POMEROY v THWAITES WITHAM PTY LTD & ANOR No. SCGRG-99-731 [2000] SASC 44

1. PRIOR J. I agree with the reasons given by Justice Martin.

2. The market value of the goods said to have been converted is a fact material to the issue of damages. As Cox J observed in Wright v Donatelli[1]

, the test for an ascertained material fact under s 48 of the Act[2] is extremely modest. The first requirement of the statutory provision was met in this case in a way that it was not in Gehan[3] in that, for the first time, the appellant learnt of the market value of some of the goods, the subject of her claim. In Gehan, the plaintiff did not learn anything new. The material fact was therefore not established.

3 I agree that, in this case, it is appropriate to allow the appeal and remit the matter to the judge to consider and determine whether, in all the circumstances of the case, it is just to grant the extension of time. Factors of significance in the proper consideration of the exercise of the discretion to grant the extension of time include the original decision to sue and the significance of what the appellant later learnt from Kearn's valuation against what she already knew[4]. It is for the trial judge to make findings against the conflicts in the evidence before him.

MARTIN J. The appellant appeals against a decision of a District Court Judge refusing an order for an extension of time within which to bring her proceedings pursuant to s 48 of the Limitation of Actions Act 1936 ("the Act").

In 1991 the appellant was a tenant in premises owned by the second respondent and managed by the first respondent. She was in arrears of rent. Following an application of 4 June 1991 to the Residential Tenancies Tribunal ("the Tribunal"), on 12 June 1991 the Tribunal ordered that the tenancy agreement terminate and that the owner be given possession of the premises at 12 noon on Wednesday, 19 June 1991. The appellant received notice of the order and sought an extension of time within which to remove her goods from the premises. She was advised that the Tribunal could not grant such an extension and the first respondent declined to agree to an extension. When the appellant returned from work on 19 June, 1991 she found the locks had been changed. She was unable to retrieve her goods. In October 1991 the first respondent sold the appellant's goods at auction, but the appellant claims she did not become aware of the sale until about February, 1992. Correspondence emanating from the appellant's solicitor suggests that she received approximately $700 by way of net proceeds from the auction.

The appellant attended retail stores to ascertain replacement costs of some of her goods and obtained other quotes or "valuations" of replacement costs of jewellery and furniture. On 4 August 1992, the appellant applied to the Tribunal for compensation of $45 000 for the losses she claimed were sustained by reason of the sale of her goods. The claim was based upon replacement costs. As the claim exceeded the $25 000 limit of the Tribunal's jurisdiction, the Tribunal explained that limit to the appellant and advised her that she could pursue her claim before the appropriate court. The Tribunal gave the appellant leave to withdraw her application, but also gave leave for the application to be reinstated upon receipt by the Tribunal of written consent by both the appellant and the first respondent to the application proceeding before the Tribunal notwithstanding that the amount claimed exceeded the Tribunal's jurisdiction. In October, 1997 the appellant was given seven days to quantify her claim. Subsequently the claim was quantified in the amount of $48 000. By letter of 3 November, 1997 the first respondent advised the Tribunal that it was not prepared to agree to an increase in the jurisdiction of the Tribunal and on 6 November, 1997 the application was struck out for want of jurisdiction.

The appellant first consulted a solicitor in 1992. She spoke with Mr Harley who advised her that the measure of her loss was the market value of the goods rather than the replacement cost of the goods. The appellant rejected that advice.

In 1992 the appellant also consulted Mr Bowler, a solicitor at Hume Taylor & Co. He wrote a letter of demand dated 2 October 1992 claiming that the value of the goods was approximately $45 000. The figure was based on replacement costs. The appellant subsequently terminated Mr Bowler's instructions.

In 1994, the appellant instructed Mr Baldock, a solicitor with the firm, Grope Hamilton. He acted for her for approximately 18 months. Mr Baldock understood that prior to being retained Mr Condon had been acting for the appellant. He understood the claim to be $41 202 on a replacement cost basis. The appellant said in evidence that she remembered Mr Baldock mentioning to her that a summons would have to be issued within a certain time period. On 2 July 1997 Mr Baldock wrote to the appellant advising her both that the limitation period would expire in September, 1997 and that if she did not issue proceedings by September, being six years from what he described as "the date of the negligence and/or breach of the Residential Tenancies Act", she would not be able to pursue her claim. He also advised that the matter could only be re-listed in the Tribunal with the consent of the first respondent. Mr Baldock's instructions were subsequently terminated.

