales, the provision is in terms slightly different. A counterclaim is deemed to have commenced on the date on which the person against whom the set-off or counterclaim is made became a party to the principal action or a party to the counterclaim or set-off, whichever date is earlier.13
It has been recognised by this court in Sanders Bros v Marshall14 by McPherson JA that the Queensland analogue of s 28 is s 42 LAA. The purpose for making the date the proceedings were commenced as the date on which the relevant limitation period for a counterclaim is determined was to avoid the potential injustice caused by the principal party instituting proceedings late or where a claimant, by timing his claim carefully, could deprive the defendant of an effective answer to his or her claim.15
In Beer v Australand Corporation (Qld) Pty Ltd,16 McMurdo J referred to the decision of Campbell J in O'Neill v Foster, observing that s 42 LAA “does not distinguish between defendants to a counterclaim according to whether they were or were not already parties to the proceedings”.17 His Honour further stated:
“Therefore, if Australand was out of time to bring separate proceedings or third party proceedings against Mr Barbuto, nevertheless the counterclaim against him would be deemed to have been commenced when the plaintiffs commenced their proceedings, with the result that it would not be statute-barred. In some other jurisdictions, that potentially unfair result has been avoided by the corresponding provision distinguishing between defendants to a counterclaim according to whether they were already parties to the proceedings, and in the case of new parties brought in by a counterclaim, the limitation period continues to run until the counterclaim”.18
Why is the rule in Weldon v Neal relevant?
“16 Amendment for new cause of action or party
This section applies to an amendment of a claim, anything written on a claim, pleadings, an application or another document in a proceeding.
The court may order an amendment to be made, or grant leave to a party to make an amendment, even though—
the amendment will include or substitute a cause of action or add a new party; or
the cause of action included or substituted arose after the proceeding was started; or
a relevant period of limitation, current when the proceeding was started, has ended.
Despite subsection (2), the rules of court may limit the circumstances in which amendments may be made.
This section—
applies despite the Limitation of Actions Act 1974; and
does not limit section 103H.”
“[18]There has been such a provision in force since 1998 when s 81 of the Supreme Court of Queensland Act 1991 (Qld) was enacted. The mischief or need for such a rule as r 376 stems from two circumstances. First, an amendment to a statement of claim operates in effect retrospectively, so that an amendment made after a proceeding is issued is treated as having been made from the date of issue or filing. Second, because an amendment so made would have the effect of permitting a new cause of action to be brought after the period of limitation has expired, an amendment of that kind could not be made if opposed. This was known as the rule in Weldon v Neal (1887) 19 QBD 394.
[19]Since 1965, but more particularly since 1999 under the form of r 376, there have been made cases dealing with an amendment to add a new cause of action after expiry of the relevant period of limitation.
[20]It should not be forgotten, however, that the rule is facultative and has as its remedial purpose to permit amendment which would have been prohibited under the rule in Weldon v Neal. Nor should it be forgotten that where the conditions precedent to the application of the rule are met the court is granted an unfettered discretion to permit an amendment. That discretion is to be exercised having regard to the philosophy of the UCPR in r 5.”
“375 Power to amend
At any stage of a proceeding, the court may allow or direct a party to amend a claim, anything written on a claim, a pleading, an application or any other document in a proceeding in the way and on the conditions the court considers appropriate.
The court may give leave to make an amendment even if the effect of the amendment would be to include a cause of action arising after the proceeding was started.
…
This rule is subject to rule 376.
376 Amendment after limitation period
This rule applies in relation to an application, in a proceeding, for leave to make an amendment mentioned in this rule if a relevant period of limitation, current at the date the proceeding was started, has ended.
The court may give leave to make an amendment correcting the name of a party, even if the effect of the amendment is to substitute a new party, only if—
the court considers it appropriate; and
the court is satisfied that the mistake sought to be corrected—
was a genuine mistake; and
was not misleading or likely to cause any reasonable doubt as to the identity of the person intending to sue or intended to be sued.
The court may give leave to make an amendment changing the capacity in which a party sues, whether as plaintiff or counterclaiming defendant, only if—
the court considers it appropriate; and
the changed capacity in which the party would then sue is one in which, at the date the proceeding was started by the party, the party might have sued.
The court may give leave to make an amendment to include a new cause of action only if—
the court considers it appropriate; and
the new cause of action arises out of the same facts or substantially the same facts as a cause of action for which relief has already been claimed in the proceeding by the party applying for leave to make the amendment.”
“Before the progenitor to r 376(4) was introduced, the amendment of a statement of claim in this court operated against well-established legal norms. Time ceased to run under any limitation statute from the issue of the writ of summons, because that is when the action was brought within the meaning of the limitation statute. Second, when a statement of claim was amended, the amendment operated from the commencement of the action in which it was delivered. Such an amendment would not be affected by a limitation defence that would have arisen to bar a new action. Third, accordingly, no amendment was allowed to add a new cause of action which would have the effect of defeating a limitation defence that arose after the date of issue of the writ of summons, except for an unclear category of cases involving ‘exceptional circumstances’.” (footnotes omitted)
“ … [S]ince Weldon v Neal, it had been a settled rule of practice that, except in ‘very peculiar circumstances’, an amendment will not be allowed setting up a cause of action which at the time of the amendment is barred by a statute of limitation.” (footnotes omitted)
This Court in Adam v Shiavon followed the New South Wales Court of Appeal decision McGee v Yeomans.24 In McGee v Yeomans, it was held that the New South Wales Supreme Court Rules 1970 as to amendments in proceedings excluded the settled rule of practice in Weldon v Neal and also, by necessary implication, excluded it from those cases falling within the general power to amend. In substitution, the Court had a general discretion to allow an amendment notwithstanding that it raised a barred cause of action, “whenever justice so requires”.25 Campbell CJ in Adam v Shiavon considered that an earlier decision of this Court, Archie v Archie,26 provided a general discretion in relation to amendments. Although O 32 r 1 of the Queensland Rules of the Supreme Court did not mirror the terms of the New South Wales Rules, his Honour considered that because of the differences between the Queensland and English rules, he preferred the New South Wales position to that of the UK and held it was permissible to make amendments which go beyond the general rule as stated in Weldon v Neal.27 In England, there was uncertainty as to whether Weldon v Neal continued to apply outside of the civil procedure rules as to amendments.28 Chief Justice Campbell29 determined therefore that O 32 r 1 of the Rules of the Supreme Court, a predecessor to r 376 UCPR, displaced the settled rule of practice laid down in Weldon v Neal.30
In Draney v Barry,31 the majority of the Court found that even if an application for an amendment did not fall within r 376(4)(b) UCPR, the Court had a general discretion to add a cause of action out of time under what was then s 81 of the Supreme Court of Queensland Act 1991. Justice Pincus, with whom McMurdo P agreed, found that the intention of O 32 r 1 was plainly to not preserve the strict rule in that amendments adding a cause of action out of time should only be allowed in “very peculiar circumstances”. His Honour considered in that case, r 376(1) and r 376(4) UCPR had no significant difference to O 32 r 1 of the , but observed a general power of amendment was given by r 375 UCPR. His Honour also considered s 81 of the was an independent source of power to allow an amendment to add a cause of action that is out of time.
