Are the s 82(1) claims time barred?
166 I propose to deal first with the contention that virtually all of Energex's claims for damages under s 82(1) should be dismissed, or struck out, as disclosing no reasonable cause of action. That contention is, of course, primarily based upon the proposition that these claims are time barred.
167 As Mr Keane noted, the respondents must persuade this Court that Energex should be denied the opportunity to present these claims. Because the time bar point is raised at the interlocutory stage, the burden that they must discharge is a heavy one.
168 If the respondents are correct in their submission that Energex's claims are time barred, it will have no recourse, by way of damages, against them no matter how strong a case it can mount that they engaged in the most flagrant breaches of s 45. There are strong reasons to think that such an outcome would not have been intended by the legislature. Collusive tendering, of the type alleged in this case, is by its very nature covert. It may take years in order to be detected.
169 In principle, a party who has engaged in fraudulent conduct should not be permitted to take advantage of a limitation defence where that conduct has not come to light until long after the victim has suffered harm. The same is true where a party has caused harm, but managed by fraudulent means to conceal it.
170 Mr Keane submitted, with some rhetorical flourish, that the outcome for which the respondents contended would be "a disgrace to our jurisprudence". That did not prevent the House of Lords in Cartledge v E Jopling & Sons Ltd from holding that the claim in that case was statute barred, notwithstanding the fact that the result was an affront to common sense, and justice. However, as Mr Keane noted, that conclusion was arrived at by construing the relevant limitation statute in the light of the maxim expressio unius est exclusio alterius, a consideration that is not present when considering s 82(2).
171 I accept Mr Keane's contention that it would be contrary to basic principle to deprive an injured party of its right to compensation arising out of a fraudulent conspiracy merely because the conspiracy was not detected until after the limitation period had expired.
172 I also accept Mr Keane's submission that s 82 should be interpreted without any of the preconceptions that would flow from the ordinary application of common law doctrines of tort and contract. In Marks v GIO, the High Court said as much. The task for the Court is to construe the expression "suffers loss or damage" in s 82(1), and the cognate expression "the conduct accrued" in s 82(2).
173 In my view, these expressions are to be given their ordinary and natural meaning. However, that meaning is to be informed by the extensive body of authority that now exists regarding when a cause of action accrues arising out of misconduct, or breach of a statute. Some of the cases suggest that this occurs only when the misconduct, or breach, comes to light.
174 The clearest example of this approach lies in the case of a defective building. It is clear that if a building with a latent defect is purchased, the plaintiff does not suffer economic loss until the defect becomes manifest. Yet the way in which such a case is typically pleaded is to assert that the loss results from the payment of a greater amount than would have been paid had the defect been known.
175 Another example is the line of cases, of which Karedis is a prime example, in which an asset is purchased, and it becomes necessary to determine, in the context of a claim under s 52, whether the transaction was disadvantageous. It may be, in such a case, that one cannot make such a finding until the benefits and burdens of the transaction have been fully ascertained. That may be long after the date on which the asset is purchased.
176 Mr Keane challenged the respondents' contention that the gist of Energex's claim was that it had paid more for the transformers than it ought to have done, and that but for the cartel, it would have paid less for those items. He submitted that this was a distortion of the way Energex's case was pleaded. It claimed that it suffered damage as a result of the price paid exceeding the price that would have prevailed, but for the contravening conduct. In Mr Keane words, the difference between these propositions was as follows:
"… it is not the case, as Mr Hilton suggested, that our pleading is that we paid more than the market price, or that we paid more than they were worth. We understand why our learned friends seek to reformulate our pleading, because their objective is to say that, having pleaded the case in the way in which we have, we must be taken to have pleaded that our cause of action is in respect of a loss suffered when we bought the transformers. But your Honour, just like the person who buys the building with the latent defects that one day will emerge into cracks that devalue it, we acquired transformers in the market in circumstances in which the day after we acquired them, just like the building with the canker working away at its foundations, our transformer was worth exactly what we paid for it the day before and remained so, and remained so until the fact of the cartel and the fact that the market was rigged emerged."
177 Mr Keane submitted that Energex's position should be regarded as analogous to that of the purchasers in the latent defect building cases. He submitted that the price paid by Energex exceeded the true value of the transformers in a market that had not been "rigged" by the respondents' conduct. The suggestion that Energex could have sued the respondents for the difference between the price paid, and their "value", the day after they had been purchased, was misconceived. The only measure of true market value would have been a hypothetical fair and honest market. That would have required the fact that the market had been rigged to become manifest.
