Plaintiff v Defendants

1 This proceeding concerns the ownership of a painting known as "Girl in Sunlight" by the well-known Australian artist, Rupert Bunny ("the Painting"). The parties to the proceeding are innocent of any wrongdoing and unfortunately one side has to lose. On the one hand, the plaintiff, Frank Ernest William Levy, a solicitor, was left the Painting by a grateful client in his will. On the other hand, the defendants, Maxwell James Watt and Michael Ian Watt, are the executors and residuary beneficiaries of their uncle, Albert James Watt, from whom the Painting was stolen in April 1991. (Both Maxwell James Watt and his uncle used the name "James" or "Jim" rather than their first given name. I shall refer to the former as "Mr Jim Watt" and his uncle as "Mr James Watt" in order to distinguish between them.) Mr Jim Watt is the older brother of Mr Michael Watt.

2 On 18 November 1953, Mr James Watt purchased the Painting from a Melbourne auction house, Decoration Co, for the sum of 26 pounds 5 shillings. The receipt, kept by Mr James Watt, bore the description "White Umbrella" in his handwriting. However, the handwritten words "Girl in Sunlight" appear faintly on the back of the Painting. Although Mr Jim Watt said that his uncle normally referred to the Painting as "Girl in Sunlight", it appears that Mr James Watt did use both titles as alternatives.

3 Nevertheless, in a book published in 1970 on Rupert Bunny by David Thomas, then the Director of the Newcastle City Art Gallery, the Painting was described in the catalogue as follows:

[O154] Girl in Sunlight, c1913? Inscr: Rupert C.W. Bunny ... Coll: A.J. Watt Esq., Melbourne, Vic.

4 Another receipt kept by Mr James Watt disclosed that he had the Painting reframed in March 1954. From about that time, the Painting was displayed in the lounge room of an apartment at 35 Marne Street, South Yarra, where Mr Watt was living with his mother. Mr Jim Watt, who was born in 1938, recalled seeing the Painting when he visited his grandmother. Mr Michael Watt, who was born in 1941, could not recall seeing the Painting at the Marne Street apartment.

5 Both Mr Jim Watt and Mr Michael Watt gave evidence that their grandmother was friendly with a lady by the name of Maxine Rand, who lived with her son, Peter Rand, in an adjacent apartment at Marne Street. The front doors of the two apartments opened opposite each other. Mrs Rand used to visit Mrs Watt, sometimes with her son. There was an age gap of about 15 years between Mr James Watt and Mr Rand. Mr Jim Watt said that he recalled seeing Mr Rand at his grandmother's apartment on at least two or three occasions. But that was probably before 1953, when Mr James Watt purchased the Painting. Mr Michael Watt said that he recalled seeing Mr Rand at his grandmother's apartment two or three times, including one or two times after 1953.

6 In about 1967, Mr James Watt and his mother moved to 252 Domain Road, South Yarra. Mr Jim Watt recalled seeing the Painting in the living room when he visited. Mr Michael Watt's earliest recollection of the Painting was at the Domain Road property. Also in 1967, Mr Rand and his mother moved to 268 Domain Road, South Yarra. Although the numbers of the properties are close, they are, in fact, on opposite sides of Punt Road. Shortly after his mother died in 1969, Mr James Watt moved to an apartment in Acland Street, South Yarra. Both Mr Jim Watt and Mr Michael Watt had no recollection of seeing Mr Rand at the Domain Road or the Acland Street properties.

7 Following his retirement in about 1972, Mr James Watt moved to live permanently at 2901 Nepean Highway, Blairgowrie. Mr Michael Watt and his wife, Sandra, visited him several times a year. Mr Jim Watt lived in close proximity to his uncle for much of this time so that he visited him often. Mr Jim Watt said that his uncle could not afford to insure the Painting. Despite this, the Painting was prominently displayed on a wall of the dining room at the Blairgowrie property.

8 At this time Mr Rand owned a holiday house at 3080 Nepean Highway, Sorrento, which was known as "The Sisters". Although he visited The Sisters over the years, the exact frequency was unclear. Sometime in 1989 Mr Rand leased the property to a Mr and Mrs Harpur. They were close friends of his so he may have continued to visit it. However, both Mr Jim Watt and Mr Michael Watt said that they never saw Mr Rand at their uncle's Blairgowrie property. Mrs Sandra Watt said that she had never met Mr Rand.

9 However, counsel for the defendants did lead the following evidence from Mrs Watt, subject to objection from counsel for the plaintiff. She said that in the late 1980s she and her husband and her late mother in law arrived at the Blairgowrie property to find Mr James Watt in an angry state. Mrs Sandra Watt said that she heard him say "I told him to get off the property". She was later told by her mother in law that she was told by Mr James Watt that he had told Mr Rand to get off the property.

10 I uphold the submission by counsel for the plaintiff that this hearsay upon hearsay evidence is inadmissible, pursuant to s 59(1) of the Evidence Act 2008, as the defendants seek to rely upon it to establish that Mr James Watt had told Mr Rand to get off the property and that he had told his sister in law what he had said and that she had told her daughter in law what had been said. Even if Mrs Sandra Watt's evidence that she heard Mr James Watt say "I told him to get off the property" is admissible under s 63 of the Evidence Act, it does not assist the defendants because the "him" is not identified.

11 On Thursday, 11 April 1991, Mr Watt's house was broken into and the Painting and a television set were stolen. Other works of art were not taken. The theft occurred between 11.00 and 11.20 am, which was the time when Mr Watt regularly went down the street to purchase "The Age" newspaper on a Thursday with the green television guide in it. Mr Watt immediately reported the theft to the police. However, the police investigation failed to identify the thief or to produce any information regarding the whereabouts of the Painting.

12 The theft of the Painting was reported, at the time, in The Age newspaper (which referred to the Painting as " 'White Umbrella', subtitled 'Girl in Sunlight' ") and in the Southern Peninsula Gazette (which referred to the Painting as " 'The White Umbrella' or 'Girl in Sunlight' ").

13 In October 1991, Mr James Watt advertised in The Age newspaper and the Southern Peninsula Gazette for any information leading to the recovery of the Painting. A reward was offered. The Painting, which was reproduced in the advertisements, was described as "Girl in Sunlight". These efforts were also unsuccessful in securing the recovery of the Painting.

14 It appears that in March 1992 Mr James Watt may have sent a letter to Detective Sergeant Heggie, the officer in charge of the investigation, asking about the result of his interview with the district nurse "Denise". Mr Watt's letter continued:

This person was the only outsider in some forty years who expressed any interest in the work. Not only did she recognise it for what it is but she brought a friend to see it. I am not suggesting that she was directly concerned in its theft but she may well have spoken inadvertently to those who were responsible. In addition she mentioned that her father was interested in painting.

A partly typed and partly handwritten draft of that letter was found by Mr Jim Watt in his uncle's papers after his death.

15 Mr James Watt died two years to the day after the burglary, on 11 April 1993. By his last will dated 30 October 1980, he appointed his nephews as his executors. Probate of that will was granted to them on 28 July 1993. After becoming executors, the brothers continued their uncle's efforts to locate the Painting. This included contacting Detective Sergeant Heggie and circulating flyers to galleries and art dealers offering a "substantial reward" for any information leading to the return of the stolen Painting. They also engaged ARM International Pty Ltd to undertake an investigation. That company's report to Mr Jim Watt, dated 22 February 1994, concluded with the following observation:

We note that there had been no art thefts of note before or after this matter in the Mornington Peninsula area. This leads us to believe, as do you, that the person(s) responsible had an intimate knowledge of the painting, the house and Mr Watt's movements.

None of those efforts yielded any positive outcome.