“Despite subsection (2) the rules of court may limit the circumstances in which amendments may be made.”34
Section 81 was replaced by s 16 CPA. While s 16(2) CPA incorporates a general discretion to amend, s 16(3) CPA provides that the rules of Court may limit the circumstances in which amendments can be made. In Stimpson v O'Toole,35 this Court held that if r 376(4) UCPR applied, the general discretion in s 16(2) CPA could not apply. However, if r 376 UCPR did not apply, the introduction of s 16(3) CPA did not alter the general discretion conferred by s 16 to allow an amendment of a claim and statement of claim despite the LAA.36
While the appellant seeks to contend that the rule in Weldon v Neal would still have application to a counterclaim not filed in accordance with r 179 UCPR, given the above decisions of this Court, I think it is doubtful that that the rule in Weldon v Neal continues to have any application in light of s 16 CPA and r 375 and r 376 UCPR, notwithstanding the amendments made after Draney v Barry. In New South Wales, it has been held that s 65 of the Civil Procedure Act 2005 (NSW) and the rules of court which preceded it overturned the settled rule of practice derived from Weldon v Neal and that it no longer has application to amendments to proceedings.37 That has been the case since McGee v Yeomans, which was followed by this Court in Adam v Shiavon in respect of O 32 r 1 of the Rules of the Supreme Court in Queensland. While the New South Wales rules are in slightly different terms, I consider that there is a strong argument that it is likely to be the same position in Queensland. However, given my findings below it is not a matter which needs to be decided finally in this case.
An error of construction?
If s 42 LAA does apply to the counterclaim to deem it to have been commenced on the day the principal proceedings were commenced by the appellant, the contentions of the appellant as to whether the counterclaim is an amendment and whether there is any power to amend to add the causes of action contained in the counterclaim fall away. It is therefore appropriate to consider the construction of s 42 LAA first.
According to the appellant, “[b]y its plain and ordinary meaning” s 42 LAA operates in relation to a counterclaim which has been filed and was properly made, given its use of the past tense: “shall be deemed to be a separate action and to have been commenced.” The deeming effect therefore only operates when a counterclaim has been filed according to r 179 UCPR. The appellant contends that after that time, leave cannot be given to allow the counterclaim to abrogate the appellant’s substantive defence that the counterclaim was statute barred.
The appellant contends that the primary judge erred insofar as her Honour determined the scope of s 42 LAA by reference to what her Honour identified as the underlying policy of the section and did not first undertake any statutory interpretation by reference to the text or its context in accordance with the rules of construction, before seeking to identify any underlying policy.38
It is further contended by the appellant that “[s]ection 42 acts to prevent a plaintiff from holding back filing a claim until the last day of any prospective counterclaim, thus depriving the defendant of the opportunity of raising an effective answer to the claim”. Understood in those terms, s 42 LAA did not warrant any further gloss as was found by the primary judge. The appellant contends that “that mischief is addressed by affording the defendant, procedurally, an opportunity to bring a counterclaim that, once brought, benefits from the relation back operation of s 42 of the LAA” and “[had] Parliament intended that s 42 cease, for all purposes, time continuing to run under limitation periods, s 42 would have been cast in very different terms”.
There is an important omission in the appellant’s analysis. Section 42 LAA does not operate in an open ended way. The claims that are the subject of the counterclaim have to be within time at the date of the commencement of the proceeding, albeit they may be out of time on the date when the counterclaim is made.
What is described as the “modern approach to statutory construction” is now well established. In R v A2,39 Kiefel CJ and Keane J summarised the approach as follows:40
“The method to be applied in construing a statute to ascertain the intended meaning of the words used is well settled. It commences with a consideration of the words of the provision itself, but it does not end there. A literal approach to construction, which requires the courts to obey the ordinary meaning or usage of the words of a provision, even if the result is improbable, has long been eschewed by this Court. It is now accepted that even words having an apparently clear ordinary or grammatical meaning may be ascribed a different legal meaning after the process of construction is complete. This is because consideration of the context for the provision may point to factors that tend against the ordinary usage of the words of the provision.
Consideration of the context for the provision is undertaken at the first stage of the process of construction. Context is to be understood in its widest sense. It includes surrounding statutory provisions, what may be drawn from other aspects of the statute and the statute as a whole. It extends to the mischief which it may be seen that the statute is intended to remedy. ‘Mischief’ is an old expression. It may be understood to refer to a state of affairs which to date the law has not addressed. It is in that sense a defect in the law which is now sought to be remedied. The mischief may point most clearly to what it is that the statute seeks to achieve.” (footnotes omitted)
In Queensland, s 14A of the Acts Interpretation Act 1954 (Qld) provides that the interpretation that will best achieve the purpose of the Act is to be preferred to any other interpretation.
While the primary judge did not raise that she had approached the construction of s 42 LAA having regard to the text and context of the provision before examining the relevant policy considerations, her Honour’s reasons were delivered ex tempore and one must be careful not to read the reasons too narrowly.41 Although the primary judge did not give any reasons breaking down her construction of the words in s 42 LAA, it is evident that her Honour did not simply proceed to the underlying policy of s 42. That may be inferred from the primary judge stating that:42
“Section 42 does not work to resurrect any claim that the defendant had that had expired prior to the proceeding commencing. It is not concerned with causes of action that remain current at the time the claim by the defendant is brought. Those types of claim, of course, could be brought as a separate claim without any limitation issues, or as a counterclaim. … If the court gives leave for the counterclaim to be filed, or the irregularity that exists regularised, … the relevant period of limitation for the counterclaim has not ended, so rule 376 does not apply in this case.”
While the primary judge did not set out the steps taken in determining her Honour’s preferred construction, she clearly has had regard to the text. That view is also supported by her Honour’s reliance on the decision of Ure v Robertson.43 As was identified in A2, reference to the wider context of a provision – which includes the mischief which it is addressing – is done at the first stage of statutory interpretation. While the words of the provision are obviously of primary importance, construing them by reference to the context in which they are made accords with principle.
As to the correct construction of s 42 LAA, it is evident that a counterclaim is not only deemed to be a separate claim within the proceeding but is in fact a separate proceeding. A “claim by way of set-off or counterclaim” does not extend to true defences. That accords with the fact that in the case of a true defence, limitation issues do not arise. Section 42 LAA applies to set-offs or counterclaims which are in the nature of a countervailing claim, not a true defence, and could therefore be filed as a separate claim. The claims the subject of a counterclaim or set-off are subject to a limitation period to the extent they contain claims or causes of action to which the LAA applies.
