SCOTT v CARABELAS AND ANOR No. SCCIV-97-407 [2003] SASC 156

SCOTT v CARABELAS AND ANOR No. SCCIV-97-407 [2003] SASC 156 - SASC 2003 case summary — Zoe

[23]

14 Although amendments from time to time have been made to the statement of claim, no special restriction or condition has been imposed by the orders allowing the amendments as to the date upon which the amendments should take effect. On 30 January 1998 a judge ordered the statement of claim to be struck out "with liberty to the plaintiff to file and serve a different statement of claim..." Undoubtedly, the Court has a power to mould its interlocutory orders to ensure that in the event of the introduction of a new cause of action pursuant to the enabling order, the right of the defendant is preserved to rely upon an accrued period of limitation as a defence. The operation of the rules of court in this respect are discussed by von Doussa J in Brook v Flinders University (1988) 47 SASR 119 especially at 125-126. In the absence of a special order the amended or substituted statement of claim operates from the date when the proceedings were instituted. The defendants seek to draw a distinction in this behalf between the amendment of a statement of claim and the substitution of a fresh statement of claim; in my view this is a distinction without a difference. In Sneade v Witherton Barytes [1904] 1 KB Collis MR at 297 pointed out that upon an amendment being allowed the writ as amended becomes the origin of the action and the claim thereon endorsed is substituted for the claim originally endorsed. The reasoning of the Master of the Rolls at 197-198 would leave no room for the distinction which counsel for the defendants now seeks to make. In ANZ Banking Group v Larcos (1987) 13 NSWLR at 292 it is clear that Rogers J was there dealing with an application to "add or substitute a new cause of action" (cf in South Australia SCR 53.03(c) dealing with "adding or substituting" a new cause of action); His Honour's approach draws no distinction between an "amendment" and a "substitution" in the statement of claim. In my opinion the South Australian rules of court do not recognise the distinction upon which the defendants' counsel relies.

[33]

"The defendants say that leave to bring this action against the proposed defendants should be refused, because it is time-barred under s 38(1)(a)(9) of the Limitation Act 1935 (WA) where the limitation period for actions of this type is two years. The plaintiffs say that the cause pleaded is not time-barred, as it falls under s 38(1)(c)(i) of the Act which provides for a limitation period of 20 years. Those two sections read:

'38(1) Subject to the preceding sections of this Act and as hereinafter provided, actions, suits, or other proceedings as herein set out shall and may be commenced within the time herein expressed after the cause of such actions, suits, or other proceedings respectively:-

(a)(i) Actions for penalties, damages, or sums given by an enactment to the party grieved;

(ii) ....

Two years

.....

(e)(i) Subject to sections four and thirty-two of this Act, and to paragraph (d) of this subsection, actions of covenant or of debts upon any bond or other specialty; and

(ii) ....

Twenty years.'

There has been no case cited to me which is precisely on point. There is no case which decides that an action against a director or other officer of a corporation for breach of his statutory duties under the Companies Code or the Corporations Law falls under s 38(1)(a)(i) or s 38(1)(e)(i) of the Limitation of Actions Act. The cases quoted to me have all been decided on other statutory causes of action. The most useful authority is State Government Insurance Commission v Teal (1990) 2 WAR 105, a decision of Commissioner Dr Williams QC, which contains a detailed review of numerous cases on this topic. The statutory cause of action in that case was given by s 7(5) of the Motor Vehicle (Third Party) Insurance Act 1943 (WA). Having considered all the cases cited to me, I am firmly of the view that the cause of action under s 229(7) of the Code arguably falls under the category of s 38(1)(e)(i) and the limitation period is 20 years. The reference to "specialty" there usually denotes a contract under seal and a specialty debt is an obligation under seal securing a debt. However, the word is not limited to that and includes a debt due under a statute: Teal at 114. The proposed action under s 229(7) of the Code is such an action. I consider it is not an action for a penalty and there is no possibility of double damages being awarded which would introduce a penal element. That is because although under s 229(10) a non-statutory cause can be combined with the statutory cause, only one lot of damages would be recoverable. An action under s 229(7) does not fall within the scope of s 38(1)(a)(i). The words there "actions for penalties, damages, or sums given by any enactment to the party grieved" have been interpreted in an ejusdem generis way, meaning that the "actions for ... damages, or sums given by any enactment" must be actions in the nature of penal actions. They must be actions in which punishment was the prime object rather than compensation for the plaintiff, although the plaintiff might get some of it: Teal at 113. The plaintiff in the proposed cause of action under s 229(7) is seeking compensation for loss and an account of any profit made.

In the absence of any precise or firm authority in favour of the defendant's objection, I do not propose to reject this statement of claim on the basis that it is time-barred. I am also mindful of the High Court's advice in Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514; 109 ALR 247 that the court should not, in an interlocutory application, except in the clearest of cases, dismiss a claim as being statute-barred. This is not a clear case of a good limitation point."

[42]

"Action Upon a Specialty

An action upon a speciality must be brought within twelve years from the date upon which the cause of action accrued, unless some shorter period of limitation is prescribed by another provision of the Act in which case that shorter period applies. In R v Williams [1942] AC 541, 555 Lord Maugham described a specialty in these terms:

'The word "specialty" is sometimes used to denote any contract under seal, but it is more often used in the sense of meaning a specialty debt, that is, an obligation under seal securing a debt or a debt due from the Crown or under a statute ... Such an obligation was for centuries treated as very different from an ordinary debt ... Unlike debt it is enforced by an action of covenant ... The deed itself was the foundation of the action and the original debt, if any, was merged. The terms of the deed were conclusive. Specialty debts till recent times conferred special rights ... They were said to be "of a higher nature" than debts by contract.'

