Insurance House of Australia Pty Ltd v Dalton

[2017] QDC 106

DISTRICT COURT OF QUEENSLAND

CITATION:

Insurance House of Australia Pty Ltd v Dalton [2017] QDC 106

PARTIES:

INSURANCE HOUSE OF AUSTRALIA PTY LTD (ACN 010 857 744)
(plaintiff/respondent)
v
ADAM CHRISTOPHER DALTON AND HEIDI PATRICIA DALTON (AKA HEIDI PATRICIA MAYCOCK) AS EXECUTORS OF THE ESTATE OF PENELOPE GODA DALTON

(defendants/applicants)

FILE NO/S:

297/16

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

District Court at Southport

DELIVERED ON:

8 May 2017

DELIVERED AT:

Southport

HEARING DATE:

6 March 2017

JUDGE:

Kent QC DCJ

ORDER:

Judgment is entered for the defendants/applicants

CATCHWORDS:

LIMITATION OF ACTIONS – LIMITATION OF PARTICULAR ACTIONS – SIMPLE CONTRACTS, QUASI-CONTRACTS AND TORTS – where the defendants were the executors of an estate – where a claim for debt was brought against the estate, which was quasi-contractual in nature – where the defendants brought an application for summary judgment, alleging the claim was brought outside the limitation period – whether the claim was brought outside the relevant limitation period stipulated in the Limitation of Actions Act 1974 (Qld)

LIMITATION OF ACTIONS – EXTENSION OR POSTPONEMENT OF LIMITATION PERIOD – FRAUD AND DECEIT – where the plaintiff alleged two causes of action arguably alleging fraud – where elements of dishonesty were not pleaded in the statement of claim – where, in the statement of claim, there were references to excessive rents, misappropriation and incorrect notations in the accounting books – whether the limitation period could, in light of the pleading, be postponed on the basis of fraud

Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232; [2005] QCA 227, cited
Hutchinson & Anor v Equititour Pty Ltd & Ors [2011] 2 Qd R 99; [2010] QCA 104, cited
Shaft Drillers International LLC & Anor v Australian Shaft Drilling P/L & Ors [2013] QSC 79, cited
Young v Queensland Trustees Ltd (1956) 99 CLR 560; [1956] HCA 51, considered

Limitation of Actions Act 1974 (Qld), s 10, s 29, s 38

Uniform Civil Procedure Rules 1999 (Qld), r 293

COUNSEL:

A Fraser for the applicants/defendants

M Campbell for the respondent/plaintiff

SOLICITORS:

Bernard Ponting for the applicants/defendants

Hannay Lawyers for the respondent/plaintiff

1. This application for summary judgment by the defendants concerns the plaintiff’s action against the defendants for sums of money said to be owing as debts together with interests and costs. 

Background

1. The plaintiff conducted a business in which Ms Dalton (the “Deceased”) was involved, at one point, with her then husband Christopher Dalton and also including the present director of the plaintiff, Robert Armstrong.

1. The Deceased and her husband, Mr Dalton, were previously directors and shareholders of the plaintiff.  In 2006, Mr Dalton was removed as a director and/or shareholder and thereafter sought relief from the Supreme Court against what he said was oppression of a minority shareholder.  This action was compromised and the plaintiff was to pay Mr Dalton $600,000. The Deceased later, in 2008, resigned as a director but retained her shareholding.

1. Thus, in 2007, the plaintiff borrowed $800,000 from the Westpac Banking Corporation.  $200,000 thereof was used for the purposes of the business.  $600,000 was used to payout Mr Dalton.  The Deceased and Mr Armstrong each borrowed this money from the plaintiff to use for the purposes of repaying Mr Dalton.  The Deceased apparently did not repay that amount to either the plaintiff or the bank, and this forms the largest part of the debts allegedly owed. The Deceased’s share of $300,000 came about by the Deceased assuming that debt which was allocated to her loan account with the plaintiff company.

1. The other amounts are as follows:

(a)        an amount of $23,748.16, said to represent a debt owed to the plaintiff from February 2007;

(b)        a further debt of $17,149.55 also said to be owing from that time;

(c)        an amount of $21,000, said to have been removed improperly by the Deceased from the plaintiff’s bank account; and

(d)        an amount of $62,000, said to represent excessive rent paid to the Deceased, as trustee of a trust, in respect of premises rented to the plaintiff.

1. The plaintiff issued proceedings on 4 November 2016, that is, somewhat more than nine years after the various sums were advanced.

The application

1. The defendant applies pursuant to rule 293 of the Uniform Civil Procedure Rules 1999 (Qld). As stated by Williams J in Deputy Commissioner of Taxation v Salcedo:[1]

“The words 'no real prospect of succeeding' do not need any amplification, they speak for themselves. The word 'real' distinguishes fanciful prospects of success or … they direct the court to the need to see whether there is a 'realistic' as opposed to a 'fanciful' prospect of success.”

[1][2005] 2 Qd R 232, [11].

