Douglas Morris Investments Pty Ltd v Australia and New Zealand Banking Group Limited

[1989] HCATrans 279

~

~ ';~~

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No B34 of 1989

B e t w e e n -

DOUGLAS MORRIS INVESTMENTS

PTY LTD

A1Jrylicant

and

AUSTRALIA Al.'ID l1EW ZEALAND

BAJ.'IKING GROUP LIMITED

Respondent

Application for special
leave to appeal

BRENNA..~ J GAUDRON J McHUGH J

Douglas

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBER.i.'tl\

ON FRIDAY, 17 NOVE:1BER 1989, AT 12.39 PM

Copyright in the High Court of Australia

C2T46/1/JH 1 17/11/89

MR P.D. ROBIN, QC:  If the Court pleases, I appear with my

learned friend, MR T.W. QUINN, for the applicant.

(instructed by C.R. Ryan)

MR J.D.M. MUIR, ~C:  If the Court pleases. I appear with my

learne friend, MR J. SULLIVAN, for the respondent.

(instructed by Horris Fletcher & Cross)

BRENNAN J:	Yes, Mr Robin?
MR ROBIN:	Your Honours, this is an action which raises

important questions under sections 10 and 26 of

the LIMITATION OF ACTIONS ACT (QUEENSLAND) 1974.

Those provisions are reflected in corresponding

provisions in other jurisdictions although not always

word for word and not always to identical effect.

The applicant was guarantor to the Bank of

indebtedness of another company described in the

documents as "the Bank's customer".

BRENNAN J:	We are familiar with the judgments, Mr Robin.
MR ROBIN:	Your Honour, the reasons why we submit that the case is important are summarized at page 3 of the
outline of argument which I take it Your Honours have.
The Full Court took the view that even should the
Bank's claim to a money judgment be entirely
statute-barred, nevertheless, its securities remained
intact and enforceable not only by such means of
self-help as the Bank might be able to resort to but with the assistance of the court. In our submission,
that is a startling result and it is inconsistent
with such authority as there is. The general area
is one where there is a paucity of authority,
particularly in this Court, which considered
one of the questions in the COMMERCIAL BANK case in 1906 and which has had occasion to refer to the
principle of equities applying the
STATUTE OF LIMITATIONS by analogy on three occasions
although not exhaustively and not in a way which
lends any assistance here.
BRENNAN J:	Mr Robin, what is it that you say is barred by

the statute?

MR ROBIN:  Your Honour, we say that claims to money amounts

are barred by the statute.

BRENNAN J:  There is no dispute about that, is there, on

the findings of the Full Court?

MR ROBIN:  No. We also say that the proceeding brought

by the Bank is an action upon a speciality under

section 10(3),which can be found at page 1 of the booklet of authorities we have had prepare~ if it is not an action on a contract under section 10(1).

C2T46/2/JH	2	17/11/89
Douglas

BRENNAN J:	What relief makes it an action under section 10(3)?
MR ROBIN:	The whole basis of the action was the Bank's

rights under certain scrip liens which in the

litigation to date have been treated as deeds and we

say for that reason the action should be regarded

as one on a speciality. Of course, section 10(6)(b)

excludes from the coverage of the section claims

to equitable relief which is what the Bank sought

here; declarations and injunctions were sought and

obtained. But, our respectful contention is that
subsection 6(b) brings back the claims to

equitable relief through its acknowledgment of the

way in which equity works by analogy, we submit.

., BRENNAN J: Now, can you just spell that out in more detail?

How is it that section 10(6)(b) applies to any

of the relief that is sought in this case or any of

the relief which the court has granted in this case?

MR ROBIN:  Well, what the court granted was injunctive and

declaratory relief which comes within the

description "injunctive or other equitable relief".

(Continued on page 4)

C2T46/3/JH	3	17/11/89
Douglas

McHUGH J:	But what is the analogy that you rely on?
MR ROBIN:	The analogy which we rely on is that the Court's

assistance is invoked for the purpose of the

Bank's being in a position to pay itself by gaining

possession of the Pioneer shares which are

part of the security in contention. They were
only part of it, Your Honours will recall.

Mr O'De~'s affidavit which was filed shows the bank has more than $1 million in its hands

otherwise and this is a kind of top-up exercise.

BRENNAN J:  Now, if you take me to the part of the judgment

which, in your submission, is the granting of

relief which is barred by the statute.

