Di Sante v Camando Nominees Pty Ltd [2000] VSC 211

Di Sante v Camando Nominees Pty Ltd [2000] VSC 211 - VSC 2000 case summary — Zoe

[51]

"The present case falls, however, in an anomalous category where the applicability of a limitation provision such as s.14(1) would invariably involve prima facie hardship and injustice and where any compensating public benefit, apart from protecting the courts from being required to determine issues of distant fact, is absent. If a wrongful action or breach of duty by one person not only causes unlawful injury to another but, while its effect remains, effectively precludes that other from bringing proceedings to recover the damage to which he is entitled, that other person is doubly injured. There can be no acceptable or even sensible justification of a law which provides that to sustain the second injury will preclude recovery of damages for the first. It would, e.g., be a travesty of justice and common sense if the law provided that a cause of action lay for damages for false imprisonment but then went on to provide that that cause of action would be lost if the false imprisonment continued for six years after the cause of action first accrued. Likewise, it would be a travesty of justice and common sense if the law imposed a duty upon a solicitor to take positive steps to inform a third person of the contents of a document of which the solicitor was alone aware and then provided that any cause of action against the solicitor for damage caused by a negligent failure to perform that duty would be lost if the negligence continued for six years. It is arguable that the notion of unconscionable reliance upon the provisions of a Statute of Limitations which provides the foundation of the long-established equitable jurisdiction to grant relief in a case of concealment of a cause of action until after the limitation period has expired (cf. s.55(1) of the Limitation Act) should, by analogy, be extended to cover cases such as these where the wrongful act at the one time inflicts the injury and, while its effect remains, precludes the bringing of an action for damages. It seems to me, however, that the preferable approach is to recognize that it could not have been the legislative intent that the effect of provisions such as s.14(1) of the Limitation Act should be that a cause of action for a wrongful act should be barred by lapse of time during a period in which the wrongful act itself effectively precluded the bringing of proceedings. On that approach, the reference in s.14(1) of the Act to the cause of action first accruing should be construed as excluding any period during which the wrongful act itself effectively precluded the institution of proceedings." (Emphasis added.)

[61]

The relevant parts of s.27(a) of the Limitation of Actions Act are cast in identical terms to s.26 of the English Limitation Act 1939 considered by the English Court of Appeal in Eddis and Anor v Chichester Constable and Ors (1969) 2 Ch. 345. In the English case a tenant for life sold a painting that formed part of the settlement. Some 11 years later the life tenant died and the trustees discovered for the first time the absence of the painting. Subsequently, a total of 14 years after the sale of the painting, the trustees instituted proceedings against the personal representatives of the tenant for life claiming damages for breach of trust and against the agent of the life tenant who sold the painting claiming damages for conversion. The defendants took the limitation point. The trustees by their reply claimed that the conduct of the life tenant was a fraudulent breach of trust and amounted to fraudulent concealment of the trustee's right of action under the statute and that the agent knew or ought to have known that the sale of the painting was a fraudulent breach of trust. At first instance Goff J held that the statute operated to prevent the period of limitation from beginning to run against the trustees until the fraud was discovered. In dismissing the appeal the English Court of Appeal held that the statute enabled trustees to bring an action for damages for conversion otherwise statute barred because the right of action had been concealed by the fraud of the tenant for life and on the basis that the words "through whom he claims" in the statute meant that the tenant for life was the person through whom the agent claimed title to the painting and any right to deal with it exercised by them so that the period of limitation did not begin to run against the trustees until the fraud was discovered. The Court of Appeal in Eddis unanimously approved of and applied an earlier judgment of Danckwerts J in Baker (G.L.) Limited v Medway Building and Supplies Limited (1958) 1 WLR 1216.

[62]

In Baker the Court of Appeal was concerned with circumstances where a company entrusted to its auditor moneys which the auditor paid into his bank account that was overdrawn at the relevant time. The auditor accounted to the company for part of the moneys but diverted the balance to unauthorised purposes. The auditor drew two cheques in favour of a company of which he was a director from the funds entrusted to him by the company. The company did not discover the payments made on the cheques until some six years later. The plaintiffs issued proceedings alleging that the auditor had fraudulently and in breach of trust paid the moneys to his company who was the defendant. It was alleged by the plaintiffs that the defendants had knowledge of the fraud through the auditor in his capacity as the director and were consequently trustees for the plaintiffs. Danckwerts J (at 1223) considered the English provision contained in s.26 of the Limitation Act 1939, the statutory equivalent of s.27(a) of the Limitations of Action Act. His Lordship considered that the plaintiffs had been defrauded by the cheques drawn by the auditor in favour of the defendant company as the cheques were handed to the defendant by the auditor in respect of which the defendants were not holders for value in due course. His Lordship considered, further, that the defendants claimed the moneys through the auditor and no-one else and, therefore, they fell plainly within the provisions of the statute, that is, "the action is based upon the fraud of the defendant or of any person through him he claims". His Lordship held that the action was based upon the fraud of the auditor because the auditor made the payments in fraud of the plaintiffs and therefore within the terms of the statute. As a consequence, Danckwerts J held that the defendant company was unable to rely upon the statute bar. The defendant sought leave to amend its defence on other grounds and the application was refused. On appeal the English Court of Appeal allowed the appeal with respect to the application for leave to amend and did not consider the limitation point. A subsequent petition for leave to appeal to the House of Lords in Baker was dismissed (1959) 1 WLR 492.´ The principle propounded by Danckwerts J with respect to the position of third parties remained unfettered and was subsequently followed, as already cited, by the Court of Appeal in Eddis.

At a glance

Court

Decision date

Before

Source

Judgment (93 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (20)