A judgment debt was also regarded as being a specialty debt: Cork & Bandon Railway Co v Goode [1853] EngR 626; (1853) 13 CB 826, 835. Separate provision is made in s 10(4) for actions upon judgments.

A statute is a specialty, but not all actions upon a statute are actions upon a specialty. An action on the case on a statute was never regarded as an action upon a specialty. Actions on the case on a statute were barred after six years by the 1623 Act, and are now barred by s 10(1)(a). Such actions were actions for damages or compensation for the breach of a statutory duty: Cooper v Municipality of Brisbane (1900) 10 QLJ 120, 124 per Real J.

An action under a statute to recover a sum of money due by the statute, if enforceable by way of an action of debt and not by way of an action on the case, is an action upon a specialty and until 1833 was not subject to any period of limitation. In that year s 3 of the Civil Procedure Act (Imp) prescribed a twenty year limitation period for actions of debt upon a specialty.

Such an action is now characterised as an action to recover a sum recoverable by virtue of an enactment and falls within s 10(1)(d). It is still an action upon a specialty, but it is not subject to the twelve year limitation period prescribed by s 10(3) because of the second paragraph of that subsection: see Collin v Duke of Westminster [1985] !B 581, 603. In that case the Court of Appeal doubted a dictum of Goddard LJ I Leivers v Barber, Walker & Co Ltd [1943] KB 385, 398 to the effect that the express provision made for debts recoverable by virtue of an enactment in s 10(1)(d) meant that the word 'specialty' in s 10(3) referred only to deeds and contracts under seal and did not include statutes. That dictum was approved in Central Electricity Board v Halifax Corporation [1963] AC 785, 799 by Lord Reid with whom Lord Hodson and Lord Pearce agreed.

In Collin's case, Oliver LJ preferred the view that a statute was still a specialty for the purposes of s 10(3). The tenant's action for a declaration that he was entitled to acquire the freehold of a house under the Leasehold Reform Act 1967 was held to be an action upon a specialty. If the Limitation Act applied to such an action (which was not expressly decided), the action was only barred after the expiration of twelve years, as the action could not be characterised as an action of debt upon a statute for which a six year period was prescribed by s 10(1)(d)."

[156]

HIS HONOUR: If these accounts are prepared I would expect to find that we will have to order the joinder of other parties to make sure that everyone is bound by them but I am not going to do that for the moment because if your client has in fact got an answer to what I am putting, I am not going to put anyone to the expense of that. But, as I see it, the formal orders that should be made is to direct the taking of accounts. Firstly, direct that the plaintiff serve on the defendants the accounts on which it relies. Well, we know that has already been done, that the defendant within so many days serve on the plaintiff an amended set of accounts showing what it claims to be the true position. That would be the convenient way of doing it in this case. If you had a different sort of dispute, I mean let's say a building dispute or something like that, then it would be a different sort of way of proceeding. You would have a schedule, you know a scot-type schedule in which individual amounts would be disputed. We know here it is not the individual amounts that have been disputed, it is the way in which they have been shuffled around.

MR MANETTA: Can I just say this: we would object to any course of the joinder of Blackcroft or Carprop.

HIS HONOUR: Why?

MR MANETTA: Because it can be of no interest or comfort to the plaintiffs at the end of the day whether or not we meet our obligations to third parties. Any more than it can be of interest to Mr Scott whether Mr Carabelas pays his water bills or pays his council fees or anything else.

HIS HONOUR: It is of interest to the plaintiff to know whether the accounts that it is dealing with are the proper accounts. I mean, there is a public interest in establishing what are the proper accounts of this company. I wouldn't allow the defendants to escape, as it were, in that way.

MR MANETTA: What we can say on the evidence, what's clear as a bell on the evidence is that no set of accounts will ever show that Mr Carabelas owes Angas Law Services money. There have never been accounts to that effect. So,.

HIS HONOUR: No, I think that is correct. From what I have seen, that is correct.

MR MANETTA: So the most my learned friend can say is look at these accounts, Mr Carabelas owed third-parties a lot of money and that is why we say these proceedings are misconceived.

HIS HONOUR: Mr Wilkinson says these accounts show that his client is entitled to claim for a preference. Now the only way that you're going to, as I see it, meet that, is to put forward another set of accounts which I am going to be asked as representing the true position. But in the course of doing that you're going to, I suspect, expose yourself to a liability to other liquidators.

MR MANETTA: Well, that is as may be and that's what we say is a matter for another day. As it happens another liquidator of Blackcroft hasn't made demand of us.

HIS HONOUR: I suppose that's because the liquidator of Blackcroft has accepted the accuracy of these accounts,

MR MANETTA: Yes, quite possibly.

HIS HONOUR: The court can't allow that. I mean, we have got, no doubt, creditors standing behind all this. They would tear their hair out if they saw a debtor being able to avoid obligations in that way."

At a glance

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Judgment (212 paragraphs)

SCOTT v CARABELAS AND ANOR No. SCCIV-97-407 [2003] SASC 156 (29 May 2003)

Parties

Legislation Cited (2)

Cases Cited (8)