MR ROBIN:  Your Honour, Mr Justice Dowsett - - -

BRENNAN J:  I am sorry, part of the order.

MR ROBIN:  Yes, Mr Justice Dowsett's order is at page 79 of

the record.

McHUGH J: But it is the order of the Full Court at 128 you

have got to deal with, is it not?

MR ROBIN:  Yes, well that, in ;fact, sets out in a preamble

what Mr Justice Dowsett did in full and the

Full Court then varied that in some particulars.

BRENNAN J: Well, now, could you draw our attention to the

parts of that order which, in your submission,

grant relief which is barred by some and which

section of the statute.

MR ROBIN:  I am grateful for Your Honour's reminder that it

is necessary to refer not only to section 10

but to two provisions of section 26 because those

also bar a mortgagee's rights and, we submit,

they are relevant here. Section 26(1) provides

that:	An action shall not be brought to recover a
principal sum of money secured by a mortgage
or other charge on property whether real or personal ..... after the expiration of twelve years from the date on which the right to
r·ecei ve the money accrued.

BRENNAN J:  We do not have to worry about that, do we?

MR ROBIN:  Our submission is that Your Honours do have to

worry about that because one of the errors made by

the Full Court was to narrowly construe provisions
in section 10 I have mentioned, this section and

the following subsection of section 26 in a way

C2T47/l/DR	4	17/11/89
Douglas

which is inconsistent with the proper way of

equities approaching the statute of lioitations.

BRENNAN J:  We do not have to worry, do we, about an action

to recover a principal sum?

MR ROBIN: Well, in form the action was not that but in

substance, we submit, it was,or it was close to it

because the Bank's getting the principal sum in

its hands is so materially advanced by what the

court has done.

McHUGH J: No, it is not. It is just getting some sheets of

paper. What it does with them is a different

thing. Is not one of your problems, in this case,

that it is the terms of the order, that the order

does not indicate anything which would lead one to

the conclusion that the order would conflict with
the LIMITATION OF ACTIONS ACT? You may have some

other arguments at some later stage.

MR ROBIN:  Your Honour, it is important that those arguments

be advanced at this stage.

McHUGH J: No, it is important that the Court does not decide

hypothetical questions.

(Continued on page 6)

C2T47/2/DR	5	17/11/89
Douglas

:MR ROBIN: Certainly, Your Honour. Could I at this stage

draw Your Honours attention to the third of the

provisions which we say is important as a

specific statutory bar and that is in section 26(2),

which deals with foreclosure actions in respect of

mortgaged personal property. It is our submission

that this proceeding is a foreclosure action or

would be treated in equity applying the statute by

analogy as such.

BRENNAN J: It is nothing like a foreclo.sure action. There is no suggestion that the owner of the property is

having his title extinquished or that the chargee

is acquiring the title.

1:1R ROBIN: That is correct, Your Honour, but - - -

BRENNAN J: Well then, the analogy with a · foreclo.sure action

is at its highest is extraordinarily tenuous.

1:1R ROBIN:  Your Honour, the proposition which we submit the

Full Court ought to have acc~ed to is of the kind

mentioned in WALTERS V WEBB trom which we have set

out an extract at pages 2 to 3 of the outline.

That was a case where Jeclaratory relief was sought, a declaration of title,and the Court of Appeal were

astute to hold that the statute of ILnitations applied

to the action, although it did not directly describe

it, because the result of success in obtaining that

declaration as to title would be to give the
claimant a foot in the door, which limitations

provisions did not allow him to have.

BRENNAN J:  Mr Robin, can I take you back to the question I

asked before. Is there any provision of the order

that has been made by the Full Court, as on page 128

and following, which has been made in facial

contradiction to any of the provisions of the Act?

MR ROBIN:  We would submit that that is so, Your Honour, that

the injunction - - -

BRENNAN J: Which injunction?

MR ROBIN:	The series of injunctions on page 130 - - -
BRENNAN J:	Well, which, - the injunction in paragraph 5?

1:1R ROBIN:  Yes, Your Honour. That injunction restrains my

client from exercising rights in relation to property

which is declared by section 42(12) of the

ACQUISITION OF SHARES CODE -that is set out at the beginning of the booklet at page 3 -to be held for it.

The declarations - - -

.

BRENNAN J: Well,which section of the LIMITATIONS ACT bars

that belief?

C2T48/l/CM	6/7	17/11/89
Douglas

:MR ROBIN:  Your Honour, we would say 26(2).

BRENNAN J: That is the foreclosure provision?