The nature of claims by way of counterclaim or set-off was authoritatively considered by this Court in Stockley Furlong (A Firm) v Hyde.44 In that case, the primary judge had granted the respondent leave pursuant to r 376(4) UCPR to amend their counterclaim. The proposed amendment sought to add a claim for an account. A defence and counterclaim had been previously filed in accordance with r 179 UCPR. On appeal, the appellant contended that the amendment was properly characterised as an independent cross claim and therefore subject to the statutory time-bar.
The appeal was dismissed on the basis that properly analysed, the account sought by the respondent was in substance a true defence to the appellant’s claim. Justice Flanagan, who delivered the lead judgment, observed an action for an account did not constitute a cause of action but rather directly undermined the plaintiff’s claim. The action for an account was in the nature of a “pure defence” and therefore was not subject to any statutory period of limitation.45 His Honour considered a set-off “properly so-called is a plea in bar to a claim and constitutes an answer to it”.46 A crossclaim, in contrast, was considered by his Honour to be:
“A ‘counterclaim’ is no answer to the claim but an independent claim which may be relied on as a cross-demand. Importantly, what is contemplated by s 42 is something which is or can be expressed as a ‘claim’, not something which has a mere status as a defence.”
(emphasis added and footnotes omitted)
“In point of principle, when applying the law of limitation, a distinction must be drawn between a matter which is in the nature of a defence and one which is in the nature of a cross-claim. When a defendant is sued, he can raise any matter which is properly in the nature of a defence, without fear of being met by a period of limitation. No defence, properly so called, is subject to a time-bar. But the defendant cannot raise a matter which is properly the subject of a cross-claim, except within the period of limitation allowed for such a claim. A cross-claim may be made in a separate action, or it may be made by way of set off or counterclaim. But on principle it is always subject to a time-bar. The period allowable to the defendant depends on the steps which he takes to enforce his cross-claim. If he brings it by a separate action or arbitration, he must start his proceedings within the prescribed time or else he will be barred. If he raises it as a ‘claim’ by way of set off or counterclaim the law is governed by section 28 of the Limitation Act 1939….” (emphasis in original)
Adopting the distinction in The Brede made by Lord Denning, the reference to set-off and counterclaim was construed in Stockley Furlong so as not to extend to a true defence. In Stockley Furlong, Flanagan JA found that no question of set-off or counterclaim “in the sense contemplated by s 42” arose, as a “running account” was separate from both a set off and a counterclaim.49 In that regard, his Honour referred to Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2015) at [39-010] where the authors stated that “Set-offs and counterclaims have to do with countervailing claims. No question of a countervailing claim can arise in the case of a running account.” Having regard to the nature of the claim pleaded, it made no difference that the action for account was pleaded by way of counterclaim.
The reference to “claim by way of set-off or counterclaim” in s 42 LAA should be construed to refer to a claim consisting of one or more causes of action which themselves can be characterised as a countervailing claim or cross-claim. A counterclaim in s 42 LAA is best characterised as a separate claim, which could be instituted as separate proceedings. The deeming of the counterclaim as a separate action50 is in the context of the provision confirming the fact that a counterclaim is a separate “action” within the principal action in which it is pleaded.
The provisions in the UCPR relating to counterclaims are consistent with the characterisation of a counterclaim as being a separate proceeding within a primary proceeding. Rule 177 UCPR provides that the defendant may make a counterclaim against a plaintiff instead of bringing a separate proceeding. Rule 181 UCPR provides that the rules apply to the conduct of a counterclaim with necessary changes as if the plaintiff on the counterclaim were the plaintiff in an original proceeding.
Similarly, r 179 UCPR does not provide that a counterclaim is part of a defence, but provides that:
“A counterclaim must be in the approved form and must be included in the same document and served within the same time as the defence.” (emphasis added)
The relevant form for the defence and counterclaim is Form 18. If only a defence is to be filed, the Form 17 is used. The counterclaim in Form 18 is an additional separate pleading to the defence, although it may rely on allegations made in the defence.
The requirements of the UCPR should not be conflated with s 42 LAA. There is no basis in principle for the contention that the UCPR is relevant to the statutory interpretation of s 42 LAA. If a claim is properly characterised as a counterclaim, section 42 LAA will apply in terms of determining when time stops running in relation to the causes of action the subject of the counterclaim. The appellant’s argument tends to conflate the procedural rules governing a counterclaim with the interpretation of s 42 LAA, insofar as she contends that if a counterclaim is not filed in accordance with r 179 UCPR, s 42 LAA cannot apply. There is no requirement or statutory pre-condition in s 42 LAA that the counterclaim be filed in accordance with the UCPR.
This conclusion is supported by the fact that a counterclaim filed outside of the requirements of r 179 UCPR is not a nullity, such that it could not be said to be a counterclaim. It is an irregularity which may be regularised under the rules.51
The respondent’s contention that s 42 LAA does not only apply to a counterclaim as filed is supported by its use of the broad term “claim”. This suggests that s 42 LAA applies to a pre-existing claim (which can be pleaded as a counterclaim or set off) and is not limited to an “action”.
In contrast, the reference to “claim by way of set-off and counterclaim” in s 42 LAA does broaden its operation to some extent. “Claim” is a broad term.52 In the context of the section, which deems a counterclaim to be a separate action, the focus of the provision is best construed as referring to the grounds upon which relief is claimed or the causes of action which constitute the claim. The fact it refers to a “claim by way of set-off or counterclaim” corresponds with the fact that it is concerned with a claim which could be pursued by separate proceedings. It follows that if a claim is brought as a counterclaim and not as a separate proceeding it has the benefit of the relation back day only insofar as it was within time as at the date of the commencement of the proceedings. That process correlates with the underlying policy for the introduction of s 42 LAA insofar as it mirrored s 28 of the Limitation Act 1939 (UK). This construction supports the view that the operation of the provision is not tied to the counterclaim being made in accordance with the rules.
The use of the phrase “shall be” is capable of supporting either a counterclaim that is filed or a prospective counterclaim regularised by court order. It is self-evident that a counterclaim will not be filed on the same day as the proceeding in which it is pleaded. The reference to “have been commenced” encompasses the notion of the relation back day, rather than carrying a requirement that the counterclaim has been filed in accordance with the rules in order for the provision to apply.
“The purpose of making ‘the issue of P’s writ the terminus ad quem for D’s counterclaim’ is to prevent the injustice which may be caused where a claimant, by timing his claim carefully, can deprive the defendant of an effective answer to his claim: see the Law Reform Committee’s Final Report on Limitation of Actions (Cmnd 6923), para 5.7.”
