WRIGHT PROSPECTING PTY LIMITED -v- HANCOCK PROSPECTING PTY LIMITED (1) [2007] WASC 78 (28 March 2007)

"Each Partner shall have the option exercisable at any time during the continuation of the Partnership to require the transfer of the HPPL interests to HPPL and the transfer of the WPPL interests to WPPL."

4 I have referred to the indorsement of claim on the writ. It is as well to set it out in full:

1. A declaration that it has validly exercised an option granted to it by Clause 4 of an agreement between the Plaintiff and the Defendant dated 15 February 1984 (the 1984 Agreement).
2. A declaration that the assets and interests of the partnership between the Plaintiff and Defendant, in and to the Rhodes Ridge Joint Venture and temporary reserves (the Rhodes Ridge Interest), as set out in the 1984 Agreement remained a WPPL Interest as defined in the 1984 Agreement as at the date of the exercise by the plaintiff of the option granted to it by Clause 4 of the 1984 Agreement.
3. A declaration that the partners of the partnership between the Plaintiff and Defendant hold the Rhodes Ridge Interest on trust for the Plaintiff.
4. An order that the Defendant take all necessary steps and execute all necessary documents to transfer the benefit of the Rhodes Ridge Interest to the Plaintiff."

5 As can be seen, apart from the claim for a declaration as to the valid exercise of the option in cl 4 to which I have referred, the contention in par 2 of the indorsement of claim was that as at the date of the exercise of the option by the plaintiff the assets and interests of the partnership in the Rhodes Ridge Joint Venture were "WPPL interests" under the 1984 agreement. That is a reference to the fact that under cl 1(a) of that agreement the defendant was to "assume sole control over and responsibility for the administration, development and disposal of the assets and interests of the Partnership set out in Schedule 1" of the agreement. They were defined to be "HPPL interests". Similarly, under cl 1(b), the plaintiff was to "assume sole control over and responsibility for the administration, development and disposal of the assets and interests of the Partnership set out in Schedule 2" of the agreement. These were the defined "WPPL interests". It was in respect of those interests, it was claimed, the plaintiff had the option to call for the transfer of the interests identified as WPPL interests in Sch 2 to it.

6 In the event that that had not occurred, the third paragraph of the indorsement of claim claimed the declaration that the defendant, so far as it had an interest in the Rhodes Ridge Joint Venture, held it on trust for the plaintiff and hence the order to complete the transfer sought in par 4 of the indorsement of claim. The formulation of the case in those terms had a beguiling simplicity.

7 On 4 April 2001 the statement of claim was filed. For present purposes it is sufficient to note that it pleaded the provisions of the 1984 agreement to which I have referred above. In cl 19 it is pleaded that the plaintiff exercised the option provided by cl 4 by a notice dated 11 December 1997 and also on 28 June 2000 requiring the transfer to the defendant of the interests identified in cl 1(a) and Sch 1 and requiring the transfer to the plaintiff of the interests identified in cl 1(b) and Sch 2. By cl 21 it is pleaded that by reason of the exercise of the option, the partners hold the Rhodes Ridge Interest for the plaintiff and are required to transfer that interest to the plaintiff. By cl 22 it is pleaded that the defendant has denied, by a letter written to the plaintiff dated 31 July 2000, its obligations in that regard.

8 It is unnecessary to refer to the pleading in detail, but I note that on 8 September 2006 the statement of claim was amended, effectively to introduce for the first time a claim that if, as pleaded by the defendant, the 1984 agreement was for any reason legally ineffectual or unenforceable, then the parties had throughout nonetheless operated upon the common assumption and belief that the 1984 agreement, in particular cls 1(a), 1(b) and 4, were valid and effective in the terms relied upon by the plaintiff. It is pleaded that the defendant has indeed, with the consent of the plaintiff and pursuant to the 1984 agreement, had certain interests allocated to it under the 1984 agreement. On the other hand, it is pleaded that the plaintiff has only sought to have transferred to it the Rhodes Ridge Interest. The defendant, it is pleaded, withholds its cooperation to achieve that and asserts that because the option is ineffective it has, with the other joint venturer, a 50 per cent interest in the Rhodes Ridge Joint Venture. To so behave, the plaintiff contends, constitutes unconscionable conduct on the part of the defendant. It is claimed the defendant ought therefore to be declared to hold any interest it has in Rhodes Ridge upon constructive trust for the plaintiff. Otherwise the prayer for relief claims a declaration that the plaintiff has validly exercised the option under cl 4 and the accompanying or related declaration that the Rhodes Ridge Interest was one committed to the plaintiff, a declaration that the partners hold that interest on what I would describe as an implied or resulting trust for the plaintiff. The Court is asked to order the defendant to take all necessary steps and execute all necessary documents to achieve the transfer of the benefit of the Rhodes Ridge Interest to the plaintiff.

9 For present purposes, it is unnecessary to discuss the defence except in one respect. At present, by pars 47 and 48, as I have ruled, there is a pleading which, on a fair reading, clearly raises a plea that what may be described as the unconscionability claim introduced by the amendment of the statement of claim in September 2006 is statute barred pursuant to the provisions of the Limitation Act1935 (WA), s 47, or by reason of the rule that equity applies statutes of limitation by analogy, because it is a claim in the nature of a claim for breach of contract or an action founded on a simple contract.

10 The reference to the Limitation Act of 1935 is appropriate because, although that Act was repealed by the Limitation Legislation Amendment and Repeal Act 2005 (WA), s 4(1), its operation was, by s 4(2) of that Act, continued in respect of causes of action that accrued before 15 November 2005, the day upon which the repeal took effect and the Limitation Act 2005 (WA) came into operation.

11 The defendant now applies to amend its defence to add a plea that the entire action is statute barred. It is necessary to set out the amendments sought:

"48.1 Further, and in any event, the Plaintiff's entire claim is statute barred by virtue of:

(a) Section 47 of the Limitation Act 1935;

(b) Section 24, Section 4 and Section 5 of the Limitation Act;

(c) Section 38 of the Limitation Act; or

(d) the operation of the rule that equity applies limitation periods analogously.

