Howlett v Dobson Mitchell & Allport (No 2)
[2009] TASSC 47
•29 June 2009
[2009] TASSC 47
CITATION: Howlett v Dobson Mitchell & Allport (No 2) [2009] TASSC 47
PARTIES: HOWLETT, Colin Horace and
HOWLETT, Roslyn Gladys
trading as C H & R G HOWLETT
v
DOBSON MITCHELL & ALLPORT (A FIRM)
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 465/2004
DELIVERED ON: 29 June 2009
DELIVERED AT: Hobart
HEARING DATE: 18 June 2009
JUDGMENT OF: Holt AsJ
CATCHWORDS:
Procedure – Supreme Court Procedure – Tasmania – Procedure under Rules of Court – Pleadings – Application to strike out reply – Plea of estoppel in response to limitation of actions plea – Claim for relief under the Fair Trading Act 1990 (Tas), s41, for misleading or deceptive conduct in response to a limitation of actions plea – Whether pleas disclose a reasonable answer.
Aust Dig Procedure [272]
REPRESENTATION:
Counsel:
Plaintiffs: P W Tree SC
Defendants: D J Gunson SC
Solicitors:
Plaintiffs: Butler McIntyre & Butler
Defendants: Gunson Williams
Judgment Number: [2009] TASSC 47
Number of paragraphs: 18
Serial No 47/2009
File No 465/2004
HOWLETT & ANOR v DOBSON MITCHELL & ALLPORT (NO 2)
REASONS FOR JUDGMENT HOLT AsJ
29 June 2009
The plaintiffs' writ against their former solicitors, claiming damages for breach of contract and negligence, was issued more than six years after the accrual of the causes of action. The defendants have pleaded the protection of the time bar provided in the Limitation Act 1974, s4(1)(a). The plaintiffs have delivered a reply alleging that their failure to sue in time was due to a misrepresentation made by a member of the firm of solicitors. They say that because of it the defendants are estopped from relying on the limitation defence. Alternatively, they say that the misrepresentation constituted a breach of the Fair Trading Act 1990 and that the appropriate relief is to prevent the defendants from relying on the defence. The defendants say that the matters raised in the reply are without any prospect of success and the pleading should be struck out.
Rule 259 relevantly provides:
"If a pleading does not disclose a reasonable … answer … the Court or a judge may order:–
(a) that … the pleading be struck out …".
In brief summary the plaintiffs' statement of claim is as follows. On 17 August 1987 they became entitled to payment of the sum of $18,654. Under the contract, by which the debt arose, the amount outstanding carried interest at 18% per annum compounded at six monthly intervals. They sued the debtor. In May 1990 they changed solicitors engaging the defendants to act for them in the litigation. There was no claim for interest at the contract rate and the defendants took no steps to amend the claim to include such interest. Under the Limitation Act, s4(5), an action to recover the interest could not be brought more than six years after the interest became due. Accordingly, interest arrears progressively became irrecoverable from 17 August 1993. On 28 May 1998 the plaintiffs terminated the retainer and engaged new solicitors. The plaintiffs claim damages in respect of the failure to include interest. They claim damages for the defendants maintaining the action against two persons who ought not to have been joined. They also claim damages for the failure to prosecute the action with due expedition.
In August 1999 six years had passed since the ability to recover interest had started to become progressively lost. In May 2004 six years had passed since the retainer had been terminated and new solicitors appointed. The writ did not issue until 18 September 2004. Accordingly, unless the plaintiffs can meet the limitation defence their case is hopeless.
In the reply, the plaintiffs' allege that on several occasions in 1994 and 1995 a member of the defendants' firm represented to them that interest at the contract rate was included in the claim and that the litigation was "progressing reasonably". It is alleged that because of the representation the plaintiffs acted to their detriment by not withdrawing the retainer. According to the reply, if the retainer had been put to an end and new solicitors engaged in about 1995, limitation periods for bringing the action would not have expired. In par1 the plaintiffs rely upon the doctrine of estoppel. In par2 the plaintiffs say that, by the misrepresentation, the defendants engaged in misleading and deceptive conduct contrary to the Fair Trading Act and that under s41(2) of that Act, the Court is empowered to grant relief preventing reliance on the limitation defence and should grant such relief. In par3, which is the final paragraph, the plaintiffs deny the allegations in the defence which do not comprise admissions.
On behalf of the defendants four submissions were made. The last matter was raised by me, adopted by counsel for the defendants and then fully argued. The submissions were, in summary, as follows:
·As there is no attempt to depart from the representation, the doctrine of estoppel can have no application.