“It seems to me that the considerations at play are somewhat different from those which apply to relation back by way of amending an existing pleading. Section 74 deals with claims back against the plaintiff. Limitation may be seen as a means of preserving the peace by preventing stale claims. It is one thing to prevent a plaintiff from introducing a stale claim by amending the statement of claim to include a claim which has hitherto not been pursued, and has become statute barred in the meantime. But arguably, a counter-claim is belatedly made back against the plaintiff should not cause the same concern. After all the plaintiff has chosen to launch the proceedings in the first place. Although this is not stated in the report of the Law Revision Committee it seems that the rationale behind s 28 of the 1939 Act was (and thus the rationale behind s 74 is) that in such a situation there is no injustice to the plaintiff in allowing the defendant to bring any cross-claim back against the plaintiff that was in existence at the time the plaintiff began his action.”
There is no impermissible gloss in the primary judge’s formulation of the underlying purpose of s 42 LAA, which consistently identifies the mischief as that which has been identified in the authorities in relation to s 28 of the Limitation Act 1939.
In my view, the primary judge was not in error in determining that s 42 LAA applied to the counterclaim, notwithstanding that it was filed irregularly. The appellant’s contention that this construction took away its right of a substantive defence to defeat the claim because it was statute barred is a distortion of s 42 LAA and in fact seeks to add a gloss to the underlying purpose of s 42 LAA which is unsupported. Section 42 LAA seeks to provide for the time at which the claim in the counterclaim is made in order to determine whether or not it is within time. In doing so, it aims to prevent a party, such as the appellant, strategically timing the filing of proceedings so a claim by way of counterclaim would be statute barred if the time it commenced was the date it was made. The decision of the primary judge did not take away a right of a defence of the party against whom the counterclaim was pleaded, insofar as s 42 LAA established the reference point for calculating whether the claim the subject of the counterclaim was within time, notwithstanding that reference point was different than if the counterclaim was pursued as a separate proceeding. The construction adopted by the primary judge best achieves the underlying purpose of s 42 LAA.
In this regard, the appellant appears to reformulate the underlying policy of Weldon v Neal, which was a rule of practice that applied to amendments, and seeks to attach significance to s 43A LAA, which was added into the LAA well after s 42.
The operation of s 43A LAA was summarised by Logan J in Reynolds v Aluma-Lite Products Pty Ltd (No 2),55 namely that “s 43A of the Limitation of Actions Act has no wider role to play than answering a characterisation question that arises in respect of a limitation period for choice of law purposes.”56 It does not add to the present argument nor do the authorities of Maxwell v Murphy57 or John Pfeiffer Pty Ltd v Rogerson.58 It is uncontroversial that a statute would generally have primacy over procedural rules, but in the present case there is no conflict between the procedural rules and s 42 LAA so as to require a different construction to be adopted of the rules in the UCPR.
The authorities relied upon by the appellant
The construction proposed by the appellant is not supported by authority.
The appellant contended that her construction was supported by the Western Australian case of DRD Australasia Pty Ltd v Mostert.59 In that case, Le Miere J refused leave to add a set off and counterclaim. His Honour found that a similar provision to r 376(4) UCPR did not permit the defendant to add a proposed set-off and counterclaim because it did not arise out of the same facts or substantially the same facts as already claimed by the party seeking leave. There is no relevant analysis in relation to any provision under the Limitation Act 1935 (WA) in similar terms to s 42 LAA or its inter-relationship with O 21 r 5(5) of the Rules of the Supreme Court 1971 (WA) considered in his Honour’s decision. More significantly, s 46 of the Limitation Act 1935 (WA) was in different terms to s 42 LAA and did not contain a relation back date.60 At the time the counterclaim was sought to be made, the claims to which it was subject were out of time. This authority is of no real assistance to the determination of the present question.
Further, the decision of Sistrom v Rangott61 was considering a different circumstance to the present. In that case, leave was sought to amend counterclaims by adding causes of action out of time, thus O 32 r 1 of the Supreme Court Rules (ACT), which was a similar provision to r 376 UCPR in respect of amendments sought to be made out of time, applied.62 The primary judge however had relied on a general discretion which was not enlivened unless leave was sought under sub-rules contained within O 32 r 1. On appeal, the Court found the primary judge had failed to consider whether leave could be given to add a cause of action to the counterclaim out of time. As those amendments were not part of the counterclaim until leave was given, s 51 of the Limitation Act 1985 (ACT), the provision for relation back, did not apply:
“Section 51 thus provides for the relation back of claims made by way of counterclaim, but it can have no operation in respect of any new causes of action until leave is given to add them to a counterclaim.”63
That conclusion is likely to be similar in Queensland if it was sought to add causes of action to an existing counterclaim which were statute barred unless permitted under r 376 UCPR. That is not the case here. This case again does not assist the appellant.
The decision of Ure v Robertson,64 which was relied upon by the primary judge, did apply s 42 LAA to a counterclaim which was sought to be made outside the time provided in r 179 UCPR and was out of time when the application for leave was heard. Ure does lend some support to the construction of the primary judge but is of limited assistance. Justice Ann Lyons observed that when the counterclaim was filed it was a separate proceeding and r 376 UCPR, which applied to amendments to existing pleadings, had no application. There was little analysis of that particular issue. However, in Ure, given the counterclaim did not comply with r 179 UCPR, it was an irregularity and in my view r 371 UCPR did apply. That argument did not appear to be raised before her Honour for consideration. The irregularity that was raised under r 371 UCPR was said to arise out of the failure to get leave under r 376(4) UCPR,65 which Ann Lyons J did not accept given her Honour considered r 376(4) UCPR did not apply.
The decisions Mao v Bao,66 Fong Consultants Pty Ltd v ATI Management Pty Ltd67 and Maronis Holdings Ltd v Nippon Credit Australia Ltd68 are also of limited assistance. In Mao, the court determined that it should allow amendments to be made to a cross-claim to add an action for account. Having determined to allow that amendment, the primary judge determined that s 74 of the Limitation Act 1969 (NSW) would apply to those claims. While the appeal decision of Parker J sets out a useful summary of the history of the provisions as to amendment and s 74, his Honour was not dealing with the same situation as the present (although his comment in obiter gives some support to the primary judge’s construction). However, Parker J’s comparison between amendment provisions in the rules as opposed to the operation of s 74 of the Limitation Act 1969 (NSW) is applicable to the present insofar as his Honour highlights that they are distinct.
“The advantage of a counterclaim for three of these respondents was from s 42 of the Limitation of Action [sic] Act 1974 (Qld), which provides that a claim by way of set-off or counterclaim shall be deemed to be a separate action and to have been commenced on the same date as the action in which the set-off or counterclaim is pleaded.”