48.2A In amplification of paragraph 48.1, the Defendant says:

(a) by letters passing between the parties and documents evidencing discussions between them, it became clear that by 1992, or 1994 at the latest, the Plaintiff sought, and the Defendant rejected, confirmation of:-

(i) the Plaintiff's asserted entitlement to the Defendant's interest in the Rhodes Ridge project; or

(ii) the asserted right to require transfer to itself (being the Plaintiff) of the Defendant's interest in the Rhodes Ridge project;

Particulars

(aa) document headed 'Notes on Discussions Re: WPPL's Position in relation to Hancock and Wright and in particular Rhodes Ridge' (WPPL discovered document A186, Tab 919A;

(bb) letter HPPL to Mrs Angela Bennett dated 7 August 1992 enclosing HPPL's faxes to Robert Hubbard of Coopers and Lybrand dated 3 April 1991 and 16 May 1991 respectively (WPPL discovered the contract no 189, Tab 930A);

(cc) letter WPPL to Mrs G H Rinehart dated 10 February 1993 (HPPL discovery number 762, Tab 934A);

(dd) facsimile transmission HPPL to Doug Salt of WPPL dated 18 February 1993 (HPPL discovery number 766, Tab 934C);

(ee) document headed 'Notes on Meeting between Gary Schwab (HPPL) and Doug Salt (WPPL) held on 22 February 1993' (WPPL discovered document no 676, Tab 395);

(ff) facsimile transmission WPPL to John Ralph, CRA Limited dated 31 March 1993 (WPPL discovery number 201, Tab 938);

(gg) letter Hamersley Resources Ltd to HPPL dated 14 September 1993 (HPPL discovery number 780, Tab 590);

(hh) letter Hamersley Resources Ltd to WPPL dated 14 September 1993 (WPPL discovery number 218, Tab 951);

(ii) letter WPPL to Mr I J Williams, Hamersley Resources Ltd of 27 September 1993 (HPPL discovery number 784, Tab 952);

(jj) letter HPPL to Doug Salt of WPPL dated 28 September 1993 (WPPL discovery number 225, Tab 954);

(kk) letter HPPL to Mr I J Williams, Hamersley Resources Ltd dated 1 October 1993 (WPPL discovery number 1173, Tab 955);

(ll) letter WPPL to Mr F R Madden, of HPPL dated 9 December 1993 (HPPL discovery number 903, Tab 959);

(mm) HPPL letter to Mr D V Salt of WPPL dated 19 January 1994 (HPPL discovery number 789, Tab 961);

(nn) HPPL letter to Mr D V Salt, WPPL dated 16 February 1994 together with attached letter WPPL to Mr F R Madden of HPPL dated 11 February 1994 (HPPL discovery number 791, Tab 965);

(oo) WPPL facsimile transmission to HPPL dated 23 June 1994 (HPPL discovery number 795, Tab 974A).

48.2B Alternatively, on its own case the Plaintiff confirms that immediately after Mr Hancock's death on 27 March 1992, the Defendant denied that WPPL was entitled to exercise the right alleged in clause 4.

48.2C In such circumstances, there was an actual breach, if the Plaintiff is correct (which is denied) about the effectiveness of the 1984 Agreement by the end of 1994 at the latest.

48.2D In the alternative, the Defendant's assertion (as described in paragraph 48.2A above etc.) as to its entitlement and the rejection of the Plaintiff's right constituted (if the Plaintiff is right about the effectiveness of the 1984 Agreement, which is denied) was an anticipatory breach of clause 4 of the 1984 Agreement or the Option.

48.3 Alternatively if, as the Plaintiff asserts, its claim is one against the Defendant in the position of an express trustee, the claim is statute barred under Section 47 of the Limitation Act.

48.4 Alternatively, if, as the Plaintiff asserts, its claim is one for, or analogous to a claim for, the recovery of land, the claim is statute barred by virtue of the operation of Sections 4, 5 and 24 of the Limitation Act, as time began to run from the date of the 1984 Agreement.

48.5 Alternatively if, as the Plaintiff asserts, its claim is in equity, the claim is statute barred on the basis that equity applies limitation periods by analogy."

12 It is clear that the various paragraphs are intended to be read together, although originally the proposed amendment stopped at par 48.1. The present form of the proposed pleading is a response to my requirement that the pleading should be certain to plead the material facts upon which the defendant proposed to rely to support the defence that the plaintiff's claim, other than that limb which depends upon unconscionability, ie:- its contractual claim for breach of the 1984 agreement seeking relief in the form of declarations and orders in the nature of specific performance of the contract, is statute barred.

13 Even at this stage, three weeks into the trial, as I apprehend it the question for me is whether there is an arguable defence under the Limitation Act. The distinction between so holding and holding that the claim is in truth statute barred, having regard to the present state of the evidence which appears to deal with all factual matters upon which the plea would depend, is rather illusory. If I consider that there is an arguable defence, I will allow the amendment sought, if necessary on terms, even though the application is made late in the day, unless in the exercise of my discretion I consider that to allow the amendment would be unfair having regard to demonstrated prejudice which would be caused to the plaintiff and which would not be remedied by an award of costs. At that point in the deliberations of the Court, the discretionary judgment will be illuminated by having regard to the prejudice which would be occasioned to the defendant who is shut out of the capacity to present an arguable defence, balanced or measured against the prejudice and the nature of the prejudice to the plaintiff who is now, at a late stage, exposed to a defence which may defeat the action.

14 Case management principles will not be lost sight of because there may be an impact upon the nature or fairness of the trial which ought not to be permitted in these times when the efficiency and expedition of the trial process is a matter of public interest as well as a matter of interest to the parties. It is trite to observe that since 1993 the making of O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA) make clear this Court's recognition of the relevance of the public interest as well as the desirability and the interests of the parties in the efficient disposition of the business of the Court.

15 The factors which bear upon that exercise of discretion will often be numerous. They must be weighed to determine where the balance of likely injustice lies. No one circumstance should be given primacy over another: Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd (1994) 13 WAR 323. In that case the Full Court provides a useful discussion of the authorities and general principles to that point. The judgment remains of assistance, in my opinion, although it must, of course, now be read subject to the rider derived from the decision of the High Court in State of Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146.

