Executor, Trustee & Agency Co of South Australia Ltd v Thompson

The Executor, Trustee & Agency Co of South Australia Ltd, as executor of Edward Saint, appealed to the High Court of Australia against a decision of the Supreme Court of South Australia. The dispute concerned an action brought by Robert Thompson against the executor for alleged indebtedness of the deceased, Edward Saint, for goods sold and delivered and for interest. The primary defence raised was that the claims were barred by the Limitation of Suits and Actions Act 1866 (S.A.).

The legal issues before the High Court were whether an oral agreement, made for valuable consideration, to pay a stated account balance, including interest previously disputed by the debtor, on a future date, constituted a new and continuing contract that took the claim out of the operation of the Limitation of Suits and Actions Act 1866, and whether such an agreement, if established, would allow an action to be brought within six years of the agreed future payment date. Specifically, the court had to determine if the agreement created a new cause of action distinct from the original debt for goods sold and delivered.

The High Court, affirming the decision of the Supreme Court of South Australia, reasoned that if an account had been stated and a new oral agreement was made for valuable consideration, whereby the debtor agreed to pay the stated balance, including interest, by a specific future date, this could constitute a new and independent contract. The court held that such a contract, if legally binding, would not be barred by section 36 of the Act if the action was commenced within six years of the agreed payment date, as the cause of action would arise from the breach of this new agreement. Furthermore, the court found that section 43 of the Act, which requires written acknowledgment for a new and continuing contract to take a case out of the statute, did not apply to this situation because the agreement was not merely an acknowledgment of the old debt but a new bargain superseding it.

The appeal was dismissed with costs. The High Court found that the Supreme Court was correct in setting aside a nonsuit granted by the Local Court and ordering a new trial, as there was sufficient evidence upon which a court could find that a new and binding agreement had been formed, creating a cause of action that was not time-barred.