MR ROBIN:	Yes, Your Honour.
BRENNAN J:	Why does a foreclosure provision bar that?
MR ROBIN:	Because we say it is a provision which - we say

the notion of foreclosure ought to be not given a

restrictive technical interpretation, and that that

is in line with authorities.

BRENNAN J:  But it is not a question of a restrictive interpretation.

It just has no relationship to a foreclosure. I mean,

what is the nature of foreclosure? What connotation

would you give the term? Give it the most extended

meaning of which it is capable, how does it

incorporate this?

MR ROBIN:  It incorporates this because what is done here

is something which leads to a foreclosure - which

renders a foreclosure possible, which otherwise

would not be.

BRENNAN J:  How?

McHUGH J: It restrains you from exercising some rights.

MR ROBIN:	Yes, Your Honour.
McHUGH J:	How can that be a foreclosure actioned by the bank?
MR ROBIN:	It is given in association with other declarations

which establish an entitlement of the Bank to

possession of scrip. This takes us back to the earlier

pages, 128 where there is the declaration that

scrip liens apply to the scrip, which is in contention;

the second declaration declares that the scrip is
charged; the third declaration is the one which the

Full Court interfered with; the fourth declaration

is most important, it declared the plaintiff entitled

to possession of the share scrip which was in

contention. So that the fourth declaration is

probably the most potent. In proceedings to which

Besser and Pioneer were parties, if that declaration

is made, the result of it will plainly be that the

share scrip comes into possession of the Bank.

McHUGH J: Well, let us assume that it does come into the

possession of the Bank.

MR ROBIN:	Yes.
McHUGH J:	How does that then attract anything that is analogous

to foreclosure?

MR ROBIN:  Your Honour, our argument is that it is a necessary

first step.

C2T49/l/LR	17/11/89
Douglas
McHUGH J:	To what?
MR ROBIN:	Towards foreclosure.
BRENNAN J:	How?
MR ROBIN:	Because the Bank is armed with rights under its

scrip liens such as powers of attorney which, once

it has the scrip, can be used to endorse a transfer

on the share transfer form on the back of them.

BRENNAN J:  Yes. It is the first step towards the exercise

of a power of sale.

MR ROBIN:  Yes.

BRENNAN J: Well, that is not foreclosure.

McHUGH J: That is a long way removed from foreclosure.

MR ROBIN:  Your Honour, we are forced to accept that, technically -

if a technical view is taken of foreclosure, those

observations are correct, but we submit that

particularly with equity, acting by analogy, that is

not the approach which ought to be taken.

(Continued on page 10)

C2T49/2/LR	9	17/11/89
Douglas

MR ROBIN (continuing):  May we refer Your Honours, for

example, to the case of FIRTH V SLINGSBY, which

concerned not declarations but specific

performance. An extract from the judgment of

Mr Justice Stirling is set out at page 145 of the

record and it concerned a claim by a mortgagee,

an equitable mortgagee, who could not get paid because his claim to moneys was statute barred.

It concerned a claim by him for specific performance

of an agreement to execute a mortgage but

Mr Justice Stirling denied him that having noted that:

the Statute of James would have been a

complete bar -

to any action to seek the money. His Honour went on

to say it would be completely:

contrary to the principles on which a

Court of Equity acts, or to the way in

which it obeys or follows the STATUTE OF

LIMITATIONS, that, the remedy at law being

barred, the Court should decree specific

performance or give effect to these

stipulations.

We have given on the following page three further

authorities in which equity has acted in that way

to apply the statute by analogy.

BRENNAN J:  Well, that is the basis of the argument, is it,

that the relief that is framed or the relief that is

granted by paragraphs 4 and 5 of the order is a grant
of relief by way of what is analogous to

foreclosure on the part of the Bank?

MR ROBIN:  We do not base it as narrowly as that. We say

one looks at also section 10(3) and section 26(1).

Just as in relation to foreclosure it is a foot-in-

the-door argument, so is it a foot-in-the-door

argument in relation to the collecting of moneys.

BRENNAN J: Well,is this the proposition: that if the relief

that is given puts the Bank into the position

of exercising its powers without further curial

assistance to recoup the amount of its debt then the

Court will not grant the relief because of

section 10?

MR ROBIN:  Section 10 or section 26 because what the Court

is being asked to do is take a first curial step.

Our submission is the Court will refuse the relief

because it is the first step.

