Hoare v Australia & New Zealand Banking Group Ltd

[1990] FCA 824

824- 90

JUDGMENT No. .... ........ ..... 1 ........ ....

CATCHWORDS

TRADE PRACTICES - time-bar - cause of action in debt - whether accrued at time money paid over or when inability to repay became known.

~rade Practices Act 1974 - s.52, s.82(2), s.87(1)

Keen Mar Pty Ltd v Labrador Park Shopping Centre Pty Ltd

(1988) 10 ATPR 49-185

Jobbins v Cape1 Corporation Ltd & Anor Unreported,

Federal Court of Australia 21 December 1989.
Forster v Outred & Co. [l9821 1 WLR 86
Sutherland Shire Council v He man (1985) 157 CLR 424

Hawkins v Clayton, trading as C ayton Utz (1986) 5 NSWLR '

---I-

109

Hawkins v Clayton 164 CLR 539

FRANK HARRY EVANS HOARE & ANOR V AUSTRALIAN AND NEW

ZEALAND BANKING GROUP LIMITED

NO. G536 OF 1989

CORAM:	FOSTER J.
DATE :	19 FEBRUARY, 1990

PLACE: SYDNEY.

IN THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY ) NO. G536 OF 1989

1

GENERAL DIVISION	)
BETWEEN: FRANK HARRY EVANS HOARE & ANOR

Applicant

AND :

AUSTRALIAN AND NEW ZEALAND

BANKING GROUP LIMITED

Respondent

JUDGE MAKING ORDERS: MR JUSTICE M. L. FOSTER
DATED: 19 FEBRUARY, 1990

PLACE: SYDNEY

MINUTES OF ORDER

THE COURT ORDERS THAT:-

1.        The relevant portions of the applicants' statement of

claim be struck out.

2.        The applicants pay the respondent's cost of this motion.

NOTE :  Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY ) NO. G536 OF 1989

)

GENERAL DIVISION	1
BETWEEN : FRANK HARRY EVANS HOARE h ANOR

Applicant

AND :

AUSTRALIAN AND NEW ZEALAND

BANKING GROUP LIMITED

Respondent

CORAM: MR JUSTICE M. L. FOSTER
DATED: 19 FEBRUARY, 1990

PLACE: SYDNEY

REASONS FOR JUDGMENT
(EXTEMPORE)

HIS HONOUR: I have before me a notice of motion brought by the respondent in these proceedings. It is dated 2 November 1989.

In the ultimate, relief is sought in accordance with paragraph	2 of the notice of motion: namely that an order be made pursuant
to order 11 rule 16 that:

"Insofar as the plaintiff's claim is based on part V of the Trade Practices Act 1974 it be

struck out. "

Discussion between myself and counsel has resulted in the order sought being further refined to an order seeking the striking out of portions of the applicant's amended statement of claim of 11 September 1989: namely, paragraph 8, the last two lines of paragraph 9, and the last three lines of paragraph 13 after the words, "guarantee mortgage". These are the portions of the statement of claim which contain the applicantsr claims under the Trade Practices Act 1974 ("the Act").

These claims are two in number. Firstly, the applicants assert that as a result of misleading and deceptive statements made to them by the relevant employee of the respondent in breach of s.52 of the Act, they were induced to enter into a certain guarantee mortgage with the respondent in respect of the indebtedness of a company, Tincan Pty Limited.

The alleged statements related to the ability of that company to service its debt to the respondent. According to the statement of agreed facts provided to me by the parties, the applicants entered into the mortgage no later than 4 June 1986. The present proceedings were commenced by the applicant on 4 August 1989.

The respondents submit that the applicants cannot rely on their claims under the Act because they were out of time in	the bringing of them insofar as three years had elapsed from the
accrual of the alleged causes of action before the issuing of their statement of claim (s.82(2), s.87(1) of the Act).
It is conceded by counsel for the applicants that the pleading in respect of the first claim cannot be sustained. This concession is clearly correct. Prior decisions of this and other courts clearly produce this result (see Keen Mar Pty Limited v Labrador Park Shopping Centre Pty Limited 1988 10 ATPR 49-185 at pages 49-195 to 49-196, Jobbins v Cape1 Corporation Limited and Anor unreported, Federal Court of Australia 21 December 1989 and cases discussed therein at pages 5 to 12).
Quite clearly in the absence of any equitable considerations (and none are here pleaded) or ameliorating statutory provisions (and there are none available in respect of the Act) time runs against the cause of action from the moment of its accrual even where the party entitled is unaware of .its existence. In the present case, time commenced to run from the moment the applicants entered into the mortgage (Forster v Outred and Co. 1982 1 WLR 86) and had expired before the proceedings were commenced.
The applicants, however, seek to sustain their second claim. This relates to a payment of $169,000 made by them to the respondent on 24 April 1986. The payment was made to reduce the then current indebtedness of Tincan Pty Limited to the respondent. The payment resulted in a debt in that amount being owed by the company to the applicants. The applicants were not
according to their case had been misled by the respondent into then aware of the company's inability to repay the debt and
believing that it had the ability to repay. They discovered the true position later, and within the limitation period.
It is submitted on behalf of the respondents that these facts do not prevent the accrual of the cause of action from the moment of the making of the payment, the debt being repayable on demand with the result that the claim under the Act can no longer be maintained. The applicants submit, however, that the cause of action did not finally accrue until the company's inability to repay became "known and manifest".
They rely on certain passages in the judgments in recent decisions of the High Court and the Court of Appeal of New South Wales. The first is a passage from the judgment of Mr Justice Deane in Sutherland Shire Council v Heyman (1985) 157 CLR 424 at pages 503 to 505. The case involved a claim against a local council for negligent inspection of a building. It was broyght by a subsequent purchaser of the building for economic loss occasioned by damage to the building through subsidence which occurred by reason of inadequate footings. The defects in the footings had not been discovered on inspection. Deane J. said, at page 505:

