Birdon Contracting Pty Ltd v Hawkesbury City Council

Section 14: Is the order under s 121B an "action on a cause of action to recover money recoverable by virtue of an enactment"? 22 The ordinary meaning of the word "action" suggests that it does not apply to the giving of an order under s 121B of the EP&A Act. This appears from the following definitions. Osborn's Concise Law Dictionary, 8th ed (1993): "A civil proceeding commenced by writ or in such other manner as may be prescribed by rules of court."

Butterworths Australian Encyclopaedic Legal Dictionary (1997): "Any proceeding in a court: (NSW) Limitation Act 1969 s 11 . 'Action' is a generic term and in its proper legal sense includes suits by the Crown: Bradlaugh v Clarke (1883) 8 App Cas 354 at 361-2."

Macquarie Dictionary, 4th ed (2005): " a proceeding instituted by one party against another ".

Finally, s 11 of the Limitation Act states that "action" includes " any proceeding in a court ". 23 The present proceedings is an administrative appeal, being a de novo hearing of the Council's decision to give the order, in which the Court exercises the same functions and discretions as the Council, afresh: s 39(2) and s 39(3) of the Land and Environment Court Act 1979. The giving of an order under s 121B is not an "action" within the meaning of that word in its legal sense in the Limitation Act.

Would proceedings to recover money in the District Court or Local Court be " an action on ... a cause of action "? 24 In Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234 at 245 the phrase "cause of action" was defined by Wilson J as being "simply the fact or combination of facts which gives rise to a right to sue". The "cause of action" in the present case would include the development condition, the order of the Council, and the amount owing adjusted according to the CPI. The answer to the question is therefore "yes" - any such proceedings would be an "action" within the meaning of s 11 of the Limitation Act.

Would proceedings to recover money in the District Court or Local Court be " an action ... to recover money by virtue of an enactment "? 25 This requires consideration of the definition of "enactment". Butterworths Australian Legal Dictionary (1997) defines "enactment" as: "An Act or part of an Act of Parliament. It may be defined for particular purposes to include legislative instruments such as rules, regulations, ordinances and by-laws." Macquarie Dictionary, 4th ed (2005) states that "enactment" means " 3. that which is enacted; a law; a statute. 4. a section or part of a section in an Act." 26 These definitions indicate that, unless otherwise defined, "enactment" refers only to a statute enacted by parliament, and not a rule, regulation, ordinance or by-law. It is my view, therefore, that "enactment" does not encompass either a condition of development consent or an order issued by the Council.

27 In the present case, the relevant "enactment" is the EP&A Act, and, in my opinion, the relevant sections of the EP&A Act are s 94 and s 121B(1). Section 94 creates a right to grant development consent subject to a condition to pay contribution towards provisions of amenities and services and item 15 of the Table in s 121B(1) allows the Council to give an order to comply with a development condition enabled under s 94.

28 The next question, therefore, is whether the money in question is money recoverable by virtue of the EP&A Act. This requires consideration of the phrase "money recoverable by virtue of an enactment". On a broad interpretation of the phrase, the money in question would be "recoverable by virtue of an enactment" because the Act enables the Council to impose a condition under s 94 requiring a monetary contribution and to give an order, which in turn enables money to be recovered. That is, were it not for the Act, the money would not be recoverable, and therefore the money is recoverable "by virtue of an enactment". On a narrow interpretation of the phrase, however, the money in question would not be "recoverable by virtue of an enactment", because the money is recoverable by virtue of a condition of development consent or an order enabled under an enactment, rather than the enactment itself.

29 Questions such as this have been commonly raised in the courts. There is a large body of precedent which deals with the distinction between an action upon a specialty ("specialty" including a statute), and an action on a debt which a statute enabled to be brought: see, for example, Public Trustee v Schultz [1973] 1 NSWLR 564 at 581-2. Making this distinction was especially important in applying previous limitation legislation because an action upon a specialty had a limitation period of 20 years, whereas an action for a debt had a limitation period of 6 years.