178 I consider that Wardley provides some support for Mr Keane's argument. I refer in particular to the discussion by Brennan J of the principle that a loss is suffered only when the true extent of the benefit and burden of the various transactions can be ascertained. Mr Keane's approach is also supported by Karedis. On that analysis, Energex could not be said to have paid more than the market value for the transformers purchased until it became clear what that market value actually was. That could not have occurred until it was discovered that the market had been rigged.
179 In summary, therefore, the primary case advanced on behalf of Energex seems to me not to be that it suffered loss at the moment it paid for the transformers, but rather, that it suffered loss because it paid more than it ought to have done, in a free market. It is arguable that Energex did not suffer loss, within the meaning of that expression in s 82(2), until the market-rigging became manifest. At that point, it could be ascertained that it had suffered loss, and that loss could be quantified.
180 I should emphasise that I am making no final determination on this point. The only question that must be considered at this stage is whether Mr Keane's submission that Energex's claims under s 82(2) are not time barred is arguable. For the reasons set out above, in my view, that submission is tenable.
181 Mr Keane also put Energex's case on several alternative bases. He submitted that the use of the word "suffers" in s 82(1) connotes knowledge, on the part of the victim, of the facts that give rise to the loss or damage alleged. He accepted that there was no authority directly in point that supported that contention. However, he submitted that there were highly persuasive dicta in cases such as Hawkins v Clayton, and Wardley,that broadly fortified it.
182 Hawkins v Clayton concerned a will made in 1970 appointing an executor, and leaving him the residue of the testatrix's estate. The will was retained by the solicitors by whom it was drawn. The testatrix died in January 1975, but the solicitors made no attempt to locate the executor and inform him of the will until March 1981. In October 1982, the executor obtained a grant of probate. Between the testatrix's death, and March 1981, the main asset of her estate, a house, was permitted to fall into disrepair and to lie vacant for a substantial time.
183 By majority, the High Court held that the solicitors were under a duty to take reasonable steps to find the executor and inform him of the existence and terms of the will. The majority also held that the solicitors were in breach of that duty, and liable in damages. They held that the action was not barred by s 14(1) of the Limitation Act 1969 (NSW).
184 Brennan and Gaudron JJ arrived at this conclusion on the ground that the cause of action did not accrue until the executor assumed office in March 1981. Deane J reasoned that the cause of action did not accrue until the expiration of the period in which the wrongful act itself effectively precluded the bringing of proceedings.
185 Wardley concerned an action by the State of Western Australia claiming damages for loss it alleged that it had suffered as a result of misleading and deceptive conduct on the part of a company called Wardley Australia Ltd. That conduct was said to have led the State to grant an indemnity to the National Australia Bank against a facility granted by the bank to Rothwells Ltd. The statement of claim alleged that at a meeting on Saturday, 24 October 1987, representations were made on behalf of Wardley to the effect that Rothwells had very substantial net assets, that it did not suffer a capital deficiency but simply a liquidity problem, and that there were no substantial amounts owed to Rothwells by Laurie Connell, or interests associated with him. It was in reliance upon those representations, that were false, that the State, on 26 October 1987, executed the indemnity. In due course, the bank called on the indemnity. The State disputed its liability, and the dispute was later settled by the State paying the bank $10.5 million.
186 On 14 January 1991, the State amended its statement of claim so as to rely on an additional representation made by Wardley at a meeting on Sunday 25 October 1987 to the effect that Rothwells was a sound financial institution that had substantial net assets. It was alleged that this was not the case, and that the State had been induced to give this indemnity on the basis of the misleading statements made by Wardley on the Sunday, as well as on the preceding day.
187 The trial judge, French J, struck out the amendment on the ground that it pleaded a cause of action that was outside the time limit prescribed by s 82(2). The Full Court allowed an appeal by the State, and Wardley appealed to the High Court from that judgment. It was held, by majority, that where as a result of misleading or deceptive conduct a person grants an indemnity under which he is obliged to make a payment when the loss of the party to be indemnified is ascertained, and quantified, the person granting the indemnity suffers no loss until the contingency is fulfilled. Accordingly, time did not begin to run under s 82(2) until that event occurred.