·The Fair Trading Act, s41(2), only applies to a proceeding instituted under, or for an offence against the Act and as this proceeding is for damages for breach of contract and negligence, and not for relief under the Fair Trading Act, the provision cannot be called in aid.
·The relief available under the Fair Trading Act does not include relief of the type claimed.
·The facts alleged are incapable of leading to a conclusion that the representation contributed to the expiry of the limitation periods.
As to the estoppel plea, counsel for the plaintiffs submitted that the focus of estoppel is the provision of relief for detriment caused by reliance on the assumption created. It was said that this is illustrated by the fact that the relief available is not confined to the making good of the assumption. Counsel referred to the judgment of Mason CJ in Commonwealth v Verwayen (1990) 170 CLR 394 at 412. With respect, this submission does not address the defendants' contention. The fact that the scope of the relief available is not confined to holding the party estopped to the assumption created has no impact on the question of what circumstances are required to attract the application of the doctrine. There is no doubt that the doctrine of estoppel serves only to protect against detriment which would be suffered by departure from the assumption created. It does not provide any other protection. Set out below are several passages from Verwayen (supra), which make it clear that the defendants' contention is correct. The passages appear at pages 409, 444 and 453 and are respectively taken from the judgments of Mason CJ, Deane J and Dawson J:
"That brings me to estoppel, a label which covers a complex array of rules spanning various categories. There are the divisions between common law and equitable estoppel, between estoppel by conduct and estoppel by representation, and the distinction between present and future fact. There are titles such as promissory estoppel, proprietary estoppel and estoppel by acquiescence. Yet all of these categories and distinctions are intended to serve the same fundamental purpose, namely 'protection against the detriment which would flow from a party's change of position if the assumption (or expectation) that led to it were deserted': Waltons Stores(Interstate) Ltd v Maher (1988) 164 CLR 387 per Brennan J at 419. See also Mason CJ and Wilson J at 404; Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR at 674 - 675.
The central principle of the doctrine is that the law will not permit an unconscionable - or, more accurately, unconscientious - departure by one party from the subject matter of an assumption which has been adopted by the other party as the basis of some relationship, course of conduct, act or omission which would operate to that other party's detriment if the assumption be not adhered to for the purposes of the litigation.
Yet the description of estoppel by conduct given by Dixon J in Thompson v Palmer (1933) 49 CLR 507 and Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 is equally applicable to common law estoppel and equitable estoppel. The description appearing in Thompson v Palmer at 547, is as follows:
'The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party.'"
There is no question of a departure from the impugned representation and so the facts alleged in the reply are incapable of attracting the application of the doctrine of estoppel.
The estoppel plea will be struck out.
I now turn to the plea under the Fair Trading Act. For the purpose of considering the statutory construction arguments the relevant parts of s41 are as follows:
"(1) … where, in a proceeding instituted under, or for an offence against, this Act, the court having jurisdiction in the relevant proceeding finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person who was engaged in … contravention of a provision of this Act, the court may … make such order or orders as it thinks appropriate against the person who engaged in the conduct … (including all or any of the orders mentioned in subsection (5)) …
(1A) …
(2) … the court having jurisdiction in the relevant proceeding may, on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct … another person who was engaged in … contravention of a provision of this Act … make such order or orders as the court thinks appropriate against the person who engaged in the conduct … (including all or any of the orders mentioned in subsection (5)) …
(3) An application may be made under subsection (2) in relation to a contravention of this Act even if a proceeding has not been instituted under another provision of this Part in relation to the contravention.
(4) …
(5) The orders referred to in subsections (1) and (2) are as follows:
(a) an order declaring … a contract … to be void …
(b) an order varying such a contract …
(c) an order refusing to enforce … such a contract;
(d)an order directing the person … to refund money or return property …
(e)an order directing the person … to pay … the amount of the loss or damage;
(f)an order directing the person … to repair, or provide parts for, goods …
(g)an order directing the person … to supply specified services …
(h)an order, in relation to an instrument creating or transferring an interest in land, directing the person … to execute an instrument …
(6)…
(7)…"
The existence of subs(3) and the fact that subs(2) does not, by its terms, confine the range of orders available, is sufficient to dispose of the defendants' statutory construction points. The futility of the plaintiffs' plea is not obvious on a reading of the provisions. The case must be very clear if a pleading is to be struck out under r259. Speaking of the rule, Porter J said in Gunns Ltd v Alishah [2009] TASSC 45 at par23:
"… Summary dismissal is a step which should only be taken if the case is 'very clear'; Dey v Victorian Railways Commissioners (1949) 78 CLR 62 per Dixon J at 91, General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 per Barwick CJ at 128 – 130 and Cubillo v Commonwealth (1999) 89 FCR 528 at 549 - 551. …"
It may be extremely unlikely that the Fair Trading Act confers jurisdiction on the Court to prevent a party from pursuing a limitation plea where otherwise no such relief would be available. However, this provides no justification for the Court to determine the point summarily. See Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251 at 255 – 256.
