Bjelica Investments Pty Ltd(ACN 009 598 172 ) v T C Waters Pepper and Co Pty Ltd(ACN 009 607 238) and:Campbell, Andrew Ryrie and:Lee, Thong Sum - [2001] NTSC 94

Bjelica Investments Pty Ltd v TC Waters Pepper & Co Pty Ltd & Ors
[2001] NTSC 94
PARTIES:BJELICA INVESTMENTS PTY LTD
(ACN 009 598 172)
v
T C WATERS PEPPER & CO PTY LTD
(ACN 009 607 238)
AND:
CAMPBELL, ANDREW RYRIE
AND:
LEE, THONG SUM

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING TERRITORY JURISDICTION
FILE NO:211 of 1996 (9622720)
DELIVERED:  1 November 2001
HEARING DATES:  21 August 2001
JUDGMENT OF:  MARTIN CJ
CATCHWORDS:
PROCEDURE
Supreme Court procedure – appeal against Master – whether amendments to Supreme Court Rules have retrospective operation – Supreme Court Act 1979, s 31 – Supreme Court Rules 1987, r 77.05.
Maxwell v Murphy (1957) 96 CLR 261, applied.
LIMITATION OF ACTIONS
Contracts – application for extension of time based on fraud – meaning of “reasonable diligence” – Limitation Act 1981, s 42.
Cubillo v The Commonwealth (1999) 163 ALR 395, applied.
Allen v Vehicle Builders Employees Federation (1978) 22 ALR 510, followed.
Peco Arts Inc v Hazlitt Gallery [1983] 3 All ER 193, approved.
LIMITATION OF ACTIONS
Contracts – application for extension of time based on material fact – material fact discovered after proceedings instituted – whether just to grant extension of time in all the circumstances of the case – Limitation Act 1951, s 44.
Sola Optical Australia Pty Ltd v Mills (1987) 163 CLR 628, followed
Metal Roofing & Cladding Pty Ltd v Eire Pty Ltd [1999] NTSC 104, followed.
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, applied.
LIMITATION OF ACTIONS
General – whether endorsement seeking extension of time is required on the writ – whether statement of claim ought plead extension of time – whether
Reply is necessary – Limitation Act 1981, s 44(4).
Couchman v Power and Water Authority, Supreme Court of the Northern Territory, unreported, Angel J, applied.
CTG Pty Ltd v Yamamori (1992) 5 NTSC 2098, followed.
Ronex Properties v John Laing (1983) QB 398, approved.
Commonwealth v Verwayen (1990) 170 CLR 394, applied.
REPRESENTATION:
Counsel:
Plaintifft:D Francis
First Defendant:  P Ward
Second Defendant:  T Anderson
Third Defendant:  R Bruxner
Solicitors:
Plaintiff:David Francis & Assoc
First Defendant:  Cridlands
Second Defendant:  Clayton Utz
Third Defendant  Noonans
Judgment category classification:      B
Judgment ID Number:  mar01
Number of pages:  17

Mar0132
IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Bjelica Investments Pty Ltd v T C Waters Pepper & Co Pty Ltd & Ors
[2001] NTSC 94
No. 211 of 1996 (9622720)

BETWEEN:
BJELICA INVESTMENTS PTY LTD
(ACN 009 598 172

Plaintiff
AND:
T C WATERS PEPPER & CO PTY LTD
(ACN 009 607 238)

First Defendant
AND:
ANDREW RYRIE CAMPBELL
Second Defendant
AND:
THONG SUM LEE
Third Defendant

CORAM: MARTIN CJ
REASONS FOR JUDGMENT
(Delivered 1 November 2001)