188 Deane J, who together with Toohey J dissented, referred to his earlier views in Hawkins v Clayton. His Honour observed at 540:
"In Hawkins v Clayton, a majority of the Court implicitly or explicitly rejected a submission that the Court should recognize a general overriding qualification of the prima facie position that a requirement of loss or damage as an ingredient of a cause of action is satisfied as soon as relevant loss or damage is in fact sustained. That suggested qualification was to the effect that, at least in the case of claims in negligence for damages for economic loss, time under a limitations provision does not commence to run until the stage is reached when the plaintiff discovers, or could on reasonable inquiry have discovered, that the loss has been sustained. If such a broad overriding qualification had been adopted in relation to such claims, reasoning by analogy would have lent strong support for the conclusion that, in a case such as the present where the action under s 82(1) is for damages for economic loss caused by misleading conduct in contravention of s 52 of the Act, time does not commence to run until the plaintiff knows or reasonably ought to know that the relevant conduct has in fact caused loss. The Court's rejection of such an overriding qualification does not, however, alter the fact that, in some of the cases where an action lies in negligence for pure economic loss, no relevant loss is actually sustained or suffered and no cause of action for damages accrues unless and until some actual adverse consequence of the negligence is known or becomes manifest. Nor does the rejection of such a qualification provide, by analogy or otherwise, a general answer to the question whether the mere incurring of a contingent liability to make a future payment of itself constitutes loss or damage for the purpose of determining when a cause of action of which loss or damage is a necessary ingredient accrues or arises." (footnotes omitted)
189 Brennan J said at 536-537:
"The cause of action created by s 82(1) has several elements, but it is a cause of action for the recovery of money representing loss or damage suffered by the plaintiff - "the amount of the loss or damage". The loss or damage includes, of course, economic loss or damage which the plaintiff suffers. …"
190 His Honour then set out the passage contained at [129] above, to which Mr Keane referred, and continued:
"False representations contravening s 52, like fraudulent misrepresentations and negligent misstatements, may induce a plaintiff to act or to refrain from acting and the relevant loss or damage may flow from the plaintiff's own act or omission and only indirectly from the defendant's contravening conduct. The relevant transaction may be between the plaintiff and a third party, not between the plaintiff and the defendant. Each case requires an analysis of its particular circumstances in order to identify the transaction, the nature of the loss or damage actually suffered by the plaintiff and, where there are benefits and burdens, their components. Once the loss or damage is identified, the date when it was suffered can be ascertained.
… There is a sense in which it is right to say that, when a misrepresentation induces a plaintiff to enter into a transaction in which the plaintiff suffers a loss, the loss is suffered once the plaintiff becomes bound to the transaction. The die is then cast and what follows can be viewed as evidence proving the extent of the loss suffered when the first binding step was taken. That may be the correct analysis when the first binding step is such that, whatever extrinsic circumstances may transpire, a loss must be suffered. For example, when an asset is purchased for a price and, by reason of an inherent defect, it is worth less than the price paid, a loss may said to be suffered when the plaintiff pays the price or becomes bound to pay the price. Similarly, when an agreement imposes on a plaintiff an obligation to pay an amount of money without acquiring a benefit and the amount to be paid is quantified by no factors extrinsic to the agreement save the passing of time, it is right to say that the loss is suffered when the agreement to pay becomes binding on the plaintiff. But when the actual loss that a plaintiff suffers depends not only on the making of an agreement but also on circumstances extrinsic thereto, the loss is not suffered until those circumstances have transpired and, in benefit and burden cases, not until the loss is ascertainable. The present case does not involve any acquisition by the State of a contractual benefit: there was simply an indemnity given to the Bank which entitled the Bank to demand the payment of money upon certain contingencies." (footnotes omitted)
191 Mr Keane accepted that on his analysis, if the cartel had never come to light, then even though Energex would have paid more that it ought to have done by reason of the cartel's existence, it would not have "suffered" any loss or damage. That conclusion seems to me to be counter-intuitive.
192 I have difficulty in accepting this alternative variant of Energex's case. It relies upon a somewhat strained meaning being given to the word "suffers" in s 82(1). In ordinary parlance, a person can "suffer" loss or damage without being aware of the facts that give rise to that loss or damage. The analogy between the present case, and the case of a latent building defect, is not nearly as exact as Mr Keane contends, nor is the analogy between the present case, and a contingent liability case, such as Wardley.
193 That does not detract from the force of Mr Keane's contention that it hardly lies in the mouth of those who have engaged in serious and persistent misconduct to say that, having managed to keep their nefarious deeds secret for a sufficiently long time, they are entitled to take the benefit of a limitation defence. The miscreants, having by their conspiracy not merely injured Energex, but also prevented it from discovering what was happening, should not be permitted to take advantage of their own misconduct.
194 There is no doubt in my mind that a person who buys what he or she is told is a famous painting, but is in fact a forgery, should be able to recover damages from the fraudulent vendor, provided proceedings are brought within the relevant limitation period once the fraud has been discovered. The question is whether it requires legislation to produce this result, or whether there is some other way in which it can be achieved.
195 For reasons that are difficult to understand, s 82(2) contains no express fraud exception. Mr Keane submits that this is because the word "suffers" was intended to do the work of such an exception. Alternatively, he submits, that it is because relief is available, in any event, under s 87. These are possible explanations, though they seem to me to lack cogency.
