Simplot Australia Pty Ltd v PSL Industries and Ors [2001] VSC 419

2. Before me are an appeal filed 17 September 2001 against a Master's orders and, following grant of special leave, a summons filed by the plaintiff on 3 October. Each pertains to the same general issue, that is, leave sought by the plaintiff to file an amended statement of claim.

5. The plaintiff, Simplot Australia Pty Ltd, a company incorporated on 2 August 1995, commenced a proceeding against PSL Industries Ltd, N. Harvesters Pty Ltd and Pacific Dunlop Ltd on 27 June 1997. The proceeding concerns the sale in 1995 of well known food manufacturing businesses by the first and second defendants to the plaintiff. Focussing upon the sale of the Edgell-Birds Eye and Leggo's businesses, which is presently pertinent, the statement of claim pleads that the sale was effected by a business sale agreement and a number of asset sale agreements. It is convenient to refer to those agreements collectively as the sale of business agreements.

8. According to the statement of claim in its present form, warranties and undertakings were given by the first and second defendants in the various sale of business agreements which breached s. 52 of the Trade Practices Act 1974 (Cth) and the equivalent provision in the Fair Trading Act 1985.[1] Thereby loss and damage was caused.

11. That is by no means the only way in which the claim is presently laid. It is also pleaded, as I understand it, in breach of contract and breach of common law duty of care.

14. By its proposed amendment the plaintiff seeks to allege that the defendants made pre-contractual representations, and gave warranties and undertakings, to the plaintiff's US parent company; that such conduct was misleading or deceptive; that such conduct in several ways led to it entering into the Edgell-Birds Eye and Leggo's agreements; and that thereby it was caused loss and damage. It is clear from draft paragraphs 25E and 25F of the statement of claim that the plaintiff seeks to raise, in connection with the matters just described, a claim under the Trade Practices Act and the Fair Trading Act.

[diamond] Section 82(2) of the Trade Practices Act was in this form:

"An action under subsection (1) may be commenced at any time within 3 years after the date on which the cause of action accrued.[2]

[diamond] Section 37(2) of the Fair Trading Act read as follows:

"A proceeding under sub-section (1) may be commenced at any time within three years after the date on which the cause of action accrued.

24. Application by the plaintiff to amend its statement of claim to raise and rely upon what can conveniently be called the pre-contractual representations failed before the learned Master. There were uncertainties about the plaintiff's proposed pleading which she considered militated against grant of leave. She did not foreclose the making of a fresh application to amend.

27. Before me, the plaintiff sought to rely upon a proposed amendment couched in somewhat different terms to the amendment placed before the Master. It was inappropriate that this be permitted on an appeal from the Master's orders. It was in those circumstances that the plaintiff filed the summons to which I earlier referred.

30. Before me, as before the Master, the defendants opposed grant of leave to amend. The arguments advanced by counsel before me were not, however, the same as those which the Master was asked to consider. Neither, for that matter, were the arguments advanced for the plaintiff in support of the application the same as those advanced before the Master. In each case that was due in part to the different form of the proposed amendment. But mostly it was by reason of counsel becoming aware of my judgment in Hatfield v Agtrack (NT) Pty Ltd[3] in the interim.

Is there a need to consider Limitation provisions?

34. Counsel for the plaintiff submitted that the proposed amendments were no more than an elaboration of the existing claim and that, consistent with authority, they should be permitted, any limitation provisions being irrelevant.

37. In Hatfield, I noted pertinent authorities and summarised their effect[4]. There was nothing new in what I said. Applying the pertinent principles I have no doubt that the proposed amendments involve "a new departure, a new head of claim or a new cause of action"[5] as those concepts have been developed in later cases.

40. By its proposed amendments the plaintiff seeks to rely on pre-contractual as opposed to contractual conduct, representations made in each case to a different audience. The representations sought to be relied upon by the plaintiff are different in content from the "warranties and undertakings" presently pleaded. A discrete causation issue arises in the case of the representations upon which the plaintiff now seeks to rely. The damage which was allegedly caused by those representations is not identical with the damage which allegedly resulted from the conduct presently pleaded and relied upon. I was told without objection from the bar table that loss and damage allegedly attributable to pre-contractual conduct will add another AUD24M to the plaintiff's claim.