Background

The plaintiff claims damages from the first defendant (“the agent”), the second defendant (“the vendor”) and the third defendant (“the solicitor”) arising from its purchase from the vendor of a block of land in Darwin.
It asserts that the agent, as agent for the vendor, represented the land as an area substantially in excess of its true area and that the plaintiff suffered loss as a consequence.
It was granted leave, by consent, to file and serve an amended Statement of Claim on 12 September 2000. It pleaded that the contract for sale and purchase was entered into on 15 September 1993, that the sale was completed on 15 October 1993, and that the true area of the land was not discovered until after completion.
The writ was filed on 18 October 1996. The claims against the agent and the vendor were based on causes of action in fraud, reckless misrepresentation, breach of contract and misleading and deceptive conduct in breach of provisions of the Trade Practices Act (Cth) and the Consumer Affairs and Fair Trading Act 1990 (NT).
As against the third defendant, the plaintiff alleges breach of contract, and negligence in the discharge of his duty as a solicitor.
The agent applied by summons dated 11 October 2000 for orders as follows:
“1. Judgment for the first defendant.
In the alternative:
2.The amended statement of claim dated 8 September 2000 be struck out in so far as it relates to the first defendant.
In the further alternative:
3.Paragraphs 14, 15, 16, 17, 18, 19 and 20 and the prayer for relief contained in the amended statement of claim dated 8 September 2000 be struck out in so far as they relate to the first defendant.
And further:
4.That the plaintiff pay the first defendant’s costs of the application and of the proceeding.
5.Such further or other orders as the Court sees fit.”
In an affidavit sworn on 28 September 2000 in support of that summons, the solicitor for the agent placed in evidence a copy of the contract between the plaintiff and the vendor raising an issue to be considered later. Its primary submissions were that the Limitation Act barred the plaintiff’s way.
On 15 February 2001 the Master refused judgment, but made orders striking out the references to the agent in the amended Statement of Claim, par 15, par 16, par 17 and par 19, that is, allegations of breach of contract and claims pursuant to the statutes. The effect was to strike out those causes of action against the agent. (They remained on foot as against the vendor). That was done because of the operation of the three year limitation period in the Limitation Act s 12, Consumer Affairs and Fair Trading Act 1990 (NT), s 91(2) and Trade Practices Act s 82(2), and the failure of the plaintiff to secure any available extension of time under s 44 upon consideration of its contemporaneous applications to the Master. No extension of time is available in respect of the claim under the Trade Practices Act. The application of the Territory statute to the contract here in issue has not been argued.
The plaintiff filed a notice of appeal, but withdrew it upon the matter coming on for hearing before me. The agent appealed against the Master’s refusal to enter summary judgment, and seeks judgment against the plaintiff in respect of all claims made against it.

Nature of Appeal from the Master

Prior to the amendment of the Supreme Court Rules 1979 (NT) of 18 October 2000 an appeal from the Master was by way of rehearing de novo, that is, by way of a fresh hearing so that the parties were entitled to begin again and adduce new evidence (r 77.05(7)). It was provided that, subject to proper objections to admissibility, each party could rely on an affidavit used before the Master, and evidence given orally before him, and the subject matter of the appeal being argued afresh upon that material. By special leave of the Judge hearing the appeal, reliance could be placed on an affidavit or oral evidence not used or given before the Master thus the right to adduce new evidence in the course of a rehearing de novo strictly so called was modified to the extent that special leave was required.