196 It is unnecessary, at the present stage, to come to any firm conclusion about this matter. It is sufficient to say, as I have done, that it is arguable that in cases where what is claimed is economic loss arising from the purchase of an asset, no loss is suffered until there has been an actual balancing of benefits and burdens, leading to the conclusion that loss has been incurred. Alternatively, no loss is suffered until it becomes possible to ascertain that an adverse balance has been struck.
197 I consider that so much follows from the reasoning of the majority in Wardley at 527:
"Economic loss may take a variety of forms and, as Gaudron J noted in Hawkins v Clayton, the answer to the question when a cause of action for negligence causing economic loss accrues may require consideration of the precise interest infringed by the negligent act or omission. The kind of economic loss which is sustained and the time when it is first sustained depend upon the nature of the interest infringed and, perhaps, the nature of the interference to which it is subjected. With economic loss, as with other forms of damage, there has to be some actual damage. Prospective loss is not enough.
When a plaintiff is induced by a misrepresentation to enter into an agreement which is, or proves to be, to his or her disadvantage, the plaintiff sustains a detriment in a general sense on entry into the agreement. That is because the agreement subjects the plaintiff to obligations and liabilities which exceed the value or worth of the rights and benefits which it confers upon the plaintiff. But, as will appear shortly, detriment in this general sense has not universally been equated with the legal concept of "loss or damage". And that is just as well. In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever-present risk of undercompensation or overcompensation, the risk of the former being the greater." (footnotes omitted)
198 I note that the majority in Wardley specifically disapproved of Jobbins and, in particular, the proposition in that case that loss or damage is sustained on entry into an agreement induced by a false, negligent or misleading misrepresentation. The majority said of Jobbins at 529:
"But we have difficulty in accepting that the applicant suffered loss or damage on entry into the agreement merely because the investment was alleged to lack the represented qualities. On this aspect of the case, the question was whether the investment was worth less than the applicant contracted to pay for it and, if so, when the applicant first sustained loss or damage. How that question could be answered in the absence of evidence is not evident to us. Although the investment lacked the represented qualities, it may have been worth no less than the consideration provided by the applicant."
199 The majority continued at 530-531:
"In the case of a fraudulent or negligent misrepresentation which induces the plaintiff to enter into a contract to purchase property, the plaintiff's loss, apart from any question of consequential damage, is measured by the difference between the price paid or payable under the contract and the value of the property at the date of the contract. It will be noticed that, even in such a case, Dixon J spoke in Potts v Miller (an action in deceit) of the measure of damages consisting in "the loss or expenditure incurred by the plaintiff in consequence of the inducement upon which he relied, diminished by any corresponding advantage in money or money's worth obtained by him on the other side". It is that amount that, in such a case, represents "the prejudice or disadvantage" the plaintiff "has suffered in consequence of his altering his position under the inducement of the fraudulent misrepresentations made by the defendant", subject to any consequential damage. Putting aside the incurring of expenditure, these statements might be thought to indicate that a plaintiff does not sustain loss until that loss is ascertained or, at least, is capable of ascertainment.
Be that as it may, the English decisions have proceeded according to the view that, where the plaintiff is induced by a negligent misrepresentation to enter into a contract and the contract, as a result of the negligence, yields property or contractual rights of lesser value, the plaintiff first suffers financial loss on entry into the contract, notwithstanding that the full extent of the plaintiff's financial loss may be incapable of ascertainment until some later date. In part, the English approach appears to have been influenced by the general principle stated in Darley Main Colliery Co v Mitchell that damages in respect of a cause of action are awarded on a once and for all basis. But that principle tells us very little, if anything, about the time when the plaintiff first suffers loss or damage in the circumstances of a particular case, except that, properly understood, Darley Main Colliery emphasizes the need for actual, as distinct from prospective, damage before prospective damages can be included in the award.
Another element in some of the English decisions, as in Jobbins, is the conclusion that, because the subject matter of the agreement lacked the qualities which it had been represented as having, that subject matter was therefore less valuable than it would have been if the representations had been true. That conclusion is acceptable in cases in which the contract measure of damages is appropriate but it is not acceptable here where the contract measure of damages does not apply. The application of that measure of damages may, in some situations, enable a court to conclude more readily that the plaintiff first suffers loss or damage on entry into an agreement.