Adding a counterclaim is not an amendment
The appellant contended that the primary judge was in error in not giving weight to English authority and “… targeted legislative reform which the UK Parliament undertook to overcome the mischief which, notwithstanding the statutory presence of the origin to s 42 left a defendant in Sandra’s position unable to bring a counterclaim”.77 As set out above, s 42 LAA mirrors s 28 of the Limitation Act 1939 (UK) which is now repealed and replaced by s 35 of the Limitation Act 1980 (UK).
Counsel for the appellant strongly contended that the position under s 28 of the Limitation Act 1939 and English authorities in relation to it support the construction that a counterclaim not filed within the terms of the rules which is out of time when an application is heard for leave is to be treated as adding a cause of action which is statute barred.
While s 28 of the Limitation Act 1939 did mirror s 42 LAA, caution needs to be exercised before applying English authority, although it is relevant to have regard to those decisions.78 In particular, under the English Rules of the Supreme Court 1965 (RSC), a counterclaim was made by adding it to a defence, albeit it was regarded as a separate claim (see RSC O 15 r 2). The appellant seeks to particularly rely on statements in recent English authorities about O 20 r 5(1) RSC when s 28 of the Limitation Act 1939 was the operative problem.
There was no error in the primary judge not following English authority, notwithstanding the similarity between the English provisions and the Queensland provisions. In particular, the English case of JFS (UK) Ltd v Dwr Cymru Cyf79 referred to a settled practice that adding a counterclaim after the filing of the original defence was treated as an amendment and therefore subject to the rule in Weldon v Neal.80 That differs from the position in Queensland. Secondly, the notion that the legislative reform in the United Kingdom was directed at the specific mischief identified by the appellant is unsupported. The legislative reform in the UK was far more wider ranging and there is no specific identification of the mischief said to arise in this case as being the purpose of the legislative changes.
Section 28 of the Limitation Act 1939 was replaced by s 35 of the (UK). The latter has been criticised for its lack of clarity by the UK Supreme Court in and the Court of Appeal in . At paragraph 23 of Sharp LJ stated as follows:
“Section 35 applies the Limitation Act to new claims made in the course of an action, including claims by way of set-off or counterclaim, and claims involving the addition or substitution of a new cause of action or a new party. Its two main objectives are: to enable a claimant to amend pleadings out of time so as to sue in another capacity; and to enable parties to be added out of time where joinder is necessary if the claimant’s claim is to succeed: see Roberts v Gill & Co at para 2. The complexity of section 35 arises in part because of the somewhat disparate number of matters that it deals with, some procedural and some substantive. Section 35(I)(3) lays down binding rules, and the remainder of the section provides for rules of court to be made permitting amendments, subject to conditions, by way of new causes of action and new parties: see Roberts v Gill & Co, at para 32.”
Lady Justice Sharp noted the origin of s 35(1) of the Limitation Act 1980 was to be found in s 28 of the Limitation Act 1939. Lady Justice Sharp observed further that s 35(1)(b), which deems the date of commencement as the date of the original application, provides that a counterclaim gets the benefit of the relation back date for limitation purposes, but no greater benefit.83 In Hassan Khan, the limitation period for the claim the subject of the counterclaim had expired prior to the principal proceedings having been commenced.
The appellant places great weight on JFS (UK) Ltd v Dwr Cymru Cyf.84 In that case, the Court of Appeal dismissed an appeal from a decision giving leave for the defendant to amend its defence by substituting a defence and counterclaim after the expiry of the limitation period for the cause of action the subject of the counterclaim. At the time of that decision, s 35 of the Limitation Act 1980 was the operative provision. The first question was whether any of the positive averments in the original defence were a “claim in the action” within the meaning of s 35(3) of the Limitation Act 1980. Some of the claims, if they were the subject of a new action that commenced on the date the order was made granting leave, would have been statute barred.85
If those claims were not statute barred, the Court had to answer subsidiary questions as to whether there was power to allow the amendment under RSC O 20 r 5 and secondly whether it was proper for the amendment to be allowed by the Court in the exercise of its discretion.
Section 35(3) of the Limitation Act 1980 was in the following terms:
“Except as provided by section 33 of this Act or by rules of court, neither the High Court nor any county court shall allow a new claim within subsection (1)(b) above, other than an original set-off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Act which would affect a new action to enforce that claim. For the purposes of this subsection, a claim is an original set-off or an original counterclaim if it is a claim made by way of a set-off or (as the case may be) by way of counterclaim by a party who has not previously made any claim in the action.”
Lord Justice Nourse86 found that the averments in the original defence were not a “claim in the action” as they made no claim for relief. As a result, the claims for relief, the subject of the counterclaim, were not precluded by s 35(3) of the Limitation Act 1980.
Having determined that s 35(3) permitted the making of the substituted defence and counterclaim, Nourse LJ considered whether the primary judge had the power to allow the amendments under RSC O 20 r 5, which was in similar terms to r 376(4) UCPR. Under O 15 r 2(1) RSC, a defendant may, instead of bringing a separate action, add a counterclaim to his defence.87 Lord Justice Nourse observed that if a counterclaim is not made in the original defence, the defendant must apply for leave to amend under O 20 r 5 RSC.88 His Honour then made the following observation:89
“Ord. 20, r 5 has been in its present form since 1964. At that time the limitation provision applicable to claims by way of set-off or counterclaim was section 28 of the Limitation Act 1939, which provided:
‘For the purposes of this Act, any claim by way of set-off or counterclaim shall be deemed to be a separate action and to have been commenced on the same date as the action in which the set-off or counterclaim is pleaded.’
That provision, like section 35(1)(b) of the Act of 1980, enabled a defendant who included a counterclaim in his original defence to overcome any limitation objection which would otherwise have arisen between the date of the writ and the date of the defence. However, Mr. Dennys has submitted, in my view correctly, that where a defendant applied for leave to add a counterclaim by amendment, he would have encountered the well established rule of practice not to permit a party to add, by way of amendment, a cause of action which was statute-barred at that time. He would not have been given leave to amend under Ord. 20, r. 5(1). Nor could he have obtained it under rule 5(2) and (5), because ex hypothesi he would not have been a party who had already claimed relief in the action. Had the court’s present jurisdiction rested only on section 35(1)(b) of the Act of 1980, the position would have been the same as it was before that Act. But it is clear that section 35(3) has widened the jurisdiction to the extent that the court may now allow a new claim which is an ‘original’ set-off or counterclaim to be made, even though it is founded on a cause of action which is statute-barred. No doubt it would have been possible for a consequential amendment to be made to Ord. 20, r. 5. But neither that rule nor the previous rule of practice can override the express provision of the Act. Accordingly, I conclude that the application to amend is one which is capable of being made under the general power contained in rule 5(1).” (emphasis added)
The passage referred to above was in relation to whether leave could have been given, as the amendment under O 20 r 5(1) was applied by the primary judge in granting leave after having already determined that the pleading was a counterclaim to which the relation back date applied.90 Section 35(3) of the Limitation Act 1980 provides an express exception to the “rules of court” that prohibit the allowing of a new claim under s 35(1)(b). Under s 35(1)(b), the counterclaim would be deemed to have been commenced on the same date as the original action. Lord Justice Nourse observed that as no consequential amendment had been made to O 20 r 5, s 35(3) had widened the jurisdiction to the extent that the court could now allow a new claim under O 20 r 5.