C2T50/l/JH	10	17/11/89
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BRENNAN J:  Now, is there any authority which suggests that

such a principle, that is the first-step argument,

is applicable to the operation of these specific

provisions of the LIMITATIONS ACT?

(Continued on page 12)

C2T50/2/JH	11	17/11/89
Douglas

MR ROBIN:	There is no authority in relation to these specific provisions, but there is authority in relation to other specific provisions.
It includes WALTERS V WEBB, which is the
case from which a quotation is given in the
outline of argument and it includes some authorities collected by Mr Justice Young
in his book Declaratory Orders. There is
a reference to this at page 147 of the
record in paragraph (f)(i). Those cases include HOGG V SCOTT, which was the case of
a police officer who had been suspended
without proper warrant, he alleged, and he sought declaratory relief to challenge his
suspension and to declare that he had always been entitled to certain emoluments
and one of the principles of tl'le ea~-,;;mich is !)icked up
in the book is that a claim for declaratory
relief should not be permitted as a way around a time limitation.
GAUDRON J:	Mr Robin, when you speak of those cases

you speak in terms which suggest that the

refusal of relief was put on discretionary

considerations rather than on the actual

terms of the statute.

MR ROBIN:	Yes, that is so, Your Honour.
GAUDRON J:	And are you then driven to the position in

this case that you are talking about a

discretionary consideration rather than an

application of the statute?

MR ROBIN:  We submit no, Your Honour, because the

Full Court has effectively held that there

is no room for the discretion. At the top

at page 116 of the record, for example, is

a passage which, as we read it, has the

Full Court saying that equity acts by

analogy only in proceedings to recover debts.

McHUGH J: But you have got to go so far as to say

in this case that if the scrip liens were

not by deed then these orders would be action

on a contract by analogy under section 10(1).

MR ROBIN:  Yes, although we would still say that they

would come under section 26, which appears not

to distinguish between a mortgagee's rights

under a deed and a mortgagee's rights under

a simple contract.

The passage at the top of page 116

in the reasons is one which we submit is unsound

in principle. I have just come from referring

Your Honours to cases of various kinds including

C2T51/l/JM	12	17/11/89
Douglas

FIRTH V SLJNGSBY and ALLCARD V SKINNER where

the statute was applied by analogy, although

the claims were not ordinary debt claims.

At page 117, about point 5, the Full Court

further limits the approach which it says ought

to be taken to the statute of limitations by

what we submit is an unduly restrictive approach.

(Continued on page 14)

C2T51/2/JM	13	17/11/89
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MR ROBIN (continuing): It is said by Their Honours that the

Act ought to be approached as a series of discreet limitation provisions which all must be looked at independently and that if a particular provision

literally does not apply because, for example, in a technical sense a foreclosure is not sought, or in a technical sense an order for money judgment

is not sought, the provisions do not apply. The

impact of that is made all the greater by the

approach at the top of the previous page 116 that

equity will take no action itself to enlarge tl-ie a_,ry:_:,lieo.tion

of the provisions and our submission is that that is

unsound in principle and the question ought to be

examined in this Court.

• • BFENNAN J: But what are the propositions for which you contend?

I understand, first of all, the analogy argument,

that one is entitled to construe these terms not in

their full strictness, but by looking for relief which

is analogous to that which is barred by the statute.

And the question on that aspect is whether or not

the relief that was granted here is analogous or no?

The second argument is that the Court will not grant
a foot-in-the-door relief when the substandve result,

by reason of self-help on the part of a successful plaintiff, will be to obtain for himself relief of

a kind which is barred by the statute.	Now are those
the two propositions?

MR ROBIN: Yes, Your Honour. Those are not all. Might I

amplify what Your Honour has said by also referring

to the passages from Dr Spry's book which is set out

at page 147 - - -

BRENNAN J: Let us understand what the propositions are,

Mr Robin, because otherwise we are going to read

a mass of things without understanding what we are

looking for. What are the other propositions?

MR ROBIN:  That declaratory relief in particular

is not available unless there is some other relief

which would be available to the claimant. There

is some authority for that in Australia in the

judgment of Sir Leo Cussen in LEVY V WILLIAMS. The

passage in question or the burden of it, is set out

at page 145 in a quotation which is set out there,

where His Honour said ofa

A declaration and an associated injunction (that)

neither of these would be granted unless they

were based on some right ... to which, at the

appropriate time, effect could be given.

We submit that, in this case, where declarations and injunctions issued, there was no other right to which

effect could be given in favour of the Bank.

