Hewitt v Henderson
[2006] WASCA 233
•8 NOVEMBER 2006
HEWITT -v- HENDERSON & ANOR [2006] WASCA 233
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2006] WASCA 233 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:105/2005 | 13 JUNE 2006 | |
| Coram: | STEYTLER P PULLIN JA BUSS JA | 8/11/06 | |
| 35 | Judgment Part: | 1 of 1 | |
| Result: | Application for leave to appeal dismissed | ||
| B | |||
| PDF Version |
| Parties: | ANDREW MALCOLM RUPERT HEWITT KEVIN LESLIE HENDERSON HENDERSON CORPORATION PTY LTD |
Catchwords: | Application for leave to appeal Interlocutory proceeding Limitation of actions Whether respondents' pleaded causes of action for breach of fiduciary duties and for an account statute barred When equity will apply a statutory limitation period by analogy to common law claims Need to determine the date on which the cause of action in question accrues Undesirable to decide in interlocutory proceedings whether equity would apply a statutory limitation period by analogy Practice and procedure Pleading by appellant of a limitation defence Pleading by respondents of breach of fiduciary duties and breach of contract Turns on own facts |
Legislation: | Limitation Act 1935 (WA), s 38(1)(c)(ii), s 38(1)(c)(iii) Rules of the Supreme Court 1971 (WA), O 20 r 9(1), O 21 r 5(5) |
Case References: | Barker v Duke Group Ltd (in liq) (2005) 91 SASR 167 Breen v Williams (1996) 186 CLR 71 Cassis v Kalfus [2001] NSWCA 460 Cohen v Cohen (1929) 42 CLR 91 Coulthard v Disco Mix Club Ltd [2000] 1 WLR 707 Graf v Hope Building Corporation (1930) 171 NE 884 In re Greaves, deceased (1881) 18 Ch D 551 KM v HM; Women's Legal Education and Action Fund, Intervener (1992) 96 DLR (4th) 289 Knox v Gye (1872) LR 5 HL 656 Matai Industries Ltd v Jensen [1989] 1 NZLR 525 Morgan v Banning (1999) 20 WAR 474 Noyes v Crawley (1878) 10 Ch D 31 Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400 Smith v Smith [1926] NZLR 311 The Crown v McNeil (1922) 31 CLR 76 The Duke Group Ltd (in liq) v Alamain Investments Ltd [2003] SASC 415 The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40 Tito v Waddell (No 2) [1977] Ch 106 Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514 Williams v Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497 Young v Waterways Authority of New South Wales [2002] NSWSC 612 Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 Cia de Seguros Imperio v Heath (REBX) Ltd [2001] 1 WLR 112 Cigna Insurance Asia Pacific Ltd v Packer (2000) 23 WAR 159 Midland Bank Trust Co Ltd v Hett Stubbs & Kemp (a firm) [1979] Ch 384 Price v Powers [2005] WASC 154 Re Will of Gilbert (1946) 46 SR (NSW) 318 Wigan v Edwards (1973) 47 ALJR 586 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : HEWITT -v- HENDERSON & ANOR [2006] WASCA 233 CORAM : STEYTLER P
- PULLIN JA
BUSS JA
- Appellant
AND
KEVIN LESLIE HENDERSON
First Respondent
HENDERSON CORPORATION PTY LTD
Second Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : SIMMONDS J
Citation : HENDERSON CORPORATION PTY LTD -v- HEWITT [2005] WASC 165
File No : CIV 1163 of 2000
(Page 2)
Catchwords:
Application for leave to appeal - Interlocutory proceeding - Limitation of actions - Whether respondents' pleaded causes of action for breach of fiduciary duties and for an account statute barred - When equity will apply a statutory limitation period by analogy to common law claims - Need to determine the date on which the cause of action in question accrues - Undesirable to decide in interlocutory proceedings whether equity would apply a statutory limitation period by analogy
Practice and procedure - Pleading by appellant of a limitation defence - Pleading by respondents of breach of fiduciary duties and breach of contract - Turns on own facts
Legislation:
Limitation Act 1935 (WA), s 38(1)(c)(ii), s 38(1)(c)(iii)
Rules of the Supreme Court 1971 (WA), O 20 r 9(1), O 21 r 5(5)
Result:
Application for leave to appeal dismissed
Category: B
Representation:
Counsel:
Appellant : Mr C G Colvin SC
First Respondent : Mr J R B Ley
Second Respondent : Mr J R B Ley
Solicitors:
Appellant : Hotchkin Hanly
First Respondent : Arthur Metaxas & Co
Second Respondent : Arthur Metaxas & Co
Case(s) referred to in judgment(s):
Barker v Duke Group Ltd (in liq) (2005) 91 SASR 167
Breen v Williams (1996) 186 CLR 71
(Page 3)
Cassis v Kalfus [2001] NSWCA 460
Cohen v Cohen (1929) 42 CLR 91
Coulthard v Disco Mix Club Ltd [2000] 1 WLR 707
Graf v Hope Building Corporation (1930) 171 NE 884
In re Greaves, deceased (1881) 18 Ch D 551
KM v HM; Women's Legal Education and Action Fund, Intervener (1992) 96 DLR (4th) 289
Knox v Gye (1872) LR 5 HL 656
Matai Industries Ltd v Jensen [1989] 1 NZLR 525
Morgan v Banning (1999) 20 WAR 474
Noyes v Crawley (1878) 10 Ch D 31
Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400
Smith v Smith [1926] NZLR 311
The Crown v McNeil (1922) 31 CLR 76
The Duke Group Ltd (in liq) v Alamain Investments Ltd [2003] SASC 415
The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40
Tito v Waddell (No 2) [1977] Ch 106
Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514
Williams v Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497
Young v Waterways Authority of New South Wales [2002] NSWSC 612
Case(s) also cited:
Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170
Cia de Seguros Imperio v Heath (REBX) Ltd [2001] 1 WLR 112
Cigna Insurance Asia Pacific Ltd v Packer (2000) 23 WAR 159
Midland Bank Trust Co Ltd v Hett Stubbs & Kemp (a firm) [1979] Ch 384
Price v Powers [2005] WASC 154
Re Will of Gilbert (1946) 46 SR (NSW) 318
Wigan v Edwards (1973) 47 ALJR 586
(Page 4)
1 STEYTLER P: I agree with Buss JA.
2 PULLIN JA: I have read the draft reasons prepared by Buss JA. I agree with those reasons and have nothing to add.
3 BUSS JA: By a writ of summons filed in the Supreme Court on 14 February 2000, Henderson Corporation Pty Ltd, as first plaintiff, and Kevin Leslie Henderson, as second plaintiff, commenced proceedings against Gibrae Pty Ltd, as first defendant, Andrew Malcolm Rupert Hewitt, as second defendant, Samit Pty Ltd, as third defendant, and Barrington Partners (A Firm), as fourth defendant. The writ contained a general indorsement. It was, relevantly, in these terms:
"As against the first alternatively second defendant
1. The first plaintiff or alternatively the second plaintiff claims against the first defendant or alternatively the second defendant:
(a) damages for losses incurred; alternatively
(b) an account of all dealings and transactions and payment of such amounts as are found to be due to the first plaintiff or alternatively the second plaintiff
arising out of breaches of contract, alternatively breaches of fiduciary duty, in or about 1996, relating to an oral joint venture agreement alternatively an oral partnership agreement, entered into in or about 1993 in terms whereof the parties expressly agreed that the first plaintiff or alternatively the second plaintiff would contribute the capital, the first defendant or alternatively the second defendant would enter into share transactions and make other investments (share transactions and other investments are hereinafter referred to as 'investments') on behalf of the joint venture or partnership, the parties would share the profits and the first defendant or alternatively the second defendant would bear all losses and would report regularly to the first plaintiff or the second plaintiff on all investments completed under the agreement, such joint venture or partnership agreement having been terminated by notice duly given on 25 January 2000, such joint venture or partnership having
(Page 5)
- incurred losses and the first defendant or second defendant having failed to report regularly or at all on the investments made for the joint venture or partnership;
- (c) interest pursuant to statute;
(d) costs;
(e) such further or other orders as to the Court seem fit."
4 On 27 March 2001, the writ of summons was amended pursuant to an order made on 20 March 2001 by Acting Principal Registrar Johnston. The amendments were significant. Mr Henderson, Gibrae Pty Ltd, Samit Pty Ltd and Barrington Partners ceased to be parties to the proceedings. The continuing parties comprised Henderson Corporation Pty Ltd as sole plaintiff and Mr Hewitt as sole defendant. Paragraph 1 of the general indorsement, which I have set out in [3] above, was amended to reflect the alteration made to the parties. The paragraph was also amended to delete the words "alternatively breaches of fiduciary duty". The effect of that deletion was to confine the cause of action alleged in par 1 to a claim for breaches of contract.
5 Also, on 27 March 2001, Henderson Corporation Pty Ltd re-amended its statement of claim, as follows:
"1. The
2. In or about mid 1993 Henderson Corporation, by its agent, Kevin Henderson, and the second defendant ('Hewitt') made an agreement for the purchase and sale of shares and options over shares in publicly listed companies ('the agreement').
3. There were express oral terms of the agreement, in effect, that:
(a) Henderson Corporation would contribute all of the capital for the purchase of shares and options;
(b) Hewitt would decide which shares and options were to be purchased and sold and when shares and options would be purchased and sold;
- (c) Henderson Corporation and Hewitt would share equally between them any profits, dividends or other income or gain realised from the shares and options purchased pursuant to the agreement;
(d) Hewitt would bear and would indemnify Henderson Corporation with respect to all losses resulting from the sale and purchase of shares and options;
(e) Hewitt would, at his cost, keep appropriate records and accounts of all transactions, receipts and payments the subject of the agreement;
(f) Hewitt would, at his cost, provide Henderson Corporation with information on a regular monthly basis regarding the transactions entered into pursuant to the agreement, including the value of any shares and options held under the agreement and the amounts received and paid by virtue of the agreement.
- 4. It was an implied term of the agreement, implied to give it business efficacy, that the agreement was terminable at any time by either party by notice given to the other party.
5. Pursuant to the agreement, during the period between about 1 June 1993 and 1 September 1996:
(a) Henderson Corporation provided a total sum of $349,655.00 for the purchase of various shares and options decided upon by Hewitt; and
(b) Hewitt purchased or caused the purchase of various shares and options.
Date | Shares | Amount Paid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6. By notice dated 25 January 2000 given to Hewitt by Henderson Corporation by its solicitors, the agreement was terminated.
7. Henderson Corporation incurred losses from transactions entered into pursuant to the agreement.
Particulars
Particulars will be provided after the taking of an account.
8. In breach of the terms of the agreement:
(a) Hewitt failed during the term of the agreement to provide Henderson Corporation with information on a regular monthly basis regarding the share transactions entered into and the value of share investments;
(b) Hewitt has failed and refused to indemnify Henderson Corporation for the losses sustained under the agreement.
(Page 8)
- 9. By reason of the matters pleaded in paragraph 8, Henderson Corporation has suffered loss and damage.
Particulars
Particulars will be provided after the taking of an account.
AND THE FIRST PLAINTIFF CLAIMS AGAINST THE FIRST SECOND DEFENDANT:
(a) An account of all transactions undertaken pursuant to the agreement.
(b) Indemnity in the sum of $349,655.00 or such other sum as is found due.
(c) Further, or in the alternative to sub-paragraph (b), damages.
(d) Interest pursuant to s.32 of the Supreme Court Act at such rate and for sum [sic] period as the Court thinks fit, on all sums awarded.
(e) Costs."
6 By an amended application dated 16 May 2005, it was sought to re-amend the writ of summons and file and serve a substituted statement of claim. The proposed amendments to the writ of summons included re-joining Mr Henderson as a plaintiff and Gibrae Pty Ltd, Barrington Partners and Samit Pty Ltd as defendants. The proposed amendments to par 1 of the general indorsement included re-introducing a cause of action based on breach of fiduciary duty, as an alternative to the cause of action based on breach of contract. In the proposed re-amended writ and proposed substituted statement of claim, Mr Henderson is the first plaintiff, Henderson Corporation Pty Ltd is the second plaintiff, Mr Hewitt is the first defendant, Gibrae Pty Ltd is the second defendant, Barrington Partners is the third defendant and Samit Pty Ltd is the fourth defendant.
7 Paragraph 1 of the proposed re-amended general indorsement is as follows:
"1. As against the first or alternatively the second defendant:
(Page 9)
- The first plaintiff or alternatively the second plaintiff claims against the first defendant or alternatively the second defendant:
1.1 damages for losses incurred, alternatively
1.2 equitable compensation;
1.3 an account of all monies received by the first defendant or alternatively the second defendant and paid out by the first defendant or alternatively the second defendant in relation to the purchase and sale of shares and options from moneys received from about 1 June 1993 to 1 September 1996 from the first plaintiff or alternatively the second plaintiff as well as an account of what moneys ought to have been received by the first defendant or alternatively the second defendant and what moneys ought to have been paid out by the first defendant or alternatively the second defendant.
arising out of breaches of contract, alternatively breaches of fiduciary duty, from in or about 1996 to in or about 2000, relating to an
- on all investments completed under the agreement, such
- 1.4 interest on damages or alternatively equitable compensation at 6% per annum from 1 July 1996 to judgment pursuant to section 32 of the Supreme Court Act.
1.5 costs
1.6 such further and other orders as to the Court seem fit."
8 The proposed substituted statement of claim was, relevantly, in these terms:
"Background
1 The second plaintiff ('Henderson Corp'), the second defendant ('Gibrae') and the fourth defendant ('Samit') are each corporations duly incorporated.
2. The first plaintiff ('Henderson') is and was at all material times a director and shareholder of Henderson Corp.
3. Gibrae was incorporated on 11 November 1986. The first defendant ('Hewitt') was appointed a director of Gibrae on 27 January 1987.
4. At all material times there were 2 issued shares in Gibrae owned by:
4.1 Hewitt; and
4.2 WBB & C Nominees (WA) Pty Ltd.
(Page 11)
- 5. The third defendant ("Barringtons") is a firm of accountants which commenced business under the name "Barringtons" on 21 March 1986. Hewitt was a partner of Barringtons from 21 March 1986 to 30 June 1999.
6. Samit was incorporated on 11 September 1987. Hewitt was appointed as a director of Samit on 10 September 1987 and continues to hold that office.
7. Henderson Corp was the owner of 1 issued share in Samit from 1995.
8. Hewitt was the owner of 1 issued share in Samit from April 1995.
Retainer of Barringtons by Henderson and Henderson Corp
9. From in or about 1990, Henderson and Henderson Corp retained Barringtons pursuant to a verbal agreement whereby Barringtons would for reward:
9.1 provide accounting services and prepare income tax returns for Henderson and Henderson Corp;
9.2 prepare financial statements and corporate returns for Henderson and Henderson Corp;
9.3 provide accountancy and taxation advice from time to time as and when required by Henderson and Henderson Corp;
9.4. provide financial and business advice from time to time as and when required by Henderson and Henderson Corp.
10. The services provided to Henderson and Henderson Corp by Barringtons were provided by Hewitt in his capacity as a partner of Barringtons.
11. By about 1992 a relationship of trust and confidence had developed between Henderson and Hewitt, Henderson Corp and Hewitt, Henderson and Barringtons, Henderson Corp and Barringtons to the extent that:
- 11.1 Hewitt was appointed by Henderson as a director of Henderson Corp and other corporations controlled by Henderson;
11.2 Henderson or Henderson Corp had acquired shares in EON Ltd on the verbal advice of Hewitt;
11.3 Henderson or Henderson Corp had sold the shares in EON Ltd on the verbal advice of Hewitt.
- 12. In the course of a meeting at Barringtons' offices in 1993, Hewitt, in his capacity as a partner of Barringtons and in the course of providing financial and business advice to Henderson and/or Henderson Corp, verbally represented to Henderson in his own right and on behalf of Henderson Corp that:
12.1 Hewitt was in frequent communication with various stockbrokers and officers of publicly listed companies;
12.2 Hewitt by reason of those communications was in possession from time to time of knowledge as to what shares and/or options in publicly listed corporations could be bought and sold for profit.
('the representations')
13. At about the same time as Hewitt made the representations, Hewitt advised Henderson in his own right and on behalf of Henderson Corp that Henderson and Henderson Corp should embark upon a venture with Hewitt ('the venture') in which:
13.1 Henderson and/or Henderson Corp would provide funds for the purchase of shares or options in publicly listed corporations to be determined by Hewitt;
13.2 Henderson and/or Henderson Corp, on one hand, and Hewitt, on the other, would share equally any profits, dividends or other income or gain realised from the venture;
- 13.3 Hewitt would indemnify Henderson and/or Henderson Corp in respect of any losses which Henderson and/or Henderson Corp incurred as a result of the venture.
('the advice')
- 14. At the time Hewitt made the representations and gave the advice, he knew and it was the case that as an alternative to embarking upon the venture, it was open to Henderson and/or Henderson Corp to enter into an arrangement with a stockbroker ("the stockbroker") whereby:
14.1 the stockbroker would identify shares or options in publicly listed corporations which he or she considered could be purchased and sold at a profit;
14.2 Henderson and/or Henderson Corp would provide funds to the stockbroker to purchase the shares or options so identified;
14.3 the stockbroker would purchase the shares or options with the funds provided by Henderson and/or Henderson Corp;
14.4 the stockbroker would subsequently sell the shares or options at a profit; and
14.5 Henderson and/or Henderson Corp would not be obliged to share the profit from the sale of the shares or options with the stockbroker and could retain the profit less brokerage.
('the stockbroking arrangement')
15. In reliance upon the representations and the advice, Henderson and/or Henderson Corp entered into the agreement pleaded in paragraph 16 below.
Agreement
16. In or about mid 1993, Henderson and/or Henderson Corp, by its agent, Henderson, made a verbal agreement ('Agreement') with Hewitt and/or Gibrae, by its agent
- Hewitt, at Barringtons' offices at 216 St George's Terrace, Perth to the following effect:
- 16.1 Hewitt and/or Gibrae and/or Samit would on behalf of Henderson and/or Henderson Corp and Hewitt and/or Gibrae buy and sell shares and options in publicly listed corporations;
16.2 Henderson and/or Henderson Corp would make funds available to Hewitt and/or Gibrae and/or Samit from time to time as requested by Hewitt to meet the cost of acquiring the shares or options;
16.3 Hewitt would determine which shares and options were to be purchased and sold and when the shares and options were to be purchased and sold;
16.4 Henderson and/or Henderson Corp, on one hand, and Hewitt and/or Gibrae, on the other, would share equally between them any profits, dividends or other income or gain realised from the sale and purchase of the shares and options pursuant to the Agreement;
16.5 Hewitt and/or Gibrae would indemnify Henderson and/or Henderson Corp in respect of any losses resulting from the sale and purchase of the shares and options;
16.6 Hewitt and/or Gibrae would keep and maintain at his or its cost appropriate records and accounts of all transactions conducted, receipts issued and payments made pursuant to the Agreement;
16.7 Hewitt and/or Gibrae would at his or its cost provide to Henderson and/or Henderson Corp information on a monthly basis regarding transactions entered into pursuant to the Agreement including the value of any shares or options purchased pursuant to the Agreement and amounts paid and received by Hewitt and/or Gibrae and/or Samit pursuant to the Agreement.
(Page 15)
- 17. It was an implied term of the Agreement and necessary to give the Agreement business efficacy that the Agreement would be terminable at any time by any party by notice to the other parties.
18. Pursuant to the Agreement during the period from about 1 June 1993 to 1 September 1996:
18.1 Henderson and/or Henderson Corp paid $349,655.00 to Hewitt and/or Gibrae and/or Samit for the purchase of various shares and options as determined by Hewitt;
18.2 Hewitt and/or Gibrae paid the funds which they or either of them received to Samit and caused Samit to use those funds and the funds which Samit received to purchase various shares and options particulars of which are as follows:
Date | Particulars Shares | Amount Paid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19. By notice dated 25 January 2000 given to Hewitt, Gibrae and Samit by Henderson and Henderson Corp by their solicitors the Agreement was terminated.
(Page 16)
- 20. Henderson and/or Henderson Corp suffered losses from transactions entered into pursuant to the Agreement. The amount of those losses cannot be quantified until accounts are taken.
21. In breach of the terms of the Agreement.
21.1 Hewitt and/or Gibrae failed during the term of the Agreement to provide to Henderson or Henderson Corp information on a monthly basis regarding the share and option transactions entered into pursuant to the Agreement, the value of the shares and options purchased pursuant to the Agreement and the amounts paid and received by Hewitt and/or Gibrae and/or Samit pursuant to the Agreement;
21.2 Hewitt and/or Gibrae has failed and refuses to indemnify Henderson or Henderson Corp for losses sustained under the Agreement.
22. By reason of the matters pleaded in the preceding paragraph, Henderson and/or Henderson Corp has suffered loss and damage.
Fiduciary duties owed to Henderson and Henderson Corp by Hewitt
23. By reason of the matters pleaded in paragraphs 5 and 9 to 11 above, there was a fiduciary relationship between Henderson and/or Henderson Corp, on one hand, and Hewitt, on the other, at the time Hewitt made the representations and gave the advice.
24. Pursuant to the fiduciary relationship pleaded in the preceding paragraph, Hewitt owed Henderson and/or Henderson Corp fiduciary duties:
24.1 to at all times act in the best interests of Henderson and Henderson Corp;
24.2 not to act for or advise Henderson or Henderson Corp if there was a conflict between the duty
- which he owed to Henderson or Henderson Corp and his interest;
- 24.3 not to prefer his interests to the interests of Henderson or Henderson Corp.
- 25. Further or alternatively, by reason of the matters pleaded in paragraphs 5, 9 to 13 and 15 to 18 above, there was a fiduciary relationship between Henderson and/or Henderson Corp, on one hand, and Hewitt, on the other, when Hewitt purchased shares and options or caused shares and options to be purchased pursuant to the Agreement.
26. Pursuant to the fiduciary relationship pleaded in the preceding paragraph, Hewitt owed Henderson and/or Henderson Corp fiduciary duties:
26.1 to at all times act in the best interests of Henderson and Henderson Corp;
26.2 not to act for or advise Henderson or Henderson Corp if there was a conflict between the duty which he owed to Henderson or Henderson Corp and his interest;
26.3 not to prefer his interests to the interests of Henderson or Henderson Corp.
26.4 to account to Henderson and/or Henderson Corp or to cause Samit or Gibrae to account to Henderson and/or Henderson Corp in respect of all moneys received from Henderson or Henderson Corp and paid out and received by Hewitt or Samit or Gibrae in relation to the purchase and sale of shares and options pursuant to the Agreement from about 1 June 1993 to 1 September 1996.
Breaches of fiduciary duty by Hewitt
27. In breach of the fiduciary duties pleaded in paragraph 24, Hewitt:
- 27.1 made the representations and gave the advice without advising Henderson and/or Henderson Corp that they could instead enter into the stockbroking arrangement;
27.2 failed or neglected to advise Henderson and/or Henderson Corp that in making the representations and giving the advice there was a conflict between the duty which he owed them and his interest in obtaining a benefit from the venture.
- 28. In breach of the fiduciary duties pleaded in paragraph 26 above, Hewitt:
28.1 acted for Henderson and/or Henderson Corp pursuant to the Agreement when there was a conflict between the duty which he owed Henderson and/or Henderson Corp and his interest in so acting;
28.2 failed to account to Henderson and/or Henderson Corp or to cause Samit or Gibrae to account to Henderson and/or Henderson Corp in respect of all moneys received by him or Samit or Gibrae from Henderson and/or Henderson Corp and all moneys paid out by him or Samit or Gibrae in relation to the purchase and sale and purchase of shares and options pursuant to the Agreement from about 1 June 1993 to 1 September 1996;
28.3 received moneys from Henderson and/or Henderson Corp, as pleaded in paragraph 18 above, used those moneys to cause Gibrae and/or Samit to purchase shares and options in publicly listed companies and made losses on those transactions but failed or refused to indemnify Henderson and/or Henderson Corp in respect of those losses;
…
(Page 19)
- Relief
37. Henderson claims:
37.1 as against Hewitt:
(a) damages for breach of contract;
(b) alternatively, equitable compensation for breach of fiduciary duty;
(c) interest thereon at 6% per annum from 1 July 1996 until judgment pursuant to section 32 of the Supreme Court Act;
(d) an account of all moneys received by Hewitt and paid out by him in relation to the purchase and sale of shares and options from moneys received from about 1 June 1993 to 1 September 1996 from Henderson as well as an account of what moneys ought to have been received by Hewitt and what moneys ought to have been paid out by him in relation to the same transactions;
(e) costs;
…
38. Henderson Corp claims:
38.1as against Hewitt:
(a) damages for breach of contract;
(b) alternatively, equitable compensation for breach of fiduciary duty;
(c) interest thereon at 6% per annum from 1 July 1996 until judgment pursuant to section 32 of the Supreme Court Act;
(d) an account of all moneys received by Hewitt and paid out by him in relation to the purchase and sale of shares and options from moneys received from about 1 June 1993 to 1 September 1996 from Henderson Corp as well as an account of
- what moneys ought to have been received by Hewitt and what moneys ought to have been paid out by him in relation to the same transactions;
- (e) costs;
- …"
The hearing and determination of the amended application dated 16 May 2005
9 The amended application dated 16 May 2005 was heard and determined by Simmonds J. His Honour granted leave for Mr Henderson, Gibrae Pty Ltd, Barrington Partners and Samit Pty Ltd to be re-joined as parties. Also, his Honour granted leave to re-amend the writ of summons in the terms sought. Further, his Honour granted leave to amend in accordance with the proposed substituted statement of claim, subject to the deletion of pars 26.4, 28.3, 35.3 and 36.
Application for leave to appeal
10 The appellant, Mr Hewitt, seeks leave to appeal to this Court against the orders made by Simmonds J. On 25 October 2005, Pullin JA ordered, relevantly, that the application for leave to appeal be heard together with the appeal. The grounds of appeal are these:
"1. The learned judge at first instance erred in law in granting leave on 29 July 2005 to the respondents (plaintiffs) to amend the writ of summons and the statement of claim to allege that the appellant (first defendant) breached fiduciary duties by engaging in conduct in 1993 and 1994 when his honour should have found that leave should be refused because the claims corresponded to common law claims that were statute barred under the Limitation Act 1935 (WA) and equity acts by analogy in such cases.
2. Alternatively to ground 1, the learned judge erred in law in granting such leave to amend without including a condition upon the grant of leave that the pleading take effect from the date of the amendment and not from the date of the writ commencing the action in circumstances where the facts upon which the claim was based had not previously been alleged in the action.
(Page 21)
- 3. The learned trial judge erred in law in finding that the proposed amendment disclosed an arguable case of breach of fiduciary duty by allowing a conflict between duty and personal interest by reason of the remuneration payable to the appellant in circumstances where the proposed plea was based upon a claim that the duty arose where the parties had expressly agreed that the appellant would be remunerated and remuneration was an inherent part of their relationship as pleaded.
4. The learned judge erred in law in granting leave on 29 July 2005 to the first respondent (first plaintiff) to amend the writ of summons and the statement of claim to allege that the appellant (first defendant) had breached a contract by failing and refusing to indemnify the first respondent (first plaintiff) for losses sustained from transactions entered into in 1993 and 1994 without identifying the time when the alleged failure and refusal occurred when such time was a material fact in respect of the claim because otherwise it was impossible to determine the case of the first respondent (first plaintiff) as to when the cause of action accrued and therefore whether a limitation defence was available to the appellant (first defendant).
5. Alternatively to ground 4, the learned judge erred in law in granting such leave to amend without including a condition upon the grant of leave that the pleading take effect from the date of the amendment and not from the date of the writ commencing the action in circumstances where the facts upon which the claim was based had not previously been alleged in the action, the only facts pleaded related to events in 1993 and 1994 and there was no plea as to when the losses were alleged to have been suffered and when the alleged failure and refusal to indemnify occurred."
Leave to appeal is required
11 The learned Judge's decision was interlocutory and leave to appeal is therefore required.
12 In general, an applicant for leave must demonstrate that the relevant decision was wrong or at least attended with sufficient doubt to justify the
(Page 22)
- grant of leave, and that substantial injustice would occur if the decision were left unreversed. See Wilson v Metaxas [1989] WAR 285 at 294. It must be emphasised, however, that these are not rigid or exhaustive requirements, and leave may be granted if, in all the circumstances, it is in the interests of justice to grant leave. See TheState of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40 at 56 - 57.
Ground 1 generally
13 In pars 24 and 26 of the substituted statement of claim, it is alleged that the appellant owed the first respondent, Mr Henderson, and the second respondent, Henderson Corporation Pty Ltd, fiduciary duties, as follows:
(a) to act in the best interests of Mr Henderson and Henderson Corporation Pty Ltd;
(b) not to act for or advise Mr Henderson or Henderson Corporation Pty Ltd if there was a conflict between the duty which he owed to Mr Henderson or Henderson Corporation Pty Ltd and his own interests;
(c) not to prefer his own interests to the interests of Mr Henderson or Henderson Corporation Pty Ltd.
- None of the grounds of appeal attacks the formulation of these alleged duties. See, however, in relation to the alleged duty to act in the best interests of Mr Henderson and Henderson Corporation Pty Ltd, the observations of Gaudron and McHugh JJ in Breen v Williams (1996) 186 CLR 71 at 113.
14 The substituted statement of claim alleges breaches of fiduciary duty, relevantly, as follows:
(a) In 1993, Mr Hewitt made representations (par 12) and gave advice (par 13) to Mr Henderson and Henderson Corporation Pty Ltd without advising them that they could instead enter into the stockbroking arrangement (as defined in par 14), and he thereby breached his duty to act in the best interests of Mr Henderson and Henderson Corporation Pty Ltd and not to prefer his own interests to the interests of Mr Henderson and Henderson Corporation Pty Ltd;
(Page 23)
- (b) Mr Hewitt failed or neglected to advise Mr Henderson and Henderson Corporation Pty Ltd that in making the representations and giving the advice there was a conflict between his duty to them and his own interest in obtaining a benefit from the venture established under the Agreement (as defined in par 16), and he thereby breached his duty not to act for or advise Mr Henderson or Henderson Corporation Pty Ltd if there was such a conflict;
(c) Mr Hewitt acted for Mr Henderson and Henderson Corporation Pty Ltd pursuant to the Agreement in circumstances where there was a conflict between the duty which he owed them and his own interest in so acting, and he thereby breached his duty not to act for or advise Mr Henderson or Henderson Corporation Pty Ltd if there was a conflict between the duty which he owed them and his own interests; and
(d) Mr Hewitt failed to account to Mr Henderson and Henderson Corporation Pty Ltd (or to cause Samit Pty Ltd or Gibrae Pty Ltd to account to them) in respect of all moneys received by him (or Samit Pty Ltd or Gibrae Pty Ltd) from them and all moneys paid out by him (or Samit Pty Ltd or Gibrae Pty Ltd) in relation to the purchase or sale of shares and options pursuant to the Agreement from about 1 June 1993 to 1 September 1996.
- The grounds of appeal do not require this Court to make an assessment as to the efficacy, in point of pleading or legal principle, of those allegations.
15 Ground 1 does not assert that the Limitation Act 1935 (WA) applies directly to the causes of action for breach of fiduciary duty pleaded in the substituted statement of claim. Rather, it asserts that in equity the statute applies by analogy to those causes of action. The appellant submitted that the acts and omissions which are alleged to constitute each breach of fiduciary duty occurred in 1996 or earlier. He argued that the causes of action based on the making of the representations and the giving of the advice were analogous to common law claims in negligence and for breach of contract, and that the limitation period in respect of those common law claims would have expired prior to leave being granted to re-amend the writ of summons and file and serve the substituted statement of claim. The appellant also argued that:
(Page 24)
- (a) the alleged failure to account was pleaded as a failure to account in respect of moneys received under the Agreement, and this failure did not involve a breach of any fiduciary duty (Coulthard v Disco Mix Club Ltd [2000] 1 WLR 707);
(b) the appellant did not hold any moneys as a trustee and his liability to account, whether it arose under the Agreement or from a fiduciary relationship with the respondents, became statute barred either directly or by analogy on the expiration of six years after the date on which he became obliged to account (Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400 at 415 - 416); and
(c) the appellant's obligation to account arose, at the latest, on or about 1 September 1996, and in consequence the limitation period under the Limitation Act expired prior to leave being granted to re-amend the writ of summons and file and serve the substituted statement of claim.
Ground 1: application of limitation periods by analogy
16 Where equity applies a limitation period by analogy, it is an illustration of the maxim that equity follows the law. In Knox v Gye (1872) LR 5 HL 656, Lord Westbury said, at 674:
"For where the remedy in Equity is correspondent to the remedy at Law, and the latter is subject to a limit in point of time by the Statute of Limitations, a Court of Equity acts by analogy to the statute, and imposes on the remedy it affords the same limitation. … But if any proceeding in Equity be included within the words of the statute, there a Court of Equity, like a Court of Law, acts in obedience to the statute."
17 In Cohen v Cohen (1929) 42 CLR 91, Dixon J enunciated the principle, at 99 - 100, as follows:
"The Statute of Limitations, by its terms, does not operate directly upon equitable remedies. (See also, for Victoria, sec. 79(2) of the Supreme Court Act 1915.) But such remedies are barred in Courts of equity by analogy to the statute. The analogy is found in the case of constructive trusts, where the equity is fastened upon the trustee not because he intended to become the fiduciary of property but because of the character of
(Page 25)
- his dealings and in spite of his intention to take the property for himself. But Courts of equity have refused to see any analogy when a person, intending to act in a capacity which is fiduciary, has received, as and for the beneficial property of another, something which he is to hold, apply or account for specifically for his benefit. Such a person is either an express trustee, or, if that name does not in strictness belong to him, he stands in the same position as a direct or express trustee (see Soar v. Ashwell (1893) 2 QB 390, and particularly pp. 393 - 394 (per Lord Esher MR) and 397 - 398 (per Bowen L.J.))."
- In Cohen, the defendant received insurance moneys on behalf of the plaintiff, his wife, and held them as her trustee. He was obliged to account specifically for those moneys. The relationship was trustee/beneficiary and not debtor/creditor. In the circumstances, the statutory limitation period did not apply in that the plaintiff's claim in equity did not correspond to a claim at common law.
18 In the present case, the appellant submitted that equity does not apply the statute by analogy where there has been concealed fraud or mistake. It was further submitted, however, that:
" … equity does not retain a general discretion as to whether to apply … the limitation statute if analogy to a common law remedy is shown. … Statements to contrary effect are incorrect and should not be followed."
19 In In re Greaves, deceased (1881) 18 Ch D 551, Jessell MR said, at 553:
"In the first place, Vice-Chancellor Sir John Leach stated, and correctly stated, this:
'The other fallacy is, that the statute bars the suit in Equity; which it does not. But, as Courts of Equity will not entertain stale demands, they have thought proper to adopt the limit of six years, in analogy to the statute; and pleas of the statute are admitted in these Courts by analogy only. When the circumstances of a case are such as to make it against conscience to apply the rule founded upon this analogy, the Court will not enforce it. … '"
20 Story's Commentaries on Equity Jurisprudence, First English Edition (1884) states, at § 64a:
(Page 26)
- " … although the statutes of limitations are in their terms applicable to courts of law only; yet equity, by analogy, acts upon them, and refuses relief under like circumstances. Equity always discountenances laches; and holds, that laches is presumable in cases where it is positively declared at law. Thus, in cases of equitable titles in land, equity requires relief to be sought within the same period in which an ejectment would lie at law; and, in cases of personal claims, it also requires relief to be sought within the period prescribed for personal suits of a like nature. And yet there are cases, in which the statutes would be a bar at law, but in which equity would, notwithstanding, grant relief; and on the other hand, there are cases, where the statutes would not be a bar at law, but where equity, notwithstanding, would refuse relief. But all these cases stand on special circumstances, which courts of equity can take notice of when courts of law may be bound by the positive bar of the statutes."
21 In KM v HM; Women's Legal Education and Action Fund, Intervener (1992) 96 DLR (4th) 289, La Forest J (with whom Gonthier, Cory and Iacobucci JJ agreed) held that even if statutes of limitation are applicable by analogy in the exclusive jurisdiction of equity, the analogy will be governed by the parameters of the equitable doctrine of laches, and equity retains a "residual discretion" as to whether the statute should apply. La Forest J said, at 332 - 333:
"The present case involves a breach of fiduciary duty, which falls solely within the realm of equity. As such, it is not in my view readily amenable to limitation by analogy to some common law action. However, even if an analogy could be drawn that is not to say that it must be applied. As I noted earlier, equity retains a residual discretion on this point, which is the point of distinction from acting in obedience to the statute. In this respect the analogy takes on the character of laches, a point explicitly recognized by Brunyate [Limitation of Actions in Equity (London: Stevens & Sons, 1932)]. A more detailed consideration of laches follows, but for now it is enough to note the following proposition advanced by Brunyate, at p. 17:
'Where a Court of Equity is applying the statute as part of the law of laches it may reasonably allow any exceptions that are allowed in the law of laches … since delay by a
- plaintiff who has been ignorant of his right of action will not amount to laches, we should expect that, where the Court is acting by analogy to the statute, time will not run until the plaintiff is aware of his right of action.'
- This reasoning would appear to be the basis of the judgment in Metropolitan Bank v. Heiron (1880), 5 Ex. D. 319 (C.A.)."
22 The judgment of La Forest J in KM was referred to with approval by Kirby P in Williams v Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497 at 509 - 510. His Honour said, at 510:
"I see no reason to conclude that the principles expressed by the Supreme Court of Canada would not be applicable in this jurisdiction."
- In Williams, Kirby P and Priestley JA held that the Limitation Act 1969 (NSW) did not apply, in its own terms, to a cause of action for equitable relief. It only applied by analogy. The President said, at 509:
"Analogous application of the statute does not necessarily mean exact application of its terms."
That statement has been criticised. It is referred to in Meagher Gummow & Lehane's Equity Doctrines & Remedies, 4th ed, at [34-075]:
"No authority was cited in support of this view. Powell JA expressed sturdy disagreement, demonstrating that Kirby P's view was inconsistent both with what the Lord Chancellor said in Knox v Gye (1872) LR 5 HL 656 and with what Dixon J said in Cohen v Cohen (1929) 42 CLR 91; [1929] ALR 204. The matter was revisited in Cassis v Kalfus BC 200107761; [2001] NSWCA 460 where Powell JA repeated his view, although Hodgson JA signified his adherence to the heresy."
In Cassis v Kalfus [2001] NSWCA 460, Heydon JA referred, at [9], to Kirby P's proposition in Williams that analogous application of the statute does not necessarily mean exact application of its terms. His Honour rejected that proposition, and added:
" … it is far from clear that it is supported by Priestley JA [in Williams] in view of the tentative and cautious mode in which he expressed the basis of his concurrence with the orders proposed by Kirby P. It was not supported by Powell JA."
(Page 28)
23 In The Duke Group Ltd (in liq) v Alamain Investments Ltd [2003] SASC 415, Doyle CJ considered the principles developed by equity in relation to the application of limitation periods by analogy, including the circumstances in which equity will decline to apply an analogous limitation period. His Honour said, at [135]:
" … before applying the statutory time limit by analogy, I must be satisfied that in all the circumstances it is just to do so. It is not just a question of finding a sufficient similarity between the equitable claim and the claim that is subject to a statutory time limit. This point has not attracted a great deal of attention in the cases referred to. Nevertheless, in accordance with basic principle it is necessary for me to consider whether it is just in all the circumstances to apply the statutory time limit."
- The Full Court of the Supreme Court of South Australia dismissed an appeal from the judgment of Doyle CJ: Barker v Duke Group Ltd (in liq) (2005) 91 SASR 167. Perry J (with whom Duggan J agreed and White J expressed general agreement, subject to one qualification which is not presently relevant) said, at 176 [84], that a court of equity will not apply a statutory limitation period by analogy if, in the particular circumstances, it would be "unjust" to do so.
24 Spry, Equitable Remedies (6th ed), states, at 419 - 420:
" … if there is a sufficiently close similarity between the exclusive equitable right in question and legal rights to which the statutory provision applies a court of equity will ordinarily act upon it by analogy but … it will so act only if there is nothing in the particular circumstances of the case that renders it unjust to do so. What is regarded by courts of equity as a sufficiently close similarity for this purpose involves a question of degree, and reference must be made to the relevant authorities. The basis of these principles is that, in the absence of special circumstances rendering this position unjust, the relevant equitable rules should accord with comparable legal rules. [footnote omitted]"
- That view (in the 6th ed) was expressly approved by Doyle CJ in The Duke Group at [112]. The same view (expressed in the 3rd ed) appears to have been approved by Tipping J in Matai Industries Ltd v Jensen [1989] 1 NZLR 525 at 543 - 544.
(Page 29)
25 In my opinion, the authorities which I have reviewed support the proposition that equity will not apply a limitation period by analogy where there are circumstances which make the application of the statute unconscionable. The learned Judge was therefore correct in deciding not to disallow the amendments on the basis asserted by the appellant. It is inappropriate, in these proceedings, to determine whether equity retains a broader discretion as to whether the statute should apply; for example, by reference to any exceptions that are allowed in the law of laches, as La Forest J held in KM, at 332 - 333, and with whom Kirby P, in Williams, appears to have agreed.
Ground 1: The limitation period in relation to an action for an account
26 By section 38(1)(c)(ii) and (iii) of the Limitation Act, the limitation period applicable to an action for an account is six years after the date on which the cause of action accrues. According to Meagher Gummow & Lehane's Equity Doctrines & Remedies, 4th ed, at [34-030], that limitation period applies to all actions of account, at law or in equity, and based on either legal or equitable liability to account. Different views have, however, been expressed. See the discussion in the Law Reform Commission of Western Australia's Report on Limitation and Notice of Actions, Project No 36, Pt II, at [12.14] - [12.17] and the authorities there mentioned. It is unnecessary to resolve that controversy in these proceedings. It is sufficient to note that if the provisions of s 38(1)(c)(ii) and (iii) do not apply directly to actions of account in equity, based on an equitable liability to account, they apply by analogy. See, in the context of s 2(2) and (7) of the Limitation Act 1939 (UK), Tito v Waddell (No 2) [1977] Ch 106 at 250 - 252, and in the context of those provisions and s 36 of the Limitation Act 1980 (UK), Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400 at 415 - 416.
27 A critical issue in relation to the application of s 38(1)(c)(ii) and (iii), either directly or by analogy, is the determination of the date on which the cause of action in question accrues. In the present case, the Agreement was characterised, in the original writ of summons, as "an oral joint venture agreement, alternatively an oral partnership agreement". That characterisation was deleted in the amendments made pursuant to Simmonds J's grant of leave. The deletion is not significant in that the true legal relationship between the parties to the Agreement involves questions of law. But the true legal relationship between the parties may be significant in determining the date on which the respondents' action for an account accrued. For example, if the parties to the Agreement were in partnership, time did not begin to run until the partnership was dissolved.
(Page 30)
- See Noyes v Crawley (1878) 10 Ch D 31 at 38 - 39; Smith v Smith [1926] NZLR 311 at 313 - 314. In par 19 of the substituted statement of claim, it is alleged that the Agreement (and, therefore, the relationship between the parties which was governed by it) was terminated by notice dated 25 January 2000.
28 Paragraph 16.7 of the substituted statement of claim pleads, relevantly, that it was a term of the Agreement that:
"[The appellant] would at his … cost provide to Henderson and/or Henderson Corp information on a monthly basis regarding transactions entered into pursuant to the Agreement including the value of any shares or options purchased pursuant to the Agreement and amounts paid and received by [the appellant] pursuant to the Agreement."
- The appellant submitted, in effect, that an obligation under the term pleaded in par 16.7 arose in each and every month during the subsistence of the Agreement and each obligation related to transactions entered into during the preceding month. In my opinion, even if that construction of the term is correct (and the obligation each month did not relate to all transactions entered into since the Agreement was made), if the parties to the Agreement were in partnership, time did not begin to run until the partnership was dissolved.
Ground 1: Conclusion
29 In Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514, Mason CJ, Dawson, Gaudron and McHugh JJ said emphatically, at 533:
"We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question."
- That statement was referred to by Burchett AJ in Young v Waterways Authority of New South Wales [2002] NSWSC 612, in the context of a successful appeal against the decision of a Master who had struck out parts of a statement of claim on the ground that those parts pleaded a
(Page 31)
- barred cause of action. After referring to Graf v Hope Building Corporation (1930) 171 NE 884 at 887, Williams and The Crown v McNeil (1922) 31 CLR 76 at 100, his Honour said, at [27]:
"These principles have only to be stated for it to be clear that their implementation involves the very kind of concern with the whole of the evidence which underlies the admonition delivered by the High Court in Wardley Australia Limited v Western Australia. An application of the statute by analogy could very rarely indeed lead to a summary dismissal of an action."
I agree, with respect, with those observations. An application which is or is analogous to a strike-out application will rarely be a satisfactory process for determining whether equity should apply a statutory limitation period by analogy.
30 In the present case, the respondents have pleaded, relevantly, causes of action for breach of fiduciary duty and an account. The appellant's allegation that a limitation period should be applied by analogy would, in the ordinary course, be specifically pleaded in his defence. See O 20 r 9(1) of the Rules of the Supreme Court1971 (WA). The respondents would then plead to that allegation in a reply. The plea in reply would include any facts which, on the respondents' contention, make it unconscionable for the appellant to invoke the limitation defence. The appellant has not (yet) sought to amend its defence to raise limitation issues. In my opinion, the application before the learned Judge was not a satisfactory process for determining, on a summary basis, whether the respondents' pleaded causes of action for breach of fiduciary duty and an account were hopelessly barred. That issue should be determined at trial on the pleadings and after all material facts have been found.
31 Ground 1 fails.
Ground 2
32 The appellant, in his written submissions, asserted:
"If unconditional leave is granted to amend then the pleading as amended takes effect from the date that the proceedings were commenced; Wigan v Edwards (1973) 47 ALJR 586 at 596.
Therefore, as there was no condition upon the grant of leave to the effect that the amendments take effect from the date upon which they were made, the consequence of the leave given by
(Page 32)
- his Honour was to deprive the appellant of the opportunity to raise limitation issues in [his] defence."
33 In Morgan v Banning (1999) 20 WAR 474, the Full Court of the Supreme Court of Western Australia held that O 21 r 5(5) of the Rules of the Supreme Court and the "relation back" rule cannot operate to override the effect of the Limitation Act. Wheeler J (with whom Ipp J agreed, and Owen J agreed subject to adding a brief comment of his own) said, at 483:
"First, if the writ when issued, although defective, is not a nullity, and its terms are wide enough to encompass the amendments sought to be made to clarify or particularise or 'cure' it, then it seems that no question of limitation arises. Such an action is within time and subsequent steps (even those directed to defects in the original indorsement) are merely steps taken in a validly instituted action with respect to which it is not necessary to consider limitation questions. However, if it is so irregular that, subsequent to the expiry of the limitation period, the defendant is successful in having it wholly set aside, it will then be too late for the plaintiff to bring a further action.
The second proposition which seems to me to follow is that if the defective indorsement appearing on the writ when issued, is not of a type which is capable of encompassing amendments sought to be made after the expiry of the limitation period, so that the amendments truly 'add' an additional and time barred cause of action (rather than particularising, clarifying, or expanding one already instituted) then, whether leave to amend is granted or not, the new action remains time barred. Whatever the rules of court may provide, an action which is in fact instituted out of time is able to be defeated by reliance upon the Limitation Act, which the court has no power to override, whether by a procedural rule of 'relation back' or otherwise."
- In the present case, counsel for the respondents informed this Court that he did not challenge the correctness of those statements of principle.
34 In my opinion, it was unnecessary for the learned Judge to make an order that the amendments which he allowed, or any of them, should take effect from the date of amendment and not from the date on which the original writ of summons was issued. The granting of leave to make the amendments does not preclude the appellant from pleading any limitation defence which he alleges applies, either directly or by analogy, to any of the causes of action in the substituted statement of claim. If the appellant
(Page 33)
- pleads that any of the causes of action is time barred, it will be necessary for the trial Judge to find the material facts and determine whether the limitation defence is made good.
35 Ground 2 fails.
Ground 3
36 The appellant, in his written submissions, asserted:
"The claim of breach of fiduciary duty by acting in a position of conflict of interest is misconceived. It is based upon a fiduciary duty that is alleged to have arisen in relation to a relationship where, on the facts as alleged by the respondents, there was express agreement to the effect that Hewitt would be entitled to half the profits from the investments. It was inherent in the nature of the alleged dealings between Hewitt and the respondents that he would be remunerated. There can be no fiduciary duty to avoid a conflict of interest by receiving remuneration arising from the nature of a relationship that involved remuneration being paid.
The pleading in the Minute suffered from two defects. First, it failed to accommodate itself to the terms of the contract as alleged by the respondents in circumstances where the fiduciary duties were alleged to co-exist with contractual duties; …
Secondly, receipt by a fiduciary of remuneration, of itself, is not a breach of fiduciary duty. There is no plea as to how the particular remuneration arrangement in this case may be alleged to be a breach of fiduciary duty. …"
37 In my opinion, the appellant's submissions are based on a misunderstanding of the respondents' pleas. In par 27 of the substituted statement of claim, the respondents assert, in substance, that the appellant breached his fiduciary duties to them by making the representations and giving the advice, without informing them that they could instead enter into the stockbroking arrangement. The alleged breach occurred before the parties entered into the Agreement. In par 28 of the substituted statement of claim, the respondents assert, in substance, that the appellant's alleged acts and omissions pursuant to the Agreement constituted ongoing breaches of his fiduciary duties. As I understand the respondents' case, the appellant is alleged to have breached his fiduciary duties, in the circumstances pleaded, by entering into the Agreement, and
(Page 34)
- continued to breach those duties, in the circumstances pleaded, by his acts and omissions pursuant to the Agreement. This appears to be the basis on which the learned Judge dealt with the point. His Honour said, at [154]:
"The first of the three pleaded breaches of these duties for Hewitt in relation to action under the agreement (par 28.1) is acting, as I have previously indicated, for the beneficiary pursuant to the agreement when there was a conflict between the duty owed to the beneficiary and his interest in so acting. On the analysis I have provided to this point, this plea could be related to all of the first three of Hewitt's fiduciary duties, considered as continuing obligations to make the beneficiary aware of the stockbroker alternative to the agreement. …"
No error has been demonstrated in his Honour's approach or conclusions.
38 Ground 3 fails.
Ground 4
39 Ground 4 relates to the first respondent's breach of contract claim. In par 16.5 of the substituted statement of claim, it is alleged, relevantly, that:
"Hewitt and/or Gibrae would indemnify Henderson … in respect of any losses resulting from the sale and purchase of the shares and options; "
- It will be recalled that the first respondent, Mr Henderson, was originally a party to the writ of summons. He ceased to be a party on 27 March 2001, and was re-joined as a plaintiff pursuant to the learned Judge's grant of leave to re-amend the writ.
40 For the reasons I have given in the context of ground 1, the precise nature of the legal relationship between the parties to the Agreement may be significant in determining the date on which the first respondent's cause of action accrued in relation to the breach of the indemnity pleaded in par 16.5. As I have noted in the context of ground 1, if the parties to the Agreement were in partnership, time did not begin to run until the partnership was dissolved, and in par 19 of the substituted statement of claim it is alleged that the Agreement (and, therefore, the relationship between the parties which was governed by it) was terminated by notice dated 25 January 2000.
(Page 35)
41 The respondents contend that they are unable to particularise the precise date or dates on which the alleged losses were incurred, or the precise amount of each loss, until after discovery and inspection of documents. They are matters within the knowledge of the appellant, who controlled the investments made pursuant to the Agreement. The respondents have sought an account.
42 In my opinion, it is not appropriate, in the circumstances I have described in [41] above, to require the respondents, at this stage of the proceedings, to provide the particulars sought by the appellant, or to disallow any part of the substituted statement of claim in consequence of the respondents' inability to provide them.
43 Ground 4 fails.
Ground 5
44 This ground reproduces, in substance, the contentions of law made by the appellant in the context of ground 2. In my opinion, ground 5 fails for the reasons I have given in relation to ground 2.
The respondents' notice of contention
45 At the hearing of the application, this Court granted the respondents leave to rely on a notice of contention which was filed and served in the week before the hearing. It is unnecessary to consider the matters raised in the notice.
The application should be dismissed
46 I am not satisfied that either of the usual criteria for the grant of leave to appeal is satisfied. I would dismiss the application.
23
16
2