(1936) 55 CLR 499
Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10
(2013) 247 CLR 613
In Re the Will of FB Gilbert (Dec'd) (1946) 46 SR(NSW) 318
Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25
(1999) 199 CLR 413
Macatangay v State of New South Wales (No 2) [2009] NSWCA 272
Murphy v Overton Investments Pty Ltd [2004] HCA 3
Source
Original judgment source is linked above.
Catchwords
(1964) 112 CLR 125
House v The King [1936] HCA 40(1936) 55 CLR 499
Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10(2013) 247 CLR 613
In Re the Will of FB Gilbert (Dec'd) (1946) 46 SR(NSW) 318
Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25(1999) 199 CLR 413
Macatangay v State of New South Wales (No 2) [2009] NSWCA 272
Murphy v Overton Investments Pty Ltd [2004] HCA 3(2004) 216 CLR 388
Perre v Apand Pty Ltd [1999] HCA 36
Khoury v Coffey Projects [2015] NSWCA 371 | Case summary | Zoe
(1999) 198 CLR 180
Re Luck [2003] HCA 70
(2003) 78 ALJR 177
Shaw v State of New South Wales [2012] NSWCA 102
Spencer v Commonwealth [2010] HCA 28
(2010) 241 CLR 118
Wardley Australia Ltd v Western Australia [1992] HCA 55
Judgment (12 paragraphs)
[1]
Coffey Projects (Australia) Pty Ltd (Respondent)
Representation: Counsel:
MF Newton (Applicant)
K Andronos SC (Respondent)
[2]
Solicitors:
Mallos Davis Lawyers (Applicant)
Baker & McKenzie (Respondent)
File Number(s): 2015/00198829
Decision under appeal Court or tribunal: Supreme Court of New South wales
Jurisdiction: Equity Division
Citation: [2015] NSWSC 591
Date of Decision: 12 June 2015
Before: Young AJ
File Number(s): 2014/00354821
[3]
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[4]
[This Headnote is not to be read as part of the judgment]
On 31 October 2008, Mr Khoury transferred approximately $900,000 to the Hong Kong bank account of an unrelated company for investment in connection with a short-term investment program. The funds have not been repaid.
On 2 December 2014, Mr Khoury brought proceedings in the Equity Division of the Supreme Court against the respondent, Coffey Projects (Australia) Pty Ltd (Coffey) and the estate of Coffey's late employee. Mr Khoury contended that the funds were transferred in reliance on certain representations made by Coffey, through its late employee, and that those representations were misleading or deceptive or likely to mislead or deceive in contravention of consumer legislation, including a representation that the funds would be repaid to Mr Khoury by the end of November 2008. He also alleged negligence and breach of contract in relation to advice given by Coffey in relation to the investment of those funds.
Before filing any defence in the proceedings, Coffey sought to have determined as a separate question whether Mr Khoury's cause of action was statute barred and also brought an application for the proceedings against it to be dismissed or permanently stayed as time barred or as disclosing no reasonable cause of action. Mr Khoury then made an application for leave to amend his statement of claim.
On the hearing of the respective applications, the primary judge found that it was unarguable that the causes of action on which Mr Khoury had sued had accrued no later than 30 November 2008 and hence the action was statute-barred. The primary judge accordingly declined leave to amend the statement of claim, struck out the existing statement of claim as against Coffey and ordered judgment in Coffey's favour. Mr Khoury sought leave to appeal against the decision, maintaining that the primary judge had erred in concluding that it was unarguable that the claims sought to be made in the proposed amended pleading were complete on the non-repayment of the funds on 30 November 2008.
Held granting leave to appeal and allowing the appeal:
(Ward JA, Basten JA and Tobias AJA agreeing)
(1) not all of the number of representations alleged in the amended statement of claim were tied to 30 November 2008 and it was not beyond doubt that all of the applicant's claims turned on there being an obligation to repay the funds on that date: [40]; [48].
(2) having regard to the way in which Mr Khoury was seeking to re-plead his claim and the caution to be exercised at an interlocutory stage, it could not be said that the statutory limitation period had unarguably expired; it could not therefore be said that the proposed re-pleaded claim was hopeless; such error in the exercise of the primary judge's discretion warranted appellate intervention: [49]; [50].
(3) it was not appropriate for the Court to make any determination on the limitation issue and it should not be taken to have done so: [54].