16 It remains the case that absent irremediable prejudice to the defendant which cannot be compensated by costs, a party who seeks an amendment to raise an issue, particularly a new issue and not merely an amplification of an existing issue, which is fairly arguable, ought to have leave to amend because it is generally in the interests of justice that parties enmeshed in litigation ought to be enabled to conduct it within a pleaded framework which permits the resolution by the Court of the true controversies between the litigants.

17 In Commonwealth v Verwayen (1990) 170 CLR 394 at 464, Toohey J cautioned against too-ready reliance upon the capacity of an order for costs to remedy the prejudice of amendment occasioned to a plaintiff. He said:

"There may be cases, and a plea of limitation is a good example, where the amendment proposed has every prospect of success, but comes at such a late stage that, if it be granted and the point raised succeeds, an award of costs in favour of the other party is no adequate compensation. It may be, for instance, that it is then too late for the plaintiff to bring action against anyone else ... . It should not be lightly assumed that the 'healing medicine' ... of costs is always a sufficient cure for the disadvantage to the other side."

18 His Honour went on to refer to an oft quoted passage from the judgment of Lord Griffiths in Ketteman v Hansel Properties Ltd [1987] AC 189 at 220:

"Whether an amendment should be granted is a matter for the discretion of the trial Judge and he should be guided in the exercise of the discretion by his assessment of where justice lies. Many and diverse factors will bear upon the exercise of this discretion. I do not think it possible to enumerate them all or wise to attempt to do so. But justice cannot always be measured in terms of money and in my view a Judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are person litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes, and the legitimate expectation that the trial will determine the issues one way or the other."

19 I shall return in due course to matters which it seems to me might affect the exercise of discretion in this case, but I commence by a consideration of the limitation defences desired to be raised and the question whether they are fairly arguable. As I understand the plaintiff's case, for present purposes it may, cutting it to its bare bones, be summarised in this way. The plaintiff and defendant, on 15 February 1984, made, as partners carrying on business under the name "Hancock & Wright", the contract described as the 1984 agreement varying the terms of their partnership so as to place primary control in each of them of nominated partnership interests and assets. Putting aside par 1(c) of the agreement, that is asserted to be the effect of par 1(a) and 1(b) and the nomination of the various assets as falling within Sch 1 or Sch 2 respectively. Nonetheless, the interests identified remained partnership interests and the asset and interest of particular relevance in this action is the interest of the partnership in the Rhodes Ridge Joint Venture which was identified in the manner I have described as a WPPL interest.

20 The plaintiff pleads that it has exercised the option provided by cl 4 of the 1984 agreement by the notice it issued to the defendant at the earliest in 1997. Thereupon, it asserts, the defendant was obliged by the contract to join with the plaintiff in using its best endeavours to secure the transfer from the defendant to the plaintiff of the defendant's interest in Rhodes Ridge. The plaintiff asserts that the defendant refused to discharge that requirement and thereby breached cl 4 of the 1984 agreement, for which breach the plaintiff sues, claiming declarations in the nature of specific performance of the 1984 agreement or declarations of trust arising out of the alleged breach of cl 4. As I understand this aspect of the case, it is claimed that the plaintiff's contractual right under cl 4, in the event of the pleaded non-compliance with the notice exercising the option, carried the consequence in equity that the defendant should be held to hold its interest in Rhodes Ridge in trust for the plaintiff, the trust arising as the result of the unsuccessful exercise of the option provided by cl 4 and by implication from those events.

21 I should add that the defendant categorises the cause of action pursued by the plaintiff as being analogous to a claim for the recovery of land to the extent that the Rhodes Ridge Joint Venture interest of the defendant involves an interest in the relevant mining tenements. But I think this adds nothing to an understanding of the claim made by the writ and statement of claim which, however the case is put, involves a cause of action arising out of the alleged breach of the 1984 agreement by the defendant's refusal to accept and comply with the exercise of the option under cl 4 which it asserts occurred, at the earliest, by its notice issued in 1997.

22 I am satisfied that the causes of action, whether directly for the breach of cl 4 or for the equitable rights asserted by the plaintiff arising out of that breach and the claims for declarations of trust, accrued, for the purpose of considering the application of the Limitation Act, when they were complete so that action could be brought in relation to them. In this case I would hold that the plaintiff's causes of action accrued when the facts or combination of facts giving rise to the right to sue occurred: Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234 per Wilson J at 245; Cigna Insurance Asia Pacific Ltd v Packer [2000] WASCA 415; (2000) 23 WAR 159, 169 [31]. It is useful to note the reminder made by the Full Court in the latter case that the defendant must not only specifically plead the material facts upon which the defence depends, but will carry the legal onus to prove that the claim is statute barred.

23 The defendant asserts by its proposed pleading that the claim is statute barred because the causes of action upon which it depends, being reliant upon the assertion of the plaintiff's entitlement to its interest in Rhodes Ridge and the right to require the transfer of the defendant's interest in Rhodes Ridge to the plaintiff under cl 4, accrued upon the breach of the contract, if cl 4 imposed an enforceable obligation which is said by the plaintiff to give rise to the equities upon which it relies in seeking the relief claimed. This breach occurred, the defendant asserts, upon the basis of the correspondence it proposes to plead, in 1992, or at the latest by 1994. The documents relied upon are in evidence. The argument proceeds upon the basis that cl 4 effectively gives to each of the plaintiff and the defendant the option or right to require the transfer of their respective partnership interests to each of them. That requirement must be communicated, but the contract provides no particular mechanism or process by which that is to be done.

24 The correspondence commences with a letter from Mrs Rinehart to Mrs Bennett, dated 7 August 1992, suggesting that the defendant was concerned to assert its interest in Rhodes Ridge. There is a reference to what is called the 1989 management contract. On 12 February 1993, Mr Salt wrote, as chairman of the board of the plaintiff, to Mrs Rinehart, on behalf of the defendant, asserting an entitlement for the plaintiff to exercise its rights under the 1984 agreement in relation to Rhodes Ridge and the other WPPL interests, but not purporting to exercise a right under cl 4. Mr Schwab, as a director of the defendant, replied to that letter by a letter dated 18 February 1993. The letter refers to management rights, but suggests that an effort needed to be made to avoid a wider dispute over Rhodes Ridge in respect of which "we do not agree with your conclusions", while at the same time acknowledging that the matter was not beyond doubt.