16 In early 2010, the Watt brothers became aware that a major Rupert Bunny retrospective exhibition was to be held at the National Gallery of Victoria. They decided to publicise the theft again. On 6 April 2010, emails were sent by Mr Michael Watt's daughter to those associated with the exhibition. This led to an informant contacting the Watts to say that he believed that he had seen the Painting about two years ago, but that he would only disclose its location to the relevant authorities. Later in April 2010, the matter was reported to the police who undertook further investigations. On 4 May 2010, a search warrant was executed at Mr Levy's house in Malvern East. The Painting, which was hanging in the dining room, was seized by the police.

17 Mr Levy was Mr Peter Rand's solicitor from about 1978. His work for Mr Rand involved property and commercial transactions. Other solicitors in Mr Levy's firm drew his wills and acted for him in any litigation. Mr Rand's business activities included the ownership of a brothel after they were legalised in 1986. Prior to that he owned properties on which brothels operated but Mr Levy was uncertain whether Mr Rand had any interest in them. Mr Levy said that Mr Rand was "most certainly" a person who was interested in art.

18 According to Mr Levy, Mr Rand was appreciative of Mr Levy's assistance and advice, particularly in advising him to reduce his borrowings prior to the property crash in the early 1990s, and wanted to leave him something in his will. Initially, Mr Rand wanted to leave "The Sisters" property to him. However, Mr Levy advised him that it was inappropriate as the gift was too substantial and that he should look elsewhere for his beneficiaries. Subsequently, on one of the social visits by Mr Levy and his wife, Judith, to Mr Rand at his Domain Road house in the early 1990s, Mr Rand took Mrs Levy upstairs and showed her two paintings, one of which was the Painting. He asked her to choose one as he wanted to give it to her husband. Mrs Levy chose the Painting because "it was bright colours and the other was very sort of wishy washy". In Mr Rand's will dated 2 November 1994, the Painting was left to Mr Levy.

19 A friend of Mr Rand, Michael Aquilina, gave evidence that he first met Mr Rand in 1991. He said that he subsequently did some casual work for Mr Rand at his Domain Road house in 1993 when he became unemployed. When their friendship developed, Mr Rand took him upstairs to the bedroom of his late mother, Mrs Maxine Rand, in late 1993 or early 1994, where he saw the Painting for the first time. Mr Aquilina moved into Mr Rand's house in 1996. He said that the Painting remained in Mrs Rand's former bedroom all the time until Mr Rand died. Mr Aquilina also said that he and Mr Rand went to "The Sisters" property "maybe a dozen times together", but he could not say how often Mr Rand went there without him. He said, however, that he had never met or heard of a gentleman by the name of Albert James Watt.

20 Mr Rand died on 7 October 1997, leaving a last will dated 8 September 1997. Probate of Mr Rand's last will was granted to the executors named therein, Frank Levy, Leon Moscovitch and Angelo Tesoriero, on 31 March 1999. Letters of administration pendente lite had previously been granted to Mr Levy on 12 February 1998. Under clause 6(a) of his will, Mr Rand bequeathed to Mr Levy his "painting by Rupert Bunny of a woman sitting on the ground". Mr Aquilina was left a life interest in the property at 268 Domain Road and a life interest in a half share of the balance of the income from the estate, or the whole of that income should he survive the other beneficiary of the income.

21 Mr Rand did not tell Mr Aquilina or Mrs Levy how he came to possess the Painting although he did falsely tell Mr Aquilina that the woman in the Painting was his aunt. Mr Levy gave evidence that he had arranged for Mr Rand's records to be thoroughly searched for documents explaining how Mr Rand came to be in possession of the Painting. He said that the searches of "cartons and cartons of books and records" did not "locate evidence of payment for the painting, nor evidence of receipt of moneys paid for the painting". Mr Levy said that he knew from a dispute that Mr Rand had with the Australian Taxation Office that Mr Rand's record keeping "left much to be desired". He said that Mr Rand rarely retained copies of documents or correspondence. Accordingly, the circumstances as to how Mr Rand came to possess the Painting remain unknown. Nevertheless, there was no evidence that Mr Rand was connected with the theft of the Painting, or that he was ever suspected of, or investigated by the police in relation to, the theft of the Painting.

22 There was no mention of the Painting in Mr Rand's will dated 18 May 1992. As previously stated, in his will dated 2 November 1994 Mr Rand left the Painting to Mr Levy. Thus, Mr Rand must have had possession of the Painting from some time before this date. The earliest evidence of Mr Rand's possession of the Painting, which Mr Levy was able to locate as a result of the searches, was a valuation of the contents of his house prepared by a Mr Les Bilham of McCann's Antique, Estate and Decorative Arts Auctions, which was dated 22 August 1994. Included in the valuation, in the contents of "Bedroom 1", was a painting described as "Rupert Bunny Oil - (3' x 2') 'Female Reading in Sun' ", valued at $100,000. The McCann's valuation was apparently "viewed" by a representative of an insurance company in September 1994 and "viewed - noted & accepted for insurance purposes" by a representative of another insurance company in September 1996.

23 The administration of Mr Rand's estate was soon beset by long-running litigation by the Harpurs concerning the beneficial ownership of numerous assets of which the Painting was one. In November 1997, a valuation of the contents of the house was obtained by Mr Rand's executors from Leonard Joel which may have been carried out for Mr Rand in April 1997. It described the painting in Bedroom Two as "R. Bunny Oil Painting" and valued it at $150,000. It seems that at some stage Leonard Joel must have revised its valuation, because the valuation of the contents of 268 Domain Road by Leonard Joel, exhibited to the joint affidavit of the executors in support of their application for probate, valued the Painting at $125,000. An insurance policy issued in August 2003 referred to "R Bunny Oil Painting 'Girl Reading' ", valued at $140,000. The Painting remained at Mr Rand's Domain Road house until the litigation concluded in late 2007. In early 2008, Mr Levy moved the Painting to his home given that the Harpurs' claim to ownership of Mr Rand's assets, including the Painting, had been finally defeated.

24 Thereafter, William Nuttall of Niagara Galleries was asked by Mrs Levy to value the Painting. In his certificate of valuation dated 26 February 2008, Mr Nuttall described the Painting as "Untitled (Woman in Pink Jacket), c1914" and valued it at $180,000. Mr Nuttall also told Mrs Levy that David Thomas of David Thomas Fine Arts, who was cataloguing Rupert Bunny's works, would be interested in seeing the Painting. Mrs Levy rang Mr Thomas who came and inspected the Painting at her house in March 2008. On 31 March 2008, Mr Thomas wrote to Mrs Levy enclosing his "working entry for my catalogue raisonné on Bunny". In that document the Painting was described as "Girl in Sunlight, c1915". It was said that it had been "possibly" exhibited in Paris in 1917 as "Au soleil" [In sunlight] and exhibited in Melbourne in 1922 and Sydney in 1923 as "Girl in Sunlight". Mr Thomas said in his letter to Mrs Levy:

The date of circa 1915 is still tentative as I hope to be able to lock down several of these paintings of similar subject to something more exact.

He also agreed with Mrs Levy's request that for privacy reasons the new catalogue describe the "provenance" of the Levys' ownership as simply "Private collection, Melbourne".

25 The Painting was insured by the Levys from March 2008 for $160,000. The policy described the specified item of contents as "Fine Art - Rupert Bunny Painting".

26 It was only after the Painting was seized from their house that Mr and Mrs Levy become aware that it had been stolen in 1991 from Mr Watt's Blairgowrie property. Thereafter, Mr Levy co-operated with the police in their investigations.

27 On 18 June 2010, an interpleader hearing, initiated by Detective Senior Constable Katherine Laird under s 125 of the Police Regulation Act 1958 ("the PRA"), came before Magistrate Johnstone in the Magistrates' Court. At the conclusion of that hearing on 18 June 2010, his Honour ordered that "the Rupert Bunny painting Girl in Sunlight be returned by Victoria Police to the Watts on the basis that they jointly and severally keep the painting until such time as ownership is determined by a court or the matter of ownership is not pursued within in [sic] a limited period of six months". The Painting was also to be insured by the Watts for not less than $200,000. The period of six months within which Mr Levy was to commence a proceeding to pursue ownership of the Painting was included at the request of the Watts' counsel and was not resisted by Mr Levy's counsel.

