Jones v Griggs
[2007] SASC 394
•21 November 2007
SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
JONES v GRIGGS
[2007] SASC 394
Judgment of The Honourable Justice Nyland
21 November 2007
MAGISTRATES - APPEALS FROM AND CONTROL OVER MAGISTRATES - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT - PRELIMINARY PROCEDURE - TIME FOR APPEAL AND EXTENSION OF
Extension of time - material fact discovered after institution of proceedings - whether plaintiff relied on representations by defendant - explanation for delay - hardship to plaintiff outweighs prejudice to defendant - appeal allowed.
Limitation of Actions Act 1936 ss 35 and 48, referred to.
Dickin v BHP Billiton Ltd & Ors [2004] VSC 215 (unreported, 18 June 2004), applied.
JONES v GRIGGS
[2007] SASC 394Magistrates Appeal
Nyland J
This is an appeal from a decision of a Stipendiary Magistrate sitting in the Magistrates Court at Adelaide on 4 May 2007 in which he refused an application for an extension of time within which to issue proceedings. The appellant was the plaintiff with respect to the proposed proceedings and the respondent was the defendant. For convenience I will continue to refer to the parties as plaintiff and defendant. I should also mention that the plaintiff was unrepresented on the hearing of the appeal, but I have done the best I can to set out his argument in support of it.
On 16 April 2006, the plaintiff issued a summons out of the Magistrates Court at Adelaide in which he sought to recover monies from the defendant arising out of an agreement to develop properties in Tumby Bay and Tanunda during 1996 and 1997.
The action is divided into three categories, namely, an agreement with respect to a property at Tumby Bay, the Tanunda land project, and a claim for payment for miscellaneous work undertaken by the plaintiff for the defendant.
Tumby Bay:
The plaintiff claims that on 7 November 1996, he and the defendant entered into a written agreement that they would jointly acquire and build a house at Tumby Bay and equally share the expenses involved in the acquisition of the land and the building of the house, and equally share any profit or loss therefrom.
The property was sold on 28 January 1998 for the sum of $85,000. The plaintiff claims that there was a loss on the project which was entirely borne by him in the sum of $12,505.90. He therefore claims to be reimbursed by the defendant for half of that sum, ie $6,252.95.
Tanunda land project:
The plaintiff claims that on 6 November 1996, the defendant entered into a contract with a Philip Avon Vanderpeer and Beress Jane Vanderpeer to buy a piece of vacant land at Tanunda for the sum of $20,000. The plaintiff says that he agreed with the defendant that they would jointly build a house on that land and share in the expenses and profit therefrom. The plaintiff says, however, that on 5 December 1997 at the direction of the defendant, the Vanderpeers transferred the land to an entity called County Classic Homes Pty Ltd (CCH) for the sum of $20,000 without the plaintiff’s knowledge or authority, and that at all relevant times CCH acted under the authority, direction or control of the defendant. The plaintiff claims that on 22 October 1998, CCH transferred the Tanunda land to a Loris Assunta Earl for the sum of $115,000. It appears that CCH was subsequently deregistered on 11 October 2000. The plaintiff claims that the defendant has never paid to him his share of the expenses, nor accounted for the profit on the sale, which he estimates to be about $40,000.
Miscellaneous work undertaken by the plaintiff for the defendant.
The plaintiff claims that in early 1997, he orally agreed to perform work for the defendant on a number of building projects being undertaken by the defendant. In particular, he spent over 200 hours performing carpentry, framing, so fit (eaves) and other building work at locations at Tanunda, Kalimna, Port Pirie, Tumby Bay and Cleve. That was on the basis that the profits made by the defendant from those projects, when completed, would be invested by the defendant in the Tumby Bay property and/or the Tanunda land. The plaintiff says that the defendant never invested any profits from those projects in the subject properties, nor has he paid the plaintiff for his work which is estimated to amount to the total sum of about $4,000.
In his summons, the plaintiff sought an extension of time based on the discovery within 12 months of commencing the action -
(1)that the defendant was not, as he had previously believed, a bankrupt, or a person under Part X Bankrupty Act arrangement, and
(2)of documents concerning the transfer of the Tanunda land[1].
[1]Presumably the plaintiff is referring to the discovery in October 2006 of documents relating to the disciplinary proceedings against the defendant which revealed that the defendant retained an interest in the Tanunda land after he had allegedly claimed to have sold his interest. In those proceedings, the judge found that the defendant constructed the house under his nominee company CCH with another entity and shared profit from the sale.