In July, 1997 the appellant again spoke with Mr Harley. She was upset about previous advice. The appellant said that Mr Harley again raised the issue of the market value of her goods and referred her to Mr Kearns for a valuation. In July 1997, based upon the description of the goods given to him by the appellant, Mr Kearns provided a valuation of the market value of some of the goods. He arrived at a total market value of $9 735.00. His valuation referred to the age of two items "at the time of removal". In view of those expressions and the general references to the age of each item, it appears that Mr Kearns has given a market value as at about June 1991. Importantly, the valuation by Mr Kearns was the first occasion on which the appellant was given information as to the market value of any of the goods sold by the first respondent.

Mr Kearns did not provide a market value for the jewellery. His valuation included a list of the jewellery, but stated that the prices had been taken directly from the quotes supplied by the jewellers and that he accepted no responsibility for the accuracy of those figures. As mentioned, those figures were based upon replacement costs. The quotes from jewellers for replacement costs as listed in the valuation by Mr Kearns provided a total figure of $20 655. The individual amounts for items of jewellery and that total must be ignored for the purposes of considering the application of s 48(3)(b)(i) of the Act. Those quotations were obtained in 1992 and the appellant has been fully aware of those facts since that time.

As mentioned, after obtaining the valuation the appellant attempted to pursue her claim in the Tribunal. There is no explanation as to why proceedings were not instituted in the appropriate court before the expiration of the limitation period. Mr Harley gave evidence, but he was not asked why proceedings were not issued within time.

The time within which the proceedings had to be brought expired on about 30 September 1997. Proceedings were instituted in May, 1998 claiming damages totalling $33 744.70. In those proceedings the plaintiff sought an extension of time pursuant to s 48 of the Act on the following grounds:-

"(a) the plaintiff did not ascertain until July 1997 that Roger Kearns, auctioneer and valuer, was of the opinion that certain of the plaintiff's goods were valued at $27,760.00; (b) the plaintiff did not ascertain until October 1997 that Ernsmiths were prepared to replace certain of the plaintiff's goods for $3689.70; (c) On 27th October 1997 the plaintiff ascertained for the first time that the defendants would not consent to her application to the Tribunal dated 4th August 1992 being re-instated; and (d) On 6th November 1997 the plaintiff ascertained for the first time that the defendants would not consent to the jurisdiction of the Residential Tenancies Tribunal to hear a claim by the plaintiff where the claim exceeded $25,000.00; all of which facts were facts material to the plaintiff's claim."

The jurisdiction to extend the time within which to institute the proceedings is limited by s 48(3) of the Act which, for present purposes, provides that s 48 does not empower the Court to extend the time unless it is satisfied that facts material to the appellant's case were not ascertained by her within 12 months prior to the expiration of the limitation period or occurred after the expiration of that period. The learned trial judge reached the view that the matters relied upon by the appellant did not amount to "facts material" to the appellant's case for the purposes of s 48(3)(b)(i).

The relevant principles were settled by the High Court in Sola Optical Australia Pty Ltd v Mills [1987] HCA 57; (1987) 163 CLR 628. Having described the requirement to demonstrate materiality to the case as a "broad general requirement that is capable of satisfaction by objective inquiry", the Court said (p 636):

"A fact is material to the plaintiff's case if it is both relevant to the issues to be proved if the plaintiff is to succeed in obtaining an award of damages sufficient to justify bringing the action and is of sufficient importance to be likely to have a bearing on the case. The Shorter Oxford English Dictionary defines the word "material", inter alia, to mean "Of such significance as to be likely to influence the determination of a cause". Although a definition attributed to the sixteenth century, in our opinion it provides an apt guide to the intention of the legislature in choosing to refer, without any elaboration, to "facts material to the plaintiff's case"."

The High Court rejected the view that in order to attract the operation of s 48(3)(b)(i) there must be some interaction between the material fact and the plaintiff's decision to sue. In answer to the proposition that such a construction opened the section up to "contrivance and absurdity", the Court said (p 637):

"On the other hand, to introduce, by a process of construction, controlling criteria to limit its abuse is to compound rather than to alleviate any difficulty. The breadth of the residual discretion vested in the Court provides an ample safeguard against abuse and provides that flexibility which will facilitate the achievement of the legislative purpose, namely, a just result in a wide range of circumstances."

