Equuscorp Pty Ltd v Lloyd

[1998] VSC 171

SUPREME COURT OF VICTORIA

CAUSES JURISDICTION

Not Restricted

No. 5497 of 1998

EQUUSCORP PTY LTD	Plaintiff/Appellant
v
STEPHEN LLOYD	Defendant/Respondent

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JUDGE:	Warren J
WHERE HELD:	Melbourne
DATE OF HEARING:	27 October 1998
DATE OF JUDGMENT:	9 December 1998
CASE MAY BE CITED AS:	Equuscorp Pty Ltd v. Lloyd
MEDIA NEUTRAL CITATION:	[1998] VSC 171

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Limitation of Actions - Debt - Whether claim for simple contract debt or money secured by mortgage - Right to recover statute barred by reason of s.5(1)(a) - Statutory interpretation - Ambiguity - ss.5, 20 Limitation of Actions Act 1958 - Barnes and Anor v Glenton and Ors (1899) 1 QB 885 - National Bank of Tasmania Ltd (in liquidation) and Anor v McKenzie [1920] VLR 4111

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff/Appellant	Mr F.J. Holzer	Equuscorp Pty Limited
For the Defendant/Respondent	Mr P. Bingham	Consumer  Credit Legal
Service

HER HONOUR:

1. This matter is an appeal brought by the plaintiff against the orders made in the Magistrates' Court at Melbourne on 25 March 1998. The proceeding is an appeal brought pursuant to s. 109 of the Magistrates' Court Act 1989 and O.58 of Ch.1 of the Rules of the Supreme Court.

2. In its particulars of complaint filed in the proceedings in the Magistrates' Court the plaintiff (“Equuscorp”) claimed the total sum of $17,372.07 being principal and interest alleged to be owed by the defendant in these proceedings (“Lloyd”) to the plaintiff. The statement of claim alleges that the moneys were owed as a result of a loan contract dated 8 August 1989 whereby Equuscorp agreed to lend to Lloyd and Lloyd agreed to borrow from Equuscorp a specified sum. The specified sum was $8,300 for a term of 84 months. It was alleged, further, in the statement of claim that there were terms of the contract that the moneys would be repaid by way of principal sum and interest by monthly instalments at a specified rate of interest and in the event of default Equuscorp was entitled to require Lloyd to pay the balance then owing under the contract.

3. Further, it was alleged in the statement of claim that the moneys lent under the contract were secured by a mortgage. The statement of claim provided:

“4. As security for the due performance of the Defendants (sic) obligations under the Contract the Defendants mortgaged to the plaintiff all their right title and interest in the timeshare resort known as ‘Club Yarrawonga Resort’ (‘the mortgaged property’).”

1. I was informed by counsel for Equuscorp during proceedings in this Court that there was no actual mortgage entered into by Lloyd with Equuscorp. Rather, there was a loan contract document and which document contained a clause whereby Lloyd agreed to enter into a mortgage with the plaintiff. However, the mortgage was never effected.

2. In the Magistrates' Court the parties agreed to the court determining a preliminary issue as to whether or not the defendant had a complete defence to the proceedings arising from the application of the Limitation of Actions Act 1958. The defendant filed a notice of defence in the Magistrates' Court wherein it was alleged that the plaintiff’s claim was statute barred pursuant to s. 5(1) of the Act. On 25 March 1998 the learned Magistrate published written reasons for his judgment finding that the claim was statute barred under s.5(1)(a) of the Act and that s.20 did not apply such as to provide a longer limitation period. As a result, orders were made that the complaint be dismissed and that the plaintiff pay the defendant's costs fixed at $3,319 with a stay of one month.

3. On an application for leave to appeal pursuant to O.58.09 the grounds of appeal were ordered as:

   (a) Whether the Plaintiff’s claim against the Defendant is statute barred by reason of s. 5(1)(a) of the Limitation of Actions Act 1958.

   (b) Whether the Plaintiff’s claim against the Defendant was within time by reason of s. 20(1) of the Limitation of Actions Act 1958.

4. Section 5(1) of the Limitation of Actions Act provides:

“5.	Contracts and torts
(1) The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued -

(a)        actions founded on simple contract (including contract implied in law) or (subject to sub-section (1A)), actions founded on tort including actions for damages for breach of a statutory duty;

(b)        actions to enforce a recognizance;

(c)         actions to enforce an award, where the submission is not by an instrument under seal;

(d)        actions to recover any sum recoverable by virtue of enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture.

...

(3)	An action upon a bond or other speciality shall not be brought after the expiration of fifteen years from the date on which the cause of action accrued:
Provided that this sub-section shall not affect any action for which a shorter period of limitation is prescribed by any other provision of this Act.”