(Basten JA)
(4) where a principle of restraint operating at the trial level has been misapplied or not applied, the principle of intervention at the appellate level is engaged: [10].
(5) the primary judge approached the application before him on a basis which failed to reflect the underlying principle in Wardley with respect to the application of limitation provisions. Because the order was, in a practical sense, determinative of the legal rights of the applicant it was apt to work a substantial injustice to the applicant: [10].
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514; Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; Be Financial Pty Ltd v Das [2012] NSWCA 164 referred to.
In Re the Will of R B Gilbert (Dec'd) (1946) 46 SR(NSW) 318; House v The King (1936) 55 CLR 499 considered.
[5]
Judgment
BASTEN JA: I agree with the orders proposed by Ward JA and with her reasons. What follows are some brief observations as to the principles relevant to the present application.
There are constraints on the exercise of the judicial function which are said to operate in this case, both at the level of the primary judge and on appeal. They pull in different directions.
The principle of constraint operating on the primary judge arose from the fact that he was being invited, in effect, to dismiss proceedings as hopeless, on the basis that they were statute barred. At least in relation to a claim seeking damages for economic loss suffered as a result of misleading and deceptive conduct, the principle of restraint was articulated in Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514. At the forefront of the reasoning in Wardley was the fact that the cause of action did not accrue until loss or damage was suffered. When loss or damage is suffered may depend upon a number of factual contingencies, not the least of which is the precise nature of the representation and the plaintiff's reliance upon it.
The point was of importance in the present case because the appellant had pleaded a number of representations, giving rise to a real issue as to their interrelationship and the extent of his reliance upon them, separately or collectively. Thus there was likely to be an issue as to whether the date of the anticipated repayment of the money (which was critical to the finding of the primary judge) might have been found to be an inconsequential detail once the matter was dealt with at trial. That was more than a possibility; the deposit in the Hong Kong bank account was but one step in a far larger funding transaction which the plaintiff wanted to pursue.
Other principles of constraint operate at the appellate level. Thus, whenever an interlocutory appeal from a procedural judgment is brought to this Court, the respondent is apt to rely upon the observations of Jordan CJ in In Re the Will of F B Gilbert (Dec'd) (1946) 46 SR(NSW) 318 at 323. The Chief Justice identified the need to keep a "tight rein" on appeals as to matters of practice and procedure, noting the danger that otherwise the "disposal of cases could be delayed interminably, and costs heaped up indefinitely". His words resonate with the statement of guiding principles for "case management and interlocutory matters" now set out in Pt 6 of the Civil Procedure Act 2005 (NSW). However, Will of Gilbert was not such a matter; rather it concerned another category of appeals, also with modern resonance, namely challenges to decisions for family provision (or, as then, testator's family maintenance). Thus, Jordan CJ continued:
"But an appeal from an exercise of so-called discretion which is determinative of legal rights stands in a somewhat different position. In this class of case, too, a Court of Appeal submits itself to self-imposed restraints, but restraints which, though strict, are somewhat less stringent than those adopted in matters of practice or procedure."
[6]
The proceedings
The applicant commenced the proceedings by filing his statement of claim on 2 December 2014. On 22 January 2015, Coffey filed a notice of motion by which it sought, among other things, an order pursuant to r 28.4 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) that the proceedings be dismissed, or alternatively permanently stayed, as having been filed after the expiration of the prevailing limitation period (order 2 in the notice of motion) and an order pursuant to r 28.2 UCPR that its r 28.4 motion be determined as a separate question before any further step in the proceedings (order 1 in the notice of motion).
An amended notice of motion was filed on 28 April 2015 seeking the same relief pursuant to rr 28.4 and 28.2, though this time actually posing the separate question for determination as a question in the following terms:
Did the plaintiff's alleged causes of action arise on or before 2 December 2008 such that its Statement of Claim filed 2 December 2014 was time barred by being filed outside the limitation of action period?
In the alternative to the relief claimed pursuant to r 28.4 UCPR (i.e., order 2 in the notice of motion), an order was sought pursuant to r 13.4(1)(b) UCPR seeking dismissal or permanent stay of the proceedings as disclosing no reasonable cause of action.
On 28 April 2015, Slattery J gave the applicant leave to file a notice of motion seeking leave to amend his statement of claim. On 30 April 2015, such a notice of motion was filed by the applicant, annexing an amended statement of claim.