By the amendment a person affected by a judgment made by the Master may in the case of a final judgment, appeal to a Judge or in the case of an interlocutory judgment appeal to a Judge, but only with leave of a Judge. It is further provided that an appeal under the Rule is an appeal in the strict sense, that is, whether the decision the subject of the appeal was right on the material before the Master.
The principal points of difference between the old and new Rules are that under the old, no leave was required for an appeal against an interlocutory judgment and additional material, with special leave, could be placed before the Judge.
The question that arises in these proceedings is whether the amendments have a retrospective operation. The agent’s summons invoking the jurisdiction of the Master was filed on 11 October 2000, the old Rules were repealed and the new Rules came into operation on 18 October 2000 and the Master’s decision was made on 15 February 2001. It is not disputed that the application was made when the summons was filed and the submission is that as at that date the agent had a vested right to a full judicial review of the Master’s decision thereon.
The Rules are silent as to whether the amendment had retrospective operation. The question arises in relation to the operation of the Rules of this Court which are made by the Judges under authority delegated to them by the Parliament, and their interpretation is subject to the same principles as an Act. The power delegated to the Judges is to make rules in respect of “practice and procedure” so that attention is directed to the general rule that statutes are not to be given retrospective operation, but that does not apply to statutes that are concerned with matters of procedure only.
In Maxwell v Murphy (1957) 96 CLR 261 Dixon CJ at p 267 cited with approval that which was stated by Mellish LJ in the Republic of Costa Rica v Erlanger (1876) 3 Ch D 62: “No suitor has any vested interest in the course of procedure, nor any right to complain, if during the litigation the procedure is changed, provided, of course, that no injustice is done.” In the same case at p 286 Fullagar J said that:
“… the distinction is probably best stated by saying that it is between statutes which create or modify or abolish substantive rights or liabilities on the one hand and statutes which deal with the pursuit of remedies on the other hand. In the former class of case there is a presumption against retrospective operation in the sense explained above. In the latter class of case, there is no such presumption: on the contrary, the presumption is that the enactment applies in all proceedings commenced after it became law, and it may be right to construe it as applying even in proceedings commenced before it became law”.
In this case the right of appeal was created by s 31 of the Supreme Court Act 1979 (NT). The amendment modified that right as regulated by the original rule. A party instituting an appeal from a decision of the Master prior to the amendment had the right to have the whole of the material before the Master plus any other material allowed by leave put before the Judge upon the hearing of the appeal and to have a new hearing. That is no longer the case. To give to the amendment a retrospective operation could result in an injustice to an appellant or respondent or both. I will deal with the first defendant’s appeal by reference to the former rule.
If I be wrong about that, then I would grant leave. The issues raised are important and an injustice may arise if the Master erred in not entering judgment on the agent’s application. However, neither party sought to introduce any additional evidence on the appeal.
Limitations Act Issues
The agent contends that the causes of action arose, at the latest, upon completion of the contract for sale, 15 October 1993, when the plaintiff paid or caused to be paid to the second defendant the purchase price and received in exchange a registrable transfer of the land and the title. It was then that the plaintiff suffered the loss giving rise to the cause of action in each case. The Master’s finding to that effect is not called in question. The date of registration of the transfer was irrelevant (Halsburys Laws of Australia Limitation of Actions, par 255-45 Accrual of causes of action).
It seems to me that since all the causes of action arose more than three years prior to the limitation period expiring, the agent had made out a prima facie case for judgment on all of its claims, whether under r 23.01 as being frivolous or vexatious or r 23.03 (Doundoulakis v Antony Sdrinis & Co (1989) VR 781 at 782). But the exercise of the power is discretionary and is to be attended with great caution (see the various cases referred to by O’Loughlin J in Cubillo v The Commonwealth (1999) 163 ALR 395 commencing at p 415).
Upon the hearing of the agent’s appeal, the plaintiff again applied for an extension of time so as to enable it to reinstate its claims against the agent for the same causes of action as those struck out by the Master. The grounds were different from those upon which the Master refused the application for an extension of time. The agent also sought to demonstrate that it fell within the provisions of s 42 of the Limitation Act in relation to its cause of action based on fraud or deceit. It provides that in such a case the time which elapses after a limitation period fixed by the Act for the cause of action commences to run, and before the date on which the person having the cause of action first discovers, or may with reasonable diligence discover, the fraud, deceit or concealment, as the case may be, does not count in the reckoning of a limitation period for an action on the cause of action by him against a person answerable for the fraud, deceit or concealment.
Those applications were argued at the same time as the appeal, and it seems to me must be dealt with first otherwise the plaintiff may be shut out from having its case tried.