It has been contended that the principle underlying the English decisions extends to the point that a plaintiff sustains loss on entry into an agreement notwithstanding that the loss to which the plaintiff is subjected by the agreement is a loss upon a contingency. For our part, we doubt that the decisions travel so far. Rather, it seems to us, the decisions in cases which involve contingent loss were decisions which turned on the plaintiff sustaining measurable loss at an earlier time, quite apart from the contingent loss which threatened at a later date." (footnotes omitted)
200 Finally, the majority in Wardley stated at 533:
"The conclusion which we have reached is reinforced by the general considerations to which we referred earlier. It is unjust and unreasonable to expect the plaintiff to commence proceedings before the contingency is fulfilled. If an action is commenced before that date, it will fail if the events so transpire that it becomes clear that no loss is, or will be, incurred. Moreover, the plaintiff will run the risk that damages will be estimated on a contingency basis, in which event the compensation awarded may not fully compensate the plaintiff for the loss ultimately suffered. These practical consequences which would follow from an adoption of the view for which the appellants contend outweigh the strength of the argument that the principle applicable to the cases in which the plaintiff acquires property (or a chose in action) should be extended to cases where an agreement subjects the plaintiff to a contingent loss. In such cases, it is fair and sensible to say that the plaintiff does not incur loss until the contingency is fulfilled."
201 Recently, the High Court has looked again at the question of when contingent losses are sustained. In Murphy v Overton Investments Pty Ltd (2004) 204 ALR 26, the applicants took a 99-year lease over a unit in a retirement village owned and managed by Overton Investments Pty Ltd. Prior to, and at the time they entered into the lease, Overton gave them an estimate of the amount that they would be required to contribute towards outgoings. It explained that this was an estimate only, and would be subject to variation from time to time.
202 The estimate was based on figures that did not reflect the actual cost of outgoings. Nor did it take into account all of the various outgoings that Overton was entitled to recover. In 1997, Overton began charging the applicants for all outgoings that could properly be charged under the lease. The applicants brought proceedings alleging breaches of s 52 and sought orders under s 87, limiting the contributions that they were required to pay. In the alternative, they sought damages under s 82. Those damages reflected the difference between the value of the lease if contributions were calculated in accordance with Overton's legal entitlement, and the value of the lease if contributions were charged in accordance with a restriction on its recovery entitlements.
203 The applicants succeeded at first instance in proving that Overton had engaged in conduct that was misleading or likely to mislead. His Honour also concluded that Overton's conduct had caused the applicants to enter into the lease. However, he held that they had not proved that they had suffered any loss or damage. That was because there was no difference between the price paid under the lease, and its value at the date of the lease. Nor was there any evidence that the applicants were not receiving value for the maintenance fees that they were required to pay. An appeal to the Full Court was dismissed. However, the High Court reversed the trial judge's decision, and remitted the matter to him for assessment of damages and interest.
204 The reasoning of the High Court can be summarised as follows. The Full Court erred in concluding that the applicants had not proved loss or damage. It is not correct to assume that in every misrepresentation case, the only type of damage that could be redressed under Pt VI of the Act was a difference between price and value, or any consequential loss. Although there was no evidence that the applicants had not received value for the maintenance fees that they paid, it did not necessarily follow that they did not incur loss.
205 The High Court also reiterated what had been decided in Marks v GIO, namely that the operation of Pt VI should not be approached by drawing analogies from the tort of deceit, or any other claims under general law. The expression "loss or damage" should not be given a narrow meaning, and was not confined to economic loss. Importantly, the Court held that if a party enters a contract that exposes that party to a contingent loss or liability (that is, the possibility of future detrimental consequences), no damage is sustained until the contingency is fulfilled and the loss becomes actual. In the instant case, the applicants suffered loss when Overton starting charging the full amount of the outgoings that it was entitled to charge. Their Honours said at [55]:
"What the appellants did not know was that the estimate of outgoings they were given did not provide for all the outgoings that were then being incurred. Here, therefore, the appellants suffered no loss as a result of undertaking the obligations they did unless and until the contingency which the misrepresentation hid (that items other than those used to form the estimate were then being incurred and could be charged as outgoings) was first realised. That was a contingency in the sense that the adverse risk might never have eventuated. When the lease was entered in 1992, the respondent was charging levies in relation only to limited categories of the overall outgoings. The respondent might have chosen to continue to charge the appellants only for those limited categories. On the other hand, it was possible that after 1992 it might decide to charge for wider categories. It was only from the time when it in fact decided to depart from the 1992 position and charge for the wider categories that the adverse risk eventuated. When it did, but only then, the appellants suffered loss and damage. And this court's decision in Wardley requires the conclusion, on the evidence in this case, that it was only when the contingency came to pass that the appellants sustained loss or damage. It follows that no limitation defence was available." (footnote omitted)
206 The Court also said at [66]:
"The appellants had been induced by the respondent's conduct to undertake an obligation which may, but need not, have been more onerous than the respondent's representation led them to believe. When the respondent started to charge all the outgoings it was entitled to charge, the appellants suffered a loss. The amount of that loss was not to be determined, as the majority of the Full Court held, only by comparing the financial position of the appellants according to whether they entered this lease or took some other accommodation. The appellants did not contend that they had suffered loss in that way. The appellants suffered loss because the continuing financial obligations they undertook when they took the lease proved to be larger than they had been led to believe."