30 The first report on Limitation of Actions of the New South Wales Law Reform Commission of 1967, which, according to the Attorney General's second reading speech, was the basis for the Limitation Act, states (at p 107): "The present law is that an action to recover money recoverable by virtue of an enactment has a twenty-year period of limitation if it is an action of debt upon a specialty within the meaning of section 39 of the Supreme Court Act, 1841 (for this purpose, a statute is a 'specialty'); if the action does not fall within section 39 of the Act of 1841, it will usually be an action founded on simple contract or quasi contract or an action on the case".

31 This indicates, therefore, that the phrase "recoverable by virtue of an enactment" is directed towards, and includes, the action of debt upon a specialty: see Dobinson v Lake Macquarie City Council (1994) 82 LGERA 16 at 19 per Stein J. This would mean that, if a proceeding in question constitutes an action of debt upon a specialty, then it would constitute an action under s 14(1)(d).

32 The authorities, however, persuade me that it is unlikely that the present proceedings would constitute an action upon a specialty.

33 In De Rossi v Walker (1902) 2 SR(NSW) 249 it was held that an action on a contract, which a statute authorised to be entered into, was not an action upon a specialty. The case involved an action brought by a District Court Registrar against the Government of New South Wales for his salary. The Act in question gave the Governor power to appoint registrars, who were to be paid by salary. Under that power, the plaintiff was appointed, conducted his work and was paid a salary. In rejecting that the proceedings involved an action upon a specialty, Stephen J said (at 253-4): "Remotely, no doubt, his cause of action is founded upon a statute, but not, I think, in the proper acceptation of the expression. The declaration states a promise made by the Government, and the failure to pay the plaintiff his salary. It is an action for wages. It is quite a novelty to me to be asked to say that this is an action founded on a statute in the sense in which I have hitherto understood that expression."

34 In Aylott v West Ham Corporation [1927] 1 Ch 30 it was held that an action on a contract, which was only enforceable by reason of the terms of a statute, was not an action upon a specialty. The Act in question had operated expressly to authorise arrangements between an employer and an employee to pay the difference between his civil salary and his war service pay. The plaintiff, in reliance on this arrangement, had volunteered for war service. Romer J held that even though the contract in question was expressly authorised by a statute, the action for the plaintiff's pay was an action on a simple contract, and not an action on a specialty.

35 De Rossi and Aylott indicate that an action on a contract, which is authorised or enforceable by virtue of a statute, is not an action upon a specialty. I believe that this principle may be applied to the present case. The proceedings in question would not be an "action upon a specialty" because they involve an action based on an order of the Council which is authorised by a statute, and not an action on a statute.

36 In my opinion, however, even though s 14(1)(d) is based upon an "action upon a specialty", these authorities are only persuasive in interpreting that section. This is reinforced by the fact that the distinction drawn in these cases has been described by the courts as a difficult distinction which is "not always clear": State Government Insurance Commission v Teal (1990) 2 WAR 105 at 116; Central Electricity Board v Halifax Corp [1963] AC 785 at 799 per Lord Reid. It is also my view that "action upon a specialty" and "action for money recoverable by virtue of an enactment" do not necessarily share the same meaning. This, I think, is reflected in the language of the Law Reform Commission report extracted above, where it states: "an action to recover money by virtue of an enactment has a twenty-year period of limitation if it is an action of debt upon a specialty. " (emphasis added)

37 I therefore believe that the authorities interpreting s 14(1)(d) of the Act (and equivalent sections in other jurisdictions) should be the primary consideration. Although these authorities are of limited assistance in directing as to which interpretation should be applied, they do make clear that if the broader interpretation were adopted, it would be making new ground. In Australia, situations where money has been held to be recoverable "by virtue of an enactment" include:

(a) Costs to the Commonwealth of keeping and maintaining a deportee recoverable under s 21A(7) and s 21A(11) of the Migration Act 1958: Chan Yee Kin v Minister for Immigration, Local Government and Ethnic Affairs [1989] FCA 511 (unreported, 14 December 1989) at par [32] and par [33]. (b) A right to indemnification under s 151Z(1)(d) of the Workers Compensation Act 1987: see South Eastern Sydney Area Health Service v Gadiry (2002) 54 NSWLR 495. (c) A right for damages under the Real Property Act 1900 as a result of rectification an error made by the Registrar-General: see Registrar-General v Cleaver (1996) 41 NSWLR 713 at 718. (d) The right of a victim of crime to recover compensation: R v Chong: Ex Parte Chong [1999] QCA 314; [2001] 2 Qd R 301 at par [35]. (e) A right of private landholders to recover compensation under the Petroleum Act 1923 (Qld): Sullivan v Oil Company of Australia Ltd [2001] QCA 252; [2002] 2 Qd R 94. (f) A right to take an action against an insurer in relation to a right of indemnification under a contract of insurance: Ceric v C E Heath Underwriting & Insurance (Australia) Pty Ltd (1993) 91 NTR 26 at 32.

