Matthew Ward Price as Executor of the Estate of Alan Leslie Price (deceased) & Ors v Christine Claire Spoor as Trustee & Ors
[2021] HCATrans 36
[2021] HCATrans 036
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Brisbane No B55 of 2020
B e t w e e n -
MATTHEW WARD PRICE AS EXECUTOR OF THE ESTATE OF ALAN LESLIE PRICE (DECEASED)
First Appellant
DANIEL JAMES PRICE AS EXECUTOR OF THE ESTATE OF ALAN LESLIE PRICE (DECEASED)
Second Appellant
ALLANNA MERCIA PRICE
Third Appellant
GLADYS ETHEL PRICE BY HER LITIGATION GUARDIAN ERIN ELIZABETH TURNER
Fourth Appellant
and
CHRISTINE CLAIRE SPOOR AS TRUSTEE
First Respondent
KERRY JOHN SPOOR AS TRUSTEE
Second Respondent
MARIANNE PIENING
Third Respondent
FREDERICK PIENING
Fourth Respondent
JOYCE HIGGINS
Fifth Respondent
CHERYL THOMPSON
Sixth Respondent
JOYCE MAVIS COOMBER
Seventh Respondent
ANGUS MACQUEEN
Eighth Respondent
ANGUS MACQUEEN AS TRUSTEE
Ninth Respondent
KIEFEL CJ
GAGELER J
GORDON J
EDELMAN J
STEWARD J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON THURSDAY, 4 MARCH 2021, AT 10.01 AM
Copyright in the High Court of Australia
MR T. MATTHEWS, QC: May it please the Court, I appear for the appellants with my learned friends, MR D.D. KEANE and MR J.K. CARTER. (instructed by M.A. Kent & Associates)
MR N. ANDREATIDIS, QC: I appear for the respondents with my learned friends, MR A.F. MESSINA and MS S.J. GIBSON. (instructed by Mullins Lawyers)
KIEFEL CJ: Yes, Mr Matthews.
MR MATTHEWS: May it please the Court. By way of a roadmap to today’s submissions, we have provided the Court with an outline of these oral submissions. That roadmap encompasses three broad points: first, that the language of clause 24 of the mortgage in question does not, on its preferable construction, mean that the appellants cannot plead a limitation defence; second, that if, contrary to that preferred preferable construction, clause 24 did have that effect, then such a clause would be unenforceable and void as contrary to public policy, whether as manifested in the Limitation of Actions Act 1974 (Qld) or otherwise at common law.
In making good the second proposition, it will be necessary for the appellants’ third to show that the public policy against contracting out is manifested by the Limitation Act or the common law. In doing so, it will be necessary to consider a judgment of the Privy Council in East India Company v Oditchurn Paul from 1849. We will come to that case in some more detail later in these oral submissions. It is in Part D of the joint book of authorities, commencing at page 525 and the citation is 7 Moo PC 85. It is also collected in 13 ER 811.
Our learned friends, as can be seen from their outline of submissions, dispute the applicability of the Privy Council’s decision to this question. There are also a handful of later English cases which appear to be against our position but are distinguishable from this case by reason of the nature of the limitation imposed by the statute.
In answer to those matters, the respondents rely principally upon some statements made by some members of this Court, who did not constitute a majority, in Commonwealth v Verwayen. Those statements are, of course, deserving of the greatest of respect and serious consideration, but they are not binding on this Court.
To be clear, it is for that reason that the appellants have not sought leave to argue that this Court should now overrule Verwayen in this respect. In any event, the appellants submit that the other obiter statements made in Verwayen should not now be followed by this Court.
Might we give your Honours a very brief factual overview – the facts themselves not being controversial. The lender, who was the predecessor to the respondents in this appeal, lent $320,000 to the appellants, and obtained the relevant mortgages securing the loan in July 1998.
The loan was repayable after one year, but in July 1999 it was extended to July 2000. No repayment was made by that time by the appellants, but in November 2000, some of the mortgaged land was sold, and the net proceeds of that sale, about $50,000, was paid in reduction of the debt to the lender, so that as at April 2001, the amount outstanding was $270,000. No repayments have been made since April 2001. The respondents had, during the intervening period, been assigned the benefit of the debt owed by the lender which by then had gone into liquidation.
On 8 August 2017, over 16 years after the last payment, the respondents commenced the proceeding in the Supreme Court of Queensland that sought repayment of unpaid principal and interest accruing monthly at 16.25 per cent, being a claim in round figures for about $4 million. They also sought recovery of the possession of the land.
Your Honours, the starting point of the reasons for judgment of the primary judge, Justice Dalton, the appellants pleaded that the claims made by the respondents were barred by operation of sections 10, 13 and 26 of the Limitation Act. They all sought declarations to that effect by way of counterclaim to be released from the mortgages that had been granted to the respondents. Only in reply, did the respondents plead clause 24 of the mortgages as a covenant that the appellants would not plead such a defence – that the pleading of the defence was a breach of the covenant and that, as a consequence of that breach, the appellants were estopped from pleading the Limitation Act.
Your Honour will see that pleading at pages 29 to 34 of the respondents’ book of further materials. Neither the clause nor its breach was pleaded in the statement of claim, which had been amended after the defences were filed. No relief was ever claimed in reliance upon the breach and this was despite the fact that, as I say, the limitation defences had been pleaded. It is that clause that is the foundation of this case. Clause 24 was incorporated into the mortgage instrument by reference. In other words, there was an instrument at the Titles Office in Brisbane and the simple single‑page instrument of mortgage incorporated the further instrument by reference.