28 On 29 September 2010, Mr Levy commenced this proceeding seeking a declaration that the defendants' proprietary rights in the Painting had been extinguished and that Mr Levy was the owner of it. He also sought an order that the Painting be returned to him. It was pleaded in the statement of claim that if the Painting was removed without the consent of Mr James Watt on 11 April 1991 then there had been successive conversions of the Painting (by the thief in April 1991, by Mr Rand in about 1994 when he acquired the Painting, by the executors of Mr Rand's estate when they obtained a grant of representation in February 1998[1] and by Mr Levy when he took physical possession of the Painting in early 2008) and that by operation of s 6 of the Limitation of Actions Act 1958 ("the Limitation Act"), any title of the defendants to the Painting had been extinguished on the expiration of six years after 11 April 1991.

29 In their defence, the defendants pleaded that s 6 of the Limitation Act did not apply by operation of s 27 of that Act. They further pleaded that at all material times between about 1953 until the death of Mr James Watt in 1993, Mr Rand:

(c) knew that Mr Watt was the true owner of the Painting.

Further, the defendants denied that Mr Rand had acquired the Painting as a bona fide purchaser for value without notice.

30 It was as a result of the interpleader application that this proceeding had a somewhat irregular structure. As counsel for the plaintiff submitted, it would usually be for the dispossessed owner of the goods to sue a subsequent possessor for return of the goods.

31 The following legislation is relevant to this dispute. First, s 125 of the PRA relevantly provides that:

When any member of the police force has taken possession of any goods ... and it is doubtful whether any person claiming such goods or which of any two or more persons so claiming is entitled to the possession thereof of the Magistrates' Court, upon the application of such member and in the presence of all the parties claiming such goods ... may hear receive and examine evidence touching the matter of such application and may order to whom such goods shall be delivered by such member, and such goods shall be delivered accordingly; and if after the making of such order any action is commenced against such member for the recovery of such goods or the value thereof, such order and the delivery of the goods in pursuance thereof may be given and shall be received in evidence in bar of such action, but such order or delivery shall not affect the rights or liabilities of the persons claiming such goods or to whom the same have been delivered as aforesaid.

32 Secondly, there are a number of sections of the Limitation Act which need to be considered. They are as follows:

3(4) A person shall be deemed to claim through another person if he became entitled by, through, under, or by the act of that other person to the right claimed:

Provided that a person becoming entitled to any estate or interest by virtue of a special power of appointment shall not be deemed to claim through the appointer.

...

5(1) The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued-

(a) ... actions founded on tort ...

...

6(1) Where-

(a) any cause of action in respect of the conversion or wrongful detention of a chattel has accrued to any person; and

(b) before he recovers possession of the chattel, a further conversion or wrongful detention takes place-

no action shall be brought in respect of the further conversion or detention after the expiration of six years from the accrual of the cause of action in respect of the original conversion or detention.

(2) Where-

(a) any such cause of action has accrued to any person; and

(b) the period prescribed for bringing that action and for bringing any action in respect of such a further conversion or wrongful detention as aforesaid has expired; and

(c) he has not during that period recovered possession of the chattel-

his title to the chattel shall be extinguished.

...

1. Where, in the case of any action for which a period of limitation is prescribed by this Act-

(a) the action is based upon the fraud of the defendant or his agent or of any person through whom he claims or his agent; or

(b) the right of action is concealed by the fraud of any such person as aforesaid; or

(c) the actions is for relief from the consequences of a mistake-

the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it:

Provided that nothing in this section shall enable any action to be brought to recover or enforce any charge against or set aside any transaction affecting any property which-

(i) in the case of fraud, has been purchased for valuable consideration by a person who was not a party to the fraud and did not at the time of the purchase know or have reason to believe that any fraud had been committed; or

(ii) in the case of mistake, has been purchased for valuable consideration, subsequently to the transaction in which the mistake was made by a person who did not know or have reason to believe that the mistake had been made.

33 Mr Klempfner of counsel, who appeared with Mr Pitt of counsel on behalf of the plaintiff, based the plaintiff's claim entirely on the operation of the Limitation Act. They submitted that any cause of action which the defendants may have had in respect of the Painting had long since expired (s 5(1)(a) of the Limitation Act), and that any title to the Painting had been extinguished (s 6(2) of the Limitation Act). It was submitted that Mr Levy's possessory title to the Painting prevailed as the defendants' documentary title was extinguished upon the expiration of six years from the date on which the Painting was stolen from their uncle's Blairgowrie property. Counsel submitted that this conclusion was not affected by the Magistrate's order as it only rendered the defendants "mere custodians" of the Painting, pending this Court's determination of the parties' competing claim to the entitlement to the Painting. They submitted that, to succeed against the defendants, Mr Levy need not show that he had documentary title to the Painting; the extinguishment of the defendants' documentary title under s 6(2) of the Limitation Act meant that his possessory title prevailed against the world at large.

34 The plaintiff's counsel also submitted that the defendants' reliance on s 27(a) or (b) of the Limitation Act to postpone the operation of the limitation period on an allegation of fraud could not succeed. Section 27(a) did not apply because conversion was not an action "based upon" fraud and s 27(b) did not apply because the fact of the theft was not concealed by fraud from Mr James Watt; only the identity of the original tortfeasor. Further, it was submitted the defendants could not prove that the plaintiff or any of his agents or persons through whom he claimed had committed any fraud. Moreover, applying the Briginshaw v Briginshaw[2] standard of proof, the caution with which the Court should receive evidence about a deceased's conduct meant that the Court could not place any weight on the defendants' circumstantial case for a postponement of the limitation period.

35 The plaintiff's counsel submitted that the policy considerations underlying the Limitation Act supported the plaintiff's claim. They referred to the following statement by Dodds-Streeton J in Nolan v Nolan: [3]

Limitation of action legislation reflects the policy that lengthy possession must ultimately operate to preclude a remedy in relation to a title, "however clear and indisputable", when a title holder comes "too late". The legislation recognises the public's interest in having "a certain fixed period, after which the possessor may know that the title and right cannot be called in question" in order to avoid an opening to "interminable litigation, exposing parties to be harassed by stale demands, after the witnesses of the facts are dead, and the evidence of the title lost".[4]

36 Mr Robins of counsel, who appeared for the defendants, submitted that because the limitation period was postponed pursuant to s 27(a) or (b) of the Limitation Act, it did not commence to run until May 2010 when the defendants learned who had possession of the Painting. This submission was constructed through the following steps:

(a) Mr Levy "claimed through" Mr Rand within the meaning of s 3(4) of the Limitation Act;

(b) Mr Rand, in turn, "claimed through" the thief who stole the Painting;

(c) Because the limitation period for the original cause of action against the thief was postponed under s 27(a) or (b) of the Limitation Act, the limitation period against Mr Rand and Mr Levy was similarly postponed and had not yet expired;

(d) Proviso (i) to the engagement of s 27(a) or (b) did not apply because:

(i) Mr Levy did not prove that Mr Rand acquired the Painting as a bona fide purchaser for value without notice, and

(ii) as a bare donee of the Painting, Mr Levy also was not a bona fide purchaser for value without notice;

(e) Mr Rand never had any valid title to the Painting and therefore could not pass a valid title to Mr Levy - nemo dat quod non habet.

37 Mr Robins also submitted that if the defendants were unable to avail themselves of the postponement provisions in s 27, the defendants could still succeed on the basis that they currently had possession of the Painting and the qualification of s 125 of the PRA - that a delivery order did not affect the rights or liabilities of persons claiming the goods or the person to whom such goods were delivered - did not assist Mr Levy. He had not been in possession of the Painting since the police lawfully executed the search warrant in May 2010. By the defendants being in possession, so Mr Robins submitted, it gave them a superior right to the Painting unless Mr Levy could establish title to it by showing that Mr Rand was a bona fide purchaser for value without notice.