While JFS did contain an observation as to the prior position under s 28 of the Limitation Act 1939 that had a defendant sought to “add a counterclaim by amendment, he would have encountered the well-established rule of practice not to permit a party to add, by way of amendment, a cause of action which was statute-barred at that time”,91 it is important to observe that in Adam v Shiavon, discussed above, the Queensland Court of Appeal had diverged from the English authorities in relation to O 32 r 1 of the Queensland Supreme Court Rules, albeit that r 376 UCPR was subsequently amended to be closer in its structure to O 20 r 5. In particular, the Court of Appeal in Adam v Shiavon did not consider that Weldon v Neal continued to be good law in Queensland, whereas it had not been regarded in the United Kingdom as having been displaced by RSC O 20 r 5. Secondly, RSC O 15 r 2 provided that a counterclaim, while regarded as a separate claim, was to be added to the defence. Thus, even though a counterclaim was regarded as a separate action, adding it to the defence required leave to amend if it was not included in the defence at the outset. That is in contrast to r 179 UCPR, which provides for a counterclaim to be contained in a new form which incorporates the defence, not incorporated by way of an amendment to the defence.
Lady Justice Sharp in Hassan Khan observed that the cases of JFS and Lloyds Bank Plc v Wojcik,92 referred to above, were “amendment cases” where the plaintiff’s original action was issued before the limitation period for the proposed counterclaim had expired.93
Conclusion
The present matter has been convoluted by many different strands of argument being raised and in some instances being wrongly conflated. In my view, a summary of the position applicable to a counterclaim is that:at common law, time did not stop running in relation to counterclaims until the counterclaim was made. This was contrary to the position in relation to set-offs: McDonnell & East Ltd v McGregor;94the common law position was altered by s 28 of the Limitation Act 1939 (UK), which provided a relation back day in relation to both set-offs and counterclaims. This approach was mirrored in most jurisdictions in Australia, including Queensland, in limitation legislation of varying forms;95the making of a counterclaim outside of the time provided under r 179 UCPR does not invite a question of whether the counterclaiming party requires leave to make an amendment under the relevant procedural rules. A counterclaim is a separate action done by way of a separate pleading in the prescribed Form 18, albeit that the rules provide for a counterclaim to be an additional pleading contained within the same document as the defence. Section 16 CPA and r 375 and r 376 UCPR do not apply;a counterclaim that is not filed in accordance with r 179 UCPR constitutes an irregularity, not a nullity, in relation to which the Court may make an order under r 371(2) UCPR, including declaring the document containing the counterclaim to be effectual if the Court exercises its discretion in favour of the counterclaim being regularised. Unless declared ineffectual or set aside, prima facie it is a counterclaim to which s 42 LAA would apply and if the counterclaim is in time when the proceedings in which the counterclaim is filed were issued, time stops running in respect of the counterclaim at the date the principal proceedings were filed. Section 42 LAA operates in relation to a counterclaim which is made under the UCPR, whether it is one filed in accordance with r 179 UCPR or where it has been regularised or otherwise ordered to be effectual by a court under r 371(2) UCPR. There is no basis upon which an additional requirement should be implied into s 42 LAA that it only has its deeming effect if a counterclaim is filed in accordance with r 179 UCPR;a defendant to a counterclaim, where the claim the subject of the counterclaim was not statute barred at the time the initiating proceedings were issued, may oppose the Court exercising its discretion to regularise the counterclaim under r 371(2) and/or r 7 UCPR on the grounds that it is prejudicial, but cannot raise an argument that it is statute barred; andalthough the initial filing of a counterclaim, either with a defence or irregularly, does not constitute an amendment to a document under the rules, once a counterclaim has been filed, any proposed amendment to that counterclaim which seeks to add a cause of action would have to satisfy the provisions for making an amendment. In that case, the counterclaim is the document or pleading which is sought to be amended. Any amendment would be determined in accordance with s 16 CPA and r 375 and r 376 UCPR and would not have the benefit of the deeming provision in s 42 LAA. In particular, if a new cause of action which is out of time is sought to be added to an existing counterclaim, r 376(4) UCPR must be satisfied. In this respect, s 42 LAA operates in a similar way to s 51 of the (ACT) considered in .
Orders 1 and 3 should be set aside.
The appeal should be otherwise dismissed.
The appellant pay the costs of the respondent of the appeal.
Adeva Home Solutions Pty Ltd v Queensland Motorways Management Pty Ltd (2021) 9 QR 141 at 149 [12]-[14]. ↩
AB 195/33-36. ↩
[2010] QSC 483. ↩
[2021] NSWSC 1096. ↩
(1992) 108 FLR 140. ↩
The original order filed did not reflect the order made by the Court: see AB 202. ↩
(1887) 19 QBD 394. ↩
(2004) 61 NSWLR 499 at 512 [49]. ↩
(1936) 56 CLR 50 at 55 and 58; see also Walker v Clements (1850) 15 QB 1046; Lowe v Bentley (1928) 44 TLR 388. ↩
(2004) 61 NSWLR 499 at 512 [51]. ↩
(2004) 61 NSWLR 499 at 512-513 [52]. ↩
See s 8 Limitation Act 1981 (NT); s 35 Limitation Act 1974 (Tas); s 30 Limitation of Actions Act 1958 (Vic). ↩
See s 74 Limitation Act 1969 (NSW); s 51 Limitation Act 1985 (ACT).
Anderson
Anderson [2026] QCA 50
(1992) 108 FLR 140
(2000) 203 CLR 503
(1957) 96 CLR 261
(1936) 56 CLR 50
(2004) 61 NSWLR 499
(2019) 269 CLR 507
(2008) 233 CLR 259
(2004) 29 WAR 505
(2024) 116 NSWLR 111
(2017) 262 CLR 362
Orders 1 and 3 were set aside; the appeal was otherwise dismissed, and the appellant was ordered to pay the respondent’s appeal costs.
Although the appellant does contend that no power existed to enliven the primary judge’s discretion, the way her Honour exercised the discretion is not the subject of challenge in this appeal.
Her Honour determined that she would order that the matter be regularised or leave be given under the alternative bases of relief sought by the respondent in its application, save that she deleted the reference in paragraph 1 to r 375 UCPR up to the word “or”. The order made by the primary judge therefore provided in the alternative that:6
Given the nature of the arguments presented, it is necessary to examine the legislative history of s 42 LAA and the rule in Weldon v Neal.