1. Section 20 of the Act provides:

“20.	Actions to recover money secured by a mortgage or charge
(1) No action shall be brought to recover any principal sum of money secured by a mortgage or other charge on property, whether real or personal, after the expiration of fifteen years from the date when the right to receive the money accrued, notwithstanding that the money is by any Act or instrument expressed to be a charge until paid.”

1. The issue for this court to determine is whether the learned magistrate was correct in characterising the claim as one for a simple contract debt under s.5 of the Limitation of Actions Act and, therefore statute barred or whether he ought to have treated the claim as one for a sum of money secured by a mortgage on property and, therefore, within time.

2. The Limitation of Actions Act 1958 was legislation that consolidated the law relating to limitation periods. The Act largely re-enacted the Limitation of Actions Act 1955. Section 5(1)(a) is in substantially the same form as enacted in 1958 (subject to an unrelated amendment made by the Limitation of Actions (Personal Injury Claims) Act (1983). Section 20 of the 1958 Act is unamended. It follows that ss.5(1)(a) and 20 of the Limitation of Actions Act 1958 were enacted at the same time and the issues arise as to whether the sections are inconsistent and in such consideration whether the history of the sections is relevant.

3. There is ample authority that where ambiguity or conflicting interpretation arises in an Act, the common law and the cause of the statute may be considered (see R. v. Schloss (1897) QCR 337; Miller v. Commonwealth (1904) 1 CLR 668). As a general proposition a later specific provision will prevail over a general provision (see Refrigerated Express Lines (A'asia) Pty Ltd v. Aust. Meat and Livestock Corp. (No. 2) (1980) 44 FLR 455; 29 ALR 333, 347 per Deane J; Smith v. R (1994) 125 ALR 385, 391 (H.C.); Purcell J Electricity Commission of NSW (1985) 60 ALR 653, 657 (H.C.); Saraswati v. R (1990-91) 172 CLR 1, 30 per McHugh J.) However, in a consolidating statute the later section does not necessarily prevail where the earlier section is taken from an Act earlier in time than the Act from which the later section is taken (see Coates v. South Loch Fyne Gold Mining Co. (NL) (1900) 26 VLR 117). Further, there is a presumption that where a provision has been the subject of judicial consideration before re-enactment, Parliament is presumed to have accepted the judicial interpretation previously made (see Public Service Association (NSW) v. Industrial Commission (NSW) (1985) 1 NSWLR 627 (per Kirby P).

4. It is appropriate to consider the history of the provision together with the judicial consideration that has occurred of those provisions and their antecedents. The legislative ancestor of s. 5(1) of the Limitation of Actions Act was s. 3 of the Statute of Limitations 1623 (21 Jac 1, c16) ("the 1623 Act"). In essence the 1623 Act provided a limitation period of six years in the case of simple contract debts. The legislative ancestor of s. 20 of the Limitation of Actions Act is s. 8 of the Real Property Limitation Acts, 1833 and 1874 ("the 1833 and 1874 Acts"). Section 40 of the 1833 Act applied to the action for recovery of principal money charged on land and prescribed a time limit of 20 years. This provision was substantially re-enacted by s.8 of the 1874 Act which changed the period of limitation from 20 to 12 years.

5. The defendant relied upon a judgment of the English Court of Appeal, Barnes and Anor v Glenton and Ors (1899) 1 QB 885. In that case an action was brought by a plaintiff creditor to recover money lent to the defendants who were trustees under a will and who transferred certain mortgages to the plaintiffs. In proceedings to recover the moneys claimed by way of a simple contract debt one of the defendants contended that the six year limitation period under the 1623 Act applied. The plaintiff relied upon the 1833 and 1874 Acts to assert that the relevant provisions of the 1623 Act had been repealed. The Court of Appeal held that no such repeal had occurred. Rather, the court considered that the case of a simple contract debt was not affected by the enactment of 1833 and 1874 Acts. The court held, further, that the later enactments imposed a limitation period of 20 years over a broader area of causes of action. Romer L.J. observed (at p.891):

   “Now it is to be observed that the Acts of William, IV and of 1874 were not intended to take away from debtors any rights, or to give any additional rights to creditors. On the contrary, the intention was to give further rights to debtors to oppose the claims of creditors after the lapse of a certain time. The statutes do not say that debts may be recovered under certain conditions, but they negative the rights of creditors to bring actions after a certain time has elapsed. They were not intended to repeal the statute of James, and do not repeal it, so far as relates to simple contract debts charged on land, either expressly or impliedly. These two statutes and the statute of James are general, and have a wide operation, and they can well stand together. There would be no difficulty in framing a provision which would comprise the material provisions of the statutes so far as concerns the question before us. The effect of such combination may be stated briefly thus: ‘No action to enforce a simple contract debt, whether charged on land or not so charged, shall be brought after six years, unless interest has been paid or an acknowledgement given, and as to any debt charged on land, even if the debt be a speciality debt, no action shall be brought for a remedy against the land after twelve years unless interest has been paid or an acknowledgement given.’ This substantially represents the joint operation of the Acts, and shows that they in no way conflict. It follows that a defendant has, in a proper case, the right to resort to either of the statutes.”