C2T52/l/CM	14	17/11/89
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Mr Justice Dowsett, at first instance, took the

same approach.

BRENNAN J: Was th.ere not the right of the chargee to possession

of the script?

MR ROBIN:	We say no, Your Honour, once the indebtedness was
statute barred.

BRENNAN J: Well that comes back to one of your first two

propositions.

MR ROBIN:  Yes, although there are authorities here in

the COMMERCIAL B.Af.TK case in this Court in 1906,

the property charged was uncalled capital of a

a liquidation calls were made on the shares and

company. This is at page 5 of the booklet of cases.

the question was who should get access to that fund.

(Continued on page 16)

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MR ROBIN (continuing):  The mortgagee claimed that it should

have the fund but failed to an extent because the

court found that a certain demand which had been made

caused indebtedness to become statute barred pro tanto.

The declarations which the court formulated in the

end contained provisions to ensure that the bank

did not get its hands on any more of the uncalled

capital than represented indebtedness which was not

statute barred. And I refer to page 10 of the booklet.

It is pages 66 and 67 of the actual judgment.

At the bottom of page 66, Sir Samuel Griffith said,

about an inch from the bottom:

so far as the present debt is to be attributed

to those two sums and interest upon them, it

is to be taken to be discharged, so far as

regards the guarantors, and, therefore, as there

is no longer any liability on the part of

the guarantors in respect of those two sums,
the bank is not entitled to hold its security

to protect them against loss in respect of them.

The last paragraph of that judgment indicates that

the declaration ought to be made, with an exception

in respect of "such part" of the moneys owing:

if any, as represents the amount, if any,

of the two several sums still remaining

unpaid -

payment of which had been demanded at an early date.

The proceedings which were on appeal to the High Court

the report in vol~e 6 of the New South Wales Reports, and	there are the subject of the next case in the booklet. It is
pag~ 14. in particular we rely on what Mr Justice Walker said at

BRENNAN J:  Can I just take you back to the COMMERCIAL BANK case

for a moment? Is that not a case where the effect

of the relief claimed was to give to the barred

creditor, payment?

MR ROBIN:  No, Your Honour. Because the demand which the bank

had made, which set the statute of limitations running,

was in respect of part only of the indebtedness.

That part of the indebtedness was statute barred

and the Court could not have been more astute to ensure

that when the bank got its hands on the security it did

not apply that security to payment of the statute

barred part of the debt.

BRENNAN J:	Why?
MR ROBIN:	As, in respect of that part of the indebtedness which

was not statute barred, there was no reason why the court should not assist enforcement of the security

by assisting the bank to get its hands on the fund.

BRENNAN J: Well, in other words it was a question of whether

or not the Court would give a judgment which, in substance,

was for the payment of money of a statute-barred debt.

C2T53/l/LR	16	17/11/89
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MR ROBIN:  The answer was that it would not.

BRENNAN J:  It would not, no. Nor will it here.

MR ROBIN:  Your Honour, in our submission it has done so here

because there is - - -

McHUGH J: It has said so, in terms, that it will not.

It has made a declaration that the debt is unenforceable.

MR ROBIN:  Your Honour, as we read the judgment, the effect of

it is that if the bank obtains possession of the

security then it has what matters in its own hands

and it can pay itself for the statute-barred debt.

BRENNAN J: Is that not the whole difficulty that you are

facing, Mr Robin? You keep looking at the operation

of the statute as though you can run together the

joint effect of the court's judgment and the rights

of the chargee, and if at the end of the day the

charger suffers, you are equating that with a judgment

of a kind that is statute barred.

(Continued on page 18)

C2T53/2/LR	17	17/11/89
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MR ROBIN:  Or of a kind which will cause equity to

act in a certain way.

BRENNAN J:  Well, put it however you like, but it seems to

me that there is not, in anything you have said

thus fa~ a tittle of support for that proposition.

MR ROBIN: 

Your Honour, at page 14 of the booklet and

page 10 of volume 6 of the New South Wales
reports - I am sorry, it is page 8, at the centre -

Mr Justice Walker sai~ and we respectfully agree

with this, the last sentence of the first paragraph

of his judgment:

It is plain that if the liability of the

guarantors is at an end then the security,

which was only given in respect of such

liability, is no longer operative.

That is one of the central propositions on which we hang our hat.

BRENNAN J:  But the liability is not at an end here.

McHUGH J:  It is still on foot. It is only bar - the

remedy is barred.