25 There are notes of a meeting held between Mr Salt and Mr Schwab on 22 February 1993. The subject for discussion was Rhodes Ridge. The plaintiff's assertion that it was a WPPL interest was reiterated and said to be supported by counsel's opinion. A suggestion that Mrs Bennett agreed with the view that had been espoused by Mrs Rinehart to the contrary was refuted. That was said also to be the position of Mr Michael Wright. So again there is a discussion of a developing difference of view, but no requirement under cl 4 by the plaintiff.

26 Mr Salt wrote to Mr Ralph of CRA Ltd on 31 March 1993, asserting that in relation to any contract negotiations between the Rhodes Ridge Joint Venture partners, the Rio Tinto company should deal with the plaintiff which had sole control to the exclusion of the defendant over the Rhodes Ridge Joint Venture as a result of "various internal arrangements" between the partners. On 14 September 1993 Mr Williams, a director of Hamersley Resources Ltd, the manager of the joint venture, wrote to the defendant, for attention of Mrs Rinehart, seeking "clarification of authority" regarding the defendant's interests in the Rhodes Ridge Joint Venture. On the same date a precisely similar letter was sent to the plaintiff, and to that letter Mr Salt replied as chairman of the board, again referring to the 1984 agreement and asserting that it gave the plaintiff "sole control over and responsibility for the administration, development and disposal of the partnership's interest in the Rhodes Ridge Joint Venture".

27 Mr Madden, the chief executive officer at that time of the defendant, wrote to Mr Salt on 28 September crossly referring to Mr Salt's letter of 27 September, expressing surprise and disappointment that it was written and describing it as "unwise and not in the long-term interests of either of our organisations". Shortly afterwards, on 1 October 1993, Mr Madden wrote to Mr Williams, as manager of Hamersley Resources Ltd, confirming the defendant's insistence that the joint venture manager continue to deal with both partners in accordance with what were asserted to be the terms of the joint venture agreement. On 9 December 1993 Mr Salt wrote a further letter to Mr Williams and copied that to Mr Madden. The purpose of this letter was to reiterate the plaintiff's view that the joint venture manager should deal with it.

28 A more conciliatory tone was adopted by Mr Madden to Mr Salt in a letter dated 19 January 1994. Again there was discussion of the respective views which apparently the two men had put to each other when they met in December following the letters written on 9 December. The debate continued to be about the management entitlement of the partners to deal with the Rio Tinto interest, the major participant in the joint venture and effectively the manager of it. Of course, this disagreement is patently related to the entitlement of the plaintiff, if it should be so advised, to give notice to the defendant of the exercise of the option under cl 4 of the 1984 agreement. But I see no suggestion in the correspondence to this point of the plaintiff asserting that entitlement.

29 That the dispute was in relation to the capacities, having regard to the contractual relations between them, of the plaintiff and the defendant, to exercise sole management powers in dealing with their joint venture partner, is emphasised by a letter dated 11 February 1994, written by Mr Salt to Mr Madden, which suggested that rather than attempt to resolve their differences by further discussion, the plaintiff considered that it might be more beneficial to refer "the matter" to a mutually acceptable arbitrator. Mr Madden replied, by letter dated 16 February 1994, expressing concern that the parties should act in cooperation to deal with third parties, "thus ensuring our royalty streams are enhanced in what is a rapidly growing market". To that end, for the defendant it was suggested that further direct discussion was the preferred way forward so that the partners might "develop a common strategy". However, the suggestion about arbitration would be considered.

30 Finally, my attention was drawn to a letter dated 23 June 1994 from Mr Salt, as chairman of the board of the plaintiff, to Mrs Rinehart on behalf of the defendant in relation to the Rhodes Ridge Joint Venture, accepting that the dispute was dragging on in circumstances where, "It seems clear at the present time that neither of us is capable of persuading the other to a change of view." Mr Salt reiterated the view that the way forward was to go to arbitration to break the impasse. The necessity for the documents to be stamped before arbitration could be undertaken was discussed.

31 As I understand the position, then, this correspondence referred to management rights in respect of Rhodes Ridge and, in particular it seems, it was a dispute having some relationship to what flowed from an agreement made on 14 September 1989 between the plaintiff, the defendant, Mr Lang Hancock and Mr Kevin Dalby whereby Mr Hancock during his lifetime and on his death, Mr Dalby (who unfortunately predeceased Mr Hancock) were given the right to manage the interests of the partners in joint ventures including Rhodes Ridge "for a term of ten (10) years, or until the death of the survivor of LGH (Mr Hancock) and KD (Mr Dalby), whichever shall occur first". (Clause 1). Under cl 3 of that agreement, the concept of sole management gave Mr Hancock, initially, very wide powers, including, "to promote actively the sale, development or turning to account the said interests of the Partners".

32 It can be seen from the correspondence to which I was referred that upon the death of Mr Hancock, Mr Dalby having predeceased him, those acting for the plaintiff took the view that the 1989 agreement ceased to have any further effect and the position reverted to that under the 1984 agreement whereby, as I have already noted, by cl 1(b), the plaintiff was to assume sole control over, including a power to dispose of, the Sch 2 assets and interests of the partnership including Rhodes Ridge. As I understand the way the plaintiff pleads its case, although it asserts what may be described as a contractual right arising out of cl 1(b) to deal with and sell the partnership interests in the Rhodes Ridge Joint Venture, and although it asserts that in equity a trust would thereby result in its favour so far as the defendant's 25 per cent interest in Rhodes Ridge is concerned, the founding breach relied upon to ground all its claims is that asserted in respect of cl 4.