38 The ambit and purpose of s 125 of the PRA was, as Nathan J observed in Thompson v Coloe,[5] that:

where goods, in the possession of a police member, are subject to competing claims between non-members or citizens, the member may resolve doubts about entitlement by referring the claims to a magistrate. The magistrate then becomes seized of the competing claims and orders to whom the goods may be delivered.

39 The object of s 125, to afford a statutory protection to a member of the police force against any civil suits by invoking the procedure under that section, was explained by Robson J in Bella Fresh Pty Ltd (in liq) v Petrac,[6] in the following way:

[T]hat section provides a mechanism whereby a member of a police force who has taken possession of goods can return them to claimants or a claimant and be protected from further action in having taken the goods and, as indicated by the wording of the section, provides a mechanism whereby, if there is more than one claimant, the Court can order which claimant the goods should be delivered to.

40 However, as his Honour also emphasised, the effect of a delivery ordered under s 125 was subject to the important qualification contained in the section that "such order or delivery shall not affect the rights or liabilities of the persons claiming such goods or to whom the same have been delivered as aforesaid". Accordingly, the mere delivery of the Painting to the Watts, pursuant to the Magistrate's order, neither strengthened their claim, nor did it lessen or diminish Mr Levy's claim, to the Painting.

41 When Mr Levy took the Painting to his house in early 2008 and hung it on the wall, there could be no doubt that by taking and exercising control of it in his house he had dominion over it, as well as a complete right to exclude others from it. He had "possession" of the Painting.[7] The concept of "possession" is central to property law. As Dodds-Streeton J said in Nolan v Nolan:[8]

... possession is prima facie evidence of property. As Issacs and Rich JJ observed in Russell v Wilson:[9]

"Possession, in the relevant sense, is not merely evidence of absolute title: it confers a title of its own, which is sometimes called a 'possessory title'. This possessory title is as good as the absolute title as against, it is usually said, every person except the absolute owner".

42 This possessory title conferred on Mr Levy a proprietary interest in the Painting and allowed him to exercise rights over it except against someone who held a superior right to it such as the true owner. That position, as the terms of s 125 of the PRA make clear, was in no way altered by the Magistrate's order that the Painting be delivered to the defendants.

43 I therefore reject Mr Robins' submission that the defendants' current possession of the Painting was sufficient to defeat Mr Levy's prior possession unless Mr Levy could show that he had documentary title. The difficulty with accepting Mr Robins' submission is that, contrary to the terms of s 125 of the PRA, it means that the result of the case before me is governed by how the Magistrate resolved the interpleader summons.

44 The relevant question, it seems to me, is whether the defendants can show that their documentary title continued to subsist at law and that it is, therefore, superior to that of Mr Levy's possessory title. The answer to this question involves the construction and application of s 27 of the Limitation Act.

45 The elements to found an action in the common law tort of conversion were not in dispute in this case. A dealing with a chattel in a manner that is repugnant to the actual possession or the immediate right to possession of the person who has the property in the chattel constitutes a tort of conversion at common law.[10] By stealing the Painting from Mr James Watt's house on 11 April 1991, the thief had committed the tort of conversion against Mr Watt in relation to the Painting. It was common ground that that conversion alone did not deprive Mr Watt of his ownership of the Painting. However, apart from the defendants' argument based on s 27, the commission of the tort would have enlivened the Limitation Act in respect of the action for conversion which Mr James Watt had against the thief. In order to come within the six year limitation period under s 5(1)(a), Mr James Watt had to commence a proceeding by 11 April 1997.

46 According to the plaintiff, Mr Watt's cause of action accrued, and time commenced to run under s 5(1)(a), notwithstanding the fact that he did not know the identity of the thief and therefore had no defendant to sue. Moreover, if there was a further conversion or conversions of the Painting within the six year period, the effect of s 6(1) of the Limitation Act was that Mr Watt's action against the subsequent tortfeasor still had to be brought by 11 April 1997, because the limitation period did not start to run afresh after each further conversion. A second consequence of a further conversion or conversions was that if the six year period had expired without recovery of the Painting, then Mr Watt's title would be extinguished by s 6(2). Therefore, there would be no "absolute owner" of the Painting and Mr Levy's possessory title would prevail against the world at large.

47 There have certainly been further acts of conversion of the Painting after the initial conversion by the thief in April 1991 - possibly by one or more persons between April 1991 and August 1994; by Mr Rand when the Painting came into his possession sometime between those dates; by Mr Levy in February 1998 when he was granted letters of administration pendente lite of Mr Rand's estate; by the executors of Mr Rand's estate in March 1999 when they obtained a grant of probate; and Mr Levy again when he took physical possession of the Painting in early 2008. Therefore, apart from the provisions of s 27 of the Limitation Act, Mr James Watt's cause of action, or more accurately the cause of action of the executors of his estate, for conversion of the Painting would have expired on 12 April 1997 and their title to the Painting would have been extinguished from that date.

48 Thus, everything turns on whether the Watts are able to avail themselves of the postponement provisions in s 27 of the Limitation Act. Mr Robins relied on the fraud exception in paragraphs (a) and (b), but not the mistake exception in paragraph (c), of that section.

49 Counsel for the defendants submitted that s 27(a) applied because the thief acted fraudulently in stealing the Painting and because Mr Rand acted fraudulently in receiving the Painting. As there is no doubt in my mind about the former proposition, there is no need at this stage to examine the evidence about Mr Rand's conduct to decide whether the second proposition is correct. This is because, as s 3(4) of the Limitation Act makes clear, the thief was a person "through whom" Mr Rand claimed, either directly or indirectly.

50 The plaintiff's counsel submitted that the existence of a fraud, in the form of theft of the Painting, was immaterial. They submitted that the fraud must be an essential element of the cause of action such as, for example, the tort of deceit. In conversion, fraud was not such an element. Counsel for the plaintiff referred to the decision in Beaman v ARTS Limited[11] as authority supporting this submission.

51 In that case, the plaintiff, when about to proceed to Turkey in 1935, deposited five packages with the defendant for safe custody. They were to be sent to her as soon as she gave notice requesting it. One package was sent but the others could not, owing to the outbreak of war. On the entry of Italy into the war, the defendant, being a company controlled by Italian nationals, had its business taken over by the custodian of enemy property. The defendant wished to wind up its business as soon as possible. Having examined the packages and deciding that the contents were of no value, the defendant's manager in August 1940 handed over everything to the Salvation Army bar one empty case which he kept for himself. No steps were taken to obtain the plaintiff's consent to this or to communicate with her then or thereafter when Italy was defeated and the Mediterranean was open. The plaintiff did not return to England until 1946. After some delay in ascertaining what had become of the packages, in November 1946 she commenced a proceeding claiming damages for conversion. The defendant pleaded that the six year limitation period had expired and that the plaintiff's title had been extinguished. The plaintiff relied on the English equivalent of s 27.