In Sola Optical v Mills, the plaintiff sought damages for an injury sustained to her right arm in the course of her employment. Her surgeon initially reported that in his opinion she had suffered "close to 100 per cent" loss of function of the right arm. The plaintiff underwent an operation and the surgeon subsequently wrote a report in which he expressed a revised opinion that the plaintiff suffered a loss of function estimated at 80 per cent. The plaintiff was not aware of the surgeon's revised opinion for over twelve months. The material fact was ascertained when, for the first time, the plaintiff became aware of the revised opinion by reading the surgeon's report. It was submitted before the High Court that discovery of the report containing the revised opinion was not the ascertainment of a fact material to the plaintiff's case because the surgeon was only putting a percentage on disabilities which the plaintiff had described and demonstrated to him and of which she must necessarily have been aware at the time of the relevant examination. In rejecting that proposition, the Court said (p 638):

"But the second report was doing more than that. It was expressing a specialist medical opinion as to the effect of the disabilities upon the functional capacity of the respondent's arm. The respondent certainly had a knowledge of the physical disabilities that she suffered, but it was material to her case to learn that a medical assessment of the effect of those disabilities upon her capacity to function was expressed in terms of 80 per cent loss of function. Such a fact was material to the issue of damages. ... It remained a significant benchmark pointing to a very substantial disability that was still present in 1983 several months after surgery. In any event, the fact of the existence and contents of Mr. Morgan's report was also capable of being material to the respondent's case in the sense that the report represented available evidence that could be called in support of her case."

In reaching the view that the valuation by Mr Kearns was not a fact material to the appellant's case for the purposes of s 48(3)(b)(i), the essence of the reasoning adopted by the learned trial Judge appears in the following passage from his Honour's reasons:

"The plaintiff, since 1992, has been aware of the distinction between the actual cost of new items as distinct from their actual market value. The plaintiff was obviously loathe to accept this advice, although by the time of the demand by Mr Baldock in February 1992 there was a reduction in the quantum by reference to "replacement value". The plaintiff was then aware of the difficulties in quantifying her loss of "about $45,000". By July 1997, Mr Kearns was of the view that her loss was $30,390, relying on many of the items valued by the experts in February and July 1992. I have some difficulty in finding that the Kearns' valuation amounted to a "material fact" within the meaning of the section. The plaintiff at that time was aware of the variance in figures and the ongoing debate of the true measure of her loss. It is simply a regurgitation of her loss. It can be seen as a more accurate assessment of the loss. The assessment of loss in this type of case is conjectural. A valuation may be right or wrong. A valuation by description is clearly open to much debate. The goods in question had a significant value. However, the Kearns' valuation is based on the plaintiff's description of her goods and is no doubt speculative and can hardly be called decisive. I do not consider that the Kearns' valuation can be sighted (sic) as a "material fact" within the meaning of the Act."

It appears that his Honour was influenced by the fact that the appellant had been aware from legal advice given in 1992 of the distinction between replacement cost and market value as the basis of her claim. Counsel for the respondent also relied upon that knowledge and sought to derive support from the decision in Gehan v South Australian Meat Corporation (SASC Full Court, 5 March 1992, S3294, unreported). The plaintiff in that case sought damages for injuries sustained in the course of his employment and, at the relevant time, read a report of a surgeon which identified the extent of his disability. However, the Court was of the view that the report did not contain any facts of which the plaintiff had previously been unaware. The facts said to be material facts to the plaintiff's claim were not new and were merely evidence of facts already known. In this way, the circumstances in that case differed from those in Sola Optical v Mills.

In my opinion, if his Honour regarded the appellant's knowledge of the distinction between replacement cost and market value as knowledge which prevented the valuation by Mr Kearns from being a fact material to the appellant's case, his Honour was in error. The knowledge of the distinction was knowledge of the legal position. It was not knowledge of the market value of the goods. Although the appellant had a knowledge that the goods possessed a market value, prior to the valuation by Mr Kearns she had not gained any information as to the amount of that market value. The market value of the goods was a fact material to the issue of damages. In addition, the existence and contents of the valuation was material to the appellant's case "in the sense that the [valuation] represented available evidence that could be called in support of her case".

It appears that his Honour may have concluded that the valuation was not a fact material to the appellant's case because the valuation was "speculative" and "could hardly be called decisive" because it was based upon the appellant's description of her goods. While the respondents might use that circumstance to mount a challenge to the reliability of the valuation, in my opinion it was inappropriate to dismiss the materiality of the valuation on that basis. A list of the goods sold at auction had been provided by the auctioneers. The description given by the appellant to Mr Kearns might be accepted by a trial judge as accurate and as a reasonable basis for the valuation by Mr Kearns.