43. The matters which the plaintiff now seeks to plead do not simply add a new legal label to conduct already pleaded. They could not be alleged as additional particulars of the presently impugned conduct. At best for the plaintiff, only in a very limited way could those matters even be the subject of evidence at trial on the pleadings as they now stand. They involve, truly, a new case, a new set of ideas.

Should the Court now decide whether the proposed amendment would, if permitted, be statute-barred?

47. According to the submissions for the plaintiff, if it was uncertain whether the proposed amendment would raise a claim which was statute-barred, then I should permit the amendment and leave the limitation issue - if raised by the defendants - until trial. There was uncertainty. I should take that course. In that event I would not need to consider the question whether leave could be granted to amend so as to raise a claim that would otherwise be statute-barred.

50. Counsel for the plaintiff submitted that in Wardley Australia Ltd and Anor v Western Australia[6] the High Court in its majority judgment had warned judges against readily concluding at an interlocutory stage that a proposed amendment fell foul of a limitation provision.[7] He submitted that this statement of principle was not confined to cases such as Wardley - which involved a contingent and executory liability created by an indemnity - but was generally pertinent. In that connection he cited the judgment of French J in Carey-Hazell v Getz Bros and Co[8]. His Honour's judgment justifies its citation.

53. Counsel for the defendants submitted, to the contrary, that the dicta in Wardley were by intent confined to "limitation questions of the kind under consideration" - that is, cases involving a contingent and executory liability.

56. I think that the observations in Wardley probably have relevance more generally than in cases of the kind described by counsel for the defendants. But in my opinion that does not avail the plaintiff. In a clear case the judge may consider at an interlocutory hearing whether a proposed amendment would, if permitted, be statute-barred; and may reach a conclusion adverse to the plaintiff upon that question. In my opinion this is a case calling for consideration and resolution of that question. In my further opinion the claim which the plaintiff seeks to raise is evidently statute-barred.

59. By draft paragraph 25G the plaintiff seeks to allege that in consequence of the pre-contractual conduct of the defendants it suffered loss and damage of two kinds. First, it was influenced to buy the businesses; and it did so. It paid too much for them. Second, it had to fund losses against forecast.

62. According to draft paragraph 25C(c) the plaintiff paid AUD392M to the defendants on or about 15 September 1995. It was common ground that this was payment for the businesses. It seems to me that, upon the case which the plaintiff seeks to raise, it suffered loss and damage on 15 September 1995 in consequence of the alleged default of the defendants. On that day it paid too much for the businesses - although quantification of the amount by which it had overpaid depended in part upon the unreliability of forecasts of business performance; and such unreliability and its consequences, as matters of fact, had not then been demonstrated.

65. Counsel for the plaintiff did not concede that the circumstances to which I have just referred meant that time began to run on the statutory claims as at 15 September 1995. His main argument, however, was directed to the second aspect of claimed loss and damage. He submitted that this loss was, on the plaintiff's case, continuing. Certainly loss of that kind had been sustained within the last three years. He argued, as I understood it, that if part of the proposed amended claim was not caught by a limitation provision, then I should permit amendment to raise the whole claim. He relied upon certain dicta of Kirby P in Wickstead and Ors v Browne[9].

68. Counsel for the defendants submitted that the second aspect of the claimed loss and damage was untenable in law. It was, or was akin to, a claim for expectation loss of profits; and no such claim lies under the relevant statutory provision. Counsel referred to Henville and Anor v Walker and Anor[10] and Marks and Ors v GIO Australia Holdings Ltd and Ors[11].