52 At first instance, Denning J held for the defendant, but on appeal, the plaintiff succeeded. All of the members of the Court of Appeal held that the equivalent of s 27(a) did not assist the plaintiff because the action of conversion was not based on fraud. Lord Greene MR said:

In my opinion the plaintiff's argument under para (a) fails on the ground ... that the action is not based on fraud. It must be borne in mind that s 26 is a section of general application. It applies to every sort of action which is affected by the Act. Of these many can properly be said to be based upon fraud: for example, an action for damages for deceit and an action claiming rescission of a transaction brought about by fraud. In all such cases fraud is a necessary allegation in order to constitute the cause of action. In other actions covered by the Act fraud is not a necessary allegation at all and the action of conversion is one of them. Indeed, the word "fraudulent" in connexion with conversion, however important it may be in a criminal matter is, in the civil action of conversion, so far as regards the cause of action, nothing more than an abusive epithet. I am of opinion, therefore, that the language of para (a) means what it says and that the action was not based on fraud.[12]

In an action at common law for conversion, fraud is not a necessary or relevant allegation and such an action is not, in my opinion, based on fraud.[13]

I do not think that the case falls under s 26(a). Conversion includes fraudulent conversion, but an action for conversion is not based upon fraud.[14]

53 But the Court of Appeal found for the plaintiff on the ground that the defendant's conduct amounted to a fraudulent concealment of the plaintiff's right of action within the equivalent of s 27(b). Lord Greene said:

I am of opinion that the conduct of the defendants, by the very manner in which they converted the plaintiff's chattels in breach of the confidence reposed in them, and in circumstances calculated to keep her in ignorance of the wrong that they had committed amounted to a fraudulent concealment of the cause of action. When she came to claim her goods she expected to find them waiting for her. The fact that she did so expect was due to the manner in which the defendants had chosen to act. This, in the circumstances, can, in my opinion, only be described as furtive and surreptitious.[15]

54 Somervell LJ said that "regard must be had to the nature and character of the act" by the defendant in deciding whether the right of action had been concealed by fraud,[16] and that what was done was, in his opinion, a fraud upon the plaintiff because:

any reasonable person directing himself to the facts as known would have realized that the defendants had no right to give away the plaintiff's goods and that it was dishonest to do so.[17]

55 Singleton LJ said that the disposal of the goods by the defendant "was a fraud upon the owner". His Lordship continued:

By concealing from her what they had done they concealed from her the right of action which arose upon the conversion of the goods.[18]

56 In my opinion, s 27(a) is not applicable in this case because conversion is not an action "based upon the fraud of the defendant or his agent or of any person through whom he claims or his agent". The reasoning of the Master of the Rolls in the passage quoted above persuasively explains why that conclusion must be reached.

57 I turn then to s 27(b) of the Limitation Act. Mr Robins submitted that the stealing of the Painting and the concealment by the thief of his or her identity satisfied the requirements of s 27(b). He placed reliance on the decision of McInerney J in Martinus v Kidd[19] in support of that proposition. In that case the plaintiff, who had been injured in a collision between two cars driven by the two defendants, did not discover until after the expiration of the three year limitation period that the driver of the other car had died before the writ had been issued. The plaintiff's appeal against the dismissal of her s 23A application to extend the time within which she might institute proceedings against the administratrix of the deceased driver's estate failed for reasons not presently relevant.[20] In the course of his judgment, McInerney J referred to an example given by Anderson J in his judgment[21] of a passenger falsely representing that he had been the driver of a car involved in an accident (perhaps because the real driver was intoxicated) and after the death of the real driver revealing the true situation, while the action was still pending but after the limitation period had expired. McInerney J stated with respect to the example:

If the pseudo-driver committed the fraud on behalf of or at the request of or in other circumstances which would have made him the agent of the real driver, then the case is within s 27(b) of the Limitation of Actions Act and there is no need to resort to s 23A of the latter Act.[22]

58 Mr Robins submitted that the situation considered by McInerney J and the situation in this case were analogous. In both, the fact that a tort had been committed was known. What was not known was the identity of the tortfeasor - the real driver of the vehicle in the first situation and the thief and any subsequent converters in the second. The effect of what his Honour said was that because the identity of the driver of the vehicle was concealed by the fraud of the defendant's agent, "the right of action" within the meaning of s 27(b) was concealed and therefore the period of limitation would not begin to run until the passenger discovered the fraud. Equally, time would not begin to run against the Watts until they discovered who had converted the Painting or who now had possession of it.

59 Mr Robins also relied on an observation by Eames J (as his Honour then was) in Skrijel v Mengler.[23] In that case, the plaintiff successfully applied for leave to join a third defendant, a Victorian policeman, and a fourth defendant, the State of Victoria. An issue on the appeal from the Master's order was whether the plaintiff's claims against the policeman Cook for misfeasance in public office and conspiracy and the vicarious liability claim against the State were statute barred. The plaintiff relied on s 27(b) of the Limitation Act. There was an argument that new evidence disclosed, for the first time, that it was the third defendant, and not someone else, who was engaged in a conspiracy with others. The third and fourth defendants submitted that the plaintiff's "right of action" was complete when the damage was suffered by him upon his conviction and imprisonment. They submitted that the plaintiff knew that he had a right of action against Cook and that the new facts, at their highest, merely constituted evidence which improved his prospects of success. Eames J dealt with the point in the following terms:

The actions of Cook in his dealings with Murdoch arguably also disclosed, for the first time, that it was Cook, and not someone else, who was engaged in a conspiracy with others (in particular the firstnamed defendant) to present such evidence for the purpose of obtaining a conviction against the plaintiff. If, arguably, those facts had been suppressed by the fraud of Cook, as alleged, then they are facts relevant to the cause of action itself, and not merely items of evidence relevant to proof of the cause of action. The terms of s 27(b) refer to concealment by fraud of "the right of action". The legislation in New South Wales - s 55 of the Limitation Act 1969 - which was discussed in Seymour v Seymour spoke of "a cause of action or the identity of a person against whom a cause of action lies". Notwithstanding the fact that the Victorian section does not distinctly refer to concealment of identify, in my view such concealment might well constitute concealment of "the right of action". The matter is plainly arguable.[24]

60 In the present case, counsel for the plaintiff submitted that there had been no fraudulent concealment of the right of action as it was readily apparent to Mr James Watt on 11 April 1991 that the Painting had been stolen. Therefore, they submitted, time began to run notwithstanding that Mr James Watt, and subsequently his executors, did not know the identity of the thief. The situation would have been different if, for example, the thief had substituted an indistinguishable copy of the Painting so that Mr Watt believed that his original Painting was still hanging on his wall.

61 Whilst the hypothetical example posited by counsel for the plaintiff might seem a little far fetched, a similar situation has in fact occurred. In the United States case of Naftzger v American Numismatic Society,[25] antique coins were stolen from the Society sometime before 1972, when they were sold to a good faith purchaser. As other less valuable coins had been substituted for the stolen ones, the theft was not discovered until 1990 and the location of the coins was not discovered until 1991. Clearly, the thief in that case had fraudulently concealed the existence of a right of action.

62 An earlier example was the decision in Bulli Coal Mining Co v Osborne,[26] where the defendant had mined underneath the plaintiff's neighbouring land and extracted coal without the plaintiff's knowledge. The Privy Council held that the defendant could not rely on the limitation defence because it had fraudulently concealed the cause of action. Their Lordships held that it was not necessary to show that the wrongdoer had "taken active measures in order to prevent detection".[27]

63 Similarly, as has been seen above, the Court of Appeal held in Beaman that the defendant had fraudulently concealed from the plaintiff that it had converted her goods.

64 Another case of fraudulent concealment was Eddis v Chichester Constable.[28] There, a stately home and its many treasures, including a painting by Caravaggio, were vested in trustees. Brigadier Chichester Constable was a tenant for life of the estate, as well as being one of the trustees. Contrary to the terms of the trust, in 1951 the life tenant sold the Caravaggio painting to a consortium of art dealers. The art consortium's agent knew from what the brigadier had told her that the painting was held in trust as an heirloom. The life tenant did not tell his co-trustees of the sale and he pocketed the money himself instead of applying it as capital moneys of the estate. In 1952, the art consortium sold the painting to an art gallery in the United States of America. After the death of the life tenant in 1963, the trustees discovered the loss of the painting. They sued the brigadier's executrix for damages for his breach of trust and the art consortium for damages for conversion. The art consortium unsuccessfully pleaded the Statue of Limitations.