38 In each of these cases (and all other cases I have researched), the money was directly recoverable by virtue of the enactment itself, rather than indirectly recoverable by virtue of a condition, order or contract enabled by the enactment.

39 I have only found one authority which appears to be directly on the point: Frost v The Speaker of the Legislative Assembly of New South Wales [2000] NSWIRComm 70; (2000) 97 IR 461. That case concerned s 106 of the Industrial Relations Act 1996, which enables the Industrial Relations Commission to make an order declaring a contract void, or varying a contract, where the contract is unfair. The applicant brought a summons seeking an order to be made under this provision, and the respondent sought an order that the summons be struck out because, amongst other things, the claim was statute barred by virtue of s 14(1)(d) of the Limitation Act. In finding that the action was not an "action to recover money recoverable by virtue of an enactment", Hungerford J said (at par [38]) that an action falling under s 14(1)(d) is typically an action to recover sums where a statute gives a right to recovery. His Honour provided the example of money recoverable under the provisions of Pt 2 of Ch 7 of the Industrial Relations Act, which enable the Commission to make an order for the recovery of money due under an industrial instrument. His Honour then said at [38]: "Section 106, in its terms, does not itself give a right to recover money, rather it enables an order to be made in favour of a person for the payment of money by another in connection with a relevant transaction declared void or varied in such an amount as is considered just."

40 In that case, Hungerford J made a distinction between an enactment which of itself gives a right to recover money and a statute which enables the recovery of money through some other means. On my understanding of the judgment, Hungerford J found that s 14(1)(d) did not apply to a claim under s 106 because s 106 merely gave a right to render a contract void or vary a contract and did not give a right to recover money. The right to recover money was one step removed from the statute, and would have been founded on contract. Similarly, in the present case, it is not the enactment which itself gives a right to recover money, but rather, the right to recover money is founded on non compliance with an order made pursuant to s 121B of the enactment, which is at least one step removed from the enactment.

41 Consequently, I believe that the narrower interpretation of the sub-section should be adopted. The answer to the question is "no".

Section 15: Is the order an action for "account founded on a liability at law to account"?

42 For the reason described in par [22] and par [23] above, the order is not "an action" within the meaning of the Limitation Act. Neither is it a cause of action for "an account founded on a liability at law to account" within the meaning of s 15 of that Act. I have come to this view for the following reasons. 43 Although "founded on a liability at law", the action contemplated by s 15 of the Act is an action taken by suit in equity. The common law action for account remains available in New South Wales, but is obsolete. 44 The report of the Law Reform Commission referred to above states (at p 108) that: "[T]he common law action of account … has been obsolete at least since the beginning of the nineteenth century. Proceedings for accounts are now taken by suit in equity and this is so whether the liability to account is a legal liability or an equitable liability." 45 In Re GDK Financial Solutions Pty Ltd [2006] FCA 1415; (2006) 236 ALR 699 Finkelstein J said (at par [50]): "The action for an account is one of the oldest actions known to the law. It appears to have developed, at common law, as early as the twelfth century as a method to force manorial bailiffs to account to their landowners for money received or income derived from the management of the land. The modern equitable action of account, which has all but superseded the common law action, imposes the duty to account more broadly than the common law. Accounts can be required for purely equitable demands or of legal demands that are ancillary to other equitable relief."

46 Dictionary definitions of "account" also indicate that an action for an account is now taken by suit in equity. Butterworths Australian Legal Dictionary (1997) refers to an "account" as a former common law action. The definition of "account, action of" in Osborn's Concise Law Dictionary, 8th ed (1993) provides that the common law action of account "became obsolete, and was replaced by the equitable remedy of an account".