The terms of clause 24 are set out at paragraph [13] of her Honour’s reasons and those reasons were given in relation to her Honour’s determination of cross‑applications for summary judgment brought by each of the appellants and the respondents. That paragraph of her Honour’s reasons is at page 10 of the core appeal book and if your Honours wish to see the clause as it was contained in the instrument under reference, it is at page 47 of the respondents’ book of further materials. It provided that:
The Mortgagor covenants with the Mortgage that the provisions of all statutes now or hereafter in force whereby or in consequence whereof any of all of the powers rights and remedies of the Mortgagee and the obligations of the Mortgagor hereunder may be curtailed, suspended, postponed, defeated or extinguished shall not apply hereto and are expressly excluded insofar as this can lawfully be done.
If your Honours have her Honour’s reasons open, you will see that at paragraphs [20] to [21], page 12 of the core appeal book, her Honour records the approach that was taken at the hearing, in particular that the clause 24 argument pleaded by the respondents as estopping the appellants’ confused legal principles and, her Honour, with respect, correctly said identify the principal to be determined as being whether clause 24 constituted on the part of the appellants a contracting out of the Limitation Act and the right to plead the defence thereunder.
Her Honour, for the reasons set out therein, entered judgment for the appellants and dismissed the respondents’ application for summary judgment. The respondents appealed successfully to the Queensland Court of Appeal, relevantly on the grounds first and foremost that the primary judge erred in concluding that clause 24 was ambiguous and that clause 24 did not prevent the appellants from pleading the limitations defence.
It is convenient to deal with the construction point first. In reasons that are embraced by the respondents in their submissions to this Court, Justice Gotterson, with whom President Sofronoff and Justice Morrison concurred, at paragraph [64] of his Honour’s reasons, which is at pages 52 to 53 of the core appeal book, adopts certain statements in the previous reasons for judgment in other cases that describe the effect of pleading a limitation defence as defeating a plaintiff’s action. Those same cases are relied on by our learned friends in this Court for the same point.
The respondents succeeded before the Court of Appeal on the basis that that Court adopted as preferable their construction of clause 24, that is because provisions of the Limitation Act have been described previously as defeating a plaintiff’s claims. The clause denied the appellants from invoking the Limitation Act by their plea of the defence.
If your Honours turn to page 52 of the core appeal book, at paragraph [64] of his Honour’s reasons, he says:
according to ordinary usage, the word “defeat” aptly describes the effect of limitation provisions.
Then, his Honour continued at paragraph [65], the passage commencing:
a limitation provision ‑
The appellants challenged directly Justice Gotterson’s reasoning in our written submissions in reply, at paragraphs 3 to 9.
In summary, our submissions as to why the construction submitted by the respondents in this Court – which were accepted by Justice Gotterson – should be rejected, are as follows. First, the majority of this Court in Westfield Management v AMP Capital Nominees – and I am happy to continue to provide your Honours the citations, if you so desire – it is at (2002) 247 CLR 129 and it is in part C of the joint book of authorities, at pages 423 to 424. We would refer your Honours to the passage in the majority judgment at paragraph 46 – which is at page 143 of the Commonwealth Law Report and page 423 of the joint book of authorities, commencing at the last sentence on that page and over to the next page, with the words:
It is the policy of the law ‑ ‑ ‑
EDELMAN J: Which page of the report is this?
MR MATTHEWS: Of the Commonwealth Law Report?
EDELMAN J: Yes.
MR MATTHEWS: Page 143, your Honour.
EDELMAN J: Thank you.
MR MATTHEWS: The very bottom of the page, the last sentence:
It is the policy of the law that contractual arrangements will not be enforced where they operate to defeat or circumvent a statutory purpose or policy according to which statutory rights are conferred in the public interest, rather than for the benefit of an individual alone. The courts will treat such arrangements as ineffective or void, even in the absence of a breach of a norm of conduct or other requirement expressed or necessarily implicit in the statutory text.
Your Honours, although you will see at the bottom of that page, footnote 46 on page 424 of the joint book, it seems that the Court was not referred to this Court’s judgment in Equitable Life Assurance of theUnited States v Bogie (1905) 3 CLR 878. It is in part C of the joint book of authorities, your Honours, commencing at page 374.
This earlier statement of principle is certainly, in our respectful submission, not inconsistent with the statement of principle enunciated in Westfield Management. Each of Chief Justice Griffiths, Justices Barton and O’Connor, give some guidance as to the standard of contractual language necessary to contract‑out effectively from a statute and we rely upon each of their reasons. Although, Justice O’Connor states the point, most succinctly, in our respectful submission, about the need for an effective contracting‑out to use strong words.
If your Honours go to page 911 of the Commonwealth Law Report in Justice O’Connor’s reasons you will see the second paragraph commencing “The only remaining question”, and we will leave your Honours to read down to about halfway down that paragraph and his Honour says:
The words “gives up all right or claim to temporary assurance,” –
which we might interpose are, in our submission, significantly stronger words than those used in clause 24 in this case. It is a phrase used in the American Acts in respect of which this clause of the contract was intended to operate. It would certainly require very much stronger words than are used here to indicate an intention to give up not only all rights already given by the statutes in existence of the date of the policy, but rights that may be hereafter given by other statutes.
So, in our respectful submission, that statement of principle aptly applies to the construction of clause 24 which, in our submission, does not include such strong words as are necessary to give the effect to clause 24 for which the respondents contend.
EDELMAN J: Ultimately the question though is what a reasonable person in the position of the parties would take the words of clause 24 to mean.