Limitation defence

1. The point taken by the defendants in this case is that the plaintiff’s claim is statute-barred.  As noted above, the Statement of Claim alleges the Deceased was indebted to the plaintiff in the sum of $374,497.71 as at her death. It is said the action is without any real prospect of success, because this proceeding was initiated more than six years after the cause of action arose.

1. Section 10(1)(a) of the Limitation of Actions Act 1974 (Qld) provides that actions based on simple contract or quasi-contract, where the damages claimed do not include damages for personal injury, shall not be brought after the expiration of six years from the date on which the cause of action arose. In this case, the limitation defence was pleaded in the Defence. The claim is in quasi contract and thus s 10(1)(a) applies.

Disability?

1. In Reply, the plaintiff pleaded that the Deceased was suffering from a significant illness (“Pick’s Disease”) from at least 23 December 2009 and therefore, in effect, the limitation period was suspended during the illness, presumably a reference to s 29 of the Limitation of Actions Act. 

1. However, as the applicant points out, the suspension provided for in s 29 of the Act for a person who was under a relevant disability only operates in favour of the person suffering the disability, not her opponent. That is, there was in this case no “right of action” accruing to the Deceased as set out in s 29; it accrued to the plaintiff company. Further, the section contemplates the person being under a disability at the time of accrual of the right of action. That did not occur here; the Deceased apparently first suffered from the disease after January 2009. Thus, this argument was not persisted with by the respondent plaintiff at the hearing of the application.

Date of accrual of cause of action 

1. The issue that was relied upon by the respondent plaintiff was the question of when the cause of action arose.  In the Reply, it is pleaded the plaintiff’s cause of action did not arise until demand was made by the plaintiff in respect of the various sums of money in 2015.

Applicant’s submission

1. On this point, the applicant submits that, in respect of these various amounts, the cause of action for monies said to be repayable on demand arises from the date the money is advanced and not from the date of a later demand.  Reference is made to Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 566-567. The court observed:

“A loan of money payable on request creates an immediate debt… the debt in which constitutes the cause of action arises instantly on the loan.  Where money is lent, simply, it is not denied that the statute begins to run from the time of lending” (referring to Norton v Ellam (1837) 2 M. & W., at p 464).

This was because the nature of an action for debt (indebitatus assumpsit) involved an action for a promise to pay on demand.  If the promise were for a collateral thing, it might not create a debt until demand (an example is a guarantee).  However, in an action for debt, the defences would seem to be limited to denying the existence of a debt at any one time, or alternatively, pleading the way in which the debt had been discharged.

The application of s 10(1)(a) to an action for debt was confirmed in Shaft Drillers International LLC & Anor v Australian Shaft Drilling P/L & Ors.[2]

[2][2013] QSC 79, [28]-[32].

1. This being so, the applicant’s submission is that the cause of action in the present case was from the date that money was advanced rather than the date of demand.  This was, in respect of each of the amounts referred to, during 2007, considerably more than six years prior to the issue of the proceedings.

Plaintiff’s response

1. The respondents then argue that the cause of action did not accrue until the loan from Westpac expired, which was not until March 2017. However, the plaintiff was not seeking to enforce the bank’s loan. It was recovering money given by it to the Deceased, in 2007. It is this debt which was pursued, and it is irrelevant that the plaintiff’s consequential debt to the bank has only now become payable.

Fraud?

1. The plaintiff also submits further that “two of the plaintiff’s causes of action arguably involve fraud, which has an unlimited period for commencing proceedings”.[3] This is presumably a reference to s 38(1)(a) of the Limitation of Actions Act, which postpones the commencement of the limitation period until the plaintiff discovers the fraud. However, the action must be based on the fraud of the defendant or her agent. This would normally involve a claim such as fraudulent conversion, involving deliberate dishonesty. In this case the claim is for debt, as discussed above; it does not involve an element of fraud. The terminology in paragraph 8(c) of the statement of claim is amounts “misappropriated” and “incorrectly noted” in the books. No dishonesty is explicitly mentioned. In paragraph 8(d) there is reference to excessive rents, but again no dishonesty is pleaded. Again, this is in the context of a claim for a debt. One of the causes of action alleging fraudulent conduct could have been chosen and was not.

   [3]Plaintiff’s outline of argument, paragraph 32.

1. It is also relevant to the determination of this issue that s 38 is not referred to in the reply, which dealt with the limitation question; for example there is no pleading (or evidence) that the fraud, if that is what is alleged, was not discoverable until after the expiration of the limitation period.[4]

   [4]See generally, Hutchinson & Anor v Equititour Pty Ltd & Ors [2011] 2 Qd R 99, [26]-[32] (Peter Lyons J).

1. In the circumstances the plaintiff is not able to call s 38 in aid.

Conclusion

1. In all the circumstances, the defence found in the Limitation of Actions Act 1974 (Qld) is made out. The result is that the action has no real prospect of success and there is no need for a trial. Accordingly, judgment is entered for the defendant. I will hear the parties as to any further orders; costs would normally follow the event.