6. In Barnes v. Glenton AL Smith LJ (at p.887-888) formulated the question in that case as whether the 1833 and 1874 Acts had repealed the provisions of the 1623 Act. His Lordship agreed that the 1623 Act was passed in favour of debtors. He specifically posed the question as to whether the 1833 and 1874 Acts had taken the right of the six year limitation period away. He observed there was nothing to that effect in the later statutes.

7. It was observed by A.L. Smith LJ in Barnes v. Glenton (at p.888) that none of the authorities supported a contrary position save for Sutton v. Sutton (1882) 22 Ch. D. 511 (CA). In that case the plaintiff creditor sought to recover a mortgage debt where no principal or interest had been paid and no written acknowledgement was given for more than 12 years. The defendant debtor relied upon the 12 year limitation period under the 1874 Act. In Sutton v. Sutton the Court of Appeal held that the 1874 Act embraced the personal remedy on the covenant of the debtor as well as the remedy against the land on which the debt was secured.

8. In Barnes v. Glenton the Court of Appeal considered the decision in Sutton v. Sutton had no bearing on the issue of whether the 1874 Act impinged upon the limitation right created by the 1633 Act. In the words of Collins LJ in Barnes v. Glenton (at p.889-890):

   "How can the later enactment, by imposing a limitation of twenty years over a larger area, enlarge the period already defined as the limitation for a particular part of that area, namely, simple contracts? The words of the section debar the creditor from proceeding after twenty years; they do not confer any right of suit upon him which he did not before possess. The statutory prohibition against taking proceedings after the period named is not a statutory permission given to take them within that period, and it does not remove the existing fetter imposed in the case of simple contracts by the Act of James. The debtor is entitled to the benefit of either Act whenever the case falls within it.

   It is said that Sutton v. Sutton altered the law; but that case has no bearing on the point before us. All it decided was that s.8 of the Act of 1874, which corresponds to s.40 of the Act of 1833, embraces the personal remedy on the covenant of the debtor as well as the remedy against the land on which the debt is secured. Assuming that the Act applies to simple contract debts, its effect is to impose a fetter over an extended area, not to remove an existing fetter. This is emphasized by the express words of the later Act, the object of which is stated to be further to limit the time within which actions or suits may be brought for the recovery of land or rent, or of charges thereon. The matter was summed up by Stirling J. in Firth v. Slingsby in which case he pointed out that the last-named statute was not in any sense an enabling statute, but that its language was entirely prohibitory."

9. In the proceedings below and before me the plaintiff relied upon a judgment of the Full Court of this Court in The National Bank of Tasmania Ltd (In liquidation) and Anor v McKenzie [1920] VLR 411. In that case the plaintiff advanced money to the defendant on the security of an equitable mortgage by way of deposit of title deeds. Over 15 years after no payment or acknowledgement, the defendant gave the plaintiff an acknowledgement of the right to the money. The Full Court held that the plaintiff was entitled to a personal judgment against the defendant for the amount owing but not to any remedy against the land. Cussen J., with whom Schutt and Mann JJ. agreed, considered the earlier decision of the Court of Appeal in Barnes v Glenton. The main issue for consideration before the Full Court in The National Bank of Tasmania case was whether s. 47 of the Real Property Act 1915 applied. Section 47 of the Real Property Act 1915 was an earlier version of s.20 of the Limitation of Actions Act 1958. The section provided that an acknowledgement may be given after the expiration of 15 years from the accrual of a present right to recover money charged on land by mere deposit of title deeds so as to revive the right to sue on the simple contract debt.

10. The National Bank of Tasmania case was one in which an acknowledgement of the debt had been provided by the debtor more than 15 years after any payment on account or acknowledgement. The Full Court held that s.47 of the Real Property Act 1915 entitled the plaintiff to a personal judgment against the defendant for the amount owing but not to any remedy against the land. At p.420 of the judgment, Cussen J suggested that A.L. Smith LJ, in Barnes v. Glenton made remarks suggesting that s.47 did not apply to the case of a simple contract debt. Cusson J specifically referred to the observations of A.L. Smith LJ at p.888 in Barnes v. Glenton. On close analysis Barnes v. Glenton does not go that far. Rather, A.L. Smith LJ was at pains to search out a specific direction or indication in the later legislation of the intention to limit the limitation right granted by the earlier statute. It is to be observed that the Full Court in National Bank of Tasmania did not consider or analyse the authority of the Court of Appeal in Barnes v Glenton in any detail.