MR MATTHEWS: Of course, your Honour. Although the appellants do not consider that it is necessary to rely upon the contra proferentem canon to advance our preferred construction, it is submitted that the canon is plainly applicable. The ambiguity is evident from the competing constructions of clause 24 adopted in the lower courts. The primary judge adopted and applied the canon, whereas Justice Gotterson by omission did not so do. Clause 24 was inserted undoubtedly for the benefits of the respondents and as such it should be construed, if ambiguous, against their interests. We do not understand that that proposition is one with which the respondents cavil in the event of this Court holding that the clause is ambiguous. The next ‑ ‑ ‑
GAGELER J: Can I ask a question ‑ ‑ ‑
MR MATTHEWS: Yes, your Honour.
GAGELER J: ‑ ‑ ‑ that arises out of both of the passages in the Commonwealth Law Reports that you have referred us to. The passages seem to me to be quite careful in the judge’s use of language in referring to contracting out of rights conferred by statute, not contracting out of the statute. The statute operates by force of law. What the parties are entitled to do in some cases is to enter into a contract as to how the rights conferred by the statute will be exercised. That is what we are concerned with in this case and in other cases where there is a loose reference to contracting out of the statute of limitations.
MR MATTHEWS: We would point your Honour Justice Gageler to this – that the language employed by clause 24 does not even specifically refer to a statute of limitations, and the ability of a party to plead so as to invoke a defence under a particular statute is so general as to, in our submission, be ambiguous.
GAGELER J: On one view, it is directed, at least arguably, to the operation of the statute rather than to the disposition of the rights. I do not know if you make anything of that.
MR MATTHEWS: Your Honour, the language of the clause is directed to the statute, as opposed to the rights. Our preferred construction is it does not affect the right to invoke the statute by pleading the defence. The next reason why we submit that our construction is that to be preferred, and that the construction as contained in Justice Gotterson’s reasons was erroneous, is that his Honour seemed to use the use of the word “defeat” in other judgments as providing a benchmark for the construction of the clause.
He has read such reasons, in our submission, impermissibly, as if they were a statute. Merely because judges – and Justices of this Court have so done in earlier cases - have described the effect of pleading the defence in that way, we submit is neither determinative of, nor relevant to the preferable construction of clause 24.
We deal with the fallacy of utilising words in judgments in order to construe contracts and statutes at paragraph 7 on page 5 of our reply submissions, citing Benning v Wong and the judgment of Justice Windeyer. In our submission, the task of a court construing clause 24 is to determine the objective meaning to be given by the language used by the parties – as your Honour Justice Edelman has pointed out, and with which we respectfully agree. But the reasoning with which, in our submission, the respondents and Justice Gotterson did not come to grips was the consideration of the concluding words of the clause.
It is well settled, and we do not cavil with the proposition that a defence created under the Limitation Act and conferred on a defendant to a proceeding cannot have any operation unless and until the defence itself raises it in the proceeding. If no defence is pleaded or otherwise raised, then any statutory bar that might otherwise preclude a plaintiff’s claim will have no effect.
That proposition itself, in our submission, puts the conduct of the appellants, in pleading their limitation defences, outside the terms of clause 24, and again, as Justice Gageler – I have just answered your question, that it is really about the right to plead, whereas the clause refers to a contracting out of the statute itself.
The respondents, at paragraphs 5 and 7 of their written submissions at page 4, appear to put a gloss on that language when they submit, as they do, that there may be either a direct or indirect means of defeating a right or remedy of the respondents. That is an interposition of language into clause 24 which has the effect of rewriting the language of the covenant itself, in our submission. By its own terms, it is directed to statutory provisions which, by their own force, defeat the respondents’ rights and remedies.
If I can move to the next reason why our preferred construction is correct. Neither the respondents nor Justice Gotterson have come to grips, as we have said, with those concluding words of the clause insofar as this can lawfully be done. This is moving to the second of the propositions, which are highlighted in our roadmap outline.
Even if our preferred construction on the balance of the language in clause 24 is not accepted by your Honours, the consequence of those concluding words is that, because in our submissions concerning public policy, which your Honours have read in the written submissions and reply and which we will briefly address in due course, what the respondents propound the clause cannot lawfully be done.
If the appellants are correct that contracting out of the Limitation Act is not lawful because it is contrary to public policy – and that is what the respondents of course submit clause 24 purports to do – then those concluding words mean that the clause does not operate to preclude the appellants from pleading the defence.
Grounds of appeal (b) and (c) advanced by the respondents in their appeal to the Court of Appeal – your Honours will see those at page 27 of the core appeal book – impute the primary judge’s conclusion that the respondents’ title to the mortgaged land was extinguished before the proceeding commenced by and pursuant to section 24 of the Limitation Act.
At paragraph [67] of Justice Gotterson’s reasons – that is page 53 of the core appeal book, your Honours – his Honour expressly did not consider the question as to whether or not the primary judge erred in concluding that it was not open to the parties by clause 24 to contract against the operation of section 24.
His Honour recorded that that was because the respondents did not challenge that conclusion by their notice of appeal. Nonetheless, his Honour’s erroneous construction of clause 24 permeated this part of his reasons as well because, at paragraph [76], page 54 of the core appeal book, his Honour reasoned that, having regard to his own conclusion that you could contract out of the application of section 13 of the Act and because time thereby did not begin to run under section 13, that period could not expire for the purposes of section 24, such that the event that triggers the extinguishment of the respondents’ title as mortgagee, could not and would not occur. It would never occur.