In response to Draney v Barry, s 81 was subsequently amended to add s 81(3):
The interpretation adopted by the primary judge is consistent with the underlying policy of s 28 Limitation Act 1939, which was adopted in Queensland with the introduction of s 42 LAA.
The policy behind s 42 LAA is to avoid a defendant being placed at a disadvantage where a plaintiff commences proceedings close to the expiration of the limitation period for a claim the defendant may have which could be the subject of a counterclaim.
The rationale in relation to s 28 of the Limitation Act 1939 was stated by Sharp LJ (as her Honour then was) in Hassan Khan & Co v Al-Rawas53 to be:
On its proper construction, s 42 LAA applies to a counterclaim or prospective counterclaim that was within time as at the date of the proceeding. There is no substantive right being removed by the operation of the UCPR, as contended by the appellant.
While the appellant sought to argue that s 42 LAA was framed in terms of a party having one shot to make a counterclaim, that is not supported by the language of s 42 nor its underlying policy. The construction that a party to a proceeding may make a counterclaim that was within time on the day the initiating proceeding was issued, as that counterclaim has the benefit of a relation back day, accords with the language of the section and its policy. The contrary construction proposed by the appellant would lead to anomalous results. For example, a claim that is the subject of a counterclaim which is within time when the proceedings were issued, but out of time at the time the defence and counterclaim is required to be lodged, will not be statute barred under s 42 LAA if both documents are filed together on the last day of the time provided for the filing of the defence under the UCPR. However, on the appellant’s construction, that would not be the case where a party files its defence the day before it is required to by the UCPR, but then seeks to add a counterclaim the next day. Although in both cases the counterclaim was filed on the same day, in the latter case, the counterclaim would be statute barred and in the former it would enjoy the operation of s 42 LAA.
While the appellant particularly sought to rely on the appellant’s substantive right to plead the limitation defence being maintained if the counterclaim was not filed in accordance with the rules, such a right does not follow in the context of s 42 LAA. Section 42 LAA is concerned with a situation where a party chooses to issue proceedings at a time that may be close to the time that the limitation period for any claims that could be the subject of a counterclaim expire. That is precisely the case at present. The appellant issued proceedings close to the time of the expiry date for the counterclaim, and then did not serve the proceedings until almost three months after.
That is the kind of mischief to which s 42 LAA was directed.
Nor does such a construction allow a party an open door to seek to add a counterclaim at any time in the proceedings. While it may not be statute barred, a court will still have to be persuaded that it is appropriate to regularise the counterclaim in the exercise of its discretion.
In the case of Maronis, Bryson J considered it was uncertain as to whether the cross-claim was out of time but granted an extension of time under a similar rule to r 7 UCPR.70 There was no discussion of an issue similar to that presently faced by this Court.
In Fong, the plaintiff made an application to consolidate a separate action by having it dealt with as a counterclaim in existing proceedings. Unlike the position under the UCPR, a counterclaim could be made at any time under the Northern Territory rules.71 Master Lefevre did consider that s 8 of the Limitation Act 1981 (NT), which was in the same terms as s 42 LAA, did apply such that the claim the subject of the counterclaim was not statute barred. Fong provides limited support to the decision of the primary judge but again there is an absence of discussion of the issues with which this Court is asked to deal.
In the circumstances, given on its proper construction s 42 LAA did apply in the present case such that the time in which the counterclaim was made was to be calculated by reference to the date of issue of the principal proceedings, it was open for the Court to exercise its discretion to order that time be extended for the making of the counterclaim under r 7 UCPR,72 or it be ordered to be effectual under r 371(2) UCPR.73
Although his Honour was addressing a different deficiency in a counterclaim, the characterisation of a counterclaim not filed in accordance with r 179 as an irregularity draws some support from how McMurdo J framed the relevant question in Australand Corporation (Qld) Pty Ltd v Tang.74 In Australand, McMurdo J found that a counterclaim had not been pleaded with a defence as required under r 179 UCPR because no defence was pleaded. His Honour characterised the counterclaim as an irregularity, not a nullity, for which the Court has the power to make any order under r 371(2) UCPR. In that regard, McMurdo J observed that:75
What is evident from a review of Hassan Khan, JFS and Wojcik is that they do not identify the present situation as being a mischief sought to be cured by s 35 of the Limitation Act 1980, as is contended by the appellant. Section 35 is a far broader, more complex section in its operation than s 42 LAA and has application beyond counterclaims and set-offs.
Notably in Hassan Khan, Sharp LJ rejected an argument that s 35(3) of the Limitation Act 1980 operated to permit a defendant one shot of making “an original set-off or counterclaim” regardless of when the limitation period for that claim (if brought as a separate action) expired. Nor did Sharp LJ suggest that had been the position previously under s 28 of the Limitation Act 1939. The effect of s 35(3), according to the Sharp LJ, was to remove compliance with s 35(4) and s 35(5), but was not to give a greater benefit than that conferred by the relation back day.
Under the UCPR, the adding of a counterclaim is not an amendment of a pleading nor an amendment to “add” a new cause of action. It is a separate action. The respondent argues that the counterclaim is an amendment to a “document” within r 375 UCPR and s 16(1) CPA. The term “document” is a broad one. However, having regard to r 375(1) UCPR, a counterclaim is distinct from “…anything written on a claim, a pleading, an application…”. Adding a counterclaim is adding a separate action, not amending a pleading. The adding of a counterclaim requires that the defence and counterclaim be included in a new form, Form 18, and is not done by amendment of the original defence contained in Form 17. The late filing of a counterclaim is not an amendment to a pleading or a document within the terms of s 16 CPA nor r 375 UCPR.
While the primary judge considered that there was an amendment of a document in this case, her Honour was in error in this respect. Further, there was no real basis identified by the primary judge upon which the respondent’s non-compliance with the rules should be excused under r 367(1) UCPR. However, that conclusion does not automatically lead to the primary decision being set aside, as her Honour considered that there are other pathways, as referred to above, by which the respondent’s counterclaim could be regularised or otherwise given leave.
Construed in this way, s 42 LAA permits a party to raise a claim which is properly characterised as a counterclaim if the limitation period had not expired at the time of the filing of the proceedings in which the counterclaim is sought to be filed. Any prejudice caused by the failure to comply with r 179 UCPR would properly be a matter to be considered under r 371 UCPR in determining how the irregularity or non-compliance is to be treated.
The counterclaim in this case was not an amendment under s 16 CPA or under r 375 or r 376 UCPR. Insofar as her Honour determined that s 42 LAA did apply to the counterclaim, such that the claims the subject of the counterclaim were not statute barred, the Court had a discretion to extend the time for the filing of the counterclaim and declare it to be effectual under r 7 and r 371 UCPR. The primary judge was not in error. The appeal should be dismissed. In that regard, I note that the exercise of the primary judge’s discretion was not sought to be impugned by either party.