65 The Court of Appeal held that the trustees' right of action had been concealed by the fraud of the life tenant and that he was the person through whom the art consortium claimed title to the painting, so that the period of limitation did not begin to run against the trustees until the fraud was discovered. Lord Denning MR held that it was clear that:

the right of action was "concealed by the fraud" of the brigadier. I do not know that he did anything actively to deceive the trustees. But that does not matter. His wrongful sale of the heirloom was enough. It was a fraud; and by saying nothing about it, he concealed the fraud.[29]

His Lordship also said that the phrase "a person through whom" a defendant claims meant a defendant who "derives his title to the property from that person".[30]

66 However, the plaintiff relied principally on the decision of Streatfeild J in RB Policies at Lloyd's v Butler.[31] In that case, a car owned by the plaintiffs had been stolen by an unknown person in June 1940. In January 1947 the car was found in the possession of the defendant who, according to his Lordship, had "given good consideration for it without knowledge that it was a stolen car".[32] It had passed to him "an innocent purchaser, through a line of intermediate purchasers"[33] during the previous seven years. Streatfeild J held that although the original owners had not known who had stolen the car in 1940 and so had been unable to bring an action for detention, their cause of action had accrued when the car was stolen and therefore the present action was statute barred.

67 His Lordship said of the equivalent of s 27:

The section was inserted to protect a plaintiff who was ignorant of his right of action in the special case of fraudulent concealment, and to overcome the difficulty that time would otherwise have been running against him, unknown to himself. But for the section, time would have run against him from the accrual of his right of action, for it is to be noted that the section, even in the case of fraudulent concealment, does not say that the cause of action shall not accrue until the fraud is discovered, but simply that "time shall not begin to run" until that event.

It is to be noted that s 26 is the only provision in the Limitation Act 1939, in which a special exception of that nature is made. Nowhere is it to be found that where a person, who otherwise has a perfect cause of action, cannot pursue it because the defendant is unknown, time does not run. And it seems to me, therefore, that prima facie as soon as there is a cause of action (as there clearly was in the present case the moment the motor car was stolen) time begins to run notwithstanding the fact that the plaintiff is ignorant of the identity of the defendant.[34]

The explanation of why ignorance of the identity of the defendant did not matter was as follows:

It was, no doubt, a misfortune to the plaintiffs that they could not find a defendant whose name they could insert in a writ; but every other ingredient of the cause of action was present. The motor car had, in fact, been converted. A statement of claim could have been drawn without any difficulty; the only item missing being the name of the defendant.[35]

68 In the All England report of the judgment of Streatfeild J, there is reference to the proviso protecting third parties who take for valuable consideration and without notice. I could not find such a reference in the authorised report of the judgment. Nevertheless, it is clear from both reports that his Lordship did not decide the case on that basis. Rather, he made the following pronouncement, which completely ignored the availability of the proviso:

Can it be said, therefore, that the cause of action being otherwise complete, the ignorance of the owner of the car of the identity of the person against whom he could bring an action was of itself sufficient to prevent the accrual of that cause of action? I think not, and I agree with the argument of Mr Jackson. If that were so it would lead to appalling results. As Mr Jackson suggested to me, if his watch were stolen, and he discovered it years later, in the pocket of a wholly innocent person who had bought it many years before, it would follow that, if the plaintiffs are right, he could bring an action for the recovery of his watch merely because he had not known who was the original thief. I cannot think that that is the policy of the Act, or that to construe its words in favour of the plaintiffs' argument would harmonize with the intention of the legislature.[36]

69 Streatfeild J went on to consider what was the policy underlying the Limitation Act 1939 (UK). One policy was that "those who go to sleep upon their claims should not be assisted by the courts in recovering their property" and another was that "there shall be an end of litigation, and that protection shall be afforded against stale demands".[37]

70 Mr Robins submitted that I should not follow Butler because the decision was "seriously flawed". He submitted that as the purchaser was a bona fide purchaser for value without notice, the proviso could have saved the purchaser from losing possession of the car, and Streatfeild J could and should have decided the case on that basis.[38]

71 Although the writers of leading textbooks and learned articles appear to have accepted Butler as a good authority for the proposition that time begins to run against the owner of a stolen chattel, even though the owner does not know the identity of the thief or the whereabouts of the chattel,[39] I agree with the criticisms of the decision. First, it does not make sense, in my opinion, to say that time should begin to run because all of the ingredients of the cause of action are present and a statement of claim could be drawn, if the identity of the defendant is not known to the plaintiff and could not with reasonable diligence have been discovered by him or her.

72 Secondly, whilst there is good reason for protecting people against "stale demands", the proviso to s 27 of the Limitation Act provides a mechanism for balancing the competing interests of the true owner of the chattel and the possessor of the chattel. Not even the true owner can recover the chattel where it has been purchased "for valuable consideration by a person who was not a party to the fraud and did not at the time of the purchase know or have reason to believe that any fraud had been committed". As stated previously, application of the proviso would have led to the same result in Butler.

73 Thirdly, the existence of the proviso means that the "appalling results" for innocent persons, which Streatfeild J feared would follow from holding that time did not run if the identity of the thief was not known, will not occur.

74 Finally, it seems to me that it is not relevant to talk about people "sleeping upon their claims" when the identity of the thief or subsequent converters is not known and could not with reasonable diligence have been discovered.

75 I therefore consider that I should not regard the decision in Butler as pre-empting the question of what s 27(b) means. It seems to me that concealing the right of action by fraud logically should also include concealing the identity of the tortfeasor. As I have said before, it seems to me to be incongruous that time can run against the owner of a chattel and that ownership rights can be lost when the owner does not know who he or she can sue to recover the chattel. It has been said that a cause of action accrues when all of the necessary facts have occurred and there exists both a competent plaintiff who can sue and a competent defendant who can be sued.[40] But if the identity of the potential defendant is not known how does one know that there is a competent defendant capable of being sued in existence? The thief may have died intestate in the period between the theft and the commencement of the proceeding and no grant of letters of administration may yet have been obtained,[41] or the wrongdoer may be entitled to diplomatic immunity at the time of the tort,[42] so that there is no defendant capable of being sued in existence. Even if there is a competent defendant in existence without these unusual impediments to being sued, how can he be capable of being sued if his identity is not known? I therefore agree with the suggestion by Michael Goodman that "the identity of the defendant is an integral part of the 'cause of action'."[43]

76 I also repeat what I said before about s 27 providing a mechanism for balancing the competing interests of the true owner of the chattel and the possessor of the chattel. If it can be shown that Mr Rand was a bona fide purchaser for value without notice then, despite the fraud by the thief, s 27(b) does not prevent him from gaining good title to the Painting after 12 April 1997. But if that cannot be established, the problem for Mr Levy is that he cannot show that he was a bona fide purchaser for value without notice because he did not buy the Painting from Mr Rand; he was given it.

77 Finally, in terms of the policy underlying the Limitation Act, it cannot be suggested, in my opinion, that the plaintiff is being harassed by stale demands by defendants who have slept on their claims. Certainly, that complaint cannot be levelled against either Mr James Watt, who took every conceivable step to locate the Painting, or the defendants, who have shown great persistence in continuing their efforts to locate the Painting despite the lapse of many years since it was stolen.

78 Counsel for the plaintiff contrasted the wording of the Victorian Act with the wording of s 55(1)(b) of the Limitation Act 1969 (NSW) and s 42(1)(b) of the Limitation Act 1981 (NT) which specifically provide that time does not commence to run where the identity of the person against whom a cause of action lies is fraudulently concealed. Counsel also referred to the changed approach to this question adopted in the Limitation Act 1980 (UK).

79 There is real difficulty, in my opinion, in using the language contained in legislation from other jurisdictions as a means of attempting to construe the words used in a Victorian Act. It is equally arguable that the legislatures in those jurisdictions which have not added the words about time not running where the identity of the tortfeasor is not known, such as the Victorian legislature, have considered that they are unnecessary because the existing words are broad enough to include that possibility. Moreover, the obiter dicta of McInerney J in Martinus v Kidd and of Eames J in Skrijel v Mengler would suggest that both of their Honours considered the existing words of s 27 broad enough to include fraudulent concealment of the identity of the tortfeasor as well as of the occurrence of the tort itself.

