Henry & Henry v Calamvale Estates Pty Ltd [1997] QSC 200

Supreme Court of Queensland|1997-10-22|Before: Mr J, Muir J

(a) to join South Pacific Trading and Management Pty Ltd as the second plaintiff in the action;

(b) to join Trevor David Chappell as second defendant in the action;

(d) to obtain leave to file and serve an amended statement of claim;

(e) for an order that the amendments consequent upon the above take effect from 4 November 1996.

The defendant respondent opposes the application, principally on the grounds that the claims intended to be made against the proposed new defendant and by the proposed new plaintiff are statute-barred. It also contends, that in so far as the proposed amendments to the statement of claim relate to claims by the applicants against the respondent, they too are statute-barred and should not be allowed.

The following chronology shows the leisurely progression of the action thus far-

18 March 1996 Applicants deliver notice of intention to proceed

11 November 1996 Summons filed by applicants seeking orders generally similar to those now sought.

26 September 1997 Filing of the summons now before me.

In the present statement of claim the applicants seeks specific performance of a contract ("the contract") which is alleged to be constituted partly by writing and partly by conduct. In broad terms, the allegations are as follows-

· The applicants and the respondent owned adjoining parcels of land. The applicants' land will be referred to as "the Henry land" and the respondent's as "Calamvale Estates".

· The respondent sought rezoning of Calamvale Estates.

· The applicants objected to the rezoning. The Council policy was that the Henry land should have only limited vehicular access to Beaudesert Road, which comprised one frontage of the Henry land. If the Henry land was to be subdivided profitably access to the subdivided parcels would need to be provided through Calamvale Estates.

· Under the contract the applicants agreed to withdraw their objection to the rezoning application in consideration of the respondent agreeing to provide "efficient road access from (Calamvale Estates) to mutually agreed positions on the western boundary of the Henry land . .".

· It was an implied term of the contract that the road access be provided within a reasonable time of the making of the contract.

· A reasonable time has elapsed and the respondent has refused to provide the access in accordance with the contract.

· The applicants are unable to develop the Henry land until road access is provided and have suffered loss and damage.

The applicants now seek to introduce claims for damages for misleading and deceptive conduct in breach of s.52 of the Trade Practices Act and for related relief under s.87 of that Act. The allegations against the respondent may be summarised as follows-

(a) the respondent represented to the applicants that-

(i) it would provide efficient road access to the Henry land;

(ii) such access would be provided within a reasonable time;

(b) the conduct referred to in (a) was misleading and deceptive in that the representations did not accord with the respondent's intention at any relevant time;

(c) the respondent failed to inform the applicants of the fact that the respondent had no intention of providing access within any reasonable time and there was thus a misrepresentation by silence;

(d) the respondent had no reasonable grounds for making the representations;

(e) in reliance on the representations the applicants withdrew their objections to the rezoning application;

(f) the applicants suffered loss and damage in that-

(i) they lost the opportunity of entering into a contract with the respondent to provide appropriate road access to the Henry land; or

(ii) they lost the opportunity of obtaining appropriate conditions from the Brisbane City Council to protect the interests of the applicants;

(g) the respondent failed to provide access within a reasonable time or during the development of the first stage of the respondent's subdivision and that has resulted in loss and damage to the applicants.

The loss and damage is further particularised as follows-

(a) the respondent failed to provide access to the Henry land either within a reasonable time from the date of the contract or during the development of the first stage of the respondent's proposed subdivision of Lot 3;

(b) the applicants "have lost the profits they would have made if they had been able to avail themselves of the commercial opportunity".

(c) the above matters denied the respondent of a valuable commercial opportunity which resulted in damage "once it became clear that the (respondent) was not going to fulfil its promise to provide access within time frames referred to".

(d) the applicants have been deprived of the use of profits which they would have earned from developing the Henry land and Lot 18 and have also incurred holding costs.

The general thrust of the allegations in respect of the proposed second plaintiff ("South Pacific") are as follows-

(a) the applicants were the shareholders and directors of South Pacific at relevant times;

(b) South Pacific at relevant times owned Lot 18, which adjoined both the Henry land and Calamvale Estates;

(c) South Pacific suffered loss and damage as a result of the applicants' misleading and deceptive conduct by being deprived of the profit it would have earned in developing Lot 18 and as a result of having incurred holding costs;

(d) the allegations in respect of the applicants are relied on generally to establish a claim by South Pacific.

The allegation against the proposed second defendant Trevor Chappell is that he "was knowingly concerned in or a party to the misleading and deceptive conduct" of the respondent.