71. I doubt, with respect, that either of the authorities cited by defendant's counsel unequivocally supports his proposition[12]. Their key import is to direct attention to the critical importance of the phrase "by conduct of" in s. 82 of the Trade Practices Act; and, in the case of Henville, to cast light upon problems of causation and upon the irrelevance to assessment of damages of what in the context of a common law claim would be characterised as the contributory negligence of a plaintiff.

74. But the matter need not be further considered. The submission was advanced as a second-line defence. The first-line defence was that the right of action sought to be raised by the proposed amendment was clearly statute-barred because all its elements were established, according to the case which the plaintiff sought to raise, when the plaintiff entered into the agreements; or at least when it paid the AUD392M. In that connection counsel for the defendants cited Jobbins v Capel Corporation Ltd[13] and Saunders and Ors v Glev Franchises Pty Ltd and Ors[14].

24 Jobbins was disapproved in part by the majority of the High Court in Wardley[15]. But disapproval did not extend to the significance of payment in that case, as distinct from entry into an agreement. In the circumstances of the present case, as the plaintiff wishes to say, it paid the purchase price at a time when various pre-contractual representations were already demonstrably false; see draft paragraph 25D(a) and (d). Moreover, the alleged falsity of other representations were soon established, either completely or in part. See draft paragraph 25D(c), (e) and (f). It seems to me, in the event, that all the elements of the statutory causes of action were in place at the time when the payment was made; or at the very latest within the short period within which the falsity of the representations referred to in draft paragraph 25D(c), (e) and (f) was disclosed. In either case, the claim sought to be raised in reliance upon the pre-contractual conduct is clearly outside the periods specified in s. 82(2) of the Trade Practices Act and s. 37(2) of the Fair Trading Act.

78. I do not accept the submission for the plaintiff - assuming for the moment that I rejected the defendants' contention that the second aspect of claimed loss and damage was legally untenable - that the existence of the second aspect should lead to me granting leave to amend as sought by the plaintiff in its entirety. The remarks of Kirby P in Wickstead, pertaining to a matter upon which his Honour dissented, are not transferable to the present situation. Further, as soon as all the elements of the right of action were present, time began to run. Pertinently, once the plaintiff suffered loss and damage which was not negligible, it was enough. Even if the second aspect of claimed loss and damage was legally tenable, it could not operate to prevent the right of action becoming statute-barred.

82. Because, in my opinion, the right of action sought to be alleged by amendment would be statute-barred, it becomes relevant to consider R. 36.01(6) of Chapter 1 of the Rules.

[diamond] At least R. 36.01(6), if not s. 34 of the Limitation of Actions Act 1958, extends to statutory limitation periods generally.

[diamond] Rule 36.01(6) extends to cases in which the right of action is extinguished as well as to cases in which the remedy is barred.

[diamond] There was no inconsistency under s. 109 of the Constitution between R. 36.01(6) and s. 34 of the Civil Aviation (Carriers' Liability) Act 1959 (Cth).

91. Counsel for the defendants understandably submitted that my decision was wrong so as to preserve his clients' position in the event of an appeal. Understandably also, I adhere to what I decided in Hatfield.

94. The defendants adduced no evidence of prejudice - that is, as would address matters other than the prejudice of being denied the opportunity to plead a limitation defence if amendment was permitted. Prejudice of the latter kind is not a sufficient basis for refusing amendment.

97. Subject to three particular submissions raised for the plaintiff, in accordance with well accepted principles pertaining to grant of amendment I would grant the plaintiff leave to amend in terms of its draft. In light of Hatfield it is unnecessary to decide whether s. 82(2) of the Trade Practices Act or s. 37(2) of the Fair Trading Act was a provision extinguishing the cause of action or rather one barring the remedy - although, see later, I think that each of them should in fact be characterised as falling within the latter class.