The respective applications were heard by Young AJA on 15 May 2015.
Young AJA concluded that the causes of action on which Mr Khoury sued had unarguably accrued no later than 30 November 2008 and hence that the action was statute-barred. He declined leave to amend the statement of claim, struck out the existing statement of claim (as against Coffey only) and ordered judgment in Coffey's favour, with an order for costs. The proceedings remained on foot as against the second defendant although, as noted above, the original statement of claim had not been served on the estate at that stage and his Honour anticipated that the relief granted on Coffey's application might ultimately dispose of the proceedings.
[7]
Application for leave to appeal
Leave to appeal is necessary as the orders striking out the statement of claim and summarily dismissing the proceedings as against Coffey were interlocutory in nature (Re Luck [2003] HCA 70; (2003) 78 ALJR 177; Macatangay v State of New South Wales (No 2) [2009] NSWCA 272 at [10]-[13]). The applicant maintains that leave should be granted having regard to the significant amount in issue. He submits that he should be allowed to demonstrate that the summary dismissal was brought about by an incorrect process of reasoning.
Coffey opposes the grant of leave on the basis that no error of principle is raised and that this was a clear case where the applicant's claim could not surmount an unassailable limitation point. However, in the event that leave were to be granted, Coffey seeks to rely on a notice of contention in which it contends that his Honour's decision should be affirmed on the basis that the applicant suffered immediate loss on the transfer of the funds to Hong Kong because, on the applicant's own pleading, the transaction involving payment into the Hong Kong account was valueless. On that basis it is submitted that the loss arose on 31 October 2008 and hence the applicant's claim became statute barred on an even earlier date than his Honour found.
Since the refusal to grant leave to amend (the consequence of which was that the proceedings were summarily dismissed against Coffey) was an interlocutory discretionary decision on a point of procedure, what must be shown is error in the House v The King sense (House v The King [1936] HCA 40; (1936) 55 CLR 499 at 505), namely that the primary judge: made an error of legal principle; made a material error of fact; took into account some irrelevant consideration; failed to take into account, or to give sufficient weight to, some relevant matter; or arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred (even though the error in question may not explicitly appear on the face of the reasoning). It is not sufficient merely to show that the primary judge was arguably wrong (Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]). Nor is it to the point that the appellate court might have arrived at a different result had it exercised the relevant discretion at first instance (House v The King at 504-505).
[8]
Refusal to grant leave to amend/summary dismissal
The matter proceeded before Young AJA on the basis that Mr Khoury did not wish to maintain the original statement of claim. It was conceded by Mr Khoury's Counsel that there were obvious deficiencies in that pleading.
Young AJA therefore indicated that he would deal first with the application for amendment of the statement of claim, noting that the application should not be granted if the proceedings were hopeless and that they would be hopeless if the limitation point was a good one ([15]). It was in that context (and not as the determination of a separate question on that issue) that the limitation point was considered by his Honour.
It follows that the relevant document to be considered (for the purpose of considering whether the claims therein were statute-barred) was the proposed amended statement of claim, not the existing statement of claim that the applicant no longer sought to pursue. There was some confusion in this regard in the respective parties' submissions on the present application, reference being made to parts of the existing pleading that were not repeated in the proposed amended statement of claim. Similar confusion appears to have infected consideration of the proposed amended pleadings in the Court below.
For Coffey, it was submitted in this Court that it was appropriate to have regard to the fact that the existing statement of claim had been verified by Mr Khoury and that, if Mr Khoury wished to resile from factual allegations made in that claim then it had been incumbent on him to explain why he should be allowed to do so (see T 14.5-10). However, the question whether leave should be allowed to file the proposed amended pleading was being approached on the basis of Coffey's contention that the only cause of action it disclosed was one that was statute-barred and therefore hopeless, such that there was no utility in the grant of leave to amend.
The question whether Mr Khoury should be permitted to withdraw an admission made in verified pleadings was seemingly not explicitly addressed. Had it been, it would have illustrated the difficulty in determining the limitation point issue on an interlocutory basis. Mr Khoury might have had any number of explanations for seeking to abandon factual allegations contained (and perhaps infelicitously expressed) in his initial verified pleading.