80 Closer to home, counsel for the plaintiff drew attention to the provisions of s 23B of the Limitation Act. This section, which was added in 2005, allows a person claiming to have a cause of action for defamation to apply to a court for an order extending the one year limitation period from the date of the publication set by s 5(1AAA) (s 23B(1)). A court, on such an application, "must, if satisfied that it was not reasonable in the circumstances for the plaintiff to have commenced an action" within that time, extend the limitation period "to a period of up to 3 years from the date of the publication" (s 23B(2)). Counsel for the plaintiff submitted that such a provision would not have been necessary if time did not begin to run until the identity of the alleged defamer was known.

81 I do not agree. Even if the only permissible reason for extending the limitation period in the case of an alleged defamation is the inability to identify the defendant (which seems an unlikely and unduly restrictive construction), s 23B is a provision dealing specifically with defamation and making special rules for that tort. Thus, no action can be brought after the expiration of one, or possibly three, years "from the date of publication". The limitation period for other torts, including conversion, are all said to start from the date on which the cause of action accrued.

82 I have, therefore, concluded that time did not begin to run on 11 April 1991 in respect of the conversion of the Painting because the thief had fraudulently concealed Mr James Watt's right of action by concealing his identity. That is, s 27(b) of the Limitation Act applies unless the proviso comes into operation.

83 As a preliminary to deciding whether the plaintiff has established that Mr Rand was a person who purchased the Painting for valuable consideration and who was not a party to the fraud (the theft) and did not at the time of the purchase know or have reason to believe that any fraud had been committed (that the Painting had been stolen) (in other words "a bona fide purchaser for value without notice"), it is necessary to consider the three factual allegations pleaded by the defendants in their defence (see paragraph 29 above).

84 First, I am not satisfied that the defendants' allegation that Mr Rand was "known to and a friend" of Mr James Watt between 1953 and 1993 was established. Although there was clear evidence that Mr Rand and Mr Watt lived in adjoining apartments at Marne Street until 1967, it was their mothers who seemed to have been friends, not necessarily the sons. After all, there was a 15 year age gap between them. I accept the evidence of Mr Jim Watt and Mr Michael Watt that each of them recalled seeing Mr Rand in their grandmother's apartment on two or three occasions. But that does not establish that the two men were friends or that Mr Rand was a regular visitor.

85 Further, there was no admissible evidence linking the two men after 1967. Neither Mr Jim Watt nor Mr Michael Watt could recall seeing Mr Rand at the Domain Road property or at Mr James Watt's Acland Street property or at the Blairgowrie property. Mr Jim Watt could not recall his uncle mentioning Mr Rand's name in any conversation during this period. Neither could Mrs Sandra Watt. Indeed, Mr Jim Watt said that Mr Rand and his uncle were "acquaintances" and agreed in cross-examination that it was an overstatement to say that they were "friends".

86 Mr Aquilina had never heard of Mr James Watt. But as counsel for the defendants pointed out, that was hardly surprising as Mr Watt died in April 1993 and Mr Aquilina's relationship with Mr Rand only really blossomed and developed in 1993 and 1994.

87 Probably the best description of their relationship is that the two men were acquaintances, rather than friends. Indeed, this description was admitted by the plaintiff in his reply.

88 Secondly, I am not satisfied that the defendants' allegation that Mr Rand was "a near neighbour" of Mr Watt between 1953 and 1993 was established. Whilst this was a correct description of their proximity between 1953 and about 1967, and possibly even until 1969, the description of "near neighbour" ceased to be applicable when Mr Watt moved to Acland Street in 1969 and Blairgowrie in 1972, and Mr Rand remained living in Domain Road. The fact that Mr Rand had a holiday house in Sorrento, the next town or suburb to Blairgowrie, does not mean that they were near neighbours, in my opinion.

89 Finally, I am not satisfied that the defendants' allegation that Mr Rand "knew that Mr Watt was the true owner of the Painting" between 1953 and 1993 was established. Mr Robins submitted that I should infer this state of mind from the fact that from about 1993 Mr Rand concealed his possession of the Painting, which was his single most valuable item of furniture, artwork or jewellery, according to the McCann's valuation and other insurance policies, by hanging it in his late mother's bedroom upstairs in his Domain Road house and, except for privileged persons like Mr Aquilina and Mrs Levy, no one saw it or was aware of its existence. He submitted that there was concealment notwithstanding that Mr Rand had had it valued by McCann's because the Painting was not described properly by the valuer.

90 Mr Robins submitted that I should draw an inference, for the purposes of s 27(b), that Mr Rand was on sufficient enquiry to at least raise with Mr Watt the fact that he had acquired this valuable painting. However, this submission overlooked the fact that Mr Watt passed away on 11 April 1993. There was no evidence that Mr Rand had possession of the Painting prior to August 1994.

91 I am not prepared to draw the inference that Mr Rand knew that Mr Watt was the true owner of the Painting between 1953 and 1993. As there was no evidence that Mr Rand ever visited the Domain Road or Acland Street properties, or Mr James Watt's property at Blairgowrie, it cannot be assumed that Mr Rand saw the Painting after 1967, at the latest, until it came into his possession in 1993 or 1994. Even if he remembered seeing it in the Marne Street apartment, he may not have known that it was stolen. He may have assumed that Mr James Watt had sold it. Because the two men cannot be linked, despite having houses in reasonable proximity on the Mornington Peninsula, it cannot be assumed that he would have had the opportunity to ask Mr James Watt about why he no longer owned the Painting. There was no evidence that, prior to his death, Mr James Watt ever told Mr Rand that his painting had been stolen in April 1991. I do not accept that I should infer that Mr Rand would have known that the Painting was stolen by reading about the theft in the contemporaneous newspaper reports or by reading the later advertisements. Even if he read these reports or advertisements at the time, why should it be assumed that he would remember them some two or more years later when the Painting came into his possession?

92 Deciding the above factual allegations in this way still leaves open the question of whether Mr Rand was a bona fide purchaser for value without notice. I agree with Mr Robins' submission that the onus of proving that he was rests on the plaintiff.[44] The difficulty about deciding whether or not Mr Rand was a bona fide purchaser for value without notice is that he has died. If he had been alive, Mr Rand may have been able to give a full and satisfactory explanation of the circumstances in which he gained possession of the Painting. Or he may not. Counsel for the plaintiff submitted that, in the absence of Mr Rand's ability to defend himself, I should, applying Briginshaw v Briginshaw,[45] hesitate before making any adverse findings against Mr Rand. Whilst I agree with that submission, I have to decide on the basis of what evidence there is before me and what inferences I am able to draw from that evidence. The following points seem to me to be the relevant considerations.

93 First, there was no document found in Mr Rand's records explaining how the Painting came to be in his possession. I consider it surprising that such a document, for example, an invoice or receipt from an art gallery or dealer, would not be retained by the owner of the significant and valuable Painting. Apart from anything else, it was Mr Rand's most valuable possession. I accept Mr Levy's evidence that Mr Rand was not a good record keeper, but Mr Rand did keep the McCann's valuation, and one might have expected that the invoice or receipt, if there was one, would have been found with that valuation.

94 I agree with the submission by the plaintiff's counsel that the lack of documentary evidence supporting Mr Rand's entitlement to the Painting did not mean that such evidence never existed. But it has to be remembered that Mr Rand would have only had such a document for between a little over three years and about six years at the maximum before he died in October 1997. That is, it was not an excessively long time to retain a document. Even though another twelve and a half years elapsed before the police seized the Painting in May 2010, this delay does not assist the plaintiff, in my opinion, because the fact that Mr Rand's estate was quickly beset by the Harpur litigation meant that it is likely that all records of the estate would have been carefully secured and stored by the executors. And yet no evidence of purchase could be found.

95 Secondly, there was no evidence produced of any payment of a large sum of money which might have been the purchase price of the Painting. Bank statements or cheque butts should have been available to prove such a payment. Counsel for the plaintiff submitted that Mr Rand could have paid in cash, and as the owner of a brothel Mr Rand might have had access to large amounts of cash. But such a suggestion is really only speculation and does nothing to support the legitimacy of the transaction by which Mr Rand gained possession of the Painting.