It would be an affront, in our submission, to the parliamentary intent that claims when they are live be litigated and that claims when stale are concluded and can be defended by a plea of limitation and in respect of title to land that it could not lawfully be contracted out of the extinguishment provisions. Justice Gotterson’s reasoning does not withstand scrutiny, in our submission. The contracting out cannot be lawfully done and therefore the conclusions as to sections 13 and 24 are erroneous.
KIEFEL CJ: But if you are wrong in relation to the construction of clause 24 and it does refer to rights which the statute provides – rights and remedies – do you still maintain that his Honour’s reasoning is not correct in relation to section 24?
MR MATTHEWS: Yes, your Honour, because of the question of public policy rendering the operation of the clause not being able to be lawfully done, and as we submitted in our opening, that is to make good the second proposition, we have to have reference to the third and make out the third. If it is convenient to the Court, I might turn to that now.
GAGELER J: Could I just follow up the Chief Justice’s question?
MR MATTHEWS: Yes, your Honour.
GAGELER J: You have a distinct ground of appeal, ground 4 of your appeal that deals with section 24 that is squarely addressed in the judgment of Justice Gotterson in the last couple of paragraphs and it is squarely addressed in the respondents’ written submissions. I am not sure I saw anything in your submissions that deal with it. Are we going to address it?
MR MATTHEWS: I will turn that up, your Honour. Perhaps Mr Carter might turn that up and then I will come back and answer your Honour’s question.
GAGELER J: Thank you.
MR MATTHEWS: Might I just interpose, I overlooked at the outset to advise your Honours of two minor corrections to those written submissions. There are a couple of references that were omitted. I would like to give them to your Honours just on the record. Footnote 76 refers to a case of Soho Square Syndicate Ltd v E Pollard and Co [1940] Chancery. The case commences at page 638. We omitted to include that. The second correction is footnote 108. The core appeal book reference is page 49. I will return and answer your Honour’s question. If we might turn though in the interim to public policy.
Before the Court of Appeal, your Honours would have seen from the core appeal book, the appellants filed a notice of contention. This is where your Honour might see the answer to that question. It is at page 46 of the core appeal book, as set out in paragraph [28] of Justice Gotterson’s reasons. Your Honours can see that ground of contention 1 had two parts, (a) and (b), and raised this issue. At paragraph [34] of his Honour’s reasons, his Honour rejected the appellants’ first contention and stated:
There appears to be no Australian authority in which separate consideration has been given to whether a contractual provision not to plead a limitations defence entered into for consideration before a cause of action to which it might be pleaded has arisen, is void as against public policy. However, judicial observations at the highest level in this country suggest that such a provision is not, for that reason, void.
Strangely, his Honour cites no authority for that proposition. He drew the observations, it seems, with respect, from Verwayen and, in particular, the separate reasons of Chief Justice Mason and Justice Brennan. The diversity of opinions expressed in Verwayen provides fertile ground for different submissions, especially because each of the Justices delivered separate reasons. There was, plainly, in our submission, no majority consensus.
That case, it will be recalled, is not about contracting out at all. It was about whether the Commonwealth could or should be precluded from relying upon a limitation defence in circumstances where it had previously – and expressly represented to the plaintiff – that it would not plead such a defence. We remind the Court, with respect, that that is not the issue in this case. By reason of the diversity of reasoning alone, the obiter remarks of the Justices of this Court, in our submission, cannot assist in the resolution of this appeal.
EDELMAN J: But why is there a material difference between the circumstances of Verwayen and the circumstances in this case? Surely, if a person is able, unilaterally, to waive rights that they have under a statute, the person must also be able to waive those rights bilaterally by contract.
MR MATTHEWS: Your Honour, we deal with that question at paragraphs 42 to 51 of our written submissions. But, in short, the answer is because with waiver the power or the keys rest with the defendant as opposed to contracting out, where the power rests with the plaintiff relying upon a clause of a contract inserted for its benefit solely, the plaintiff - in the latter case, the plaintiff, while memory strayed, documents and evidence are lost and in this instance, default interest at 16.25 per cent continues to accrue without any bar to the plaintiff having to commence a proceeding means, in our submission, that whether one can waive – knowing the facts in the case that is alleged, so whether one can waive a position knowing the facts is quite different from contracting out of future rights when you do not know the case to be brought against you, before a cause of action is crystallised.
That is the policy to which we refer, which is different from the policy about which the Chief Justice spoke in Verwayen. He was speaking about the policy of finality in litigation and that is made plain if one looks at the context within which his Honour referred to waiver as being akin to contracting out.
KIEFEL CJ: Apart from the policy in the finality of litigation, is there any other aspect of statutory policy that you rely upon which says that a person - which would support a person not being able to contract out of a benefit provided by a statute?
MR MATTHEWS: Yes, we have that in our written submissions. There are cases such as Cholmondeley and - - -
KIEFEL CJ: I just want you to identify what the policy is.
MR MATTHEWS: The policy is that a party with an imbalance of power under a contract should not be permitted to render nugatory or abrogate Parliament’s intent that claims are brought expeditiously and within time. That has been the intent of Parliament, in our submission, as you will see in our written submissions since the Jacobean statute in 1623.
KIEFEL CJ: That is really just extrapolating on the finality principle. It is adding a kind of unconscionability aspect to the finality principle, is it not?
MR MATTHEWS: Your Honour, it may be, but we submit in addition there is this policy that statutes of limitation should be enforced.
KIEFEL CJ: Do you deny that the Limitation of Actions Act provides a benefit?
MR MATTHEWS: It provides a benefit to an individual and to the Court and the public as a whole that stale claims are able to be defended by a defendant invoking a limitation defence.