33 In relation to that, the factual material relied upon by the defendant which I have just reviewed does not seem to me to be either relied upon by the plaintiff, or capable of being relied upon by the plaintiff, or material upon which the plaintiff must necessarily rely, to establish the exercise of its asserted entitlement under cl 4 and the breach of contract in that regard by the refusal of the defendant to afford its cooperation to the exercise of that entitlement which, in my view, are the necessary facts to be established to demonstrate the accrual of the causes of action upon which the plaintiff's claim depends. On the contrary, the act of asserting those rights relied upon as the first disclosed by the evidence, was the notice dated 11 December 1997, the breach being crystallised by the defendant later declining to afford its cooperation to what, in a shorthand way, I may describe as the cl 4 for process of transfer. All of that is on the basis of course, that the plaintiff may make out a case that cl 4 constitutes a legally effective and enforceable contractual provision.

34 On that ground alone, then, it can be seen that the asserted limitation defence, in the manner pleaded, is not fairly arguable insofar as it relies upon accrual of the causes of action in 1992 or, at the latest, 1994. That is so because on the most charitable view of the material facts put before the Court the earliest date for the accrual of the cause of action is the date of the 1997 notice, even accepting the defendant's view that the accrual of the cause of action could be regarded as "the assertion of the right or its denial". (My emphasis.) As I have endeavoured to make clear, my view however, is that the causes of action accrued on the assertion of the entitlement under cl 4 and its denial.

35 In case I should be wrong about that, I should note and comment upon the defendant's alternative argument that there was in 1992 or, at the latest, 1994, an anticipatory breach of cl 4, on the plaintiff's case. It is convenient to commence with the work published as a loose-leaf service edited by Professor Carter, known as "Carter on Contract". At [35-050] it is said:

"For an anticipatory breach to occur the promisee must terminate the performance of the contract, and repudiation, standing alone, does not have this effect. Because of the requirement of termination, it is not, strictly speaking, correct to describe a repudiation as itself an anticipatory breach of contract. It is the exercise of the right of termination by the promisee which gives rise to an anticipatory breach of contract."

A number of cases are cited in support of this proposition. For the defendant, it is submitted that while this statement of the law may be correct, it only applies to the case where the remedy sought is damages, because the damages may not be seen to arise or be assessed until the anticipatory breach is converted to an actual breach of contract where the breach and the repudiation it involves has been accepted by the innocent party who elects to terminate the contract and sue for damages. On the other hand, for the plaintiff it is argued that this is a statement of general application concerned to define the circumstances in which the cause of action for breach of contract, which is an anticipatory breach, may be said to accrue.

36 In my opinion, there is much in this area of contract law which is a debate about semantics rather than substance. I shall refer to some of the cases shortly, but it seems to me that a breach of contract may be regarded as an anticipatory breach if it occurs before the time for performance of the contractual obligation arrives or before the contract is to be completely performed (eg, a contract for payment by instalments or for the delivery of goods periodically) but it remains necessary, in a case of anticipatory breach, for the contractual obligation to be repudiated by the promisor. The promisee, the innocent party, then has a choice. He may accept the repudiation, terminate the contract and take action to recover damages for the breach, or he may elect to keep the contract on foot and insist upon its performance on the due date. In the meantime, the contract remains on foot. It has not yet been breached in fact, and the anticipatory breach may be remedied where it is in fact remediable, although not, of course, if the anticipatory breach arises out of the impossibility of performance by the promisor. If that is the course taken, then I think the cause of action for breach of contract has not accrued.

37 In this case, I think, there is no evidence of an anticipatory breach. The breach pleaded to have occurred was an actual breach. The time for the performance of the cl 4 obligation and therefore the time when it became relevant to consider the plaintiff's equitable rights, according to the way it has pleaded its case, was at the time of the asserted actual breach of cl 4 upon the denial by the defendant of the asserted exercise of the cl 4 right by the plaintiff, at the earliest in 1997. If there was in this case an earlier anticipatory breach in 1992 or, at the latest, in 1994, there is nothing to suggest that at that time the plaintiff accepted the repudiation. On the contrary, it seems that it was then seeking an avenue to persuade the defendant to remedy the breach which might be said to have been anticipated. To assert that it then had a right to sue to enforce a contractual term which was still capable of being complied with by the defendant (on the plaintiff's case) seems to me to be a contradiction in terms.

38 The concept of anticipatory breach is said to stem from at least the time of Hochster v De La Tour [1853] EngR 760; [1853] 2 EL&BL 678; 11 ER 922. That was a true case of anticipatory breach. The plaintiff had agreed with the defendant to employ him as a courier. Before the date when that employment was to commence, the defendant said that he would refuse to perform the agreement, saying that he released the plaintiff from its performance and put an end to it. It was held that the plaintiff could sue for damages because it appeared that the defendant had not merely evinced an intention to break the contract, as the headnote has it, "of which intention he might repent", but he had communicated to the plaintiff his renunciation of the contractual obligation upon which the plaintiff was entitled to act and did act by the suit he brought.

39 I was referred to the instructive decision of the High Court in Peter Turnbull & Co Pty Ltd v Mundus Trading Co Pty Ltd [1954] HCA 25; (1954) 90 CLR 235. The plaintiff had contracted to buy oats from the defendant fob Sydney, to be loaded on a ship nominated by the plaintiff, in January or February of 1951. On the basis of the receipt of the oats under that contract, the plaintiff contracted to sell them to a third party. The defendant told the plaintiff before the required date that it could not supply the oats fob Sydney, but would do so fob Melbourne. The plaintiff said that that would be an unacceptable performance of the contract and insisted on performance. The defendant said that it did not have the oats which it agreed to sell to the plaintiff and could not carry out the contract. The plaintiff sued for damages and was met by the defence, which was unsuccessful, that the plaintiff could not maintain its cause of action because it was in breach of the contract by failing to nominate the vessel in Sydney on which the oats were to be loaded, that failure being in the context of the defendant's advice that it was impossible for it to perform its part of the contract.

40 Again, as I say, this was an action for damages, but the case does not turn on that. The judgments in the High Court make it plain that this was a case of anticipatory breach of a particular kind. The cause of action arose, not strictly as a matter of anticipatory breach, but on the failure to meet the obligation to deliver the oats fob Sydney, or at all. It was held, in effect, that it did not defeat the plaintiff's cause of action arising upon that actual breach to sue for damages, that the plaintiff had in its turn failed to perform one of its contractual obligations in circumstances where that failure had been caused by the intimation of the defendant that it would not or could not perform its fundamental obligation going to the root of the contract to deliver the oats in the circumstances promised.