Since s 44 operates upon an expired limitation period, it is convenient to deal first with the plaintiff’s evidence and submissions in relation to s 42 which established the limitation period for those particular causes of action. The plaintiff advances its case upon the evidence of Mr Bjelica in his affidavit of 18 December 2000. He deposes that he first became aware of the discrepancy between the area of the land as represented to the plaintiff and the actual area of the land on or about 20 October 1993 when he was informed by a plan attached to a letter from a firm of surveyors instructed by the plaintiff that the total area of land was 10,200 square metres and not 12,180 square metres as he says was represented. As previously outlined, the limitation period commenced to run on the date of completion of the contract for sale, but by operation of s 42, the period of three years is extended to the date on which the person having the cause of action first discovers, or may with reasonable diligence discover, the fraud. The plaintiff says he first discovered the fraud on 20 October. The agent argues that with reasonable diligence it would have discovered the fraud prior to completion. As to the meaning ascribed to the words “reasonable diligence” see the reference by Smithers J in Allen v Vehicle Builders Employees Federation (1978) 22 ALR 510 at 513 and the cases referred to - “not the doing of everything possible, but the doing of that which, under ordinary circumstances and with regard to expense and difficulty, could be reasonably required.” In this case I think that it means the doing of that which a prudent buyer “engaged in the business of purchasing, subdividing and/or developing land for resale” (Statement of Claim par 2) ordinarily would do.
The plaintiff bears the onus of showing that it could not have discovered the mistake if it had exercised reasonable diligence, Peco Arts Inc v Hazlitt Gallery [1983] 3 All ER 193. (If I might say, with respect, an entertaining judgment to do with the authentication of art works). Clause 8.1 of the contract reserved to the plaintiff as purchaser the right to conduct a survey of the land to ascertain the boundary and area of it prior to completion. By its requisitions on title prior to completion, it asserted that it intended to carry out searches – “Final searches will be made and the result must be satisfactory to the purchaser”. The true area of the land was easily discovered by a simple expedient able to be undertaken by any prudent purchaser of land. The plaintiff has failed to show why that was not done.
A copy of the Certificate of Title to the land obtained upon search of the public record at the Lands Title Office in Darwin is in evidence. It shows the area of the land. The application to extend the time in relation to the cause of action based on fraud pursuant to s 42 of the Act is refused.
I should add here that the solicitor pleads that he sent a copy of the search of the title to the plaintiff prior to completion, but there is no evidence on that point.
I turn now to the question of the application of s 44 to the causes of action in respect of which an extension of time may be sought. The plaintiff has always quantified its claim for damages in the Statement of Claim and amended Statements of Claim. In that for which leave to amend was given on 12 September 2000, the claimed loss amounts to $120,750, for which very detailed particulars are given comparing anticipated sale prices and expenses associated with the subdivision and sale of the area of land as represented and as it was. The application for extension of time is supported by the solicitor for the plaintiff deposing that in early April 2001 he had received a written report and valuation prepared by a certified practising valuer. The valuer assessed the immediate loss at the time of settlement of the purchase through misrepresentation as to the area of land, without taking into account any proposed subdivision of the land, at $70,000 and the loss caused to the plaintiff through its inability to proceed with its plans to subdivide the land caused through the misrepresentation, at $90,000. In arriving at the second valuation, the loss was assessed taking into account a valuation of the land less the costs of sale and subdivision. I do not perceive there to be any difference of any significance in the approach taken by the valuer in the second basis of assessment, than that taken by the plaintiff in the Statement of Claim. However, the first basis of assessment is new and may be relevant depending upon the view the court takes at trial as to the extent of the plaintiff’s loss for the purposes of this case.
The first consideration is whether the contents of the valuer’s report and the report are material facts within the meaning of s 44. The evidence is that it was handed to Mr Bjelica, a director of the plaintiff, by his solicitor on 26 April 2001.
In Sola Optical Australia Pty Ltd v Mills (1987) 163 CLR 628 at 636 the High Court identified a fact as being material to the plaintiff’s case:
“ if it is both relevant to the issues to be proved if the plaintiff is to succeed in obtaining an award for damages sufficient to justify bringing the action and is of sufficient importance to be likely to have a bearing on the case.”
In that case the material facts were the contents of a medical report and the medical report itself. Prior to its disclosure to Mrs Mills by her solicitor she knew that she had suffered an injury to her right arm and the report went to an assessment of the effect of the disabilities upon her capacity to function. It was held that such a fact was material to the issue of damages. The report itself was also capable of being material to Mrs Mills’ case in the sense that it represented available evidence that could be called in support of it. The report was disclosed to Mrs Mills after expiry of the limitation period, but before the institution of proceedings.
The plaintiff also referred to the decision in Pomeroy v Thwaites Witham Pty Ltd [2000] SASC 44 in the Full Court of South Australia. That case had to do with a fact ascertained by the plaintiff comprising a valuer's report and its contents which again was obtained after the limitation period expired and before the institution of proceedings. Here, it cannot be doubted from the way in which the plaintiff particularised its claim that it had ascertained the fact of its loss and had assessed it on a particular basis. It was in a better position than Mrs Mills, presumably arising from its business experience and had assessed damages sufficient to justify its bringing the action, but that does not preclude its application for relief.
As to a case in which the fact was not ascertained by the plaintiff until after the institution of the proceedings, as here, see Ward v Walton (1989) 66 NTR 20. The medical report there relied upon had come into existence prior to the institution of the proceedings, although the plaintiff did not find out about it until afterwards. See also Fersh v Power and Water Authority (1990) 101 FLR 78.