KIEFEL CJ: The defendant is not required to invoke it?
MR MATTHEWS: Not required to.
KIEFEL CJ: That is rather important, is it not, if one is discerning the policy of the statute?
MR MATTHEWS: Yes, your Honour. Can we come to that? We are going to.
KIEFEL CJ: Yes.
MR MATTHEWS: What we would say further about Verwayen is that cognisance should be taken of what Justice Deane said. It is at page 433 of the Commonwealth Law Report and page 311 in Part C of the joint book of authorities where his Honour said:
It is undesirable to seek to define exhaustively and in the abstract the content or operation of any general legal doctrine. Inevitably, there will be unforeseen and exceptional cases. Ordinarily, there will be borderline areas in which the interaction of the doctrine with other doctrines will be uncertain. Most important, it is part of the genius of the common law that development on a case-by-case basis enables its adaptation to meet changing circumstances and demands.
Your Honours, although it is not in the joint book of authorities, contained in footnote 132 to paragraph 46 of our written submissions we referred to this Court’s judgment in Agricultural and Rural Finance v Gardiner (2008) 238 CLR 570, in particular ‑ your Honour the Chief Justice was part of the majority – at paragraphs 60 and following. At paragraph 62 on page 590, your Honours said:
The setting in that case [in Verwayen] was provided by the existence of litigation between the parties. The issue was whether one party had so acted that it should not be permitted to rely on a defence that it had at first said it would not raise but later sought to rely on to –
here is the use of the word:
defeat the plaintiff’s claim. There is evident danger in divorcing what is said in that case from that context and attempting now to apply it directly in the radically different context of contractual relations.
Then your Honours went on to refer to what was said by the majority in Giumelli v Giumelli.
EDELMAN J: Before you move on to that case, can I take you to page 592, paragraph 68?
MR MATTHEWS: Yes, your Honour.
EDELMAN J: One of the senses of waiver that is picked up in the submissions that the joint judgment is referring to in the last three lines of paragraph 68 is waiver as:
“the unilateral renunciation or abandonment of a right or benefit where a party acts in a manner inconsistent with the maintenance of that right or benefit”.
Do you accept that a unilateral waiver can operate in that way?
MR MATTHEWS: A waiver can operate in that way.
EDELMAN J: Why then cannot the entry into a contract amount to an action by a party which is inconsistent with the maintenance of a right or benefit?
MR MATTHEWS: A unilateral waiver can occur when the facts are known of a claim and one can decide whether to enforce an entitlement or not to enforce it.
EDELMAN J: But that is the different sense of waiver referred to about six pages earlier – known as election. This is the sense of waiver which is being described here as “forbearance”, whereby a party’s overt acts, those acts amount to a unilateral renunciation or abandonment on their proper construction.
MR MATTHEWS: With respect, your Honour, there can have been no overt acts at the time of entering into a contract.
EDELMAN J: Other than the entry into the contract itself?
MR MATTHEWS: Other than the entry itself. And the absence of knowledge of what might arise in the future, in our submission, militates against that doctrine of waiver being transferable to an ability to contract out.
GORDON J: It comes back then, does it not, to the construction of either clause 24 or what you describe as the absence of knowledge. At the time of the contract, they knew of the possibility under the Limitations Act of limitation periods applying – pertaining to have that knowledge, that is knowledge that is there.
MR MATTHEWS: Yes, your Honour.
GORDON J: So why, to pick up Justice Edelman’s question, is that not a unilateral abandonment/forbearance in respect of those matters, of which they had knowledge?
MR MATTHEWS: Your Honour, we can only submit that knowledge was not knowledge that the appellants could in future be sued and could give up a right to plead the statute. The circumstances of the entry into the contract itself are such that they did not have knowledge that they were going to be sued. Whereas the other cases, such as Verwayen and the like – and I see our learned friends – yes, Verwayen and the like, were in the context of extant litigation, and our submission is that absent extant litigation, one cannot waive a benefit contractually.
STEWARD J: How much knowledge do you need to have before you can efficaciously waive a benefit? When proceedings are commenced, a defendant may not have a great deal of knowledge about what will happen, will not have seen perhaps the evidence to be filed. At what point do you have sufficient knowledge, in your submission?
MR MATTHEWS: The authorities, in our submission, suggest that one can waive up to the point of judgment. But we would submit that ‑ ‑ ‑
STEWARD J: Well, what is the earliest point, then?
MR MATTHEWS: When you are served with the proceeding – or, sorry, when a claim is articulated against you, and circumstances may have changed ‑ we can submit by analogy, that some of these earlier cases were at a time when a writ could simply be issued. In the modern context of statutes such as the civil liability Acts, motor insurance Acts, motor accident insurance Acts, workers compensation Acts, there are now ‑ a defendant has a right to have articulated a claim in a pre‑court procedure.
EDELMAN J: Are you not confusing two different senses in which “waiver” is used? That is one of the primary points that is made in expense - reduction analysts, is that one has to be very careful when using slippery terms like this what they actually mean. One sense which I understand you to be speaking about is waiver as election where you need to know of inconsistent possible rights and you elect between them. A different sense is waiver as forbearance where objectively by your conduct you have acted in a way which has given up a particular right that you would have had.
MR MATTHEWS: Yes, your Honour, we see that. It is waiver in the second sense and what we are trying to highlight is that waiver when you have a claim articulated against you was the subject of the cases which are put against us, and that is not the context here. When we move to the policy considerations, your Honours will construe and look at those concluding words of clause 24 “insofar as this can lawfully be done”, and if the policy of the limitations statute is that you cannot lawfully contract out, then our submission would be that you cannot be held to have waived the effect – a right under the statute before such time as a claim is articulated against you.