[9]
Determination
It is clear that Young AJA proceeded on the basis that the pleadings contained the allegation that the money was to be repaid on 30 November 2008. His Honour stated as much at [7] and the comments at [14] and [28] assume that this was the due date for repayment. Certainly, the allegation at [15(c)] of the ASOC was that it was represented that funds invested in the [next] Hong Kong Program would be repaid by the end of November 2008 but not all of the alleged representations were tied to such a date and it is not beyond doubt, taking the proposed pleaded facts as correct for this purpose, that all of the applicant's claims turned on there being an obligation to repay the funds on that date.
His Honour also appears to have proceeded on the basis that the money was repayable by Coffey, saying (at [28]) that this appeared to be a simple case of debt, though pleaded as a Trade Practices Act claim, and going on to say:
… Thus one is in the realm of damages, not debt. But even here there is no reason to my mind why there is any need to go further than saying the plaintiff was entitled on 30 November to get his money back and to take action at that point. There was no reason at all why the plaintiff would have to delay for as long a period as the defendants might take to pay back the whole or some of the money. It is true that there is a possibility or at least there was a possibility for some time after 30 November that the defendant might repay the money, though late. However all that this means is that the plaintiff's action has accrued and the defendant is then making payment to reduce or extinguish the cause of action that has already accrued. (my emphasis)
That conclusion does not accord with what is sought to be alleged in the proposed amended pleading. The conclusion expressed by Young AJA that, at least as against Coffey, this was a simple case of debt is difficult to draw from the proposed amended pleading.
Similarly, the conclusion that the case was not one involving the balancing of benefit and burden (having regard to the discussion in Wardley) seems to have been based (as it was sought to be justified in this Court) on the transaction being "worthless at the outset", though no such allegation is contained in the proposed ASOC.
Ultimately, the argument in this Court was as to whether it was unarguable that the claims sought to be made in the amended pleading were complete on the non-repayment of the funds on 30 November 2008. Insofar as Coffey argues that this was the date on which the relevant representation was falsified, that does not necessarily take into account the various representations that were allegedly made (not limited to the representation set out at [15(c)]). A representation that the money would be "safe", or would be kept in a short-term deposit, for example, would not necessarily be falsified simply by the non-repayment of money on 30 November 2008. Non-repayment of the funds would not, for example, necessarily be inconsistent with them either having been safely retained in the relevant bank account or invested in a short-term deposit as variously represented.
[10]
Notice of Contention
The notice of contention point must similarly fail, as was in effect conceded must be the case if regard could not be had to the original statement of claim when determining the application for leave to amend, since there was no allegation in the proposed amended pleading that would support the conclusion that this was unarguably a "no benefit" case or that the relevant investment was worthless at the outset.
[11]
Orders
Coffey submitted that, in the event that the appeal were to succeed it should not be precluded from raising by way of defence to the claim that it was statute-barred.
It is not necessary to make any particular direction in that regard. His Honour did not purport to determine the application by Coffey for the separate determination of the question posed by Coffey as to the limitation issue. Rather, as noted above, Young AJA dealt first with the application for leave to amend the statement of claim and, once he had reached the conclusion that the claim sought to be raised in the amended statement of claim was unarguably statute-barred, and in light of the fact that Mr Khoury did not wish to pursue the claim as filed, Young AJA found for Coffey on its summary dismissal application. Although not articulated as such, it would appear that the dismissal was pursuant to r 13.4(1)(b) UCPR.
Accordingly, the limitation issue (if raised in due course by way of defence) remains one to be determined at first instance. It is not appropriate for this Court to make any determination in that regard and it should not be taken to have done so. The orders sought by Mr Khoury include the dismissal of Coffey's amended notice of motion in which it had applied for the limitation point to be defined as a separate question. That relief should be granted.
There was some debate as to whether leave should be granted to amend the statement of claim in the form annexed to the 30 April 2015 notice of motion or with amendments thereto of the kind foreshadowed during submissions in this Court. In the circumstances, it is appropriate only to grant leave to file the amended pleading that was the subject of the application before Young AJA. If further amendment is sought thereto then that may be the subject of further application in the court below in due course. It would be hoped that any such further application, at least if the amendments were not of a substantive nature, could be dealt with on a sensible basis by agreement between the parties without the need for further court costs to be incurred.
