Khoury v Coffey Projects

Judgment

1. There are currently before me two notices of motion: 1. A notice of motion filed on 22 January 2015 by the first defendant seeking that the statement of claim be struck out and the proceedings dismissed; and 2. A notice of motion by the plaintiff seeking leave to amend the statement of claim.
2. Because of this it seems to me that it is first appropriate to look at the plaintiff's notice of motion because the attitude taken by the plaintiff is that he virtually abandons his original statement of claim which his current solicitor says was filed by an earlier solicitor and which the current solicitor obviously does not wish to maintain.
3. I should say at this point that there are two defendants. The second defendant is deceased and has not yet been served though recently the Registrar gave leave to extend the period for serving the statement of claim on a representative of the second defendant. Accordingly the present dispute is between the plaintiff and the first defendant to which I will refer simply as 'the defendant'.
4. The basal facts which I take from the plaintiff's submissions at page 100 of the Court Book, (as far as I can see they are not significantly disputed), are that in 2008 the plaintiff Mr Khoury was providing services to a group of companies carrying on a property development business including a group of companies known as the Manassa Group. Mr Khoury and the Manassa Group were introduced to Mr Bevitt, the second defendant, a former employee of the first defendant.
5. It is alleged that between 15 October and 31 October 2008 Mr Bevitt made representations to Mr Khoury to the effect that a loan which the Manassa Group badly wanted in order to take up what appears to be a lucrative development opportunity would be more easily secured if US$600,000 were placed in a short term investment program in Hong Kong. The Manassa Group did not have such funds but Mr Khoury did and he was prepared to put them into the Hong Kong account.
6. It is alleged that representations were made by Mr Bevitt that if the 'investment' was provided by 1 November 2008 it would: 1. Be placed on short term deposit at the bank in Hong Kong; 2. Stay in and would not leave the bank account in Hong Kong; 3. Be repaid by the end of the month of November 2008; 4. Be safe; 5. Not at risk; and 6. Be protected against credit risk or risk of counter party default.
7. On 31 October 2008 the plaintiff transferred: AUD$910,748.81 to a Hong Kong account. The money was to be repaid on 30 November. It was not so repaid and has never been repaid.
8. The plaintiff commenced proceedings on 2 December 2014.
9. Essentially the defendant says that the plaintiff's cause of action arose no later than 30 November 2008 so that any action after 30 November 2014 is barred by either the Limitations Act 1969 (NSW) or the Trade Practices Act 1974 (Cth). There is no dispute that under each of those statutes the relevant limitation period is six years. The question that I have to determine is when does the cause of action accrue, or rather, is it so clear that the cause of action arose before 2 December 2008 that the proceedings must fail.
10. It is clear that if the cause of action accrued no later than 30 November 2008 the plaintiff's proceedings are statute barred and that the proceedings ought to be dismissed. Accordingly the relief sought by the defendant in its notice of motion will follow the result of the plaintiff's notice of motion.
11. The motions came before me on 15 May 2015 when Mr M Newton of counsel appeared for the plaintiff and Mr K Andronos SC appeared for the defendant.
12. Before dealing with the substantial issue I should cover a preliminary point made by Mr Newton and that is that as a general rule questions of whether an action is barred by limitations should only be dealt with at the final hearing of the proceedings except in the clearest of cases. Mr Newton referred to what the plurality consisting of Mason CJ, Dawson, Gaudron and McHugh JJ said in Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 at [533] that: We regard it as undesirable the 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.
13. See also Shaw v State of New South Wales [2012] NSWCA 102 at [32].
14. The reason for this general rule is as the High Court noted that it is more often than not the case that one only knows the full extent of the plaintiff's damages and the circumstances which brought it about and the facts generally at the final hearing. However in the instant case the facts are fairly clear and the only real dispute is whether because of some contingency involved the limitation period did not commence when the money was not repaid on 30 November (or indeed earlier when the money was deposited in the Hong Kong account on 31 October 2008) or whether there is some contingency involved which makes the period commence at the later date.
15. Of course another answer is that it is the plaintiff that is making an application to amend his statement of claim. That application should not be granted if the proceedings are hopeless. They will be hopeless if the limitation point is a good one. Although here too one must be careful and still grant leave to amend if the plaintiff's case is fairly arguable at the trial, the fact that the plaintiff is making the application makes it more appropriate for the court to consider the limitation point if it can fairly do so. In other words, if it is a clear case.