207 The present case differs in several important respects from both Wardley and Murphy v Overton. There is no question of Energex having entered into a contract that exposed it to a "contingent loss or liability". Nonetheless, the reasoning in those cases, and the reasoning in Karedis, at least lends some support to Mr Keane's argument that Energex did not suffer loss or damage at the moment it entered into each of the agreements pleaded. Rather, it suffered loss only at the point that it could be ascertained that the price it had paid exceeded the market value of the goods. That is, of course, treating "market value" as a value untainted by market rigging.
208 It is not necessary, therefore, to determine whether Mr Keane's alternative contention as to the meaning of the word "suffers" is arguable in order to conclude that Energex should not be shut out of court, at this stage, on the basis of s 82(2).
209 It is also unnecessary to accept as arguable Me Keane's somewhat elaborate submissions regarding what Energex might do in the event that the respondents seek to rely upon s 82(2) as an answer to the claim for damages under s 82(1). Mr Keane pointed out that it was theoretically possible that the respondents would not plead the limitation defence. He submitted that no application for summary dismissal should be entertained until that defence had at least been pleaded.
210 I am not persuaded by that submission. The various notices of motion presently before the Court make it abundantly clear that the respondents will, if required to file defences, plead the limitation defence. Mr Keane's suggestion that they may not do so is entirely unrealistic.
211 The next point raised by Mr Keane was that any attempt on the part of the respondents to plead a limitation defence would be met by an amendment to the statement of claim, by way of reply, in which Energex would seek damages based not upon the original breaches of s 45, but rather upon the unconscionable conduct involved in pleading the defence. Mr Keane contended that such relief would arise pursuant to s 51AC. Alternatively, he submitted that Energex would be entitled to recover damages, pursuant to the causes of action already pleaded, or to obtain injunctive relief to prevent the respondents from pleading that defence.
212 I am greatly impressed by the ingenuity of the argument. I am rather less impressed by its merits.
213 Mr Keane submitted that any attempt to plead the limitation defence would amount to conduct "in trade or commerce". Section 51AC relevantly provides:
"(1) A corporation must not, in trade or commerce, in connection with:
(a) the supply or possible supply of goods or services to a person (other than a listed public company); or
(b) the acquisition or possible acquisition of goods or services from a person (other than a listed public company);
engage in conduct that is, in all the circumstances, unconscionable.
(2) A person must not, in trade or commerce, in connection with:
(a) the supply or possible supply of goods or services to a corporation (other than a listed public company); or
(b) the acquisition or possible acquisition of goods or services from a corporation (other than a listed public company);
engage in conduct that is, in all the circumstances, unconscionable.
…"
214 Section 51AC(4) contains a series of matters to which the Court may have regard when determining whether either ss 51AC(1) or 51AC(2) has been contravened.
215 Section 51AC(5) provides:
"5. A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with:
(a) the supply or possible supply of goods or services to another person; or
(b) the acquisition or possible acquisition of goods or services from another person;
by reason only that the first-mentioned person institutes legal proceedings in relation to that supply, possible supply, acquisition or possible acquisition or refers to arbitration a dispute or claim in relation to that supply, possible supply, acquisition or possible acquisition."
216 Mr Keane submitted that any party who enters into a contract, and then seeks to plead a defence, or seeks to take advantage of a legal right, in circumstances where it would be "unconscionable" to do so, thereby contravenes s 51AC. He submitted that s 51AC(5) supported that contention, and he relied in particular upon the use of the expression "by reason only that".
217 I am not persuaded by that submission. It requires the expression "in trade or commerce" to be given an unduly wide meaning. It is also difficult to reconcile with those authorities that have dealt with the meaning of that expression in this context. For example, in Little v Law Institute of Victoria & Ors (No 3) [1990] VR 257, the Full Court of the Supreme Court of Victoria held that a statement made by the respondent during the course of proceedings brought against the appellant seeking to restrain the appellant from practising as a solicitor could not give rise to a claim under the Fair Trading Act 1985 (Vic).
218 In a joint judgment, Kaye and Beach JJ said at 273:
"In our opinion, statements made during the course of litigation cannot be categorised as statements made in trade or commerce nor can they categorised as representations."