As to costs, it was conceded by counsel for the applicant that, in the ordinary course, it would be appropriate for there to be an order that it pay costs thrown away by the amendment of the pleadings. That should be the case. Otherwise, costs should follow the event. Coffey resisted the application for leave to amend and pressed its summary dismissal application before Young AJA. In this Court it unsuccessfully sought to maintain the orders made by Young AJA. It should bear the applicant's costs of the appeal and the costs of the hearing of the motions before Young AJA.
[12]
Amendments
04 December 2015 - Typographical error par 44
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 04 December 2015
While the summary dismissal of a proceeding is aptly described as a procedural ruling and is classified as interlocutory, it is also, in a practical sense, likely to be dispositive of the legal rights of the plaintiff, without the merits of the case being explored.
In Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177, the appellant's counsel urged that the Full Court of the Federal Court, in order to interfere with an interlocutory order of a trial judge, should have been persuaded both that there was error of principle and that, if not reviewed, the order will work a substantial injustice to the party seeking to challenge it. The joint reasons in the High Court (of Gibbs CJ, Aickin, Wilson and Brennan JJ) eschewed as "unnecessary and indeed unwise" the setting of rigid and exhaustive criteria, noting that the circumstances of different cases "are infinitely various."
It is also commonplace for counsel, as in the present case, to invoke the criteria identified in House v The King (1936) 55 CLR 499 at 505, as if it were a statutory standard. However, House was not concerned with interlocutory orders, nor with matters of practice and procedure, nor indeed with a civil case, but rather with appellate intervention with respect to the sentence imposed in a criminal case. Even where an evaluative judgment is required, the choice of a particular point along a spectrum or range of possible outcomes is a different exercise from a binary choice between granting and refusing an application. Furthermore, the grounds for intervention are not stated in precise terms and include, as perhaps the broadest concept, mistaking the facts.
While all of these authorities provide a degree of guidance, most cases can be decided by reference to current legislation and the Uniform Civil Procedure Rules 2005 (NSW). Thus, most interlocutory appeals are now subject to the filter of a leave requirement: see eg Supreme Court Act 1970 (NSW), s 101(2)(e). A decision as to whether to grant or refuse leave in a particular case must have regard to the guiding principles set out in Pt 6 of the Civil Procedure Act, as discussed in Be Financial Pty Ltd v Das [2012] NSWCA 164 at [32]-[39]. Some considerations are specific to the circumstances of the particular case; some operate generally in relation to the control of the court's workload and the impact of a particular practice or procedure on other litigants. Again echoing modern concerns, Jordan CJ in Will of Gilbert abjured an approach which would "in effect transfer all exercises of discretion in interlocutory applications from a judge in chambers to a court of appeal."
In the present case, for reasons fully articulated by Ward JA, the primary judge approached the application before him on a basis which failed to reflect the underlying principle articulated in Wardley with respect to the application of limitation provisions. In other words, where a principle of restraint operating at the trial level has been misapplied or not applied, the power of intervention at the appellate level is engaged. Because the order is, in a practical sense, determinative of the legal rights of the applicant, it is apt to work a substantial injustice to the applicant and should be set aside.
WARD JA: This is an application by Mr Khoury for leave to appeal from a decision in the Equity Division of the Supreme Court of New South Wales ([2015] NSWSC 591) refusing him leave to file an amended statement of claim, striking out his statement of claim as against the respondent and summarily dismissing that claim with costs.
The proceedings in question related to the transfer of funds by the applicant on 31 October 2008 to the Hong Kong bank account of South East Hong Kong Investment Limited (SEHKIL) for investment in connection with a short-term investment program.
The applicant contended that the funds (in the order of $900,000) were transferred in reliance on certain representations made by the respondent, Coffey Projects (Australia) Pty Ltd (Coffey), through its late Senior Project or Development Manager, Mr Bevitt; and that those representations were misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Trade Practices Act 1974 (Cth), s 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth), and s 42 of the Fair Trading Act 1987 (NSW). The applicant also contended that Mr Bevitt and Coffey were negligent in the advice given to him with respect to investment in the said program.
The funds were not repaid. As against Coffey, the applicant sought damages under the respective consumer statutes and at common law. (In the filed pleading the applicant's claim for relief also included equitable compensation and damages for breach of contract but those claims for relief were not included in the proposed amended pleading.) The applicant also named the estate of the late Mr Bevitt as the second defendant to the proceedings but, as at the time of dismissal of his claim against Coffey, the applicant had not served the initiating process on the estate's representative and therefore it played no role in the hearing of the interlocutory applications.