In this case the valuer’s report was not created until after the proceedings were instituted. In Metal Roofing & Cladding Pty Ltd v Eire Pty Ltd [1999] NTSC 104 the Court of Appeal dismissed an appeal against a trial Judge’s granting an extension of time where the cause of action accrued in November 1990, the limitation period expired three years later, the proceedings were commenced in February 1995 and the material factor relied upon was a report of a firm of accountants prepared in May 1998. The report was based on material which had been provided by the plaintiff to the accountant. The Court of Appeal accepted the trial Judge’s finding that there was a close analogy between the medical report in Sola Optical and the accountant’s report in that case. It applied the decisions of the High Court that:
1.there is no requirement that there should be some interaction between the ascertainment of the material fact and the plaintiff’s decision to sue; and
2.that a fact is material to the plaintiff’s case if it is relevant to the issue and is likely to have a bearing on the case.
Taking into account that authority in particular, I hold that the contents of the valuer’s report, especially as to the plaintiff’s loss at the date of completion, and the report itself are material facts within the meaning of the statute and that the requirements of s 44(3)(b)(i) are satisfied. There remains the question of whether in all the circumstances of the case it is just to grant the extension of time. In the context of potential abuse, the High Court said in Sola Optical at p 637 that:
“The breadth of the residual discretion vested in the court provides an ample safeguard against abuse and provides that flexibility which will facilitate the achievement of the legislative purpose, namely, a just result in a wide range of circumstances”.
In Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 it was held by Toohey and Gummow JJ that where the conditions for the exercise of the discretion have been satisfied, the applicant still bears the legal onus of showing that the justice of a case requires a discretion to be exercised favourably, and to do so must prove that an extension beyond a limitation period would not result in significant prejudice to the prospective defendant. Such a provision does not require a weighing process between the potential prejudice to the applicant and the prospective defendant. In their judgment at p 547 their Honours refer to the evidentiary onus on the prospective defendant to raise any considerations going against the exercise of a discretion, but go on to say that the ultimate onus of satisfying the court that time should be extended remains on the applicant.
The question whether any relevant prejudice to the agent is likely to prevent a fair trial is to be answered in the context of the application to extend time (Halsburys Laws of Australia Limitation of Actions par 255-380). I am uncertain as to whether the parties have fully dealt with this aspect of the matter and will hear their submissions.
Exclusion Clause
In seeking judgment the agent also relies upon cl 13 of the contract for sale by which the purchaser acknowledges that it has not relied on any representation of the vendor, the vendor’s agent or any other person inducing it to enter into the contract. I note that it is not put forward in the agent’s defence. In any event its meaning and effect and whether it operates as an estoppel against the plaintiff is a matter which must be left until trial when all the facts are found (for a discussion on a like provision see Byers v Dorotea (1987) 69 ALR 715 at 722).
Pleadings
The writ has no endorsement on it as required by s 44(4) of the Act. That is because the view was taken by those advising the plaintiff that the limitation period did not commence to run until registration of the transfer. The limitations defence was raised by the agent in its Defence, as it must have been under r 13.07(1)(a).
A writ is a document for the purposes of the general amendment provisions in O 36 (r 36.01(2)). In Couchman v Power and Water Authority (Supreme court of the Northern Territory, No 196 of 1988, unreported) Angel J said at par 8:
“In my opinion, the absence of an endorsement under section 44 is a mere irregularity and capable of amendment. It is procedural. If the plaintiff had proceeded with the action as presently constituted and the defendant had not pleaded the statute, I see no reason why the action could not validly have proceeded to judgment. If the defendant had entered a defence pleading the statute, I can see no bar, subject to questions of prejudice, to the plaintiff having added an application to extend time by way of amendment.”
Just why it is thought necessary or even important to remedy such an irregularity when the issue has been raised in the pleadings and an application has been made to extend the time is not apparent. Indeed, in CTG Pty Ltd v Yamamori (1992) 5 NTSC 2098 the Court of Appeal at 2106 said:
“It was unnecessary for the plaintiff to seek to amend the endorsement on the writ of summons by adding the words “The plaintiff seeks an extension of time pursuant to s 44 of the Limitation Act”. No doubt the plaintiff took that course because of the terms of s 44(4) set out above. That provision is permissive in terms and has application at the commencement of the action. It has no application where the action has been instituted and an application to extend the time for institution of the action is granted.”
As to the Statement of Claim, r 13.02 requires only that the facts necessary to constitute the cause of action be pleaded (Williams, Civil Procedure Victoria, par 13.02.15). The limitation provisions are procedural and only deny the remedy, they leave intact the underlying right. Unless the plea is raised in defence the matter does not arise for consideration (Ronex Properties v John Laing (1983) QB 398, and per Toohey J in Commonweath v Verwayen (1990) 170 CLR 394 at 473.
Issue is joined between the parties. I do not consider that a Reply was necessarily called for. That depends upon the operation of r 13.07(1) in the circumstances of the case and whether the plaintiff seeks the benefit of the exceptions under Part III of the Act. Without a Reply all the material allegations in the defence are taken to be denied and put in issue. A Reply which merely joins issue is unnecessary (r 13.13(2)). No reply has been filed and served, but the purpose of pleading the exception in s42 has been met by the application made pursuant to that section and now dealt with. Either party may make such interlocutory applications as are appropriate in the circumstances of the particular case.
I have decided that the plaintiff cannot receive any benefit under s 42, but that it has proved material facts within s 44(3)(b)(i). Whether the time to commence proceedings should be extended is unresolved. The outcome of the agent’s appeal from the Master depends upon that.
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