219 Their Honours referred to Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 22 ALR 621 where Bowen CJ explained that the words "trade" and "commerce" were ordinary terms which described all the "mutual communings" that comprised commercial arrangements or commercial dealings. They then concluded:
"A statement made to a court during the course of litigation is not a statement made in connection with or as part of a commercial arrangement."
220 See also the observations of Ormiston J at 292, which are to the same effect.
221 I also note that in Australian Associated Motor Insurers Ltd v NRMA Insurance Ltd (2002) 124 FCR 518, Conti J held that a claim that the NRMA and the second respondent, who was a solicitor who acted under retainer agreements from NRMA-insured parties, had contravened s 52, should be struck-out because the conduct about which the applicant complained did not occur "in trade or commerce". His Honour applied the test laid down in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 603-604 in arriving at that conclusion. In substance, he accepted that the conduct of litigation in court on behalf of a client does not amount to engaging in an activity having a trading or commercial character.
222 On the present state of the authorities, any attempt on the part of Energex to invoke s 51AC in response to a pleading of a limitation defence is unlikely to succeed. The same may be said regarding Mr Keane's submission that the equitable jurisdiction of the Court could be invoked to enjoin the respondents from relying upon any limitation defence. There is no basis, in the present case, for invoking an estoppel of the kind raised in The Commonwealth v Verwayen (1990) 170 CLR 394. The respondents have not undertaken, expressly or impliedly, not to plead a limitations defence. I accept that in Hawkins v Clayton, Deane J flagged the possibility that an injunction might go to prevent reliance upon such a defence in circumstances where it would be unconscionable to permit it to be raised. However, his Honour's analysis does not seem to have commended itself to the other members of the Court.
223 Mr Keane also relied upon what is known in the United States as the "doctrine of fraudulent concealment". He referred to Atlantic City Electric Co v General Electric Co 312 F2d 236 (1962), a decision of the United States Court of Appeals, Second Circuit. In that case, the majority referred to that doctrine, and its application in every Federal statute of limitation. In effect, the Court held that the doctrine applied unless Congress expressly provided to the contrary, in clear and unambiguous language.
224 A similar approach had earlier been taken by the United States Supreme Court in Bailey v Glover 88 US 342 (1874). There, it was held that, at least in equity suits, time did not run in cases of fraudulent concealment until the fraud had been discovered. The Court observed that the position at common law was less clear, but on balance, the same principle ought to apply.
225 The difficulty with my placing any reliance upon these authorities is that the Full Federal Court in Wardley expressly considered, and rejected, any such principle. It noted, for example, that in England, historically, limitation statutes had been construed in a manner that favoured defendants. That led to the enactment of the Latent Damages Act 1986 (UK) which inserted s 14A into the Limitation Act 1980 (UK). This had the effect that the starting date for the reckoning of the period of limitation would be the earliest date on which the plaintiff first had both the knowledge required to bring an action, and the right to do so.
226 The Full Court in Wardley observed that the older English authorities had not escaped criticism. Nonetheless, those cases had been repeatedly followed in Australia and left little room for the invocation of any equitable doctrine of concealed fraud. The Full Court observed at 269:
"The equitable doctrine of concealed fraud does not operate to prevent a defendant to a purely legal claim, not being a claim also cognisable in the concurrent jurisdiction of an equity court, from pleading the Statute of Limitations."
227 The Full Court noted that strong criticisms had been levelled at this approach by various commentators and law reform bodies. It said at 270:
"In 1936, the contrary views of McCardie J in Lynn v Bamber drew some anxious comment in par 22 of the Fifth Interim Report of the Law Revision Committee which dealt with statutes of limitation: see also the cautious treatment of the subject by D B Ross, "Concealed Fraud and the Statute of Limitations" (1930) 4 ALJ 174. The result was a recommendation by the Committee (since embodied in the British legislation) that in all cases in which the statutes of limitation apply, or are applied by analogy, (a) where a cause of action is founded on fraud, committed by the defendant or his agent or some person through whom he claims, or (b) where a cause of action unconnected with fraud is fraudulently concealed from the plaintiff by the defendant or his agent or some person through whom he claims, the right of the plaintiff to sue should be deemed to have first accrued at the time when the plaintiff discovered such fraud, or could with reasonable diligence have discovered it. The New South Wales and Victorian legislation, to which Davies J referred in Fenech v Sterling, expresses the same policy. We were told that there was no such legislation in Western Australia. (No question arose on this appeal as to whether, consistently with the scope of s 82 of the Act, there remained room for the operation of s 79 of the Judiciary Act to pick up any State limitation statute: see Vink v Schering Pty Ltd (No 2) [1991] ATPR 52,113.)"