MR ROBIN:  None the less, Your Honours, the context of

Mr Justice Walker is the same as the context here.

What was barred was a money claim.

BRENNAN J:  It is not at all. Mr Robin, that is a case

where the security no longer secured a debt. Here,

there is a debt. True it is it is barred but there

is a debt. There is no similarity. We can keep

reading cases but surely you must draw our attention

to propositions which are supported by cases.

MR ROBIN:  Your Honour, what was barred in the

COMMERCIAL BANK case was indebtedness and it was

barred because of the time when indebtedness was	demanded. It was effluxion of time from the
Dank's demands of 14 December 1892 and 30 June 1893 which caused a situation of some of the
indebtedness becoming statute barred.

BRENNAN J:	That is right.
MR ROBIN:	And, in that case, other indebtedness remained

not statute barred so the court said, "The security

is good and can be enforced but we'll add a rider

to the declaration to ensure that access is not

had to that security to pay anything that's

statute barred".

C2T54/l/JH	18	17/11/89
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BRENNAN J: "We will not give relief which is equivalent to

enforcing the statute oarred debt."

MR ROBIN:  Your Honour, in our case we say that all the

indebtedness is statute barred; that there is not

a cent of indebtedness remaining.

McHUGH J:  The Court is not giving any relief and, of course, it still remains. If you were sued for

it and you did not plead the statute there would

be a judgment against you.

MR ROBIN:	Yes, if we do not plead the statute, yes.
McHUGH J:	But these orders are not enforcing the debt in

any way.

MR ROBIN:  Your Honours, our proposition is that as an

enforceable obligation the debt is wholly gone and,

therefore, the security is wholly gone too.

BRENNAN J:  But you have not got a shred of support for that

proposition, have you?

MR ROBIN:  Well, if we rely on what Mr Justice Walker

has said, Your Honour, and the - - -

BRENNAN J:  That is utterly distinguishable. That was a

case where the debt had gone. Your debt has not.

MR ROBIN:	I have difficulty in understanding that distinction that Your Honour finds there.
BRENNAN J:	The distinction is between the barring of a remedy for a debt and the. existence of a debt. In
the case of Mr Justice Walker, he was speaking
about that which was no longer a debt whereas you
are saddled with a debt. True it is that you are not exposed to an action for the recovery of debt
by reason of the statut~ if you choose to plead it,
but you are still liable, so that that is a
s~ey ground of distinction between the present case
and that with which Mr Justice Walker was concerned.

(Continued on page 20)

C2T54/2/JH	19	17/11/89
Douglas

MR ROBIN: Well, Your Honour, as we read the COMMERCIAL BANK

case, the position - - -

BRENNAN J: Well, are you speaking about Mr Justice Walker's

case or about the COMMERCIAL BANK case.

MR ROBIN: It is the same case, Your Honour.

Mr Justice Walker was the first instance proceeding

and it went to the High Court - that is the

COMMERCIAL BANK case. As we appreciate what

happened in that case, the debt to the bank remained

in exactly the same sense as Your Honour is

suggesting to me it remains here. It was simply

affected by a limitation bar to the creditors

suing.

BRENNAN J: That is not the way in which Mr Justice Walker

expressed himself, Mr Robin.

MR ROBIN:  Your Honour, if we analyse the proceedings before

Mr Justice Walker a little bit further, what

His Honour was deciding was whether the communications which the bank sent out in 1892 and 1893 represented

a demand.	He held that, although couched in
polite terms, they were nevertheless a demand.	The

effect of that was to set the statute o·f limitations

running. Your Honours will see, at page 7,

Mr Sly raised the point of the statutes of ·1initation

beginning to run once this demand had been made.

It has to be a case where the indebtedness

remained but the sum in question could not be sued

for because of the statute of limitations. In

my respectful submission, there is no distinction

whatsoever between our case and that one. As

Mr Justice Walker described the matter: if the

indebtedness is wholly statute barred the security

is gone.	As the High Court approached the matter
on appeal -

BRENNAN J:  Mr Robin, that was not what Mr Justice Walker

said: 

if the liability of the guarantors is at

an end -

are the words that he use~ not if it was statute

barred-.

MR ROBIN:  Your Honour, our submission in relation to that

is that in context the liability was at an end only

in the sense that the creditor could not sue in the

face of a limitation.

McHUGH J:  He- could not sue the guarantor. The guarantor's

liability was at an end because the debt was

statute barred.