The respondent contends that it is plain that the applicants' Trade Practices' claims are statute-barred and also that the applicants have misconceived the basis of their claims in that they are seeking to be compensated as if the alleged promise by the respondent had been performed. It is submitted that the true measure of the applicants' damages, if successful, is the amount necessary to put the applicants in the position in which they would have been if the misleading conduct had not occurred; Gates v. City Mutual Life Assurance Society Ltd (1986) 160 CLR 1. The respondent's outline of submissions assert that-

"If the misleading conduct had not occurred, the Henry claim is based on the proposition that the objection would not have been given up on 5 September 1990. The Henry claim is therefore based on the value of the right to pursue the objection, given up at that date. The objection was valuable, because it was a document which Brisbane City Council had to take account of, and because it gave Henry the right to appeal against an approval, or to participate in an appeal against refusal, by the Council under the provisions of the Local Government Act. It is plain from the alleged contract, that the objection was a valuable right; Henry alleges that the objection was given up on the promise of the construction of the road to the western boundary of the land."

It is further submitted that, on the applicants' case, damage was suffered by August 1993 at the latest. It is said that "by that time, the time for provision of road access to the western boundary of the Henry land had expired" and the Henry land was deprived of the promised road access. The submission is based on particulars to the allegations in paragraph 35(c) which state-

"The deprivation of the valuable commercial opportunity only caused the first plaintiffs damage once it became clear that the first defendant was not going to fulfil its promise to provide access within the time frames referred to. The following measure of damages proceeded on the assumption that those time frames expired in August 1993."

In relation to South Pacific's claims the applicants submit, additionally, that they are ill-founded because-

(a) its loss is alleged to be the loss of profits from the development (and holding cost and interest after August 1993);

(b) South Pacific pleads that it purchased Lot 18 in September 1991. If that parcel of land was purchased for full value, no loss or damage has been suffered. If it was purchased for more than its true value the loss was suffered in September 1991.

THE AUTHORITIES GENERALLY ON LIMITATION PERIODS

In Wardley Australia Ltd v. Western Australia [1992] HCA 55; (1992) 175 CLR 514 the Court warned of the undesirability of determining limitation points in interlocutory proceedings. It was said in the joint judgment at 533-4-

"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 was sustained to justify a confident answer to the question."

"The case, however, provides a good illustration of the difficulty and undesirability of trying to determine a limitation point in interlocutory proceedings, unless the position is clear beyond peradventure."

Determining the point at which loss occurs so as to constitute a cause of action and commence a limitation period running is often a difficult matter, particularly in the absence of appropriate findings of fact. That may be seen, for example, from the following observations in the joint judgment in Wardley at 527-

"Economic loss may take a variety of forms and, as Gaudron J. noted in Hawkins v. Clayton (1988) 164 CLR 539 at pp.600-601, 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 . . 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 become 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."

Magman International v. Westpac [1991] FCA 41; (1991) 32 FCR 1 also illustrates the difficulty of attempting to determine limitation points in the absence of relevant findings of facts. The respondent relied particularly on the following observation of Toohey J. in Wardley 561-2-

"When the Federal Court is faced with an application to amend a statement of claim by introducing allegations that, though they may relate to a time after the relevant limitation period has expired, do no more than expand a cause of action already pleaded, there is no difficulty in treating O.13, r.2 as wide enough to permit such an amendment. But when, as here, the proposed amendment introduces an admittedly new cause of action, the position is quite different. Section 82(2) presents a statutory barrier to any new cause of action; to this barrier, reference to express, implied or incidental powers provides no answer."

"Strictly speaking, it is unnecessary to deal with the question of the power of the Federal Court to amend a statement of claim so as to introduce a cause of action which otherwise would be statute-barred. I would, however, indicate my general agreement with what is said by Toohey J. in relation to that question."

Mason C.J., Dawson, Gaudron and McHugh JJ. did not find it necessary to resolve the question of whether a judge of the Federal Court had power to allow an amendment which adds a cause of action to a statement of claim when that cause of action is otherwise statute-barred. However, it was plain from their reasons at 533-534 that there was thought to be no impediment to granting an amendment merely because it might subsequently be established on the trial of the action that the claim introduced by the amendment expired prior to the limitation period set by s.82(2).

In Jekos Holdings Pty Ltd v. Australian Horticultural Finance Pty Ltd (1994) 12 Qd.R. 515 it was held, in reliance, at least in part of the observations of Toohey J. in Wardley, which I referred to earlier, that s.87(ICA) in so far as it stipulated that an application seeking relief under s.87(1A) "may be commenced . . at any time within three years after the day on which the cause of action accrued" constituted a bar to an amendment to the proceedings before the court claiming relief under s.87(1A). The parties in that case accepted that the cause of action the subject of the amendment had accrued outside the relevant three year period. That is not the position here. As I understand the applicants' submissions it is not contended that leave to join should be given if it is plain that the limitation period has expired.

I do not see anything in Wardley or Magman which, in circumstances in which it is not clear that a limitation period has expired under s.82(2) or 87(ICA), requires a preliminary trial of relevant questions of fact before an amendment can be allowed. In my view, the majority judgment in Wardley proceeds on a contrary assumption.