228 Having given the matter careful consideration, the Full Court concluded:
"But the question for us is whether there is room for the application of this particular equitable doctrine to defeat reliance upon a limitation provision contained within the statute conferring the cause of action. The equitable doctrine is expressed in terms of claims arising under the general law, whether they might be characterised as legal or equitable. It is not couched in terms which extend to claims created purely by statute. In such cases, the statute has to be given its full effect including any engrafted time limitation of whatever character. That, in our view, is what follows from the decision of the High Court in Crown v McNeil."
229 Nothing said by the High Court in Wardley, when the case went on appeal, casts any doubt upon the correctness of the approach taken to this issue by the Full Court. Other cases that are in point, including Scarcella v Lettice (2000) 51 NSWLR 302, point in the same direction. See generally the observations of Handley JA in Scarcella at 306 and 308.
230 In Scarcella it was held that time commenced to run, in an action for negligence, when damages accrued, even though the purchasers were not aware of the defect in title. The defect in question was not latent, and could have been discovered had the solicitors who acted for the plaintiff adopted normal conveyancing procedures.
231 On the present state of the authorities, the doctrine of concealed fraud cannot be invoked in answer to the respondents' foreshadowed reliance upon s 82(2). The authorities suggest that there may be some scope for the application of the doctrine of equitable estoppel, but it is clearly premature to consider that possibility. There would need to be a great deal more known about the facts before any definitive conclusion could be reached.
232 Some commentators have noted that in cases of fraud, statutes of limitations have been given a special application in equity. For example, I C F Spry, in The Principles of Equitable Remedies 5th ed, 1997, observes at pp 424 and following, that courts of equity would not ordinarily allow a statute of limitations to be set up, in equitable proceedings, in respect of time during which, by reason of the fraud of the defendant, the plaintiff was not aware of his or her right of action. He says that the precise basis upon which equitable relief was granted had been the subject of controversy but "should probably be found in the general disposition of courts of equity to prevent fraudulent reliance on rights". He also says that there has been some uncertainty as to whether courts of equity would intervene to prevent the setting up of statutory limitation periods in common law actions.
233 The learned authors of Meagher, Gummow & Lehane's Equitable Doctrines & Remedies, 4th ed, 2002, essentially agree with this analysis. They point out that when the Court of Chancery developed the doctrine of applying statutes of limitation, by analogy, it refused to do so in cases of "concealed fraud". There were two main classes of case to which the doctrine applied: (a) when the action was one alleging fraud, in which case time did not run until the discovery of the fraud; and (b) where the cause of action did not involve fraud but its existence was fraudulently concealed by the defendant, in which case time did not run until both the concealment had been discovered, and the cause of action ascertained. They suggest that the former category included actions involving the common law notion of deceit.
234 Whatever rules developed in equity regarding the taking of limitation defences in cases of fraud seem to have been confined to purely equitable proceedings. In Meagher, Gummow & Lehane, it is said at [34-095] that the equitable doctrine of concealed fraud furnished an answer only to equitable claims. It could not be used to furnish grounds for an injunction restraining a defendant at law from pleading the statute of limitations. See generally Imperial Gas Light and Coke Co v London Gas Light Co (1854) 10 Exch 39; 156 ER 346, Hunter v Gibbons (1856) 1 H & N 459; 156 ER 1281, Armstrong v Milburn [1886-90] All ER Rep 596, and R v McNeil (1922) 31 CLR 76 at 99-100. The New South Wales Court of Appeal took the same approach in Metacel Pty Ltd v Ralph Symonds Ltd (1969) 90 WN (Pt 1) (NSW) 449 at 452, a case cited with approval by the Full Court in Wardley.
235 In such cases, time did not begin to run against a plaintiff so long as, by reason of the fraud of the defendant, the plaintiff was not aware of the matters giving rise to the cause of action. See for example Gibbs v Guild (1882) 9 QBD 59 at 69. According to Dr Spry, the better view was that fraud included, for these purposes, fraudulent concealment after a cause of action accrued. He noted, however, that much of this old learning had been superseded by the passage of legislation dealing with limitation periods.
236 In summary, I am not persuaded that Energex's claims for damages under s 82(1) are untenable. It is at least arguable that any loss or damage suffered by Energex did not occur until after 26 July 1998, the date on which time began to run. Whether or not the limitation defence ultimately succeeds will be a matter for the trial. It is not a matter for summary dismissal.
237 I am fortified in my conclusion regarding this matter by what the High Court said in Wardley. The majority observed in its joint judgment at 533:
"We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question."
238 In Cubillo v Commonwealth (1999) 89 FCR 528, O'Loughlin J adopted a similarly cautious approach at 580-590. His Honour supported that approach by reference at 588 to a passage from the judgment of the Queensland Court of Appeal in Noble v Victoria [1999] QCA 110.