GAGELER J: It is very common in commercial contexts for parties to find themselves in dispute and in negotiations as the limitation period is drawing to a close and they enter into what the Americans call a tolling agreement. They say, “We will continue our negotiations and we will enter into a deed that says no reliance will be placed on rights under the Limitation Act until a later time”. Without any proceedings being commenced there is a deferring of any right to plead the Limitation Act. Does your public policy mean that that sort of arrangement is unenforceable?
MR MATTHEWS: No.
GAGELER J: How do you deal with that?
MR MATTHEWS: The parties can extend the limitation period, and that is essentially what those commercial contexts do, but they are not thereby waiving an entitlement to invoke the limitation beyond the agreement to extend the period of limitation whilst those ongoing commercial negotiations continue.
GAGELER J: So the distinction is between non‑exercise for a period and complete abandonment, is it?
MR MATTHEWS: Yes, your Honour, and that is so – as my learned friend, Mr Keane, reminds me – because in those sorts of negotiations you have an articulated claim and an articulated response or counterclaim.
KIEFEL CJ: Does your reference to the need for extant litigation or an extant dispute identify that, on your argument, there has to be something which makes a party aware of an issue?
MR MATTHEWS: Yes.
KIEFEL CJ: Is that what it really comes down ‑ ‑ ‑
MR MATTHEWS: That is what it really comes down to.
KIEFEL CJ: It comes down to that.
MR MATTHEWS: That is why ‑ ‑ ‑
KIEFEL CJ: But, of course, as has been pointed out in questions to you earlier, a party can be aware of limitation of actions defences at the point of contract before any dispute has arisen. It is by way of avoiding that issue that one signs the document.
MR MATTHEWS: That may be so, and the knowledge could well be imputed. Of course, there is no evidence in this case as to any knowledge, but I take the force of Justice Gordon’s question of me.
KIEFEL CJ: I think you were going to further develop your public policy argument.
MR MATTHEWS: Yes, your Honour. At paragraphs 21 to 30 of our written submissions, we have reviewed the authorities on the approach as to whether statutes permit contracting out, in the absence of express words, to assess whether or not the statute permits contracting out. At paragraph 27, we submit that the matters are to be taken into account. We have adopted that approach in our submissions, and we do not propose to take the Court to those cases specifically, as it appears our learned friends do not cavil with it in their written submissions.
The first of the authorities is Cholmondeley v Clinton (1820) 2 Jac & W 1, 37 ER 527 and it is at page 502 in Part D of the joint book of authorities. There, Master of the Rolls, Sir Thomas Plumer, described the justifications for statutes of limitation but particularly with respect to titles for land. The relative passage commences at page 577 of the English Report and 502 in the book of authorities. It is about two‑thirds of the way down in the second paragraph. Your Honours will see the footnote in the square brackets, [140], and his Lordship was dealing with the 1623 Jacobean statute. We would ask your Honours to read from “The statute is founded upon” to the end of that paragraph.
Your Honours, I have not eschewed reading the passage because of my fear of the pronunciation of the Latin, but my schoolboy Latin was not sufficient to translate the maxims. For your Honour’s benefit, the first maxim starting with “interest” means in the interests of society as a whole litigation must come to an end. So that is the question - finality policy. But also, the final maxim commencing “vigilantibus” translates to equity aids the vigilant not the indolent. Of course, we acknowledge that this was an equity case.
GAGELER J: Do we see the statute there concerned with somewhere? I know you said it was a Jacobean statute. I do not carry that around in my head, I am afraid.
MR MATTHEWS: It is not in the headnote and it is not set out in the reasons, but what we have done is to go to the date of the hearing and of the judgment and it is the 1623 Jacobean statute of limitation because the decision predates the 1800 amendment.
GAGELER J: The provisions we are concerned with seem to have their provenance in the English Act of 1837. There may be some benefit in going back to Jacobean times, if you can tie these principles to the Act as it emerged and as it has been developed since then.
MR MATTHEWS: Your Honour, the tracing of the history of the statutes since the Jacobean statute has been done authoritatively by Justice McHugh in Brisbane South Regional Health Authority v Taylor, and his Honour’s history of the statutes would, in our submission, support our submission that the Master of the Rolls’ comments in Cholmondeley remain of full force and effect today because they are mirrored in Justice McHugh’s reasons in Taylor, to which we were going to turn next. It is reported in (1996) 186 CLR 541, at page 90, in Part C of the joint book of authorities.
From page 551 of the report, page 100 of the joint book, from the third paragraph down, his Honour traces the history of why Parliament has sought to restrict the time period within which actions might be commenced. Your Honours will read:
The discretion to extend time must be exercised in the context of the rationales for the existence of limitation periods.
That case of course concerned an application under the very self‑same Act with which your Honours are dealing in this case for an extension of the period of three years limitation for the bringing of an action for personal injuries under section 31.
GORDON J: I know you are going to come to it, but when one looks at this Limitation of Actions Act one sees different causes of action dealt with in different ways.
MR MATTHEWS: Yes, your Honour.
GORDON J: What Justice McHugh is dealing with is, as I understand it, those causes of action which have a right granted under the statute to an extension of time and they are primarily – not entirely – but primarily dealing with what I will call non‑voluntary causes of action, personal injuries and the like.
MR MATTHEWS: Yes.
GORDON J: That is not this area which we are dealing with, is it? There is no statutory grant of an extension of time.