The claim set out in the summons is for:
1.The sum of $6,252.95 as the defendant’s 50% share of the loss on the Tumby Bay property.
2.An account for the Tanunda land project.
3.50% of the profits on the Tanunda land project.
4.Alternatively, reimbursement of the whole of or, alternatively, 50% of the expenses paid out by him in respect of the Tanunda land project.
5.The sum of $4,000 with respect to the miscellaneous work undertaken by him.
6. Interest.
7.Costs.
The defendant filed a defence in which he joined issue with the plaintiff on a number of the allegations set out in the summons. He did not, however, dispute there was a joint venture agreement between him and the plaintiff entered into on 7 November 2006 with respect to the Tumby Bay property, nor that the property was sold for $85,000. He says, however, that the ANZ bank took the entire proceeds of the sale in payment of its mortgage and he relies upon a letter written by the plaintiff to the effect that they were “fortunate just to get our money back” in asserting that the claim is vexatious and frivolous and should be dismissed. The defendant also refers to other proceedings with respect to the Tanunda property which were prosecuted by the plaintiff as assignee of his company, Dorrien, in liquidation, which were dealt with in the Tanunda court but were dismissed[2]. As far as the claim for miscellaneous expenses is concerned, the defendant says that he promptly paid the plaintiff by cash for all of the services rendered by him in 1997.
[2] Proceedings in the matter of Dorrien Homes Pty Ltd v David J Griggs (Action No TANCT-04-585) were instituted on 20 December 2004 in the Tanunda Court. The proceedings were commenced in the name of Dorrien, the plaintiff Jones was later substituted as the plaintiff, having been assigned the right to sue by the liquidator of Dorrien.
The defendant opposed the application for extension of time on the basis that the plaintiff’s conduct in not issuing proceedings within time was unreasonable and therefore sought an order that the proceedings be dismissed.
In support of his application to extend time, the plaintiff filed an affidavit which was sworn on 15 January 2007. In that affidavit he referred to his dealings with the defendant in 1997. He claimed that the defendant had breached the agreements with him and had never accounted for profits. He had failed to share agreed expenses and had failed to pay him at all for certain work. The plaintiff went on to say:
8. In about June 1997 I was approached by the Australian Securities and Investments Commission (ASIC) who advised me that the Defendant was an undischarged bankrupt and that he did not hold a builder’s licence as necessary to perform the work concerned under his various agreements with me.
9. I immediately terminated all of my dealings with the defendant.
10. At that time the Defendant told me that he had no money that he had previously entered into a Part X arrangement with his creditors and would have to ‘work something out’ with me regarding what he owed to me.
The plaintiff continued:
11. In about April 2004 I bumped into the Defendant in Tanunda.
12.He told me that he had just bought a new car and that he was going on a skiing trip to New Zealand. I therefore suspected that he had assets and went to see a solicitor about pursuing a claim against him.
13.I did a search of the National Personal Insolvency Index. Attached to this affidavit and marked Exhibit NJ 1 is a copy of a National Personal Insolvency Index extract as at 26 December 2004 which showed that the Defendant had been discharged from bankruptcy on 12 January 2001.
14.No legal action was commenced against the Defendant in relation to these claims until that time, when an action was commenced in the Magistrates Court at Tanunda, namely action 585/2004 (‘the Tanunda action’).
As appears hereafter, there is an error in the subsequent paragraph numbering of the plaintiff’s affidavit, but the plaintiff’s affidavit continued:
13.Mr Agar was my solicitor in relation to the Tanunda action.
14. On his advice:
· The Tanunda action was brought in the name of the company, Dorrien Homes Pty Ltd;
· The claims were pleaded on the basis that the defendant was bankrupt at the time of the various agreements entered into between him and myself.
15.Between 1997 and late 2004 I had believed that the Defendant was still a bankrupt and that was the reason why I did not take or instruct any legal action to be taken in relation to these matters until then.
16.Dorrien Homes Pty Ltd then went into liquidation in early 2005, and in about March 2005 I was substituted as plaintiff in the Tanunda action instead of the company.
17.A hearing took place at Tanunda Magistrates Court on 21 December 2005 as a result of which the Tanunda action was dismissed on the basis (as far as I could work out) that a deed of assignment assigning Dorrien’s rights of action against the Defendant to me was invalid or ineffective. I was also ordered to pay the Defendant’s costs of that action.
The plaintiff then says that acting on legal advice, in April 2006, he commenced the within proceedings which involved additional and different claims from the Tanunda action. He says that the new material facts on which he relied were as follows:
1.In February 2005, I discovered the defendant was in fact discharged from bankruptcy in April 1996. Attached to this affidavit and marked Exhibit NJ2 is a copy of the National Personal Insolvency Index extract as on 28 February 2005.