96 Thirdly, Mr Rand apparently never told his friend, Mr Aquilina, or his proposed beneficiary, Mr Levy, or Mr Levy's wife, how or from where he had acquired the Painting. It seems to me to be somewhat unusual that no explanation of the provenance of the Painting was ever given to these people. In particular, one might have expected Mrs Levy to be given that information when she chose the Painting to be the subject of the bequest to her husband. As counsel for the defendants point out, the only history told by Mr Rand to Mr Aquilina, claiming that the girl in the Painting was his aunt, was false. This led Mr Aquilina to assume that Mr Rand had been left the Painting by his aunt. I do not think that this false account can be dismissed as Mr Rand simply spinning a harmless story.

97 The matters discussed so far point to the conclusion that I cannot be satisfied that it has been proven that Mr Rand was a bona fide purchaser for value without notice. Other considerations indicate to the contrary. Fourthly, I find that Mr Rand did not conceal the fact that he had gained possession of the Painting. I do not consider that the different names given to the Painting in the various valuations and insurance policies was of any significance. Even Mr James Watt did not use only one name for the Painting. Nor do I consider that the fact that the Painting was hung in an upstairs bedroom was evidence of concealment.

98 On the contrary, I agree with the submission by counsel for the plaintiff that Mr Rand's openness in dealing with the Painting was possibly an indication that he had acquired it as a bona fide purchaser for value without notice. They submitted that there was no concealment because Mr Rand showed the Painting to valuers and friends. Counsel submitted that the fact that the Painting was valued and insured militated against any conclusion of fraud or concealment on the part of Mr Rand. They asked rhetorically if Mr Rand had not paid for the Painting, why would he insure it? I do not accept this point because there are at least two possible answers. Mr Rand may have paid the thief or a fence for the Painting or, even if he had not paid for it, Mr Rand may have wanted to protect himself from loss if the valuable Painting was damaged, destroyed or stolen from him. A more difficult question asked by counsel was, if Mr Rand wanted to conceal his possession of the stolen Painting, why would he run the risk of having it seen by, or its existence revealed to, valuers and insurers?

99 Fifthly, there is no suggestion that Mr Rand was ever suspected by Mr James Watt, the police or ARM International Pty Ltd of having any involvement with the theft of the Painting. Mr James Watt's letter to Detective Heggie makes clear his thoughts about possible suspects.

100 Despite these contrary indications, I am not persuaded that I should find that Mr Rand was a bona fide purchaser for value without notice. There is really insufficient evidence to make a positive finding to that effect on the balance of probabilities. After all, rather like Mr Levy, Mr Rand may have been given the Painting by a friend, and that would not make him a bona fide purchaser for value without notice.

101 I should make it clear that in reaching this conclusion I have not taken certain matters into account. They were, on the one hand, the submission by counsel for the defendants that the Briginshaw principle did not apply to Mr Rand because he owned freehold land which was used by his tenants to run illegal brothels prior to their legalisation and he did not tell or cause the tenants to cease those illegal activities and because he was subjected to investigations and betterment assessments by the Australian Taxation Office, and on the other hand, the submission by counsel for the plaintiff that had Mr Rand had a guilty conscience as to the provenance of the Painting, it was hardly likely that he would make a gift of it to Mr Levy, as this might embroil him in litigation. These matters did not seem to me to be persuasive in deciding whether Mr Rand came within the proviso to s 27(b) of the Limitation Act.

102 The result of the above discussion is that I have found that the defendants' proprietary rights in the Painting have not been extinguished under ss 5(1)(a) and 6(1) and (2) of the Limitation Act because s 27(b) prevented time from beginning to run when the Painting was stolen from their late uncle in April 1991. The defendants' documentary title is, therefore, superior to Mr Levy's possessory title and they are entitled to retain possession of the Painting. Accordingly, the plaintiff's claim will be dismissed.

[1] This was not accurate. The executors did not obtain a grant of probate until March 1999. Mr Levy was granted letters of administration pendente lite in February 1998.

[2] [1938] HCA 34; (1938) 60 CLR 336.

[3] [2003] VSC 121; (2003) 10 VR 626, 647, [127].

[4] Per Sir Thomas Plummer MR in Marquis Cholmondeley v Lord Clinton (1820) 2 Jac & W I, 140; [1820] EngR 550; 37 ER 527, 577.

[5] Supreme Court of Victoria, Nathan J, No 8616 of 1990, 20 March 1992, unreported, p 4.

[6] [2007] VSC 291, [4].

[7] Flack v Chairperson, National Crime Authority (1997) 150 ALR 153.

[8] [2003] VSC 121; (2003) 10 VR 626 at 647, [126].

[9] [1923] HCA 60; (1923) 33 CLR 538, 546.

[10] Penfolds Wines Pty Ltd Ltd v Elliott [1946] HCA 46; (1946) 74 CLR 204, 229 per Dixon J.

[11] [1949] 1 KB 550.

[12] [1949] 1 KB 550, 558.

[13] [1949] 1 KB 550, 567.

[14] [1949] 1 KB 550, 571.

[15] [1949] 1 KB 550, 566.

[16] [1949] 1 KB 550, 570.

[17] [1949] 1 KB 550, 569.

[18] [1949] 1 KB 550, 571.

[19] [1982] VicRp 81; [1982] VR 807.

[20] [1982] VicRp 81; [1982] VR 807. (McInerney J at 814 and Jenkinson J at 824 dismissed the appeal. Anderson J at 819 dissented).

[21] [1982] VicRp 81; [1982] VR 807, 817-818.

[22] [1982] VicRp 81; [1982] VR 807, 812.

[23] [1998] VSC 71.

[24] [1998] VSC 71, [60].

[25] (1996) 42 Cal App 4th 421.

[26] [1899] AC 351.

[27] [1899] AC 351, 363.

[28] [1969] 2 Ch 345 (Lord Denning MR, Winn and Fenton Atkinson LJJ).

[29] [1969] 2 Ch 345, 356.

[30] [1969] 2 Ch 345, 356-357.

[31] [1950] 1 KB 76. The case is also reported in [1949] 2 All ER 226. There are a number of important differences in the judgments in the two reports.

[32] [1950] 1 KB 76, 82.

[33] [1950] 1 KB 76, 79.

[34] [1950] 1 KB 76, 80.

[35] [1950] 1 KB 76, 79-80.

[36] [1950] 1 KB 76, 81.

[37] [1950] 1 KB 76, 81.

[38] See also the article by MJ Goodman: First Catch Your Defendant - Limitation and the Unknown Tortfeasor, (1966) 29 MLR 366.

[39] See, for example, Clerk & Lindsell on Torts, Eighteenth Edition, Sweet & Maxwell, 2000, para 33.16; Palmer on Bailment, Third Edition, Sweet & Maxwell and Thomson Reuters, 2009, para 40-017; Handford: Limitation of Actions in The Laws of Australia, Second Edition, Thomson and Lawbook Co, para 5.10.2240; AT Kenyon: Legal Issues and Recovery Processes: Australia, paper presented at the Australian Institute of Criminology Art Crime Conference, Sydney, December 1999; AT Kenyon and S Mackenzie: Recovering Stolen Art - Australian, English and US Law on Limitations of Action, Faculty of Law, the University of Melbourne, Public Law and Legal Theory, Working Paper No. 23, 2002.

[40] Handford: Limitation of Actions in The Laws of Australia, Second Edition, Thomson and Lawbook Co, para 5.10.450.

[41] Handford: Limitation of Actions in The Laws of Australia, Second Edition, Thomson and Lawbook Co, para 5.10.450.

[42] Musurus Bey v Gadban [1894] 2 QB 352.

[43] MJ Goodman: First Catch Your Defendant - Limitation and the Unknown Tortfeasor, (1966) 29 MLR 366, 369.

[44] Di Sante v Camando Nominees Pty Ltd [2000] VSC 211, [48] (Warren J).

[45] [1938] HCA 34; (1938) 60 CLR 336.