While the appellant sought to argue that the costs of the appeal should be deferred until the proceedings have been resolved, no compelling basis was presented in that regard and costs should follow the event.
The order of the Court should be:
[1996] 2 Qd R 534 at 537. ↩
Hassan Khan & Co v Al-Rawas; Hassan Khan & Co v Al-Shanfari [2017] 1 WLR 2301 at 2309 [27] per Sharp LJ with whom Elias LJ and Green J agreed. ↩
[2010] QSC 369. ↩
[2010] QSC 369 at [7]. ↩
[2010] QSC 369 at [7]. ↩
[2016] QSC 218 at [18]-[20]. ↩
[2018] 3 Qd R 28. ↩
[2018] 3 Qd R 28 at 32 [5]. ↩
[1977] 1 NSWLR 273 at 277 per Glass JA. ↩
[1985] 1 Qd R 1 at 6. ↩
[1985] 1 Qd R 1 at 7. ↩
[1985] 1 Qd R 1 at 7. ↩
[1980] Qd R 546. ↩
[1985] 1 Qd R 1 at 7-8. ↩
[1985] 1 Qd R 1 at 7. ↩
With whom Sheahan and McPherson JJ agreed. ↩
[1985] 1 Qd R 1 at 7-8. ↩
[2002] 1 Qd R 145. ↩
[2002] 1 Qd R 145 at 155 [18]. ↩
[2002] 1 Qd R 145 at 156 [21] – [22]. ↩
See s 67 Justice and Other Legislation (Miscellaneous Provisions) Act 2002 (Qld); Norman Nominees Pty Ltd (in liq) v Zervos Pty Ltd [2014] 2 Qd R 202 at 207 [16]. ↩
(2022) 12 QR 27 at 39 [40]; followed in Gladstone Ports Corporation Limited v Murphy Operator Pty Ltd [2024] QCA 74 at [155]. ↩
(2022) 12 QR 27 at 38 [37] and 39 [40]. ↩
See discussion of McPherson JA, with whom Jerrard JA and White J agreed, in MAM Mortgages Ltd (in Liq) v Cameron Bros; Piesse Investments P/L v W R Mortgage Services P/L [2002] QCA 330 at [39]; Leeming JA in Commonwealth of Australia v Winston (2024) 116 NSWLR 111 at 129 – 131 [63] – [71] noted that this was in contrast to English decisions. For example, see Brickfield Properties Ltd v Newton [1971] 1 WLR 862. ↩
As set out for example in SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at 368 [14]. ↩
(2019) 269 CLR 507. ↩
(2019) 269 CLR 507 at 520 – 521 [32] – [33]. ↩
Pingel v Toowoomba Newspapers Pty Ltd [2010] QCA 175 at [69] per Fryberg J. ↩
AB 196 – 197. ↩
[2010] QSC 483. ↩
(2023) 17 QR 116. ↩
(2023) 17 QR 116 at [7] and [38]. ↩
(2023) 17 QR 116 at [40], referring to Dixon J in McDonnell & East Ltd v McGregor (1936) 56 CLR 50 at 58. ↩
(2023) 17 QR 116 at [40], referring to Dixon J in McDonnell & East Ltd v McGregor (1936) 56 CLR 50 at 58-59, with whom McTiernan J agreed. ↩
[1974] QB 233 at 245-246. ↩
(2023) 17 QR 116 at [42]. ↩
The definition of “action” includes any proceeding in a court of law. ↩
See r 371 UCPR. ↩
For example, in the Encyclopaedic Australian Legal Dictionary it was said to be “The assertion of a right to property or to a remedy; a cause of action; the grounds in pleadings upon which relief is claimed” (citing Read v Brown (1888) 22 QBD 128). ↩
[2017] 1 WLR 2301 at [27]. ↩
[2021] NSWSC 1096 at [373]. ↩
[2010] FCA 914. ↩
[2010] FCA 914 at [43]. ↩
(1957) 96 CLR 261 at 277-8 per Williams J. ↩
(2000) 203 CLR 503 at [98]-[99]. ↩
[2008] WASC 71. ↩
Young v National Australia Bank Ltd (2004) 29 WAR 505 at 513 – 515 [36] – [37], [40] – [41] and [44] where the Court contrasted s 46 with Queensland legislation which followed s 28 of the English Limitation Act 1939. ↩
[2004] ACTCA 14. ↩
[2004] ACTCA 14 at [23]. ↩
[2004] ACTCA 14 at [26]. ↩
[2010] QSC 483. ↩
[2010] QSC 483 at [25], [27] and [41]. ↩
[2021] NSWSC 1096 at [373]-[374]. ↩
(1992) 108 FLR 140. ↩
[2000] NSWSC 482. ↩
[2021] NSWSC 1096 at [373]. See his Honour’s comments excerpted above at [71]. ↩
[2000] NSWSC 482 at [14]-[15]. ↩
Supreme Court Rules 1987 (NT) r 10.02(1). ↩
Given it was not being applied to vary a time fixed by statute cf Westpac Banking Corporation v Commissioner of State Revenue [2005] QCA 327 at [19]-[21]. ↩
Mayfair Property Holdings Pty Ltd v Southland Packers Pty Ltd (No 2) [2016] QSC 145 at [15]-[17]. ↩
[2009] QSC 221. ↩
[2009] QSC 221 at [19]. ↩
Cf Imam v Life (China) Co Ltd [2023] QCA 19 at [229]. ↩
[7(e)] Appellant’s submissions. ↩
Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259 at 270 [31]. ↩
[1999] 1 WLR 231. ↩
[1999] 1 WLR 231 at 236. ↩
[2011] 1 AC 240 at 246 [3]. ↩
[2017] 1 WLR 2301 at 2307-2308 [20] per Sharp LJ with whom Elias LJ and Green J Agreed. ↩
[2017] 1 WLR 2301 at 2310 [31]. ↩
[1999] 1 WLR 231. ↩
[1999] 1 WLR 231 at 234. ↩
With whom Evans LJ and Ward LJ agreed. ↩
[1999] 1 WLR 231 at 235. ↩
[1999] 1 WLR 231 at 235. ↩
[1999] 1 WLR 231 at 236C-G. The Court referred to an earlier Court of Appeal decision in similar terms, Lloyds Bank Plc v Wojcik (unreported), 19 December 1997, Court of Appeal (Civil division) at 235H-237D. ↩
[1999] 1 WLR 231 at 235 and 237. ↩
[1999] 1 WLR 231 at 236E. ↩
(unreported) 19 December 1997; [1997] CA Transcript No 2122. ↩
[2017] 1 WLR 2301 at 2311 [40]. ↩
(1936) 56 CLR 50 at 57. ↩
Mao v Bao [2021] NSWSC 1096 at [366]-[367]. ↩
[2004] ACTCA 14 at [26]. ↩