47 The old common law action has become obsolete because, firstly, it only applies to certain relationships, that is, where the defendant is a bailiff, a guardian in socage or receiver. The second reason is the cumbersome nature of its procedure: see Michael Evans, Equity & Trusts (2003) LexisNexis Butterworths at 664.

48 In my opinion, therefore, the application of s 15 of the Limitation Act to the proceedings in question requires consideration of whether or not a court of equity has jurisdiction to grant relief.

49 At the time the Limitation Act was enacted, equity matters were heard separately from the other business of the court. This changed after 1970, when the enactment of the Supreme Court Act allowed equitable and common law proceedings to be heard together. It is important to take this into consideration because, at the time of enactment, the intention of the legislature was to apply s 15 of the Limitation Act only to actions for account for which a court of equity had jurisdiction. 50 A court of equity has a discretion as to whether or not it should hear an action for an account. This is made clear by the following statement of Lord Cottenham LC in North Eastern Railway Company v Martin (1848) 2 Ph 758 [41 ER 1136] (cited in Rapid Metal Developments (Australia) Pty Ltd v Rosato [1971] Qd R 82 at 87): "The jurisdiction in matters of account… is concurrent with that of the Courts of law and is adopted because, in certain cases, it has better means of ascertaining the rights of the parties. It is, therefore, impossible with precision to lay down rules or establish definitions as to cases in which it may be proper for this Court to exercise this jurisdiction… It is, therefore, necessary for this Court to reserve to itself a large discretion in the exercise of which due regard must be had, not only to the nature of the case but to the conduct of the parties."

51 In my opinion, a court would not exercise its discretion to hear these proceedings in equity and neither should this Court. An "action for account" should only be entertained where a court of equity has a better means of ascertaining the rights of the parties than a court of law, typically, where an order for the taking of accounts is appropriate. That is, where a proceeding in debt is adequate, there is no need for the court of equity to intervene, and a court of equity will not intervene. This is made clear from the following authorities. 52 Firstly, the judgment of Alexander LCB in King v Rossett (1827) 2 Y & J 33 [148 ER 820] at p 35: "Undoubtedly, a principal is entitled to an account from his agent, and may apply to a Court of Equity for that purpose; but, as I conceive, before the Court will interfere, a ground for its interposition must be laid, by shewing an account which cannot fairly be investigated by a Court of Law. Unless Courts of Equity were to put that limit to their interference, no case of this description would ever be tried in a Court of Law, and wherever a person was entitled to a set off, a bill might be sustained." 53 And secondly, the judgment of Higgins J in Davis v Hueber (1923) 31 CLR 583 at 595-596: "A court of equity could make a decree for accounts under special circumstances only, as where the accounts are so complicated that the Courts of law are inadequate. As stated in King v Rossett, 'before' a Court of equity 'will interfere, a ground for its interposition must be laid, by showing an account which cannot fairly be investigated by a Court of law'." (footnote omitted)

54 The High Court differed on its application of this principle. Higgins J (dissenting) held that the court of equity did not have jurisdiction to hear the action for account because (at 595-596): "In this case, the only item in dispute was a definite sum…There is not the slightest evidence of any complexity in the accounts… There is no indication of any dispute as to accounts as between … the parties to the cause. Therefore the equitable jurisdiction as to accounts does not justify this suit in equity".

55 The majority (Knox CJ and Starke J), however, disagreed. They acknowledged that there was no disputed sum, but held that the court of equity had jurisdiction, because the claim for an account was not only for a mere "debt" but for an indemnity against all of the assets in question (at 592). It seems that Knox CJ and Starke J held that an indemnity against all of the assets was distinguishable from a debt, and required the intervention of equity, because it was a right to the assets of a company, which is distinguishable from a mere amount due and payable.

56 In my opinion, the proceedings in question are distinguishable from Davis, because they relate to an undisputed amount due and payable, and, unlike Davis, there is no relationship which would require the intervention of the courts of equity. It seems clear that the Council could commence proceedings in the District Court or the Local Court to recover the amount owed, without the assistance of equity.

57 It follows, therefore, that the original jurisdiction of a court of equity would not be enlivened and that the proceedings in question would not constitute an equitable "action on a cause of action for an account founded on a liability at law".