In his draft notice of appeal, the applicant identifies the following errors on the part of Young AJA:
1. finding that it is unarguable that the causes of action on which the applicant sued accrued no later than 30 November 2008 (J[29]);
2. not determining the applications on the basis of an acceptance of the truth of all ranges of meaning which the facts pleaded and/or proposed to be pleaded were reasonably capable of bearing;
3. finding that, on the pleadings and/or proposed amended pleadings:
1. moneys paid by the applicant to a third party [SEKHIL] were due for repayment on 30 November 2008 (J[7], [13], [27]); and
2. the applicant was entitled on 30 November 2008 to get his money back from that third party (J[27]);
1. finding that, on the pleadings and/or proposed amended pleadings, Coffey was obliged to repay money to the applicant on 30 November 2008 (J[27]);
2. failing to distinguish between the accrual of a cause of action against a third party (to whom the applicant had transferred funds) [i.e., SEKHIL] and the accrual of a cause of action against Coffey; and
3. refusing leave to file the proposed amended statement of claim.
In an amended draft notice of appeal, the applicant also now seeks to raise an additional ground of appeal, namely that Young AJA erred:
(5A) in finding that, on the pleadings and/or proposed amended pleadings, there was no question of balancing benefit and burden [J23] and no benefit and burden is to be balanced.
It is well recognised that the power summarily to terminate proceedings is to be exercised with caution (Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118 at [24]). The question on such an application is whether the claims in question are so obviously untenable or groundless that there is a high degree of certainty that they will fail if allowed to go to trial (the test articulated in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 128-129 being applicable on such an application). It is only in the clearest of cases that the court will intervene to prevent the claims being litigated (Shaw v State of New South Wales [2012] NSWCA 102 at [32]).
In this context, the applicant emphasises the warning sounded in the plurality judgment in Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 533, to which Young AJA expressly adverted (at [12]), as to the determination of limitation questions at an interlocutory stage of proceedings, namely that it is:
… 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.
For the reasons set out below, I am of the opinion that leave to appeal should be granted and the appeal allowed.
When considering the amendment application by reference to the proposed amended pleading, the relevant factual allegations included the making of various representations to Mr Khoury by Coffey (by its employee, the late Mr Bevitt), as to a short-term investment program "due to commence" on 1 November 2008 (proposed Amended Statement of Claim, "ASOC", at [15]). Those representations included that funds invested in the program due to commence on 1 November 2008 would be repaid by the end of the month of November 2008 (ASOC at [15(c)]).
Significantly, however, the representations allegedly made and relied upon by Mr Khoury in transferring his funds to Hong Kong were not limited to the representation ([15(c)]) that funds invested in the Hong Kong Program (as defined in [13(a)]) would be repaid by the end of the month of November 2008. Other representations set out at [15] of the ASOC were that the funds so invested: would be placed on short-term deposit with a bank in Hong Kong ([15(a)]); would stay in, and not leave, the bank account in Hong Kong ([15(b)]); would be safe ([15(d)]); would not be at risk ([15(e)]); and would be protected against credit risk or risk of counterparty default ([15(f)]). Other representations later set out in the ASOC (at [18], [19], [25], [27], [29], [31], [32] and [34]) were to the effect that funds invested in the Hong Kong Program, or transferred to the Hong Kong Account, would be repaid (but without specification of the time at which or by which repayment was due).
The ASOC also included allegations of negligence by Coffey and Mr Bevitt in arranging and advising with respect to investment in the Hong Kong Program, which it is alleged caused Mr Khoury to transfer funds into the Hong Kong Account and to suffer loss and damage.
The sole reason for refusing leave to amend was his Honour's conclusion that the claims sought to be pleaded in the ASOC had accrued on 30 November 2008, when the moneys transferred to Hong Kong were not repaid.
The applicant's written submissions identify three errors that gave rise to the erroneous finding that the cause of action accrued no later than 30 November 2008: first, that the money transferred was due to be re-paid on 30 November 2008; second, that Coffey (as opposed to SEKHIL) was the party liable to repay the money; and, third, the conflation of the question of accrual of a cause of action against SEKHIL with the question of the accrual of the cause of action against Coffey. In oral argument the three errors were somewhat differently identified: the first two were in effect combined and a further error was identified as being the finding by the primary judge that the case was not one of benefit and burden.