MR MATTHEWS: No, of course not.
GORDON J: We are dealing with a different subject matter. We are dealing with property, here land. Section 12 deals with personal property in a similar way. Does that impact upon the way in which we look at it?
MR MATTHEWS: In our submission, no, because Justice McHugh’s reasoning, in our submission, covers the spectrum of the various limitations on different causes of action in the Limitation Act.
GAGELER J: What do you draw from Justice McHugh’s reasoning, in a nutshell?
MR MATTHEWS: His reasoning is – the classic passage is at page 553 after his Honour identified the four policy rationales for enactment of limitation statutes generally as being: the loss of evidence; the oppression to defendants; the arrangement of affairs and utilisation of resources without fear of claims; and the public interest in the settlement of disputes as quickly as possible.
GAGELER J: His Honour was dealing there with an inter partes claim though, a personal injuries claim.
MR MATTHEWS: Yes.
GAGELER J: There may or may not be other public policies that come into play where you are concerned with title to property, possibly, which might mean that sections 12 and 24 of this Act involve other considerations.
MR MATTHEWS: In our submission, Sir Thomas Plumer’s remarks were directed to adverse possession and titles to land and the public policy of those who are vigilant in respect of their title are afforded access to the courts, whereas those who are indolent should be prevented such access.
GAGELER J: It might have something to do with successes in title as well. I am just wanting to explore these questions which at least on one view arise on your case.
MR MATTHEWS: It is particularly important, your Honour, in respect of claims for adverse possession, for example, where a period of time elapses and the owner’s title is lost. Utilisation of resources on property might have a limit ‑ ‑ ‑
KIEFEL CJ: It would be difficult to think of a situation where you would come to contract out of an adverse possession claim though.
MR MATTHEWS: It is difficult to postulate, your Honour.
KIEFEL CJ: Yes.
MR MATTHEWS: Your Honour, the next authority, which is called into question by the respondents is the judgment of the Privy Council in East India Co v Oditchurn Paul (1849) 7 Moo PC 85, collected in 13 ER 811, which is at page 525 in part B of the joint book of authorities. The Privy Council heard an appeal from the Supreme Court of Judicature at Fort William in Bengal. The East India Company had offered salt for sale and Mr Paul purchased a quantity of that salt, paid the purchase money to the company in advance of delivery and he was issued with a permit that authorised him to take possession of a certain quantity of salt.
The salt was stored at a warehouse from which Paul was to collect it but before he could collect the salt, there was an inundation and no salt was available to fulfil his purchase. Mr Paul sought repayment of his purchase money, but the company refused on the ground that the loss to Mr Paul was caused by his own negligence in not collecting the salt before the inundation.
Following a report by the salt collector after his inquiry which refused to direct the return of the purchase money, he brought an action of assumpsit in the Supreme Court of India. The company pleaded the limitation that by that time had expired. Mr Paul succeeded at first instance and the Full Court of the Supreme Court concluded that insofar as the company had consented to the salt collector’s inquiry taking place, that is precedent to the litigation being commenced, the company could not have refused to deliver the salt to Paul until the inquiry was concluded and that, as such, his action was brought within time.
The Privy Council overruled the conclusions of the Supreme Court and the passage to which we will take your Honours is that in the reasons of Lord Campbell, at pages 821 to 822 of the English Reports, page 535 over to 536 in the joint book, and the passage commences at the very foot of page 821 of the English report:
There might be an agreement that in consideration of an inquiry into the merits of a disputed claim, advantage should not be taken of the Statute of Limitations in respect of the time employed in the inquiry, and an action might be brought for breach of such an agreement; but if to an action for the original cause of action the Statute of Limitations is pleaded, upon which issue is joined‑‑proof being given that the action did clearly accrue more than six years before the commencement of the suit—the Defendant, notwithstanding any agreement to inquire, is entitled to the verdict.
That, with respect, your Honours, is the principle for which the appellants here contend. So, although Paul involved an agreement to inquire into the merits of Mr Paul’s claim, it does not appear, in our respectful submission, that anything turns upon the reason for the agreement not to plead the limitation period.
EDELMAN J: If you are correct, how could an action be brought for breach of that agreement if the provision, or the agreement, is void?
MR MATTHEWS: That was not the basis upon which their Lordships in counsel decided the case. It was on the basis that, notwithstanding any such agreement, if the Limitation Act is invoked, the defendant is entitled to the verdict, and that is consistent with the Limitation Act, your Honour, barring the remedying, not the right, in our submission.
EDELMAN J: But you say that the very premise upon which the Privy Council is deciding that, which is that the alternative action for breach of contract that might still exist, is wrong.
MR MATTHEWS: Yes.
KIEFEL CJ: Did the Privy Council in this case accept that there may be an agreement deferring the limitation period for the time which was not taken up with the inquiry?
MR MATTHEWS: Yes.
KIEFEL CJ: So, they agreed that you could contract out of the statute of limitations ‑ ‑ ‑
MR MATTHEWS: For a particular purpose.
KIEFEL CJ: ‑ ‑ ‑ for a period.
MR MATTHEWS: Which is consistent with the agreements in America.
KIEFEL CJ: Yes, so somewhat alike.
MR MATTHEWS: That while commercial negotiations continue ‑ ‑ ‑
KIEFEL CJ: Yes.
MR MATTHEWS: ‑ ‑ ‑ the period is stayed or not to be relied upon.
KIEFEL CJ: But their Lordships were concerned with how that agreement took effect so as to – when the period ran from and when it stopped.
MR MATTHEWS: Yes.
KIEFEL CJ: That is what they were concerned with.