WHETHER THE NEW CAUSES OF ACTION ARE STATUTE-BARRED

It is not appropriate that I express a concluded view on the prospects of success of the respondent's limitation points. It is sufficient for present purposes for me to state that it is not unarguable that the new causes of action arose with three years of the date of these reasons. For example, the applicants can argue that the "interest infringed" is the value of the Henry land as the applicants' potential trading stock. Whether "actual damage" has accrued may depend on: the way in which the applicants intend to deal with the land, the time at which they intend to so deal; prevailing market conditions and local authority subdivisional requirements at relevant times. It would be easier to reach a conclusion on these matters if the allegations in the proposed pleadings were more adequately particularised. But, even then, determination of the limitations points would tend to prove difficult in the absence of appropriate findings of fact.

CONCLUSIONS IN RELATION TO THE JOINDER APPLICATION

It was urged on behalf of the applicants that if joinder was permitted and leave to amend granted it should be ordered that the amendments take effect from 4 November 1996 when notice was given of intention to bring this summons and when the broad nature of the relief which the applicants wished to obtain was communicated to the respondent.

Under O.3 r.11 the court may permit the joinder of a party to an action notwithstanding that the effect of the joinder might be to permit the plaintiff to proceed against the newly joined party under a cause of action which was statute-barred at the time of joinder. Unless otherwise ordered, a defendant joined under O.3 r.11 becomes a party from the date of joinder and, accordingly, the newly joined defendant is not prevented from raising a limitation defence; Lynch v. Keddell (No.2) (1990) 1 Qd.R. 10 at 17 and the cases there cited. The court has power under O.3 rr.11 and 13 to order that the amendment relate back to an earlier date provided that date is on or after the commencement of proceedings. Such an order will not ordinarily be made if its effect is to deprive a person of an accrued right to plead a statute of limitations; Lynch v. Keddell at p.12.

In those circumstances joinder should be permitted only if "special" or "peculiar" circumstances are made out by the applicant for the joinder; Lynch v. Keddell at p.14. See also Grother v. Maritime Timbers Pty Ltd (1991) 2 Qd.R. 128 at 132 and 139. What constitutes "special" or "peculiar" circumstances was the subject of extensive discussion by Lee J. in Grother. That discussion does not suggest that the applicants have established any "special" or "peculiar" circumstances in relation to their application. Moreover the material before me does not disclose the reason why the parties now sought to be joined were not joined in the first place, how or when the desirability of joinder was first considered, or why the applicant did not proceed expeditiously with the 11 November application. Those are matters relevant to the exercise of my discretion. In any event as is mentioned earlier, the Rules of the Supreme Court can not override the provisions of Commonwealth legislation. If I were satisfied that the causes of action the subject of the joinder application were statute-barred I would dismiss the application. I cannot be so satisfied and I have concluded that I should accede to the application. The respondent and the new party will be able to rely on any limitation defences that are properly open on the facts.

Because the parties have agreed that the respondent should take no benefit from any running of time in this matter after 30 September 1997, I am prepared to order that the joinder take effect from that date.

CONCLUSIONS IN RELATION TO THE AMENDMENT APPLICATION

There is possibly some doubt about the date on which amendments made to proceedings between continuing parties are deemed to apply. Dicta in Lynch v. Keddell at p.17 suggests that they apply as from the commencement of the proceedings between those parties. In Adam v. Shiavon (1985) 1 Qd.R. 1 Campbell C.J., with whom Sheahan and McPherson JJ. agreed, did not deal with the point expressly but referred with implied approval to the following observations of Samuels J.A. in Baldry v. Jackson (1976) 2 NSWLR 415 at 419-

"But an amendment, duly made takes effect, not from the date when the amendment is made, but from the date of the original document which it amends."

Pincus and Davies JJA. in Wilkinson v. Rockdrill Contractors Pty Ltd (9 February 1996, Court of Appeal Queensland, unreported) accepted that the view of the court in Adam v. Shiavon was encapsulated in the above quotation.

Order 32 rule 1(2) expressly permits an amendment to be made after the expiration of a relevant limitation period current at the date of the issue of the writ. Sub-rule (1)(5) allows amendment to add or substitute a new cause of action between existing parties in the circumstances there described. Such amendment may be allowed even after the expiry of the relevant limitation period by operation of r.1(2). But, as I have remarked, the Rules of the Supreme Court cannot override Commonwealth legislation. In the circumstances I can see no reason why I should take a step which would deprive the respondent of the benefit of a limitation defence, even if I had power to do so. As with the joinder application, it seems just that the applicant be permitted to raise the fresh allegations as long as the respondent is not deprived of limitation defences. I am prepared to order that the amendment take effect from 30 September 1997. Order 32 rule 1 permits an amendment on such conditions, c.f. White v. Eurocycle [1995] SASC 5109; (1995) 64 SASR 461 and The Fibreglass Pool Works (Manufacturing) Pty Ltd v. ICI Australia Pty Ltd (12 June 1991, Moynihan SJA, unreported).

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