"The alternative and in my view preferable approach is that any loss or injury involved in the actual inadequacy of the foundations is sustained only at the time when that inadequacy is first known or manifest. It is only then that the actual diminution in the market value of the premises occurs."

This passage was referred to by McHugh J. in Hawkins v Clayton, trading as Clayton Utz, (1986) 5 NSWLR 109 at 143, where his Honour indicated that in his view it "correctly insists on a precise characterisation of the nature of the plaintiff's loss".

Further consideration was given to the question on
appeal to the High Court (Hawkins v Clayton 164 CLR 539) by Deane
J. at pages 587 and 588, Brennan J. at pages 561 and 562, and

Gaudron J. at pages 601 and 602. Deane J. says at page 587:

"There remains for consideration the firm's defence based on s.14(1) of the Limitation Act. That section provides, for present purposes, that an action on a cause of action founded on contract or tort 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 he claims'.

A cause of action in negligence is complete when

the damage caused by the breach of duty is sustained. It is at that time that, in the ordinary case, the cause of action 'first accruesf for the purposes of a provision such as s.14(1) of the Limitation Act. It was submitted, on behalf of the plaintiff, that this Court should qualify that settled position by a general proposition that, at least in the case of a claim in negligence for damages for economic loss, time does not commence to run for the purposes of a provision such as s.14(1) until the stage is reached when the plaintiff discovers, or could on reasonable inquiry have discovered, that the damage has been sustained. In support of that proposition, particular reliance was placed upon the decision of the Supreme Court of Canada in Kamloo S v Nielson [l9841 2 SCR 2 esp. at pp. d i 9 8 4 ) 10 DLR (4th) 641, esp. at p. 681ff. and a passage in the judgment of this Court in South Australia v Johnson (1982) 42 ALR 161 at p. 169. I do not think that those cases, upon proper analysis, support the broad proposition for which the plaintiff contends. Such support is however, to be found in the judgment of the Supreme Court of Canada in Central Trust CO v Rafuse (1986) 31 DLR (4th), at pp. 535-536.

Kamlooos. like the decision of the Enalish Court
.	-

<

of Appeal in Sparham-Souter v Town & Country Developments (Essex) Ltd. [l9761 QB 858 which the Suoreme Court of Canada areferred to the

su~seouent decision of the House of Lords in .. .

~irelii General Cable Works Ltd v Oscar Faber & Partners [l9831 2 AC 1, was a case where economic loss had been sustained as a conseauence of the development of a latent defect in- a building. Commonly in such cases, the building never existed and was never owned without the defect and (in the absence of consequential collapse or physical damage or injury) the only loss which could have been sustained by the owner was the economic loss which would be involved if and when

the defect was actually discovered or became manifest, in the sense of being discoverable by reasonable diligence, with the consequence that the damage was then sustained by the then owner:

cf. Sutherland Shire Council v He man (1985) 157 different in cases where all or some of the

CLR 424 at pp. - T -try-- e position is

damage, be it in the form of physical or property or present economic loss, is directly sustained in the sense that it does not merely reflect diminution in value or other consequential damage which occurs or is sustained only when a latent defect which has existed at all relevant times becomes manifest. In those cases, damage is sustained when it is inflicted or first suffered and the cause of action accrues at that time."

Although counsel for the applicants has based an ingenious argument upon these passages, I have concluded that there is no substance in it. In my view there is no significant analogy between the applicant's subsequent discovery that they could not recover their debt from the company because of its inability to pay and the making manifest of a latent defect in a building. The well established rule that damage accrues on the payment away of the money in my view clearly prevails and applies in the present case.

I consider that the relevant portions of the statement of claim should be struck out as the causes of action there

pleaded are clearly not maintainable.

I order accordingly, and also order that the applicants pay the respondent's cost of this motion.

I c e r t i f y t h a t t h e preceding

6 pages a r e a t r u e copy of

t h e reasons f o r judgment of H i s

Honour Mr J u s t i c e M. L. Fos t e r .

Dated: 14 &bruT Is90

issoeiate: 7, &

A P P E A R A N C E S

SOLICITOR FOR THE APPLICANT: Messrs. MCGIRR JAMES HALL

& ASSOCIATES.

COUNSEL FOR THE APPLICANT:  C. M. SIMPSON.

SOLICITOR FOR THE RESPONDENT: Messrs. NORTON SMITH.

COUNSEL FOR THE RESPONDENT:	J. STEVENSON.
DATE OF HEARING:	19 FEBRUARY 1990.

DATE OF JUDGHENT: 19 FEBRUARY 1990.