"In the Supreme Court the plaintiff failed because the case was treated as one in which the contract had been kept open by the plaintiff notwithstanding the defendant's intimation of its inability to perform it, with the consequence that the plaintiff was bound to fulfil the conditions on its part to be fulfilled. But this is not a case confined to a simple anticipatory refusal to perform or declaration of inability to perform on the part of one party followed by an election by the other not to treat the contract as discharged by breach. The course taken by the defendant involved something more than that and the additional element brings into application other principles of law. The defendant persisted up to 2nd March that it could perform the contract only in one way, namely by substituting a shipment by the same vessel in Melbourne for that in Sydney contracted for. By seeking the plaintiff's help in an attempt to effect this substitution and at the same time persisting that it could not perform the contract according to its terms the defendant clearly intimated to the plaintiff that it was useless to pursue the conditions of the contract applicable to shipment in Sydney and that the plaintiff need not do so. The fact that under the rules of law governing anticipatory breach of contract, the plaintiff might have elected to treat the defendant's intimation as a discharge by breach may be disregarded. The plaintiff did not do so and that left the contract on foot."

These observations make it perfectly plain that ordinarily for the plaintiff to have a capacity to claim any relief for an anticipatory breach of contract it must elect to treat the defendant's intimation as a discharge of the contract by breach.

42 The same point was made clear by Kitto J who discussed the doctrine of anticipatory breach in the following terms, at 250 - 251:

"The doctrine of anticipatory breach is, of course, applicable as soon as A has communicated to B his refusal to carry out the contract. Under that doctrine B is put to his election. He may, if he chooses, treat the contract as brought to an end in consequence of A's default, and recover damages from A for loss of the benefit of the contract. Alternatively, he may treat the contract as continuing on foot, in which case it will remain in force for the benefit of both parties, just as it would if the refusal had never been declared. If A persists in his refusal, B may at any time while the refusal continues elect to treat the contract as at an end and sue for damages; but unless and until he does so the contract remains on foot, and A may withdraw his refusal and require B to perform the contract on his part, subject only to giving B reasonable notice of his change of intention or he may take advantage of any supervening circumstances of such a character as to discharge the contract. But suppose that A's refusal is never retracted; that B does not elect while the period specified by the contract for performance is unexpired to treat the contract as determined by reason of the refusal; and that no event occurs during that period to discharge the contract. I am supposing, of course, a case like the present where in all the circumstances the refusal necessarily conveys to B that he need not trouble to fulfil a condition to which A's obligations under the contract are subject, because even if he does A will still not perform his obligations. Is it true in such a case to say that A's continued refusal must not be allowed any significance in an action by B against A, in which B seeks damages for not getting what he bargained for and A seeks to defend himself by relying upon the condition which he has all along shown that he was not concerned to have fulfilled? What does it matter for the purposes of that action that the refusal was not treated as ending the contract and as founding an action for anticipatory breach? The damages claimed are not for loss of the contract by premature termination, but for loss of the benefit which performance of the contract in accordance with its terms by both parties would by now have produced to B but for the fault of A. It is a cause of action which the facts I have assumed make out, unless the non-fulfilment of the condition is an answer to it; and as to that the inescapable fact is that A's refusal was a continuing intimation that the condition need not be observed, and it did not become any the less an intimation to that effect because B chose not to determine the contract before its time. The intimation having continued until the time came when A would certainly have been in default if the condition had been fulfilled, the law, as I understand it, treats A's obligation as absolute, and holds B entitled to damages for not having got what A promised he should have in the event of the condition being fulfilled."

43 To the same effect, in my opinion, generally as to what is required by way of acceptance of the repudiation and termination of the contract, if an action is to be based on an anticipatory breach, are the judgments of the House of Lords in Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1979] AC 757. The principal reasons were those of Lord Wilberforce and reference may be made to his Lordship's observations at 778 and 780. Again, I do not think that the case turned upon the capacity to bring an action for damages as opposed to the capacity to seek other relief.

44 For the defendant, in the context of the application of limitation periods, particular reliance was placed upon the decision the English Court of Appeal in Bell v Peter Browne & Co [1990] 2 QB 495. This was an action against solicitors for their negligence in advising the plaintiff, who suffered loss in dealings with his wife in respect of the transfer of the matrimonial home. The solicitors' failure to protect the plaintiff's interests as a matter of fact continued to be capable of remedy so long as the wife remained the owner of the home, but ceased to be so when she sold it, and without any action being taken to protect the plaintiff's interests in the proceeds of sale the money was lost.

45 The defendant's solicitors had the statement of claim struck out on the ground that any cause of action, including that available for breach of the contract of retainer, was statute barred. The plaintiff appealed unsuccessfully, the Court of Appeal holding, in relation to the potential contract claim, that there had been a breach of the contract at the point where the solicitors failed to take appropriate action to protect the position of the plaintiff. The plaintiff's writ not having been issued until after the limitation period expired, any action based on breach of contract was statute barred. So it can be seen that this is not a case of anticipatory breach, but a case where, a breach having occurred, time began to run and the court held that it mattered not, in contract, that the breach was remediable in the sense that action might have been taken which would prevent the loss which ultimately occurred at times thereafter until, by the wife's action, the funds were dissipated.

46 In my respectful opinion, that is a perfectly understandable outcome consistent with general principle, which says nothing about when an action for damages or seeking some form of equitable remedy may be brought in the case of an anticipatory breach of contract. Bell provides no authority as to when a cause of action in respect of an anticipatory breach may be said to accrue, which, in my view, as I have said, will occur while the breach remains anticipatory if the innocent party accepts the breach and terminates the contract, thus paving the way for an action, or if, on the other hand, despite the anticipatory breach, the innocent party chooses to keep the contract on foot, the cause of action will not accrue to permit action generally on the contract until the time for performance arrives and an actual breach occurs.