58 I conclude, therefore, that the defence raised by Mr Webster under s 14(1)(d) of the Limitation Act is unavailable. Mr Webster's submission is contrary to both principle and authority. I also reject Mr Webster's reliance on s 15 of the Limitation Act also for the reason that his submission is contrary to principle and authority. I note that Mr Webster relies upon only one other provision of the Limitation Act, namely, s 14(1)(b), which refers to a cause of action founded on tort, but which clearly does not apply.

Discretionary considerations 59 Birdon Contracting submits that, in the exercise of the Court's discretion, the Council's order should be revoked. It claims that it is prejudiced by the Council's delay of some 12 years before issuing the order. It relies upon the following facts which give rise to the prejudice.

(a) The evidence shows that the company had a practice of recovering the contribution required by condition 8 from its customers. It invoiced its customers with its monetary invoices for the amount of the levy.

(b) It is now impossible for the company to recover the amount now claimed by the Council from the customers to whom the material was delivered.

(c) The company provided full details to the Council annually of the payments made to the Council, showing the tonnage and the rate of the levy per tonne. There was no suggestion by the Council that the rate was inapplicable.

(d) As soon as the Council drew the company's attention to the appropriate rate per tonne, payments were made by the company at the new rate in accordance with the Council's request.

(f) It cannot be said that the company has profited in any way from its failure to comply with the condition 8. 60 In an appeal against an order the Court may: "(a) revoke the order, or (b) modify the order, or (c) substitute for the order any other order that the person who gave the order could have made, or (d) find that the order is sufficiently complied with, or (e) make such order with respect to compliance with the order as the Court thinks fit, or (f) make any other order with respect to the order as the Court thinks fit." (Section 121ZK(4) of the Environmental Planning and Assessment Act .) 61 I am not persuaded by the reasons advanced by the company for a favourable exercise of the Court's discretion. As stated in par [8] above, the onus was and remains at all times upon the person carrying out development to do so in accordance with the consent: s 76A(1). Birdon Contracting knew that the contribution required by condition 8 had to be adjusted annually in accordance with the CPI, yet it continued to levy its customers at the unadjusted rate. It cannot now be heard to complain that it did not know that the adjustment had to be made and that it failed to do so. The provision of annual statements to the Council did not relieve Birdon Contracting of its obligations. 62 Moreover, if the company were to be relieved of its obligation to make the full amount of contributions required by the condition, then the public interest which the condition was imposed to meet, would suffer. It is a notorious fact that heavy trucks cause considerable damage and wear to public roads - and many times more so than passenger cars. The public interest would be the loser if the company were to be relieved of full compliance with the condition. 63 If the Court were to exercise its discretion in favour of Birdon Contracting, it would not advance the purposes of the limitations legislation. A commonly cited authority which outlines the purposes of limitation legislation is the judgment of McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541. McHugh J said (at 552-3): "The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost. Second, it is oppressive, even 'cruel', to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed. Thirdly, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period … The final rationale for limitation periods is that the public interest requires that disputes be settled as quickly as possible." (footnotes omitted) 64 In my opinion, in the present proceedings, the first, second and final rationales noted by McHugh J would not be advanced. As to the third rationale, it should, in my opinion have been obvious to a business such as Birdon Contracting that its contributions were required to be indexed according to the Sydney CPI, and that CPI figures were readily available for this purpose. Although Birdon Contracting contends that it has organised its affairs on the basis that the contributions would not be indexed, it chose to do so knowing that the contributions were required to be indexed, and the Court would not, in this case, be advancing the third rationale in the way that it was intended to operate. 65 The Council, however, is not entirely blameless. It was content to receive the contributions required by the condition, together with the annual statements, without complaint. It somewhat belatedly decided, many years down the track, to enforce the condition by requiring the immediate payment of the arrears. Nevertheless, the public interest, together with the fact that Birdon Contracting knew what its obligation was under condition 8 yet chose not to observe the condition, persuade me that the appeal should be dismissed and the order should be confirmed.

Orders 66 The orders of the Court are: (1) The appeal is dismissed. (2) The Council's order issued under item 15 of the Table in s 121B(1) of the Environmental Planning and Assessment Act 1979 and dated 3 September 2008 is confirmed.

(3) The exhibits may be returned. I hereby certify that the preceding 66 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

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