11. In essence, the Full Court did not express a view one way or the other with respect to the propositions upheld in Barnes v. Glenton. Furthermore, the distinguishing feature of the circumstances before the Full Court in the National Bank of Tasmania case compared with the facts in Barnes v. Glenton and the present matter is that an acknowledgement was given by the debtor after the expiration of the limitation period. No such acknowledgement was given in this matter nor was one given in Barnes v. Glenton. In my view, therefore, the National Bank of Tasmania case turns upon the discrete fact of acknowledgement and its ramifications that flowed under s.47 of the Real Property Act 1915. In terms of closeness of facts, the facts in Barnes v. Glenton are far more relevant to the facts in the present proceeding, namely, that there was a debt pursued under contract where the limitation period had expired but the creditors sought to rely upon a later limitation period by virtue of the fact that the simple contract debt had been secured by mortgage.

12. Both below in the Magistrates' Court and in these proceedings Equuscorp relies upon The National Bank of Tasmania Ltd (in liquidation) and Anor v McKenzie, supra, to support the proposition that there is authority in this State which binds me that has specifically not followed Barnes v Glenton. On the basis of the analysis made by me I do not accept this position.

13. The judgment of the Full Court in The National Bank of Tasmania case was considered again by Cussen J. in Levy v Williams [1925] VLR 615. At p.624 of the judgment, Cussen J. observed that if the remedy is to recover “the land” and is barred under earlier sections, the title is extinguished under s.43 of the Real Property Act 1915. To support this proposition the learned Judge cited The National Bank of Tasmania Ltd (in liquidation) and Anor v McKenzie. Levy v. Williams included a consideration by Cussen J of Sutton v. Sutton. He held that Sutton was an action on the personal covenant and not an action for ejectment or a suit for foreclosure and that the question of an action or suit "to recover land" was never in debate or considered before the Court of Appeal. Levy v. Williams was concerned with whether or not the limitation statute resulted in the plaintiff's right and title in the relevant land being extinguished. Cussen J considered it did not and relied upon the National Bank of Tasmania case to support that position. Again, Levy v. Williams is a matter that is clearly distinguishable both on its facts and on the relevant statutory provisions from the present case and, further, Barnes v. Glenton. Furthermore, there is nothing said in Levy v. Williams against the propositions expressed in Barnes v. Glenton.

14. The National Bank of Tasmania case was considered again by Deane J. in Ryan v O’Sullivan [1956] VLR 99. In considering the nature of the remedy available to a mortgagee in that case, Deane J. held that the proper remedy is foreclosure and cited in support The National Bank of Tasmania Ltd (in liquidation) and Anor v McKenzie at p.425. This approach is consistent with the facts and the findings in the National Bank of Tasmania case and Levy v. Williams.

15. In the appeal before me it was submitted on behalf of the plaintiff, Equuscorp, that the learned Magistrate below was wrong in following the judgment in Barnes v Glenton and that the court was bound by the judgment of the Full Court in The National Bank of Tasmania Ltd (in liquidation) and Anor v McKenzie.

16. On behalf of the defendant, Lloyd, it was submitted that Barnes v Glenton did not support a proposition that s. 5 of the Limitation of Actions Act 1958 contradicted s. 20. The argument was developed to the effect that the provisions of ss. 5 and 20 are not exclusive. It was acknowledged that whilst there are significant differences between the two provisions they are concerned with different causes of action and the accrual of such causes of action.

1. In my view there is nothing in the Victorian authorities said against or indeed to contradict the approach taken by the Court of Appeal in Barnes v. Glenton. Furthermore, in Barnes v. Glenton there was not a direct inconsistency between the legislation, rather, effect could be given to both Acts. In the present case it was open to the learned magistrate to find that s.5 of the Limitation of Actions Act 1958 was the relevant provision as there was no evidence before him to establish that there was, in any event, a mortgage that entitled the plaintiff, Equuscorp, to rely upon s.20 of that Act.

2. On the basis of these matters I consider that there was no error made by the learned magistrate below. Furthermore, it follows that I find that the plaintiff's claim against the defendant is statute barred by reason of s.5(1)(a) of the Limitation of Actions Act 1958 and was not within time by reason of s.20(1) of that Act. Accordingly, I dismiss the appeal.