MR ROBIN:  Yes, Your Honour.

C2T55/l/DR	20	17/11/89
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McHUGH J: That case says nothing about a case here which is

not against the guarantor.

MR ROBIN:  Yes. Your Honours, I am not sure that the action

before Mr Justice Walker was the guarantor.	At
page 10 of the report the judgment concludes:

The demand, then, having been made,

and the liability to pay having in

consequence arisen, and no action having

been brought against the guarantors

within the period allowed by law, the

Statute operates as a bar.

So it does appear to be a case where Mr Justice Walker

thought that the only defect of the debt was that

the statute operated as a bar.

BRENNAN J:	Yes.
MR ROBIN:	We are unable to assist Your Honours with authorities other than those bearing on the
principle that if the debt cannot be sued for the
security goes. Perhaps mention also ought to be made of FIRTH V SLINGSBY which says if the debt is gone the court will not intervene by a specific performance award to give the creditor a security
which he would then be able to enforce, no doubt
by his own efforts.

The Full Court was of the view that even though

the indebtedness may wholly be statute barred, that

had no effect on the security. We submit that is

unsound in the face of the High Court authority and

Mr Justice Walker's judgment in the same matter.

The Full Court did go on to hold that some indebtedness

had arisen within the statutory period, in particular interest which had accrued within the last six years.

The Full Court took the view that section 26(5) was a warrant for permitting the creditor six years

to which that interest was accessory was wholly	interest, notwithstanding that the indebtedness
statute barred.

In our submission, that is an unsound principle -

page 148 of the record we set out some of the

authorities which, in our submission, are universal

but where the principle becomes statute barred

interest cannot be recovered at all. The English

authorities begin in 1836 with HOLLIS V PALMER and

run through to ELDER V NORTHCOTE in 1930. WEIGALL

V GASTON is a Full Court decision in Victoria.	The
judgment is at page 16 in our booklet. Commentators on section 26(5) accept - - -

C2T56/l/HS	21	17/11/89
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BRENNAN J:  Was there any order or declaration made which gave

effect to the proposition which you now seek to canvass?

MR ROBIN:  Yes. Page 132 at the bottom of the page:

(b) section 26(5) of the Act is

effective to bar action to recover arrears

of interest in respect of the said

principal sum ..... after six years -

et cetera.

BRENNAN J:	Sorry, I cannot hear you, Mr Robin.
MR ROBIN:	Sorry. It is at page 132, paragraph (b) at the bottom,

which deals with the interest question by making that declaration. Now, the effect of that declaration, as

we would see it, is to allow six years interest to

the bank.

(Continued on page 23)

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BRENNAN J: That is a declaration that a statute operates

to bar something.

MR ROBIN:	Yes, Your Honour.
BRENNAN J:	You have no complaint about that?
MR ROBIN:	What we have a complaint about is the

negative pregnant which appears to be in it.

But principals being barred - or submitted

it ought to have been specified that if the

principal is barred then no interest can

be obtained at all. The natural reading of
that provision seems to be to allow five

years interest even though principal cannot

be recovered at all. That is certainly

what the Full Court appeared in the reasons

to say was the position.

BRENNAN J:  Had you sought a wider declaration than

that?

MR ROBIN:	Your Honour, our position was that there should have been no relief - we certainly
argued that point.
BRENNAN J:	Be it so, did you seek a wider declaration

than that?

MR ROBIN:  Yes, we did, Your Honour.

BRENNAN J: Is there a notice of appeal which shows

us that?

MR ROBIN:	No, the notice of appeal has not been reproduced. That issue was not in the case when it went to the Full Court.
Mr Justice Dowsett had taken the view that the
Bank would never become statute barred because
as the balance of indebtedness changed the
bank fees, anything of that kind which
Bank could make a new demand.  So interest,
affected the bottom line gave the Bank another opportunity to make a demand and 12 years from
that time it was in the Full Court that
Mr Justice McPherson, who wrote the reasons,
I believe for the first time, said that the solution to the interest problem lay in section 26(5) which irrespective of the situation
re principal gave six years interest. By allowing
that interest claim the Full Court is acknowledging
the arising of some indebtedness within the
limitation period and that is the reason why that is important.

The Full Court, in our submission, at

page 105 made a similar error in relation -

C2T57/l/JM	23	17/11/89
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BRENNAN J:  We are not going to go through the whole

of the judgment in order to canvass whether

or not there might be some point of disagreement

with the Full Court's judgment.