The final matter for me to consider is whether the facts alleged in the reply are capable of supporting a finding that the representation caused the limitation problem. The reply, so far as causation is concerned, is as follows:
"but for the representation:
(i)they would have removed the carriage of the litigation from the defendants in or about 1995;
(ii)they would have identified their claim against the defendant for damages for negligence and breach of contract earlier than they did;
(iii)they would have instituted proceedings against the defendants earlier than they did, and particularly within the limitation period applicable to their claim;"
Subparagraph (iii) must be characterised as conjecture rather than inference as insufficient facts to support it as an inference have been put forward. Taking the claim for the initial failure to include interest as an example, the limitation period for suing the defendants expired in August 1999. The plaintiffs' new solicitors took over the retainer from the defendants on 28 May 1998.In order to support the conclusion in (iii), that but for the representation the claim would have been made within time, there would need to be evidence that the plaintiffs were unaware until sometime after August 1999 that interest had not been included in the claim against the debtor. (Absent this fact being established, there would be insufficient evidence to be capable of giving rise to an inference that the representation had an influence on time expiring.) It has already been alleged in the statement of claim that the plaintiffs started to incur costs in July 2001 in connection with an application to amend the statement of claim against the debtor to include an interest claim. Accordingly, the discovery that the interest claim had been omitted was made within about three years of the new solicitors being retained. If the representation had not been made and the retainer of the new solicitors had commenced in 1995, rather than in 1998, an inference would be available that the omission would have been discovered by the new solicitors before time expired in August 1999. In order to show that a writ would have issued promptly following the discovery, the delay in issuing the current writ would have to be explained. If the reason why the writ did not issue promptly after the discovery of the omission was because, by then, an action against the defendants was out of time, this would explain the further delay. Upon proof of facts such as these it might reasonably be deduced that, but for the representation, the claim against the defendants would have been identified and commenced within time. The reply, however, does not contain these allegations, nor other allegations which, if proved, would be sufficient to convert what is currently conjecture, into a matter capable of being established by inference based on the facts.
Mere conjecture cannot provide a causative link. This is explained in the judgment of Lord Macmillan in Jones v Great Western Railway Co (1930) 47 TLR 39 where he said at 45:
"The dividing line between conjecture and inference is often a very difficult one to draw. A conjecture may be plausible but it is of no legal value, for its essence is that it is a mere guess. An inference in the legal sense, on the other hand, is a deduction from the evidence, and if it is a reasonable deduction it may have the validity of legal proof. The attribution of an occurrence to a cause is, I take it, always a matter of inference. The cogency of a legal inference of causation may vary in degree between practical certainty and reasonable probability. Where the coincidence of cause and effect is not a matter of actual observation there is necessarily a hiatus in the direct evidence, but this may be legitimately bridged by an inference from the facts actually observed and proved. Indeed, as Lord Shaw said in Marshall v Owners of SS Wild Rose (26 The Times L R 608; [1910] AC 486 at 494): 'The facts in every case may leave here and there a hiatus which only inference can fill.' The true doctrine in the matter is clearly stated by Lord Penzance in Parfitt v Lawless (L R, 2 P and D, 462 at 472): 'It is not intended to be said that he upon whom the burthen of proving an issue lies is bound to prove every fact or conclusion of fact upon which the issue depends. From every fact that is proved legitimate and reasonable inferences may, of course, be drawn, and all that is fairly deducible from the evidence is as much proved for the purpose of a prima facie case as if it had been proved directly.' I conceive, therefore, that in discussing whether there is in any case evidence to go to the jury, what the Court has to consider is this, whether, assuming the evidence to be true, and adding to the direct proof all such inferences of fact as in the exercise of a reasonable intelligence the jury would be warranted in drawing from it, there is sufficient to support the issue."
The Fair Trading Act plea will be struck out. A new reply can be submitted, if it contains allegations of fact sufficient to support an inference that the representation contributed to the expiry of the limitation periods.
The balance of the reply being a mere denial is unnecessary. Rule 228(2) provides that a party who in a pleading subsequent to a defence or reply to counterclaim would, if a pleading was delivered, merely deny or not admit facts alleged in the immediately preceding pleading is not to deliver any such pleading.
There will be an order striking out the reply.
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