100. I turn to the three submissions to which I referred a moment ago. It was first contended for the defendants that the time limit set out in s. 82(2) is an ingredient of the cause of action; akin to a statute providing that a blue-eyed person could not sue. The situation was to be contrasted with a limitation provision operating upon a right of action arising under the common law. So, it was said, there was necessary inconsistency between the right of action created by s. 82 in conjunction with s. 52 and the Victorian Act or Rules of Court. It was not a question of deciding whether s. 82(2) was a provision which extinguished the right, or alternatively barred the remedy. Neither was it a question whether the provision was directory, mandatory, or could be waived. The matter fell squarely within the second type of inconsistency described by Kenny JA in Felman v Law Institute of Victoria[16].

103. Counsel for the defendants submitted that passages in Wardley supported his argument.[17] I do not agree with that submission. Toohey J evidently accepted that s. 82(2) was a discrete limitation provision, whatever be its true characterisation.[18]. The passages in his Honour's judgment to which counsel referred me were obiter dicta; in which, as obiter dicta, Deane J agreed. That and references I cited a moment ago apart, the entire content of the section in the judgment headed "The Power of Amendment" makes it clear that Toohey J regarded s. 82(2) as a discrete limitation provision. So, for example, his Honour said that the provision "strikes only at a cause of action under s. 82(1), namely action to recover loss or damage suffered by conduct done in contravention of Part IV or V of the Act".[19]

106. Toohey J questioned whether the Federal Court Rules, either of themselves or by reference to s. 86 of the Federal Court of Australia Act 1976 (Cth), gave power to permit amendment so as to allege a claim that was statute-barred. But nothing his Honour said leads to the position contended for by the defendants. Nor does it deny the characterisation of s. 82(2) by the Full Court of the Federal Court in Wardley[20].

109. In my opinion the structure of s. 82 is opposed to the submission made for the defendants. Section 82(2) stands apart from the cause of action to which it refers. I add that s. 82(2) is a provision which mirors others in the Trade Practices Act. See, for example, ss. 74J and 87(1CA). In each case the structure of the legislation shows that the limitation provision stands apart from the cause of action to which it refers. In Carey-Hazel, French J held that s. 74J did not make compliance with the time limit an element of the cause of action to which it applied. Neither was it said to extinguish the cause of action. It operated only to bar the remedy.[21] In my respectful opinion that analysis equally applies in the case of s. 82(2).

112. In the event, the foundation for the inconsistency argument raised by counsel's first submission was not made out.

115. The second submission for the defendants was founded on the repeal of the Fair Trading Act 1985 as at 1 September 1999. Counsel submitted that there was no relevant transitional provision in the Fair Trading Act 1999. He further submitted that the only transitional provision of possible application was s. 14(2)(a) and (e) of the Interpretation of Legislation Act 1984. Counsel for the plaintiff did not disagree with either of those contentions.

118. The next and critical step in the argument was this: that at the time when the 1985 Act was repealed the plaintiff had no acquired or accrued right under the repealed Act. That was because any right of action which the plaintiff had possessed in respect of the alleged pre-contractual conduct under the repealed Act was no longer in existence. The key question was whether a legal proceeding in respect of such a right had been instituted at the time of repeal; and it had not. In this last connection counsel referred me again to the judgment of Kenny JA in Felman.[22]

121. Counsel for the plaintiff submitted that his client did have a relevant accrued right as at 1 September 1999. It had commenced a proceeding. It had a right to amend. Its amendments would speak from the date of the commencement of the proceeding.

39 Felman is certainly authority for the proposition that where a person brings action seeking to enforce a statutory remedy there is, within the meaning of s. 14(2)(e) of the Interpretation of Legislation Act, an acquired right to have the Court decide that application. Is that the extent of possible operation of s. 14(2)(e)? I think not. It may be noted, for example, that s. 14(2) provides that a legal proceeding may be "instituted, continued or enforced" in respect of an accrued right as if the repealed Act had not been repealed. If Felman represented the outer limits of the preservation of accrued rights there could be no relevance to institution of proceedings after repeal of the Act conferring those rights.