MR ROBIN:  Yes.

BRENNAN J: Your problem, Mr Robin, is to satisfy us

that there are special leave points here.

MR ROBIN:  Yes, Your Honour.

BRENNAN J: What is the special leave point which you

wish to make next?

MR ROBIN:  My learned junior refers me, Your Honour,

in relation to the declarations that we had

sought, to our defence. It can be found at

page 44 of the record. That sets out what

has been the first defendant applicant's

position, that:

No later than on or about 21st March, 1987

the Plaintiff's claims thereunder

(i) to payment of any indebtedness

became statute barred, or -

(ii) to the assistance of the Court in

enforcing any security.

McHUGH J: But, Mr Robin, as it stands, is there anything

the matter with 3(b), on page 132?

(Continued on page 25)

C2T57/2/JM	24	17/11/89
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MR ROBIN:  If it carries with it the rider

that interest cailnot be recovered at all on statute-

barred principle, there is nothing wrong with it. the reasons for judgment of the Full Court, the rider

would not have been added because it was inconsistent
with the Full. Court's views.

BRENNAN J: Well, if you be sued for that amount of interest

that is not covered by the declaration, then it is still

open to you to raise the statute.

MR ROBIN: Well, we hope so, but I wish we could be sure of it,

Your Honour.

BRENNAN J: If it is, there is no special leave point, is there?

MR ROBIN:  Yes, Your Honour. We submit that it is mischievous

to leave without the comments of this Court these

reasons of the Full Court of Queensland, which - - -

McHUGH J:  They do not bind the parties. It is only the

declarations that are made.	I cannot see that there
is any legal error in (3)(b).	As it stands, it is a

perfectly correct statement, is it not?

MR ROBIN:  As a quotation of the statute, yes, it is. That is

really what it does, quotes the statute for us.

McHUGH J: Well, that is all it does.

BRENNAN J:  We understand that, Mr Robin. Take us, if you

would, to your next special leave point if you have

one.

MR ROBIN:  Your Honour, we say it at page 105. This is

raised as such a point. The court was concerned with

the claim by the Bank that certain indebtedness arose

within the 12-year period, notwithstanding that

outside the 12-year period the Bank had demanded it.

The sums in question arose under guarantees which the

Bank had given for construction work, and the

customers were able to call on the Bank to make

payments over the years, which some of the customers

did. Notwithstanding that, the Bank, as we submit

was contractually entitled to do, made demand for all

sums contingently due,which included these items.

BRENNAN J:	What is the special leave point, Mr Robin?
MR ROBIN:	The special leave point concerns the possibility,

in a limitations context, of the limitation period
not commencing to run upon the demand made but
its commencing to run being deferred until, on the
facts of this case, the Bank had made payments out

to the customers.

C2T58/l/LR	25	17/11/89
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BRENNAN J: What declaration did the court make, which

adversely affects your interests, which is based

upon this proposition?

MR ROBIN:	The court did not make a declaration about this.
BRENNAN J:	Then what are we spending time on this for,

Mr Robin?

MR ROBIN:  Your Honour, in an area of law where there is a

paucity of authority, these reasons of the Full Court,

in our submission, are going to become of great

practical importance.

BRENNAN J:  Mr Robin, this Court does not sit to give advisory

judgments, or to write,unnecessarily, texts on the

subject-matter of any judgment.	Have you any other
special leave points?

(Continued on page 27)

C2T58/2/LR	26	17/11/89
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MR ROBIN:  No, Your Honour, those are the points we wish to

raise.

BRENNAN J:  Very well. We need not trouble you, Mr Muir.

The argument against the limited operation of

section 26 ( 5) of the Act upon interest, arose in

the Full Court incidentally to the general

argument which was concerned with the possession

of share scrip. This is not a suitable vehicle

for considering the point, and the declaration

made, so far as it goes, is unexceptionable.

Otherwise there is not sufficient reason to doubt

the co~rectness of the decision of the Full Court
such as to warrant the grant of special leave.

Special leave will therefore be refused.

•	.MR MUIR:	If Your Honours please, the respondents ask for
costs.

BRENNAN J:	Do you have anything to say on that, Mr Robin?
MR ROBIN:	I do not, Your Honour.

BRENNAN J: Yes. It will be refused with costs. The Court

will now adjourn until five past two this afternoon.

AT 1. 40 PM ':HE l~TTER WAS ADJOUPl{f:D SINE DIE

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