47 My attention was drawn to a passage in the judgment if Nicholls LJ at 501:

"A remediable breach is just as much a breach of contract when it occurs as an irremediable breach, although the practical consequences are likely to be less serious if the breach comes to light in time to take remedial action. Were the law otherwise, in any of these instances, the effect would be to frustrate the purpose of the statutes of limitation, for it would mean that breaches of contract would never become statute-barred unless the innocent party chose to accept the defaulting party's conduct as a repudiation or, perhaps, performance ceased to be possible."

48 The observation made must be good law for the reason given by his Lordship, but the fact remains that it is made in the context of an actual breach which in its factual content happens to be capable of remedy at the time that it occurs, and I do not think that the same criticism may be levelled at the view to which I have come of the law in relation to anticipatory breach. It was put to me that in this case, if an anticipatory breach occurred in 1992 or by 1994, the plaintiff could prevent time running against it by the simple expedient of keeping the contract on foot, as indeed in the years that followed, it sought to do. I do not see how the situation which occurred, on the factual material before me in this case, works any injustice towards the defendant in that regard, even on the basis that there was an anticipatory breach of the 1984 agreement at the time mentioned.

49 It is useful also to refer to the judgment of Mustill LJ at 511 - 512. In expressing his agreement with the reasons of the other members of the Court of Appeal, his Lordship added some observations upon the proposition that where there is a breach of contract not accepted by the promisee as a repudiation, that party has no cause of action. His Lordship drew a distinction between two situations by saying:

"In the first, the promisor makes it plain by words or conduct, before the time fixed for performance, that when the time arrives he cannot or will not perform. This is the case of anticipatory breach of contract, where under English law the promisee has an option whether or not to continue with the contract. If he elects to 'accept' the promisor's conduct as a wrongful repudiation the obligations for the future of both parties are discharged, and the promisee may sue at once to recover damages for loss of the bargain. If, however, he elects not to treat the contract as repudiated the obligations of both sides continue in existence and the promisor's renunciation has no effect as a breach of contract and gives no immediate cause of action for damages, although it may create certain rights in equity.

The second situation exists where there is no renunciation in advance, but where when the day for performance (if the obligation is to do a once-for-all act) or the first day for performance (if the contract requires acts to be done continually or intermittently over a period of time) arrives the promisor either performs badly or does not perform at all. Here the fate of the bilateral obligation will depend on a number of factors. First, on the nature of the obligation and magnitude of the breach. If the obligation is a condition of the contract, or if the breach is serious enough to go to the root of the contract, the promisee will have the option to treat himself as discharged from his present and future obligations. Second, on whether the breach, even if insufficient in itself to justify a termination, nevertheless demonstrates when placed in the context of other relevant facts, an unwillingness or inability on the part of the promisor to go ahead and perform his obligations in the future. If it does, the promisee may elect to treat himself as discharged by anticipatory breach of those future obligations. Third, on the conduct of the promisee himself. This may be such as to be a waiver of the right to treat a breach of condition, or a serious breach of an 'innominate' term, as a ground to terminate the contract. Or it may show an election not to treat the future obligations as having been the subject of an anticipatory breach. In such cases the contract remains alive for the future. The point, however, for present purposes is that even if the promisee does not 'accept' the promisor's breach as a repudiation, it retains its character as a breach and is actionable at once, even though the continuing obligation to perform in the future will also be capable of founding new causes of action when the time becomes ripe. Thus I would not for my part accept that there is no right of suit, and hence no commencement of the limitation period, until the promisee finally loses patience and elects to bring the contract to an end."

In my respectful opinion, those observations are entirely consistent with the law as I have stated it above.

50 My attention was directed, for the defendant, to passages in a number of textbooks in relation to limitation of action. In the work "Limitation Periods", 5th ed (2006) by Professor McGee, there is a discussion at [10.001] and [10.002] of the basic rule in contract, that the right of action accrues as soon as there is a breach of the contract, notwithstanding that at that time no damage beyond the purely nominal has been suffered. At [10.006] there is a reference in this context to anticipatory breach and the case of Hochster, which, without elaboration, expresses the view that for limitation purposes time will begin to run as soon as the claimant is able to sue, because that is when the cause of action accrues. Without reference to authority it is said, "Consequently, time begins to run from the anticipatory breach." There is no citation and I am uncertain what the observation means. If by the term "breach" in that context, the learned author is taken to mean the occurrence of events accepted by the innocent party to ground the right to terminate the contract and therefore constituting an anticipatory breach at that time, although the time for performance of the obligation has not arrived, then of course what is said is unexceptional. I was referred to the text, "The Modern Law of Limitation" by Prime & Scanlan, Butterworths (1993), and the discussion of anticipatory breach at 81. There the observations are clearly expressed in terms which I have understood to accord with the law.

51 On the other hand, the text, "Limitation of Actions", by Oughton Lowry & Merkin (1998), at 116 - 118, contains a discussion of limitation of action in relation to anticipatory breach which may engender some confusion, and in respect of which it would follow from what I have written above that I would not agree with the authors if they mean to assert that in a case of anticipatory breach, time will begin to run, for limitation purposes, from the occurrence of the repudiatory conduct alone.

52 I turn then to the way in which the plaintiff's claim is formulated and the potential application of the provisions of the Limitation Act 1935. I do so, as I have indicated, on the basis that as the plaintiff pleads its case the essential combination of facts upon which it relies to ground the accrual of its cause of action seem to be the making of the 1984 agreement; the rights conferred upon the plaintiff in relation to the Sch 2 interests, including Rhodes Ridge, by cl 1(b); and the exercise of the option conferred upon the plaintiff by cl 4, at the earliest on 11 December 1997, by which time it was plain that the defendant would not assist in the process of the transfer, with the result that the partners are pleaded to hold in trust for the plaintiff the Rhodes Ridge interest, and the defendant is required to use its best endeavours to secure the transfer of that interest to the plaintiff. The equities pleaded to arise in favour of the plaintiff are said to spring from its purported exercise of its asserted rights under cl 4.