2.In about January 2006 I discovered that the Tanunda property had been sold by its original owners to CCH and that it had then been sold to a purchaser Loris Assunta Earl for $115,000 in October 1998.
3.In October 2006 I discovered documents relating to disciplinary proceedings against the defendant in the District Court.
4.In those proceedings it was agreed as a fact that in January 1998 the defendant had entered into an agreement with CCH for the defendant and another entity to develop the Tanunda property, with the profit (less a sum of $10,000) to go to the defendant.
5.I therefore discovered for the first time, evidence that the defendant had not only finished the development of the property – under the auspices of a nominee company – but also shared in the profits of the sale of the property.
The defendant filed an affidavit in reply which was sworn on 19 February 2007. He denied there was a joint venture between himself and the plaintiff in relation to the Tanunda land and claims that the joint venture in respect of that land was with Dorrien Homes Pty Ltd of which the plaintiff was a director. He referred to the proceedings in the Tanunda court which were dismissed and asserted that the plaintiff “is now trying to have a second bite of the cherry despite the fact that he has made admission against his own interest”.
As far as the Tumby Bay joint venture is concerned, the defendant relies on a letter written by the plaintiff to the defendant in which he asserts that inter alia:
On the sale of the property in Tumby Bay there was no profit. We were fortunate to get our money back.
He therefore asserts that the claim is vexatious and frivolous due to that admission.
On the hearing of the application to extend time, the plaintiff apparently claimed that the duty owed to him by the defendant was equitable in nature so that there was no time limit for the commencement of the action. In the alternative, he argued that the action was for account or simple contract as referred to in s 35 of the Limitation of Actions Act 1936 (the Act) and relied on s 48(3)(b)(i) thereof to claim that he had discovered new material facts, namely:
·In January 2006, he discovered that the Tanunda property had been sold.
·In October 2006 he learned that disciplinary proceedings had been instituted against the defendant.
·That a profit was realised on the sale of the Tanunda property and that profit went to the defendant.
The plaintiff also relied on s 48(3)(b)(ii) of the Act to submit that the reason why the action was not commenced within time was that he had been told by the defendant in 1997 that he was a bankrupt, or in the alternative, that he had been told by the defendant that he was a discharged bankrupt.
In my opinion, for the reasons he gave, the magistrate correctly approached the matter on the basis that a time limit should be applied to the plaintiff’s claim, and that it was appropriate to rely on the six year time limit limitation set out in s 35 of the Act. That section is in the following terms:
Actions on simple contract and in tort:
The following actions, namely:
(a) actions founded upon any simple contract express or implied, or upon any award where the submission is not by specialty;
(b) actions of account or for not accounting;
(c) actions founded on tort;
(d) actions or other proceedings to recover arrears of rent where the letting is not by deed;
(e) actions to recover arrears of interest in respect of any sum of money charged upon any land or rent or arrears of interest in respect of any legacy;
(f) actions to recover damages in respect of any such arrears of rent or interest;
(g) actions for seamen's wages;
(h) actions for money levied on a fieri facias or for an escape;
shall, save as otherwise provided in this Act, be commenced within six years next after the cause of action accrued and not after.
On basis of the dates set out in the plaintiff’s statement of claim the limitation period with respect to the Tumby Bay contract expired on 27 January 2004, the Tanunda claim 4 December 2003 and the claim with respect to miscellaneous works in early 2003.
A power to extend the period of limitation is, however, provided by s 48 of the Act, which is in the following terms:
General power to extend periods of limitation
(1) Subject to this section, where an Act, regulation, rule or by-law prescribes or limits the time for -
(a) instituting an action; or
(b) doing any act, or taking any step in an action; or
(c) doing any act or taking any step with a view to instituting an action, a court may extend the time so prescribed or limited to such an extent, and upon such terms (if any) as the justice of the case may require.
(2) A court may exercise the powers conferred by this section in respect of any action that -
(a) the court has jurisdiction to entertain; or
(b) the court would, if the action were not out of time, have jurisdiction to entertain.