125. The question remains, how does s. 14(2)(e) operate in the present case? I think that the answer is this: either on or not much later than 15 September 1995 the plaintiff acquired a right of action under s. 37(1) of the Fair Trading Act read in conjunction with s. 11(1). That constituted an acquired or accrued right for the purpose of s. 14(2)(e). It did not cease to be an accrued right by reason of s. 37(2) on or shortly after 15 September 1998. Section 37(2) did not set up an element of the right of action. Neither was the right of action extinguished when the three year period had elapsed. The sub-section operated to bar the remedy. The right of action had thus been susceptible to a limitation defence. In all, the operation of the sub-section was the same as in the case of s. 82(2) of the Trade Practices Act.

128. In my opinion, in the circumstances described, the acquired or accrued right enjoyed by the plaintiff under s. 37(1) of the Fair Trading Act did not cease to be an accrued right on or shortly after 15 September 1998. Subject to the effect of the amendment of the statement of claim in the existing proceeding the defendants had an available defence - that is, to a freshly commenced proceeding relying only upon the pre-contractual conduct. But that was all. It may be the case, I add, that the fact that the proceeding was on foot, and that amendment would speak from a date before 15 September 1998, would itself bear upon the question whether there was an accrued right on 1 September 1999. That was, in effect, the argument advanced for the plaintiff. But I do not think that the answer to the critical question depends upon the correctness of that argument.

131. In concluding that the plaintiff acquired a right of action under s. 37(1) which constituted an acquired or accrued right for the purposes of s. 14(2)(e) of the Interpretation of Legislation Act I have considered Ogden Industries Pty Ltd v Lucas[23] and Stevedoring Industry Finance Committee v Crimmins[24] neither of which was cited in counsel's submissions but to each of which I referred in the course of debate.

134. In Lucas, the potential dependants of a worker who later died were held to have no accrued rights under s. 7(2)(c) of the Acts Interpretation Act 1958 - the predecessor of s. 14(2)(e) - before his death, despite his having suffered compensable injury. No person could say before the death that he (or she) would be a dependant if he outlived the worker. Matters necessary to identify a dependant were not ascertainable before the worker's death.

137. In Crimmins, what was in issue were provisions of the Stevedoring Industry Acts (Termination) Act 1977 (Cth). Both in the Court of Appeal and the High Court it was emphasised that the particular legislation must be discretely considered; that there was a danger in reasoning from one transitional provision to another which was similar but not identical in form.[25] What is of some present relevance is this: both in the Court of Appeal and the High Court Lucas was cited as bearing upon the propositions that the meaning of the word "liability" may vary in context, and that in certain contexts liability may be read to attach to inchoate as well as to complete causes of action, to liabilities which are "potential" or "contingent". Those propositions bear on the reach of the concept of acquired or accrued rights. The second of them shows a reach probably beyond that required by the plaintiff in the present case.

140. I have also considered, in connection with the question of the operation of s. 14(2)(e), Sharp v Associated Pulp and Paper Mills[26] cited by Buchanan JA in Crimmins[27]. What the Full Court there described as the appellant's accrued rights were the right to claim and recover damages arising out of circumstances which were relevantly complete before the commencement of amending legislation. That situation may be contrasted with Lucas, where a crucial element of the employer's liability was not ascertainable until the worker's death, it occurring after the commencement of the amending legislation.

143. In all, as I said earlier, it seems to me that rights were acquired or accrued, and that correlative liabilities were incurred[28] when the elements of the statutory cause of action became complete. That happened either on 15 September 1995 or shortly thereafter. For reasons earlier set out they had not lost that character on 1 September 1999.

146. The third submission raised by defendants' counsel concerned matters of form. My attention was directed to the use of the words "warranted and undertook" in draft paragraph 25A and to an alleged inconsistency in draft paragraphs 25B and 25C.

149. Counsel submitted that the verb "warranted" was a word of contractual import. I do not think that he made the same submission concerning the verb "undertook". Be that as it may, the thrust of his argument was that the use of the word "warranted" cast into doubt the nature of the allegations sought to be made by paragraph 25A. Were they intended to raise a contractual claim, or a claim based on pre-contractual conduct, or both?