The respondent also sought to rely upon a comparison between the amount of $9 735 claimed for market value of some of the goods and the considerably larger figure of $20 655 which represented the claimed replacement costs of the jewellery. This appeared to be an attempt to suggest that the information as to market value was not significant in the context of the entire claim and could not, therefore, amount to a fact material to the appellant's case.

The amount of $9 735 is a substantial amount. It is not a fact that is so insignificant in the context of the entire claim that it ceases to be a fact material to the appellant's case because it is not likely to have a bearing on the case. The reasoning of the respondent appeared to verge on the approach prohibited by the High Court in Sola Optical v Mills of asking whether the discovery of the market value was discovery of a fact which affected the appellant's decision whether to proceed with the action (see also Wright v Donatelli [1995] SASC 5291; (1995) 65 SASR 307).

In my opinion, the approach for which the respondent contended is unduly restrictive. The legislation is remedial in nature and, as the High Court observed, possesses the broad purposes of eliminating injustice to a prospective plaintiff and of achieving a just result in a wide range of circumstances. The legislation should be interpreted accordingly. Notwithstanding that the appellant was aware that the goods possessed a market value, in my view when the appellant, for the first time, ascertained the opinion of Mr Kearns that the market value of certain of her goods was $9 735, the appellant ascertained a fact material to her case for the purposes of s 48(3)(b)(i).

The appellant also argued that gaining knowledge on 6 November, 1997 of the fact that the first respondent would not consent to an increase in the jurisdiction of the Tribunal to hear the appellant's claim in excess of $25 000 and of the dismissal of her claim by the Tribunal was the ascertainment of facts material to the appellant's case. Counsel was unable to point to any authority to support that proposition and urged that the judgment in Sola Optical v Mills should not be treated as providing an exhaustive definition of "facts material".

In my opinion, it is unnecessary to explore the appellant's contention that Sola Optical v Mills does not provide an exhaustive definition of "facts material". In essence, in suggesting that knowledge of the respondent's refusal and of the Tribunal striking out the claim is knowledge of material facts, the appellant is seeking to include within the definition facts which are not relevant to any issue to be proved by the appellant in her proceedings in the District Court against the respondent. In my view, the legislature did not intend that the expression "facts material to the plaintiff's case" should encompass such facts.

In my opinion, in finding that gaining knowledge of the valuation was not ascertaining facts material to the appellant's case, the learned trial Judge erred in law. The appellant had satisfied the requirements of s 48(3)(b)(i) related to ascertaining a fact material to her case. However, that is not the end of the matter. Section 48 directs that the Court is not empowered to extend the time within which to bring the proceedings unless it is also satisfied, in all the circumstances of the case, that it is just to grant the extension.

The appellant submitted that this Court should determine for itself that it is just to grant the extension. In my opinion, however, in the particular circumstances of this case it is not appropriate for this Court to undertake a consideration of that question. Evidence was given before the learned trial judge by the appellant and solicitors Mr Harley, Mr Bowler and Mr Baldock. The appellant's knowledge of the time limitation and her attitude to it are matters of significance in the exercise of the discretion. The learned trial judge is in the best position to consider and determine those matters and any issues of credit that may have arisen between the appellant and other witnesses. One of the issues of credit concerns the appellant's attitude to instituting proceedings. The appellant said she asked Mr Baldock to "serve a summons", but he said the institution of proceedings was not discussed. The question as to whether it is just in all the circumstances to grant the extension should be determined by the learned trial judge.

I would allow the appeal on the basis that the appellant has satisfied the requirements of s 48(3)(b)(i) related to the ascertainment of facts material to the appellant's case. The appellant's application for an extension of time should be remitted for further hearing before the learned trial judge and determination of the question whether the appellant has satisfied the Court that in all the circumstances of the case it is just to grant the extension of time.

[1995] SASC 5291; (1995) 65 SASR 307 at 310

3 Gehan v South Australian Meat Corporation (SASC Full Court, 5 March 1992, S3294, unreported)

4 cp Perry J in Wright v Donatelli [1995] SASC 5291; (1995) 65 SASR 307 at 310, 311.

[1995] SASC 5291; (1995) 65 SASR 307 at 310

[3] Gehan v South Australian Meat Corporation (SASC Full Court, 5 March 1992, S3294, unreported)

[4] cp Perry J in Wright v Donatelli [1995] SASC 5291; (1995) 65 SASR 307 at 310, 311.