16. To my mind, because the basal facts are not in dispute this is a clear case and although I acknowledge the general rule, this is not an occasion where it should prevent me from dealing with these interlocutory motions.
17. I now turn to the substance of the motions.
18. In Murphy v Overton Investments Pty Ltd [2004] HCA 3; 216 CLR 388 at 407 the plurality said: In Wardley Australia v Western Australia … a majority of the court held that risk of loss is not itself a category of loss, and that, if a plaintiff enters into a contract which exposes the plaintiff to a contingent loss or liability, that the plaintiff 'sustains no actual damage until the contingency is fulfilled and the loss becomes actual'.
19. Mr Newton repeated that phrase 'no loss just because there is a risk of loss' on several occasions during his address.
20. The submissions hark back to Wardley. That was a case where Western Australia gave an indemnity to a bank against a facility granted by the Bank of Rothwells Ltd. Western Australia claimed it had entered into the indemnity because of untrue representations by Wardley that Rothwells had substantial net assets. Western Australia suffered loss and the question before the Court was whether its cause of action accrued when it entered into the indemnity (in which case it was statute barred) or later.
21. The High Court rejected the view that loss or damage occurred on the entry into the indemnity although there was some substantial authority (mainly English authority) to support that proposition.
22. At [527], the plurality in Wardley said: 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.
23. Brennan J said in Wardley at 536: Whether loss or damage is actually suffered … depends on the value of the benefit, if any, acquired by the plaintiff if by paying the money, transferring the property, having the value of the asset diminished or incurring the liability. If the plaintiff acquires no benefit, the loss or damage is suffered when the event occurs. At that time, the plaintiff's net worth is reduced. And that is so even if the quantification of that loss or damage is not then ascertainable. But if a benefit is acquired by the plaintiff, it may not be possible to ascertain whether loss or damage has been suffered at the time when the benefit is borne - that is, at the time of the payment, the transfer, the diminution in value of the asset or the incurring of liability. A transaction in which there are benefits and burdens results in loss or damage only if an adverse balance is struck. If a balance cannot be struck until certain events occur, no loss is suffered until those events occur.
24. In the instant case, there is no question of balancing benefit and burden.
25. Deane J in Wardley said at 540 to 541: It is not possible to derive from the authorities or from settled principle a simple negative or affirmative answer to the abstract question whether, for the purposes of a limitation provision, the mere incurring of a contingent liability to make a monetary payment in the future suffices to give rise to a cause of action of which loss or damage is a necessary ingredient.
26. There has grown up the idea in some quarters after Wardley that whenever one can find the hint of some contingent liability that the cause of action only accrues when all chances that might affect the amount of the loss have played out. This is a misreading of the authorities. It is noteworthy that in Highup Pty Ltd v Gubas [2014] FCA 1170; (2014) 226 FCR 541 at 552 [67] Buchanan J said: I am not able to accept the bald submission, unsupported by reference to authority, that a mere demand raises a contingent liability …
27. As noted earlier Deane J in Wardley made it quite clear that there was no general rule that applied and that one must look at each of the situations to see when the cause of action accrued.
28. In the instant case there is no benefit and burdens to be balanced. The plaintiff deposited US$600,000 in a bank account to be repaid on 30 November. It was not paid. That appears to be a simple case of debt in which case the cause of action would probably accrue when the money was not repaid if not before. However, it is pleaded as a Trade Practices Act claim. 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 a payment to reduce or extinguish the cause of action that has already accrued.
29. On any other view, any action taken by the plaintiff to recover his loss would be premature if commenced at any time prior to the time when it was reasonably clear that no part of the deposited money would be repaid.
30. I am of the clear view that it is unarguable that the causes of action on which the plaintiff sued accrued no later than 30 November 2008 and accordingly the action is statute barred.
31. Accordingly, I decline to give leave to amend the statement of claim. The earlier statement of claim has virtually abandoned - properly so. This means as against the first defendant the proceedings must be dismissed with costs. I will not make any observation about the second defendant as his estate has not yet been served though of course when it is served it will be with the original statement of claim which is defective so that it may be that, subject to any appeal, this will be the completion of the whole proceedings.

ORDERS

1. Thus: 1. I strike out the statement of claim as against the first defendant. 2. I order that there be judgment in the proceedings for the first defendant. 3. The plaintiff is to pay the first defendant's costs of the proceedings.

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