Jensen v Queensland Law Society Incorporated

REASONS FOR JUDGMENT 1 By letter dated 25 July 2001 the Queensland Law Society Incorporated ('the Society') advised the appellant that it had passed the following resolutions at its meeting held on that date: '1. RESOLVED to suspend, pursuant to Subsection 41B(1)(f) of the Queensland Law Society Act 1952 (as amended), the practising certificate held by Peter Jensen, solicitor, practising as Jensens Solicitors, Bundall, such suspension to be effective immediately; and 2. RESOLVED to appoint the Queensland Law Society Incorporated pursuant to Section 11A(1A)(b)(ii) of the said Act, receiver of the trust property, more particularly described in that Section, of Peter Jensen, solicitor trading as Jensens Solicitors, solicitors of Bundall.' 2 The receiver thereafter took possession of the appellant's property. On 20 March 2003 the Society obtained summary judgment in the Supreme Court of Queensland against the appellant in the sum of $589,772.88, representing the amounts it had paid to persons having claims against him. 3 The appellant was imprisoned from July 2003. He says that in about May 2003 he came across a copy of the Society's Annual Report for the year 2000 to 2001 and discovered that the persons who had signed the flying minute containing the two resolutions were not all members of the Society's Executive Committee and that there were no unanimous resolutions, which he contends are required. The appellant then believed the resolutions to be invalid but was unable to take any steps to deal with the matter until recently because his affairs were under the control of the Public Trustee. 4 The Society issued a bankruptcy notice founded upon the judgment on 1 June 2004 and the appellant applied to the Federal Magistrates Court to set it aside. The application was dismissed after argument on a preliminary point. The Society argued that even if there was some substance to the appellant's case of invalidity of the resolutions, he could not show that he had a counter-claim, set-off or cross demand which he could not have set up in the Supreme Court proceedings, as s 40(1)(g) of the Bankruptcy Act 1966 (Cth) ('Bankruptcy Act') requires. If the appellant is successful on this application the matter would need to be remitted to the Federal Magistrates Court to determine the question whether the appellant's claim of invalidity is arguable. 5 The appellant's argument on the appeal is that he had a number of causes of actions available to him - deceit, trespass to his property and misrepresentations in contravention of s 52 of the Trade Practices Act 1974 (Cth)- but that he could not bring them because he was unaware of the invalidity of the resolutions until too late. He remained unaware because the Society continued to mislead him about the invalidity. In that regard he relies upon letters and statements by the Society and its officers referring to the fact of the resolutions or that he had been suspended and a receiver appointed to his assets. 6 The appellant's argument is drawn from cases concerning the time within which an action must be brought. There are statutory provisions which permit the extension of time where there has been fraudulent concealment of a cause of action. As Deane J pointed out in Hawkins v Clayton (1988) 164 CLR 539 at 590, there has been a long established jurisdiction in equity to grant relief in such a case. 7 The question whether time should be extended, or a defence of limitation upheld, is different from the question whether a cause of action has accrued, which is here the relevant question. If it has accrued the appellant was legally entitled to bring proceedings, by way of cross-claim or otherwise. In that regard it is generally the case that a cause of action accrues as soon as a wrongful act has caused loss or damage. A fundamental principle is that a plaintiff's unawareness of the existence of their cause of action does not prevent it accruing: Jobbins v Capel Court Corporation Limited (1989) 25 FCR 226 at 229. In the present case the appellant suffered loss, and his cause of action arose, when the receiver seized and realised his assets. 8 The appellant relied upon the approach adopted by Deane J in Hawkins v Clayton. At issue in that case were the provisions of s 14(1) of the Limitation Act 1969 (NSW) which provided that an action on a cause of action founded on tort was not maintainable if brought after the expiration of six years 'running from the date on which the cause of action first accrues'. The solicitors for the testatrix failed to inform the executor of her estate of the existence of the will for almost six years. In that time the estate suffered loss. The question of limitation of action arose when the solicitors were sued by the estate. Although the majority held that the cause of action in such a case did not arise until the executor assumed office, Deane J considered another possibility. Although his Honour accepted that a Statute of Limitations will on occasions lead to injustice, there was another approach which could be taken in the circumstances of the case (at 589-590). Reasoning by analogy with cases of concealment of causes of action his Honour considered that the statutory provision 'should be construed as excluding any period during which the wrongful act itself effectively precluded the institution of proceedings' (at 590). His Honour's approach has been regarded as one that accepts that there may be an 'anomalous category' of cases where the plaintiff's ignorance would exclude the running of time: Jobbins v Capel Court Corporation Limited at 229. I take the Full Court in that case to be of the view that Deane J's identification of that category did not substantially affect the fundamental principle concerning a person's ignorance. 9 There is nothing approaching the facts in Hawkins v Clayton in the present case nor is there any evidence of fraudulent concealment. The appellant merely points to statements by the Society that resolutions had been made and on that he was suspended and a receiver had been appointed . Those statements did not preclude the institution of proceedings and there is no conduct on the part of the Society which would have prevented or deterred the appellant from discovering the true facts, which he ultimately says he did. 10 The appellant's case in reality is that he was unaware of the alleged invalidity of the resolutions. The question posed by s 40(1)(g) of the Bankruptcy Act is however answered by reference to legal considerations, not practicalities. The question is whether the counter-claim, set-off or cross demand could have been set up as a matter of law: Re Brink; Ex parte The Commercial Banking Company of Sydney Ltd (1980) 44 FLR 135. The section is not concerned with personal and practical reasons why proceedings were not brought. The extent of the appellant's knowledge falls within these categories. 11 I add that I consider that the facts do not suggest the existence of a cause of action in deceit or under s 52 of the Trade Practices Act 1974 (Cth). The former requires knowledge of the relevant falsehood and this could not be inferred in this case. There was nothing approaching a misrepresentation and any damages suffered were not as a consequence of anything said by the Society. This is not a case of misrepresentation by silence. It is not even possible to infer that the Society knew of any problem associated with the resolutions. If the appellant is correct that the resolutions were invalid there has been a wrongful appointment of a receiver and a wrongful dealing with his property for which damages may lie. 12 The appeal will be dismissed with costs. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel.