Hillebrand v Penrith Council

[2000] NSWSC 1058

CITATION:	Hillebrand v Penrith Council [2000] NSWSC 1058
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 3391/00
HEARING DATE(S):	13, 14 November 2000
JUDGMENT DATE:	14 November 2000
PARTIES :	Bernard Hillebrand (P1) Lindy Gai Hillebrand (P2) The Council of the City of Penrith (D1) Richard Mork (D2) The Registrar General of New South Wales (D3)
JUDGMENT OF:	Austin J

COUNSEL :	J Whittle SC with H Woods (P) D P Robinson (D1)
SOLICITORS:	Roberts Mann Davies (P) Gadens (D1)
CATCHWORDS:	PRACTICE AND PROCEDURE - summary dismissal - scope of Pt 13 r 5 - whether there is 'no reasonable course of action' if there is a clearly applicable limitation period - TORT - negligence causing economic loss - Council alleged to have negligently conveyed away plaintiffs' land - whether cause of action accrues when conveyance occurs or when plaintiffs discover that it has occurred - whether limitation period has expired.
LEGISLATION CITED:	Limitation Act 1969 (NSW) ss 14, 56 Local Government Act 1919 (NSW) ss 602, 604 Real Property Act 1900 (NSW) s 42 Supreme Court Rules Pt 1 r 3, Pt 15 r 26, Pt 13 r 5
CASES CITED:	Brimson v Rocla Concrete Pipes Limited [1982] 2 NSWLR 937 Shoalhaven Shire Council v Logue (1979) 41 LGRA 116 Bryant v Maloney (1995) 182 CLR 609 Pyrenees Shire Council v Day (1998) 192 CLR 330 Sutherland Shire Council v Heyman (1985) 157 CLR 424 Idoport Pty Ltd v National Australia Bank (2000) 49 NSWLR 51 Scarcella v Lettice [2000] NSWCA 289 Registrar General v Cleaver (1996) 41 NSWLR 713 Christopoulos v Angelos (1996) 41 NSWLR 700 Sargent v ASL Development Limited (1974) 131 CLR 634 McKenny v The Council of the Shire of Balmoral [1906] QdWN Case 14
DECISION:	Summary dismissal of part of proceedings relating to relief claimed for negligence causing economic loss

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

TUESDAY 14 NOVEMBER 2000

3391/00 - BERNARD HILLEBRAND & ANOR v THE COUNCIL OF THE CITY OF PENRITH

JUDGMENT (Ex tempore; revised 15 November 2000)

1   HIS HONOUR: This is an application by Notice of Motion filed on 30 October 2000 by the Council, as first defendant in the proceedings, for orders directed to part of the plaintiffs' Further Amended Statement of Claim filed on 1 November 2000 (‘the Statement of Claim’).

2   The orders seek to attack paragraphs 15 to 18 of the Statement of Claim which plead a cause of action in negligence against the first defendant in the following terms:
’15. In the alternative, if, contrary to the matters pleaded in paragraphs 8 and 11 above the first defendant is found to have validly conveyed either lot 17 or lot 20 of section C in Deposited Plan 976412 to the second defendant or the Half Lot to itself, the first defendant was under a duty to each of the plaintiffs to exercise reasonable care in taking any steps to sell each of the said parcels of land pursuant to sections 602 and 604 of the Local Government Act, 1919, as amended.
16. Further, in breach of the said duty, prior to executing the Deed of Conveyance to itself referred to in paragraph 4 above, the first defendant:
(a) did not take reasonable care to ascertain whether any rate levied by the first defendant in respect of the Half Lot had been overdue for more than five years at the time the Council decided to sell the said land;
(b) did not take reasonable care to publish any notice of any kind in the New South Wales Government Gazette or any newspaper of a sale of the Half Lot being land vested in the plaintiffs;
(c) did not take reasonable care in making a search against the Half Lot;
(d) did not take reasonable care to give notice to either of the plaintiffs of any proposed sale by the first defendant of the Half Lot.
17. In breach of the said duty, prior to executing Deed of Conveyance to the second defendant referred to in paragraph 9 above, the first defendant:
(a) did not take reasonable care to ascertain whether any rates levied by the first defendant in respect of lot 17 and lot 20 of section C in Deposited Plan 976412 had been overdue for more than five years at the time the first defendant decided to sell the said lands;
(b) did not take reasonable care to publish any notice of any kind in the New South Wales Government Gazette or in any newspaper of the sale of lot 17 and lot 20 of section C in Deposited Plan 976412 being land vested in the plaintiffs or any other persons;
(c) did not take reasonable care in making a search against lot 17 and lot 20 of section C in Deposited Plan 976412; and
(d) did not take reasonable care to give notice to either of the plaintiffs of any proposed sale by the first defendant of lot 17 or lot 20 of section C in Deposited Plan 976412.
18. By reason of the breaches of duty by the first defendant pleaded in paragraphs 16 and 17 above, the plaintiffs have suffered loss and damage.’
3 It will be seen that the cause of action asserts that the Council owed a duty of care to each of the plaintiffs to exercise reasonable care with respect to the sale of some parcels of land and that it failed to do so. The Council seeks to strike out these paragraphs under Pt 15 r 26 of the Supreme Court Rules, or to obtain an order that the claims based upon those paragraphs be stayed or dismissed under Pt 13 r 5. The Council relies, in addition to those two rules, on the inherent jurisdiction of the Court, submitting that the inherent jurisdiction is broader in scope than either of rules: see Mason K, ‘The Inherent Jurisdiction of the Court’ (1983) 57 ALJ 449; cf, as to the respective scopes of the inherent jurisdiction and Pt 13 r 5, Brimson v Rocla Concrete Pipes Limited [1982] 2 NSWLR 937.

Facts


4 The plaintiffs have sued the Council for wrongfully selling three portions of the plaintiffs’ land in Emily Street, Londonderry New South Wales in 1993 for alleged non-payment of rates. The Council purported to do so in reliance on its powers under sections 602 and 604 of the Local Government Act 1919 (New South Wales). The land was held under old system title, though a primary application had been made to bring it under the provisions of the Real Property Act 1900 (NSW). The portions sold comprised half of Lot 31 (‘the Half Lot’) and the whole of Lots 17 and 20 in Section C of Deposited Plan 976412. The plaintiffs had owned Lots 16 to 30 in Deposited Plan 976412 and the Half Lot as joint tenants since 1980.

5 The Statement of Claim pleads the conveyance of the whole of Lot 31 (including the Half Lot) by the Council to itself on 9 February 1993 in consideration of the sum of $555,650. It alleges that at the time of that purported conveyance no rates had been levied by the Council in respect of the Half Lot which were overdue for more than five years and that (in effect) the procedures set out in s 602 of the Local Government Act had not been followed and that the Council had not given the plaintiffs notice of any proposed sale of the Half Lot.

6   In its Amended Defence filed on 6 November 2000, the Council admits the assertion that no rates had been levied by it in respect of the Half Lot which were overdue for more than five years and the assertion that it did not give notice to the plaintiffs of the proposed sale.

7   Similar pleadings are found in the Statement of Claim with respect to Lots 17 and 20. In the case of those lots the Deed of Conveyance was made on 13 April 1993 in consideration of $3,050, the purchaser being Mr Richard Mork, the second defendant.

8   Again, the Council, by its Amended Defence, admits that no rates were levied in respect of Lots 17 and 20 which were overdue for more than five years and that no notice was given to the plaintiffs of any proposed sale by the Council of those lots.

9 The plaintiffs have submitted to me that, in light of those admissions, it is established that the Council's purported sales and conveyances of Lots 17 and 20 and the Half Lot were not authorised by s 602. Consequently, they submit, for the purposes of s 604, Lots 17 and 20 and the Half Lot are not encompassed by the statutory use of the words ‘the land’ because, as a matter of construction, those words refer only to land in respect of which rates have been levied that are overdue by more than five years.

10 Clearly, a major part of the case will be whether the purported conveyances had any effect in the circumstances set out above and whether Mr Mork can rely upon the defence conferred upon a purchaser by s 604(2) to any claim to recovery of the land after the Council has purported to dispose of it. Part of the relief sought in the Statement of Claim goes to establishing the validity of the conveyances.

11   The case is made complex by some inconsistency of description of the subject properties. It appears that the plaintiffs acquired by conveyance in 1980 land described as Lots 18 and 19 in Registered Plan 610. The conveyance also describes the land by metes and bounds. There are questions upon which, no doubt, survey evidence will become relevant as to the relationship between Lots 18 and 19 in Plan 610 and Lots 16 to 30 and the Half Lot in Plan 976412.

12   The Statement of Claim alleges that on the proper construction of the Deed of Conveyance in their favour the plaintiffs' land comprised Lots 16 and 30 and the Half Lot in the latter plan, but it appears that confusion was created by the co-existence of the two plans with different, though similar, numbering.

13   According to the evidence before me, an advertisement appeared in the Penrith Press on Tuesday 8 September 1992 giving notice of the intention of the Council to sell specified land for overdue rates. The specified land includes Lots 17 and 20 in Emily Street (the street which, according to Plan 976412, is the frontage to Lots 16 to 30 and the Half Lot), but the owners are named as ‘R Gropley’ and ‘K Moore’ respectively.

14   The plaintiffs submit that the intention of the Council was to specify Lots 17 and 20 in Plan 610, but when the sale was brought into effect the Council purported to sell Lots 17 and 20 in plan 976412, the plaintiffs' land, rather than the land of Mr Gropley and Mr Moore.

15   There is also evidence before me relating to a primary application made by the plaintiffs in respect of Lots 18 and 19 of Plan No 610. The primary application was dated 19 December 1990 and numbered PA63264J.

16   There was correspondence during 1993 with respect to the primary application between the Land Titles Office and the lodging party (Berkhart and Co) and Mr John Gibson, then the solicitor for the plaintiffs. It appears from that correspondence that the plaintiffs' application related both to land in respect of which they claimed documentary title and land in respect of which they asserted an entitlement based upon possession.

17   On 12 August 1993 Mr Gibson wrote to the Director of Land Titles saying:
‘I refer to your letter of 3 August and advise that the applicants abandon their possessory claim to those parcels sold by Penrith City Council for unpaid rates.
I understand that these are Lots 17 and 20 Emily Street and also 31 Emily Street. I am not certain as to Lot 31 and should be pleased if you would let me know before I have the surveyor amend the linen plan.’

18   Both plaintiffs gave oral evidence before me to the effect that they did not authorise Mr Gibson to write that letter and that they became aware of the existence of the letter only in May 2000.

19   Additionally, the plaintiffs have given evidence that they saw the advertisement in the Penrith Press to which I have referred but they observed that none of the lots identified was Lot 18 or 19 in Plan 610, and that they became aware that it was possible that some of their land may have been sold by the Council only in 1997 or 1998, when some work was done to the land on behalf of Mr Mork. The evidence implies that they were confused by the existence of the two plans and the failure of the Council's advertisement to specify which plan it had in mind.

Scope of Supreme Court Rules


20 In these circumstances, the Council seeks relief, as I have said, under the Supreme Court Rules or the Court's inherent jurisdiction.

21 As far as Pt 13 r 5 is concerned, it obviously cannot be said in the present circumstances that paragraphs 15 to 18 of the Statement of Claim are frivolous or vexatious, or that they constitute an abuse of the process of the court. The question under that rule is whether paragraphs 15 to 18 constitute a claim for relief which does not disclose any reasonable cause of action (r 5(1)(a)).

22 As far as Pt 15 r 26 is concerned, again there can be no claim, in the circumstances, of any abuse of process and so the question is whether sub-paragraph 26(1)(a) or (b) is attracted. They are in the following terms:
‘(1) Where a pleading--
(a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;
(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings...
the Court may at any stage of the proceedings, on terms, order that the whole or any part of the pleading be struck out.’

23   The Council does not in this application assert that paragraphs 15 to 18 fail to disclose any known cause of action. It is evident that the cause of action asserted in those paragraphs is a claim based on breach of a duty of care leading to economic loss (compare the earlier cases in this area, McKenny v The Council of the Shire of Balmoral [1906] QdWN Case 14; Shoalhaven Shire Council v Logue (1979) 41 LGRA 116, 121, which on one view may assert a stricter form of liability). There is no question of physical injury to the land or chattels upon it - this is a claim as to financial loss which is not ‘causally consequent upon physical injury to the plaintiffs' own property’: see Bryant v Maloney (1995) 182 CLR 609, 657 per Toohey J.

24 Although the plaintiffs submitted to me that the law as to negligence causing economic loss is in an uncertain state, (‘conceptually unsettled’ in the words of Kirby J in Pyrenees Shire Council v Day (1998) 192 CLR 330), it is at least plain that damages are the gist of the cause of action and that the cause of action arises when the economic loss is suffered: see Sutherland Shire Council v Heyman (1985) 157 CLR 424, 503-5 per Deane J.

25 The sole challenge to the cause of action asserted in paragraphs 15 to 18 is that any such cause of action is statute barred. Reliance is placed on s 14(1)(b) of the Limitation Act 1969 (NSW) which says:
‘(1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims...
(b) a cause of action founded on tort, including a cause of action for damages for breach of statutory duty...’

26 The immediate question is whether the Supreme Court Rules to which I have referred are relevant at all to the Council's limitation claim.

27   There is an obvious distinction between the pleading of a cause of action and the application of a limitation period which means that the cause of action is not maintainable. It is arguable that the words ‘no reasonable cause of action’ in the two rules have no application where the defect relied upon is the expiry of a limitation period. However, in my opinion the better view is that in an appropriate case if a cause of action is clearly statute barred, the Court may conclude that the cause of action is not reasonable for the purposes of these two rules and may act under the appropriate rule accordingly. The precondition to that conclusion is that on the pleadings, and without reference to any disputed questions of fact, the limitation period clearly applies and has expired. Although counsel have been unable to refer me to any case in which either of the rules has been applied because of the expiration of a limitation period, in principle it seems to me, having regard to the underlying policies of the rules as well as their wording, that they should be available in a very clear case.

28 The Council invited me to reinforce this conclusion by recourse to Pt 1 r 3(1) and (2), according to which the over-riding purpose of the Supreme Court Rules is to facilitate just, quick and cheap resolution of the real issues in proceedings, and the Court is to give effect to the over-riding purpose when it exercises powers and interprets the rules. The operation of this rule, which is new, was considered in Idoport Pty Ltd v National Australia Bank (2000) 49 NSWLR 51. My interpretation of Pt 13 r 5 and Pt 15 r 26 is consistent with Pt 1 r 3, but I do not find it necessary to rely on the latter rule in order to reach my conclusion as to the proper meaning of ‘no reasonable cause of action’.

29 Therefore, those rules are available to be invoked in the exercise of the Court's discretion, in my view. I am inclined to the view that Pt 13 r 5 is more appropriate in the present circumstances than Pt 15 r 26. This is because Pt 15 r 26 is limited to cases where there is a defect in the pleadings as such and does not include cases where after examination of the evidence the Court comes to the conclusion that the plaintiff's case is hopeless: see Brimson's case at 941. To establish the expiration of a limitation period, the Council must refer to some evidence, although (in its submission) the evidence is clear and uncontroversial. Although the Statement of Claim itself asserts the dates of the relevant conveyances, and at least implies that the conveyances (if valid) caused the loss relied upon in paragraphs 15 to 18, it seems to me that r 26 is not really directed at reliance upon the pleaded facts to establish the limitation point. I, therefore, prefer to rely on Pt 13 r 5 as a source of jurisdiction.

30 To the extent that the inherent jurisdiction of the Court reinforces Pt 13 r 5, I would rely upon the inherent jurisdiction as well, but it is not necessary for me to decide whether the inherent jurisdiction goes beyond Pt 13 r 5 in view of the construction I have adopted of the rule.

31 The Council relies not only upon the submissions that there is no reasonable cause of action disclosed in paragraphs 15 to 18 because of the expiration of the limitation period, but also that under Pt 15 r 26 (1) (b) paragraphs 15 to 18 have a tendency to cause prejudice, embarrassment or delay in the proceedings. Essentially the submission is that if paragraphs 15 to 18 are allowed to remain, even though they are clearly open to objection because of the limitation period, the proceedings will be much longer and slower than they otherwise would have been. The plaintiffs say that to a large extent that is not so, because questions of assessment of damages will be referred to a Master and so issues of valuation will not have to be considered at the trial; and, in any event, there is a cross-claim by Mr Mork which will raise some issues of quantification of damages and other matters. In all the circumstances, say the plaintiffs, the hearing time will not be much reduced.

32 It is difficult for me to make a clear determination on this matter since there is no evidence on it before me, and I am relying only on the submissions of counsel. It seems to me, however, that if the cause of action in negligence causing economic loss is removed from the proceedings it is likely that there will be some saving in time and costs. I would, therefore, be inclined to regard paragraph 26(1)(d) as an additional jurisdictional ground for making the orders which I propose to make. However, as I have indicated, in my view it is preferable to act under Pt 13 r 5 as a matter of discretion.

Is the cause of action statute-barred?


33   This brings me to the key question in this case, namely, whether, on any view of the disputed facts, the limitation period must have expired so that paragraphs 15 to 18 do not disclose any reasonable cause of action.

34   The Council invites the Court to assume, for the purposes of determining that matter, that the plaintiffs were unaware of the facts constituting their right to commence proceedings against it for negligence at any time before the filing of the Summons by which the proceedings were instituted. The Summons was filed on 18 July 2000.

35 Section 14(1)(b) causes the limitation period of six years to commence to run on the day on which the cause of action first accrues. As I have mentioned, the cause of action in negligence causing economic loss is complete when the plaintiff first suffers actual economic loss or damage: see Scarcella v Lettice [2000] NSWCA 289, paragraph 13 per Handley JA. The authorities indicate that time commences to run when the damage accrues, even if the plaintiff is not aware of it: Scarcella’s case at paragraph 15. However, there is an apparent exception to those propositions where an owner suffers loss because of the existence of latent defect in a building, or because of the existence of a latent defect in title.

36   As far as latent defects in a building are concerned, the position was explained by Deane J in Sutherland Shire Council v Heyman at 503-5, a passage quoted in Scarcella’s case at paragraph 16. What emerges is that the fundamental question for the Court is to identify when the loss has occurred.

37   In the case of economic loss relating to a latent defect in a building, the loss does not occur until the inadequacy is first known or manifest. This is because until that occurs, the owner of the building is still in a position to dispose of it for a value not diminished by the defect, assuming of course that the purchaser from the owner would not discover the defect upon making normal inquiries.

38   Precisely the same principle is applied in the cases about latent defect in title. Registrar General v Cleaver (1996) 41 NSWLR 713 is a case where the benefit of a restrictive covenant was recorded on the plaintiff's certificate of title, but the burden of the covenant was not noted on the title of the land burdened by it. Both the land benefited and the land burdened by the covenant changed hands several times after the original mistake occurred. The plaintiffs acquired the property with the benefit of the covenant in 1978, but did not discover the absence of notation on the land burdened until 1988 when the proprietor of the land burdened threatened to breach the covenant. The plaintiffs were unable to enforce the covenant. They sought damages from the Registrar General because of his failure to annotate the register. The Registrar General unsuccessfully claimed that the action was statute barred. The Court's reasoning was that the plaintiffs' cause of action was not complete until the omission of the register was discovered because that was the time when the plaintiffs first suffered economic loss. They could, until that time, have resold the property for its full market value. A title search by someone aware of the existence of the covenant and the land benefited by it, would have disclosed the defect in title, but conveyancing practice did not require that such a search be made in connection with the sale and transfer of the burdened land.

39   Christopoulos v Angelos (1996) 41 NSWLR 700 is slightly closer to the present circumstances. In that case the plaintiffs purchased property that was subject to an easement not recorded on the certificate of title to that property. However, the easement was recorded on the certificate of title of the dominant tenement. The plaintiffs had no actual or imputed notice of the easement at the time of the purchase. As with Cleaver's case, the existence of the easement could have been discovered by a search of the title to the dominant tenement, but conveyancing practice did not require searches to be made of the dominant tenement, or of unregistered easements, in connection with the sale and transfer of the servient tenement. The difficulty for the plaintiff was that s 42(1)(b) of the Real Property Act 1900 (NSW), the fundamental provision dealing with indefeasibility of title to Torrens land, provides that the title of a registered proprietor is subject to an unregistered easement created in or existing upon the land. The Registrar General recorded the easement on the plaintiffs’ certificate of title about four years after the plaintiffs had become registered as proprietors. The Court of Appeal by a majority held that the plaintiffs did not suffer economic loss until the Registrar General recorded the easement on their title and they became aware that their land was burdened by it.

40   As with Cleaver's case, the reasoning was that until that time the plaintiffs could have resold their property for its full market value. If they had done so, they would not have incurred any economic loss. Consequently, economic loss only occurred at the point of time when the Registrar General acted and they became aware. The conclusion reached by the majority of the Court of Appeal was that the action (based on negligent misrepresentation), was not statute barred. I note that, according to the majority reasoning (per Handley JA at 703C, Cole JA at 711C), the plaintiffs would not have suffered any economic loss had they resold the property for its full market value in good faith before discovering the defect.

41   In the present case the economic loss flows from the conveyance by the Council of the two parcels of land by conveyances dated 9 February and 13 April 1993. The Council submits that the cause of action was complete upon delivery of the Deeds of Conveyance. It was the Council's conveying away of the land that caused the plaintiffs to suffer loss, and that occurred more than six years before the commencement of the proceedings. The plaintiffs submit that, by analogy with the latent defect cases, the cause of action for economic loss did not accrue until 1997 at the earliest, when one of them became aware that the Council had purported to make the conveyances.

42   In my opinion, the Council's submissions are correct on this point. This is a case where the loss was caused by the conveyances even though the plaintiffs were not aware of them. It is true that, the land being old system land, the plaintiffs might have purported to convey it for full value after the date of the conveyances by the Council. I have no evidence before me as to the proper conveyancing practice, but I am prepared to assume (indeed I am invited to do so, in effect, by the Council) that proper conveyancing practice would not have led to discovery of the conveyances by the Council if the plaintiffs had sold after April 1993. However, had they sold, they would have acted at a time when the conveyances by the Council were an established fact. Assuming (as the cause of action in negligence necessarily does) that the conveyances were effective, they operated to dispose of the title to the land the subject of the conveyances. A later purported conveyance would necessarily have failed to convey any title: nemo dat quod non habet. Therefore, a subsequent purchaser from the plaintiffs would have had a cause of action to recover an amount equivalent to the purchase money and other consequential loss from the plaintiffs, once the truth came out. There would surely be a high likelihood that the purchaser would seek recovery of the purchase price after discovering that the vendor had no title whatsoever. In those circumstances, any apparent avoidance of loss by the plaintiffs, if they had innocently purported to sell the land after April 1993, would have been likely to be corrected subsequently by a suit for damages brought by the purchasers from them. That prospect would be more than a mere contingency.

43   This is the crucial distinction between the present case and the Christopoulos case, for in Christopoulos , as I have emphasised, the Court of Appeal found that until the plaintiffs became aware of the defect they could have resold the property for its full market value and, thereby, avoided any economic loss. This implies that in the majority’s view, the prospect that a purchaser from the plaintiffs might sue them for damages for breach of warranty as to title (or, as in the Christopoulos case itself, for negligent misrepresentation in replies to requisitions) once the easement was discovered, should not be taken as sufficiently likely that the plaintiffs in that case should be regarded as able to sell only for a discounted price. Where, as here, the plaintiffs have no title whatever to convey to a purchaser, it is in my view unrealistic to proceed on the basis that they could convey away property that they did not own for a market price and retain the purchase money, and thereby avoid loss.

44 On this analysis, therefore, the economic loss asserted by the plaintiffs in paragraphs 15 to 18 of the Statement of Claim was suffered by them by virtue of the delivery of the Deeds of Conveyance in February and April of 1993. Upon the principles that I have set out, time commenced to run under s14(1)(b) at that stage, and the limitation period has expired. Therefore, even assuming the facts to be at their most favourable for the plaintiffs, the cause of action in paragraphs 15 to 18 cannot succeed because of the limitation period, and, in my view, the Council has made out its entitlement to relief.

45 In response to a question by me during the course of argument on 14 November, counsel for the plaintiffs said that he wished to rely upon s 56 of the Limitation Act, though he was unable to make any submission in respect of it at that stage.

46 Section 56 has the effect that where there is ‘a cause of action for relief from the consequences of a mistake’, the time which elapses after the limitation period commences to run and before the day upon which the plaintiff first discovers (or may with reasonable diligence discover) the mistake does not count in the reckoning of the limitation period.

47   If this section were applicable, it would have the effect that the cause of action in paragraphs 15 to 18 would commence to run no earlier than 1997 (on the plaintiffs' version of the facts), or no earlier than July 2000 (on the assumption the Council invited the Court to make).

48   In my opinion, however, this section does not apply. It is applicable only where the cause of action seeks relief from the consequences of a mistake. The cause of action in the present case seeks relief from the consequences of negligence rather than a mistake. It is true that the particulars of the negligence relied upon involve the assertion that the Council made mistakes including the mistake of confusing Lots 17 and 20 in Plan 610 with Lots 17 and 20 in Plan 967412, but the gist of the cause of action is negligence rather than mistake.

49 During argument, I led counsel for the plaintiffs to believe that he would have the opportunity to make submissions about s 56 and to refer the Court to any relevant authorities. In my ex tempore reasons for judgment delivered on 14 November 2000 I indicated that I would give counsel for the plaintiffs the opportunity to make any such submissions in writing by five o'clock on that day, and that I would defer making orders until 15 November 2000. I said that if any submission was made which affected the reasoning set out above, I would give the Council the opportunity to respond. If not, I would proceed to make the orders in chambers. Subsequently counsel for the plaintiffs notified my associate that he had received instructions not to lodge any further submission.

50   It follows from the reasoning set out above that it is strictly unnecessary for me to deal with the alternative submission made by the Council. This is a submission based upon Article 97 propositions 1 and 2 in Bowstead and Reynolds on Agency (16th edition 1996) (see also Sargent v ASL Development Limited (1974) 131 CLR 634 at 658), to the effect that the solicitor Mr Gibson had knowledge of all the relevant circumstances in 1993 and his knowledge should be imputed to the plaintiffs.

51   Suffice it to say that if this were the sole ground upon which the Council had relied, I would not have thought it appropriate to grant the relief which the Council seeks on any of the bases put forward today. This is because the state of knowledge of Mr Gibson as to the relevant issues in 1993 is far from clear, at least on the evidence before me now. In my view, it is just not appropriate to make any determination on that matter in an application of this kind.

Conclusion


52 Therefore, my orders will be that the claim to relief in the proceedings constituted by paragraphs 15 to 18 and the consequential claims for relief in paragraphs 10 and 11 of the Further Amended Statement of Claim be dismissed generally under Pt 13 r 5.

53   I propose to order the costs of the application to follow the event and that the proceedings be listed for mention before the Registrar next Thursday 23 November 2000.
* * * * * * * * *

Last Modified: 11/22/2000