Coffey maintains that his Honour did not err in any of the respects identified. Though it accepts that [27] of the judge's reasons may be read as treating Coffey (incorrectly) as the principal obligor, Coffey maintains that this was not dispositive of the issue as to whether the claim was statute-barred.
In essence, Coffey maintains that the relevant economic interest alleged to have been infringed was the right to be repaid the funds by 30 November 2008 and that this was infringed at the latest by that date (when the representations relied upon were, on the applicant's case, falsified by the failure of the principal obligor to repay the moneys). It argues that whether or not the party who made the false representation was the same party as the principal obligor in debt is immaterial to the cause of action and that any conflation of the respective causes of action against SEKHIL and Coffey respectively is immaterial since any such causes of action were linked to the same event and arose at the same time.
It is arguable that the relevant risk on entry into the transaction in reliance on the representations (at least having regard to the way some of the representations were articulated) was that the funds would not be able to be recouped from SEKHIL and that such a risk arguably did not "come home" until the point at which it was reasonably ascertainable that the funds were lost. It is by no means clear that this was the case as at 30 November 2008.
In Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180 Gleeson CJ (at [6]) recognised that the concept of financial or economic loss or harm is wide enough to comprehend a variety of circumstances or contingencies some of which may be indirect and difficult to identify or measure. The applicant places weight on decisions such as Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; (2013) 247 CLR 613 and Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413 for the proposition that he did not sustain actual loss and damage by the infringement of his economic interest in the repayment of the sum of money until the risk of loss or contingent loss became actual and that this was when it was reasonably ascertainable that the risk of non-repayment had materialised. Reliance is placed on Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388 at 407; [46] for the proposition that a risk of loss is not itself a category of loss.
Coffey argues that the present case is not analogous to those where the economic interest and determination of loss and damage were undefined, contingent or otherwise incapable of being identified until a much later point in time. It seeks to distinguish Hunt & Hunt on the basis that in that case there was security provided for the loan (albeit there security was unenforceable and hence worthless) and argues that in the present case there was no alternative mechanism for the enforcement of the right to repayment (though it was effectively conceded in oral argument that there was no basis on the pleading to determine whether there was any such alternative enforcement mechanism and that this might depend on what evidence was ultimately before the court). Its argument seems to be that Hunt & Hunt is distinguishable simply because here there was no security for the repayment of the funds.
In my opinion, the present is a clear example of a case where it was not apt for a limitation issue to be decided on an interlocutory basis. There were a number of representations sought to be pleaded, most of which were not expressly tied to a 30 November 2008 repayment date, and Coffey's contention that the loss and damage suffered in reliance on those representations was suffered on that date may turn on evidence not yet before the court as to the content of the pleaded representations and the circumstances in which the transfer of funds to the Hong Kong Account was made.
Having regard to the way in which the applicant was seeking to re-plead his claim, and having regard to the caution to be exercised at an interlocutory stage in this context, it could not be said that the statutory limitation period had unarguably expired. That being the case, it could not be said that the proposed re-pleaded claim was hopeless. As that was the only basis on which the application to amend was refused, there was an error in the exercise of that discretion of a kind that warrants appellate intervention.
It follows from that conclusion that the proceedings should not have been summarily dismissed as against Coffey (the limitation issue being the only basis on which it was suggested that no reasonable cause of action was disclosed on the proposed amended pleadings).
The following orders should be made:
1. Leave to appeal be granted and the appeal allowed.
2. The orders made by the Court below on 12 June 2015 be set aside.
3. In lieu thereof:
1. The first defendant's amended notice of motion dated 28 April 2015 be dismissed.
2. The first defendant pay the plaintiff's costs of and incidental to the hearing of the amended notice of motion.
3. Pursuant to s 64 of the Civil Procedure Act 2005 (NSW), the plaintiff be granted leave to file an amended statement of claim in the form annexed to his notice of motion filed 30 April 2015 and marked "A".
4. Subject to (e) below, the first defendant pay the plaintiff's costs of the hearing of the plaintiff's notice of motion filed 30 April 2015 beyond those that would otherwise have been incurred had the first defendant not opposed the grant of leave to amend the statement of claim.
5. The plaintiff pay the costs thrown away by the amendment of the statement of claim in accordance with (c) above.
1. The respondent pay the applicant's costs of the application for leave to appeal and the appeal.