(3) This section does not -
(a) apply to criminal proceedings; or
(b) empower a court to extend a limitation of time prescribed by this Act unless it is satisfied -
(i) that facts material to the plaintiff's case were not ascertained by him until some point of time occurring within twelve months before the expiration of the period of limitation or occurring after the expiration of that period and that the action was instituted within twelve months after the ascertainment of those facts by the plaintiff; or
(ii) that the plaintiff's failure to institute the action within the period of the limitation resulted from representations or conduct of the defendant, or a person whom the plaintiff reasonably believed to be acting on behalf of the defendant, and was reasonable in view of those representations or that conduct and any other relevant circumstances, and that in all the circumstances of the case it is just to grant the extension of time.
(4) Where an extension of time is sought pursuant to this section in respect of the commencement of an action, the action may be instituted in the normal manner, but the process by which it is instituted must be endorsed with a statement to the effect that the plaintiff seeks an extension of time pursuant to this section.
(5) Proceedings under this section may be determined by the court at any time before or after the close of pleadings.
(6) This section does not derogate from any other provision under which a court may extend or abridge time prescribed or limited by an Act, regulation, rule or by-law.
I should mention that s 48 was amended to include further sub-sections (3a) and (3b) which came into operation on 1 May 2004. Subsections (3a) and (3b) provide:
(3a) A fact is not to be regarded as material to the plaintiff's case for the purposes of subsection (3)(b)(i) unless -
(a) it forms an essential element of the plaintiff's cause of action; or
(b) it would have major significance on an assessment of the plaintiff's loss.
…
(3b) In determining whether it is, in all the circumstances of a case, just to grant an extension of time, the court should have regard to -
(a) the period of extension sought and, in particular, whether the passage of time has prejudiced a fair trial; and
(b) the desirability of bringing litigation to an end within a reasonable period and thus promoting a more certain basis for the calculation of insurance premiums; and
(c) the nature and extent of the plaintiff's loss and the conduct of the parties generally; and
(d) any other relevant factor.
In my opinion, the magistrate correctly found that neither of those subsections applied, as the transitional provisions provide that the amendments apply prospectively and that if a cause of action is based wholly or partly on an event that occurred before the commencement of the amending act, it would be determined as if the amendments had not been enacted.
The magistrate considered that the discovery by the plaintiff in October 2006 that the defendant had shared in the profits of the Tanunda property was not a material fact so as to bring him within the provisions of s 48(3)(b)(i). He found that for a fact to be considered material, it must be relevant to the issues to be proved and of sufficient importance to have a likely bearing on the case. He did not consider that the discovery of the fact that the defendant shared in the profits of the Tanunda property met that criteria. He further held that the plaintiff failed to satisfy the requirements of s 48(3)(b)(ii) on the basis that any representation made by ASIC to the plaintiff concerning the defendant’s bankruptcy could not in any way be seen as an act “on behalf of the defendant”. He went on to say that it would not be unreasonable to expect a person in the plaintiff’s position to have made inquiries into the defendant’s financial position if he considered that money was owed to him.
The magistrate finally concluded that the only way the discretion could be enlivened was if the discovery of facts in October 2006 was viewed as a discovery of material facts. Even if they were, the court was required to consider whether it was just to grant an extension of time, having regard to the reasons for the delay, the length of delay, the hardship to the plaintiff if the application was rejected, the prejudice to the defendant if it was granted, and the conduct of the defendant in the litigation. The magistrate did not accept that the plaintiff had a reasonable explanation for his delay. He considered that the plaintiff could have made inquiries regarding the position of the defendant and the possibility of legal action against him much earlier than he did. He said that although that might have been fruitless, in view of the impending time limitation, it would have been prudent to claim any entitlements. He acknowledged that the period of delay might not have been immense but it was still some 10 years from the completion of the contracts and between two and four years after the limitation periods ended. The magistrate appeared to accept that the plaintiff’s loss was “not insignificant”, but considered the prejudice to the defendant outweighed this loss as it was unlikely that the defendant would have expected the plaintiff to issue proceedings. The first that he knew of an intended action was December 2004, which was seven years after the contracts were performed.
Section 48(3)(b)(i):
The magistrate did not explain why he concluded that the discovery by the plaintiff in October 2006 that the defendant had shared in the profit from the sale of the Tanunda property was not a material fact for the purposes of this section.
The magistrate appears to have considered that this fact was not relevant to the issues to be proved, or of sufficient importance to be likely to have a bearing on the case. Whether this was due to his acceptance of the defendant’s argument that discovery of receipt of profit was immaterial, as in a joint venture the defendant is accountable to the plaintiff regardless of any profit, is not clear.
In my opinion, however, the receipt of profit would be relevant to the quantum of the plaintiff’s loss as well as the decision to commence proceedings to recover his share thereof. On that basis I consider that it would amount to a material fact.