152. In light of the entirety of draft paragraph 25A, considered together with paragraphs 25B to 25H, I think that the nature of the claim sought to be raised is not in doubt. On the other hand, the statement of claim as it presently stands contains other allegations that one or more of the defendants "warranted and undertook" certain things.[29] It is also alleged in another instance that the first and second defendants warranted certain matters. [30] As I understand it, in the case of other alleged warranties and undertakings claims both statutory and contractual are raised. Counsel for the plaintiff offered no convincing reason why there was any need to refer in draft paragraph 25A to the giving of warranties and undertakings. In all, I think that the case which the plaintiff seeks to raise by its amendment is capable of being clearly and unequivocally framed by reference to representations alone.

155. I turn to draft paragraphs 25B and 25C. I think that the defendants' point was well made. The solution, in consequence of debate with plaintiff's counsel in the course of his submissions in reply, is to require that the verb "requested" be substituted for the verb "procured" in paragraph 25B.

159. Upon its summons filed 3 October 2001 the plaintiff should have leave to amend its statement of claim in the form of the document carrying the fax header "3 Oct 2001 15.35 Minter Ellison 613 86081000 No 3569", pages numbered 8 to 35, save only that the words "warranted and undertook" should be excised from paragraph 25A and that the word "requested" should be substituted for the word "procured" in paragraph 25B.

162. The plaintiff's appeal from the Master's orders should be dismissed.

165. Subject to any submissions that counsel may wish to make I think that the plaintiff should have the costs of the summons, including costs reserved on 8 October 2001; and that the defendants should have the costs of the appeal, including costs reserved on 1 October.

168. For the assistance of the Taxing Master I would indicate that on and from 8 October 2001 any costs solely related to the summons.

[1] The latter Act was repealed in 1999. But any claim by the plaintiff must be made under that Act. I shall simply refer to it as the Fair Trading Act.

[2] It has since been amended, by s. 20 of the Trade Practices (Amendment) Act (No.1) 63/2001; but the sub-section in its amended form is not pertinent.

[3] [2001] VSC 182, now on appeal.

[5] Marshall v London Passenger Transport Board [1936] 3 All ER 83 at 87.

[6] [1992] HCA 55; (1992) 175 CLR 514.

[7] See at 533 to 534 per Mason CJ, Dawson, Gaudron and McHugh JJ.

[8] [2001] FCA 703 at paragraph [40].

[9] (1992) 30 NSWLR 1 at 5.

[10] [2001] HCA 52.

[11] [1998] HCA 69; (1998) 158 ALR 333.

[12] See, for example, Henville at paragraphs [43]-[44], per Gleeson CJ. Note that the ultimate consequence of the passage in the judgment of McHugh J relied upon by counsel - paragraph 132 - was that his Honour concluded that the trial judge had underestimated the damages which should be awarded. So also did Hayne J. Gummow J agreed in the judgments of McHugh and Hayne JJ.

[13] [1989] FCA 538; (1989) 25 FCR 226.

[14] (1995) 133 ALR 731.

[15] See at 528 to 529; see also Marks at paragraph 47.

[16] [1998] 4 VR 324 at 343.

[17] He cited Toohey J at 561 to 562, Deane J agreeing at 545.

[18] See, for example, at 554 to 555 and 558.

[20] Reported as State of Western Australia v Wardley Australia Ltd and Ors [1991] FCA 314; (1991) 30 FCR 245 at 259.

[23] [1968] UKPCHCA 1; (1968) 118 CLR 32, see particularly at 37-38. See also [1967] HCA 30; 116 CLR 537.

[24] [1999] 1 VR 782, and in the High Court, sub nom Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; (1999) 200 CLR 1.

[25] In the end, the Court of Appeal and High Court arrived at diametrically opposed conclusions. But that is not presently important.

[26] [1989] VicRp 12; [1989] VR 139.

[28] As to which see Lucas in the Privy Council at 118 CLR 38.