53 Insofar as the plaintiff's action is founded on the 1984 contract, as I have held, no basis is pleaded by the proposed cl 48.2A or within the proposed cl 42.2B to support an arguable case under the proposed cl 48.2C that would make out of time and statute barred the action commenced by the issue of the writ on 2 March 2001. Insofar as the plaintiff's action is, at least having regard to the rule that equity applies the limitation statute by analogy, founded on the contract, s 38(1)(c)(v) provides for a limitation period of 6 years which would expire at the earliest, in my view, on the pleaded case, on 11 December 2003. As I have already indicated, in my view the pleading in the proposed cl 48.2D, which categorises the plaintiff's allegations about the defendant's conduct as the assertion of an anticipatory breach of cl 4, is not, in my opinion, capable of sustaining separately a fairly arguable limitation defence.

54 The proposed cl 48.3 may be taken as a reference to the limitation period arising out of the categorisation of the plaintiff's action as one against the defendant holding, since the plaintiff's assertion of its alleged rights under cl 4 of the 1984 agreement and by the operation thereafter of cl 1(b), its interest as a partner in Rhodes Ridge on a bare trust for the plaintiff. The proposed pleading refers to an express trust. I have said that I find more understandable, in the circumstances, a categorisation of the trust as one arising by implication from the terms of the contract, or by operation of law, an implied or resulting trust. But what label you put on it matters not for present purposes.

55 Section 47(1) of the Limitation Act provides that in such a case, not founded upon any fraud or fraudulent breach of trust, by par (a), the defendant may enjoy the benefit of the limitation periods under the Act as in a case where he had been sued other than as a trustee. The provision would apply, I think, because under s 47(3), as presently material, the reference to a trustee in the section "includes a trustee whose trust arises by construction or implication of law, as well as an express trustee". Again, the limitation period is 6 years, and, as the relevant trust is pleaded to arise at the earliest on or after the purported exercise of the option, the defendant's capacity to assert an arguable limitation defence is not advanced.

56 In effect, the same observation may be made about the proposed cl 48.4, which seeks to raise a limitation defence based upon the view that the plaintiff's claim is one for or analogous to a claim for the recovery of land. The provisions of s 38(1), directly or by analogy, operate subject to the preceding sections of the Act. So far as material, s 24 provides that a person claiming land in equity is required to commence the action during the period during which an action might have been brought at law to recover the estate, interest or right in or to the land as is claimed in equity. By s 3, "land" is defined to include any interest in land. On the basis that an equitable interest as the beneficiary of the trust in respect of the land, is land for the purposes of the Limitation Act, one is required to consider the operation of s 4 of the Act, the effect of which is that an action to recover land must be brought within 12 years after the time at which the right to bring the action first accrues. In that regard, it seems to me to be unnecessary and unhelpful to refer to the provisions of s 5 which makes particular provision in particular situations as to when the right to bring the action is to be deemed to have first accrued.

57 Again, however, viewing the action in this light, as I understand the pleading by the plaintiff, the equitable interest in Rhodes Ridge is said to arise out of the non-compliance by the defendant with the asserted exercise of the option provided by cl 4 of the 1984 agreement, at the earliest, in my view, in 1997, having regard to the fact that I have been unable to conclude that the factual material advanced by the defendant to support its proposed limitation defence supports a fairly arguable defence on the ground that time began to run, for limitation purposes, at a time before 1997.

58 The conclusion to which I have come, therefore, is that in no form of the proposed pleading of the limitation defence is there a fairly arguable defence raised. The application to amend cl 48 of the defence in the manner proposed must be refused.

59 Before leaving the matter, in case I am wrong in any respect in what I have written above, I should consider the plaintiff's submission that even if there was held to be a capacity to amend to raise a fairly arguable limitation defence, leave should be refused on discretionary grounds.

60 It is put that if leave is granted at this stage, the effect may be to deprive the plaintiff of the capacity to pursue a cause of action against the defendant and leave it without remedy because time would have expired also during which the plaintiff might bring an action against its legal advisers on the ground of their breach of contract and/or negligence for their failure to ensure that the plaintiff commenced its action within time. What is referred to would, of course, be the sort of litigation discussed by the English Court of Appeal in Bell, and whatever might be the position in respect to a contractual claim, I accept the submission made for the defendant, that because the action for the tort of professional negligence could not be instituted until the plaintiff suffers damage, that action could not yet be brought. The damage would be the loss of the capacity to pursue an action good in substance against the defendant. That damage would only occur upon the dismissal of the plaintiff's claim. The cause of action in tort against any legal advisers has not yet accrued. Time has not commenced to run, for limitation purposes.

61 There is more merit, I think, in other submissions made for the plaintiff concerning the exercise of the discretion. It is pointed out that the amendment is sought at a very late stage, in the context of litigation which did not raise the defence in a timely way, or earlier, although what seems to me to have been a great number of eminent lawyers had been involved in the litigation for the defendant and a considerable number of amendments have been made to the defence. This might be said to have built up an expectation in those who represent the guiding will and mind of the plaintiff that this litigation would afford them a substantive trial of their claims. It would clearly be relevant if those hopes were to be dashed by an apparently meritorious defence.

62 It is the fact, of course, that these parties are corporate entities who are the partners in Hancock and Wright, but it was the case when Mr Lang Hancock and Mr Peter Wright were alive, and I think it remains the case now that their children are involved, that these corporate entities are driven in a very real sense by the natural persons who direct their operations. In that regard one should not overlook, I think, the personal strain which must be felt by the people involved, whether they come to give evidence in the proceedings or not. I have no direct evidence that any of the persons to whom I now refer have suffered any personal harm as a result of their involvement in the action, but I would be prepared to accept that generally there is stress and strain arising out of such involvement by persons who may regard the stakes as being high in the pursuit of the action and its defence.

63 These are clearly matters of a less tangible kind which it may not be possible to consider may be adequately compensated by an award of costs accompanying the grant of leave to make the amendment raising the limitation defence. But on the other hand, so far as the defendant is concerned, if it had been my view that there was a fairly arguable defence, I would be asked, if I were to refuse leave, to shut the defendant out of a potentially sound defence on such grounds and I would not, having regard to the state of the evidence before me in this case, have considered it to be appropriate were I of the contrary view, as to the merits of the defence, to nonetheless refuse leave in the exercise of my discretion.

64 However, for the reasons I have given, the application for leave to amend is refused.