This fact was not discovered, however, until after the proceedings were initiated. It is therefore necessary to consider whether in that circumstance s 48(3)(b)(i) of the Act is satisfied. That provides that the court may not extend time unless an action is instituted “within twelve months after the ascertainment of those facts by the plaintiff”. This issue was considered by Ashley J in the case of Dickin v BHP Billiton Ltd (trading as Whyalla Shipbuilding and Engineering Works) & Ors[3]. In Dickin, the plaintiff ascertained material facts regarding asbestos after the commencement of proceedings, but within the twelve month period. The extension of time was granted on the basis that, inter alia, the purpose of the legislation was to prevent undue delay in bringing proceedings after the ascertainment of material facts. The plaintiff in this case therefore relies on the decision in Dickin as authority for the proposition that a material fact discovered after the initiation of proceedings, but before the expiration of the twelve month period, is a material fact within the meaning of s 48(3)(b)(i). Although the defendant argued that the fact in question was not a material fact on the grounds of relevance, it was not submitted that the decision in Dickin should not be applied in this case.
[3] [2004] VSC 215 (unreported, 18 June 2004)
Consistently with that decision, I consider that I am not precluded by s 48(3)(b)(i) from exercising my discretion to grant the extension of time, provided that I find it is just to do so, notwithstanding that the information relating to the receipt of profits was ascertained after the proceedings had been instituted.
Section 48(3)(b)(ii):
In any event, in my view, the matter can be dealt with under s 48(3)(b)(ii). The magistrate, in finding that the plaintiff did not satisfy the requirements of s 48(3)(b)(ii), appears to have proceeded only on the basis of the representation made by ASIC to the plaintiff in 1997 that the defendant was an undischarged bankrupt. He correctly found that a representation made by ASIC could not be seen as an act “on behalf of the defendant”. He does not, however, appear to have considered the evidence of the plaintiff, as contained in his affidavit with respect to the extension of time, that the defendant told him in about 1997 that he had no money, that he had entered into a Part X arrangement and that he would “work something out” with the plaintiff regarding what he owed him.
The defendant, in his affidavit in reply, does not deny that conversation occurred. The information apparently provided by ASIC to the plaintiff in June 1997 was that the defendant went into bankruptcy on 11 January 1993. It now appears that the defendant was discharged on 11 April 1996 but the plaintiff says he was unaware of this and believed that the defendant was still bankrupt until 2004. As it happens, a search of the National Personal Insolvency Index on 16 December 2004[4], gave a discharge date of 12 January 2001. A further search on 28 February 2005[5] gave the date as 11 April 1996. By letter dated 14 February 2005 to the plaintiff’s then solicitor[6], the plaintiff was informed that the correct date was 11 April 1996.
[4] NJ1 to the affidavit of the plaintiff sworn on 15 January 2007.
[5] NJ2 to the affidavit of the plaintiff sworn on 15 January 2007.
[6] Included in plaintiff's documents tendered on the hearing of the appeal.
In any event, it was following the earlier advice that the plaintiff commenced the Tanunda Court proceedings. In October 2006, the plaintiff also discovered the documents relating to disciplinary proceedings against the defendant in the District Court. Acting on legal advice, the plaintiff then instituted the present proceedings against the defendant on 16 April 2006.
It is surprising that the plaintiff did not make enquiries as to the defendant’s financial position between 1997 and 2004. Nevertheless, statements made by the defendant to the plaintiff in 1997 that he would “work something out” with the plaintiff was a representation by him to the plaintiff. The plaintiff relied on that representation and that provides an explanation for the plaintiff’s delay in instituting proceedings. In my opinion, that brings the plaintiff within the provisions of s 48(3)(b)(ii).
Residual Discretion:
It is nevertheless necessary to consider whether, in the circumstances, it is just to grant the extension of time. The claim relates to agreements entered into some years ago. I do not, however, consider that unduly burdens the defendant, particularly as the documents, for the most part, relate to land transactions which are readily traceable. The plaintiff has explained that the delay in bringing proceedings was due to the representations made to him by the defendant. The magistrate accepted that the loss to the plaintiff was “not insignificant”.
In all of the circumstances, I have finally concluded that the hardship to the plaintiff in not having his case heard, outweighs any prejudice to the defendant occasioned by the delay. The appeal is therefore allowed. The order made by the magistrate is set aside. I order that the time within which the plaintiff may institute proceedings against the defendant be extended to 26 April 2006, being the date on which proceedings were filed. The matter is remitted back to the Magistrates Court to be further dealt with in accordance with the rules of that court.