Burner v Sanctuary Homes Pty Ltd

[2018] NSWCA 165

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Burner v Sanctuary Homes Pty Ltd [2018] NSWCA 165
Hearing dates:	On the papers
Decision date:	30 July 2018
Before:	Basten JA; Sackville AJA
Decision:	Grant leave to appeal
Catchwords:	CIVIL PROCEDURE – appeal – application for leave to appeal – judgment sum less than $100,000 – limitation defence rejected – whether failure to pay debt constituted fraud – whether fraud discoverable more than 6 years before proceedings commenced – whether applicant’s case more than merely arguable – whether issue of principle – costs of appeal likely to be disproportionate to amount in issue
Legislation Cited:	District Court Act 1973 (NSW), s 127 Limitation Act 1969 (NSW), ss 14, 55
Category:	Procedural and other rulings
Parties:	Lee Burner (Applicant) John Dimov (First Respondent) Sanctuary Homes Pty Ltd (Second Respondent)
Representation:	Solicitors: Hodges Legal (Applicant) Herbert Weller (Respondents)
File Number(s):	2018/56620
Decision under appeal	Court or tribunal: District Court Jurisdiction: Civil Date of Decision: 1 December 2017 Before: Mahony SC DCJ File Number(s): 2017/59583

Judgment

1. THE COURT: In July 2009 the applicant, Ms Lee Burner, entered into a contract with a company, Sanctuary Homes Pty Ltd, to purchase a residential unit in Australia Street, St Marys. The purchase price was agreed at $317,000. In a somewhat informal manner, when settlement occurred in September 2009 there was agreement with the vendor, through its director and shareholder, Mr John Dimov, that the conveyancing firm acting for the applicant would retain $31,700 pending completion of certain works on the premises.

2. Mr Dimov claimed that in mid-September 2009 the works had been completed, but the applicant removed the funds from her agent’s trust account and refused to pay the balance of the purchase price.

3. On 24 February 2017 Sanctuary Homes and Mr Dimov commenced proceedings in the District Court seeking payment of the amount of $31,700. On the plaintiffs’ case in the District Court, the money was due and payable in September 2009. Accordingly, the proceedings were out of time. The applicant relied, in her defence, on s 14 of the Limitation Act 1969 (NSW).

4. The trial judge held that the refusal of the applicant to pay the money constituted “actual fraud”. Further, the judge held that, pursuant to s 55 of the Limitation Act, Mr Dimov did not discover and could not with reasonable diligence have discovered the fraud until on 14 November 2012, being the conclusion of proceedings brought by him in the Consumer, Trader and Tenancy Tribunal. Accordingly, the trial judge held that the limitation period did not commence to run until that date. The judge also held that the failure to pay the money constituted a “continuing fraud” on the respondents.

5. The applicant seeks leave to appeal from the judgment in the District Court requiring that she pay an amount of $47,083 to the respondents (the original contract debt plus interest). As the amount is less than $100,000, she requires leave to appeal: District Court Act 1973 (NSW), s 127(2)(c).

6. In such cases, an applicant must establish more than an arguable case; in order to warrant the expenditure of further costs by the parties and further demands on the public resources for resolving disputes, the applicant must demonstrate that she has good prospects of succeeding on the merits.

7. That standard is achieved in the present circumstances. The finding that there was actual fraud, rather than a dispute as to whether an amount of money was payable was arguably wrong. More importantly, it is by no means clear that there was any element of fraud, let alone one which was unknown to the respondents. On one view, it was an essential element of the respondents’ case that by 17 September 2009 there was no further work required to be done on the unit, so that they then knew that the applicant’s position to the contrary was wrong and patently wrong.

8. There is a further question as to whether the case involves any issue of principle; the Court will not readily grant leave to appeal in relation to amounts well below the $100,000 threshold if the issues are limited to a dispute as to the facts. In the present case, however, there is a serious issue as to whether the cause of action was “based on fraud or deceit” within the terms of s 55(1) of the Limitation Act. There is also an issue as to what is meant by describing a fraud or deceit as not able to be discovered with reasonable diligence and not having been discovered. Particularly is that so where, as the judge found, there was no question of fraudulent concealment.

9. There remains a question as to whether these considerations, which would warrant a grant of leave, outweigh the fact that further costs will be incurred which are likely to be disproportionate to the amount in issue.

10. On one view, that question looms large. The respondents have already brought proceedings in the Consumer, Trader and Tenancy Tribunal and in the Local Court, unsuccessfully. Costs have been assessed against them in those proceedings in amounts totalling some $50,000, which sums are attracting interest. On the other hand, if the applicant is entitled to resist a claim, arguably the same claim which has been raised on two prior occasions, the fact of her earlier successes should not preclude a grant of leave to appeal in relation to the District Court judgment.

11. The applicant’s case is more than merely arguable and, if accepted, would demonstrate a significant misapprehension as to the operation of s 55 of the Limitation Act. There is a public interest in this Court maintaining regularity in the administration of justice.

12. Accordingly, there should be a grant of leave to appeal.

13. In some cases it is appropriate to direct that, in order to save the parties some expense, an appeal may proceed on the basis of the materials in the white folder prepared for the leave application. In the present case there are materials which were before the District Court judge which are not contained in the white folder and which are necessary for the proper disposal of an appeal. Further, it may be expected that the parties will wish to supplement the summaries of argument with more complete written submissions. The parties will have an opportunity to obtain directions from the registrar in relation to these matters.

14. Once those steps are taken, it may be anticipated that the hearing of the appeal would not take more than half a day.

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Decision last updated: 30 July 2018