MR MATTHEWS: Yes, they were.
KIEFEL CJ: But, so far as is relevant to this case, does not East India v Paul stand for the proposition that a party can contract out of a limitation statute – that the parties can agree that the effect of it be stayed while they undertake negotiations in the same way as the cases to which Justice Gageler referred.
MR MATTHEWS: But the right to raise the limitation is preserved because that is the policy of the statute.
KIEFEL CJ: That is only because the parties say that. The extended question would be, if they can contract out of the statute by saying that it will not have an effect – will not come into effect for a period – they could say that it will not come into effect at all.
MR MATTHEWS: The consequence of which would, in our submission, fly in the face of the intent of Parliament in enacting the statutes.
KIEFEL CJ: Can you take the public policy argument any further than finality of litigation?
MR MATTHEWS: Only by referring to “The Sauria” and the “Trent” [1957] 1 Lloyd’s Rep 396 and at page 574, in part B of the joint book of authorities. And I will answer your Honour Chief Justice Kiefel’s question about whether we can take it further. We do, and it is in our written submissions, that part of the public policy is that parties should not be permitted to take control of the Court process, particularly in light of this Court’s decision in Aon about expeditiously disposing of claims when made and we deal with that in our written submissions.
GAGELER J: Where in your written submissions do we see the clearest articulation of the basis of the public policy for which you contend?
MR MATTHEWS: At paragraphs 52 and following.
GAGELER J: That is not a reference to authority. I am just trying to – can you crystallise it?
MR MATTHEWS: I will endeavour to, your Honour.
KIEFEL CJ: Mr Matthews, that might be a convenient time for the Court to take its morning break.
MR MATTHEWS: Yes, your Honour.
KIEFEL CJ: You can busy yourself with crystallising your argument.
MR MATTHEWS: Thank you, your Honour.
AT 11.13 AM SHORT ADJOURNMENT
UPON RESUMING AT 11.29 AM:
KIEFEL CJ: Yes, Mr Matthews.
MR MATTHEWS: Thank you, your Honour. Your Honour Justice Edelman, could I clarify an answer I gave to your Honour immediately before the adjournment. What we say is that if you are against us that it is not contrary to public policy to contract out, then we say that Paul says that we have contracted out but, notwithstanding that, we are still entitled to the verdict on raising the plea of the Limitation Act. The respondents’ rights are against us for breach of the covenant not to raise the plea; in other words, an action for damages.
EDELMAN J: So effectively this is the point that is made by the Privy Council that you can bring a separate action for damages but you cannot obtain what is effectively specific performance.
MR MATTHEWS: That is so.
EDELMAN J: The law and the approach to specific performance has moved on quite a lot in the last 150 years.
MR MATTHEWS: But Mr Paul was not effectively seeking specific performance. He was seeking a refund of the prepayment of the moneys he had made to the company in assumpsit.
GAGELER J: In a pre‑Judicature Act environment.
MR MATTHEWS: Yes, your Honour, we accept that. That is our submission, that notwithstanding in a pre‑Judicature Act environment that Paul is still good law and that your Honours will see from paragraph 16 of our submissions in reply we advance some reasons why the position in Paul continues to be appropriate. First, contracting out of the traditional form of limitation statutes will be rendered nugatory. Second, and as a corollary to the first, such provisions would become the ubiquitous boilerplate in many, if not most, contracts, particularly in mortgage contracts such as that in issue in this case.
Third, such contracting out will burden the courts both with disputes about the efficacy of such clauses that purport to contract out of the limitation statutes but also by keeping alive artificially claims that Parliament has determined should otherwise be stale.
That leads me to then answer your Honour Justice Gageler’s second of the two questions that I said I would come back to and that is where is the clearest articulation of the policy of Parliament in balancing the interests between plaintiffs and defendants in enacting limitation statutes? That is at paragraphs 37 to 38 of our written submissions at pages 13 and 14.
GAGELER J: That is really not quite the question that I meant to ask. You rely, as I understand it, on a public policy as incorporated into the common law.
MR MATTHEWS: Yes.
GAGELER J: Maybe I misunderstood you.
MR MATTHEWS: No, you have not misunderstood.
GAGELER J: Really, I am asking where do we find the clearest articulation of that public policy incorporated into the common law?
MR MATTHEWS: In those particular paragraphs of the written submissions, 37 and 38. Then reverting to my promise to answer the first question your Honour put to me which was concerning section 24 of the Act, we accept that we have not addressed the same specifically in our written submissions, but we would address it in this way.
Justice Gotterson proceeded on the basis that the effect of clause 24 was that time did not run and that the cause of action did not accrue. The basis of our ground 4 of the notice of appeal is again Paul – that is, that while a breach of the covenant might give rise to a damages action, we are still entitled to the verdict.
The consequence would be, on Justice Gotterson’s reasoning, that time would never run for that breach and the action would never be available. Sorry, I put that rather badly. We submit that the basis of ground 4 is that while our breach – if your Honours were against us on the construction of the clause and the public policy, then the pleading of the defence is not barred – on the reasoning of Paul – but we are liable for damages for a breach of the covenant not to rely on the statute. That is none of the relief that is claimed in this proceeding by the respondents – which is why we took your Honours to the fact that the breach was only pleaded by way of reply and no substantive relief was claimed in respect of that breach.
GAGELER J: Justice Gotterson deals with an argument in the Court of Appeal about the operation of section 24, at paragraphs [74] to [76].
MR MATTHEWS: Yes.
GAGELER J: What do you say about that reasoning, if anything?
MR MATTHEWS: The trigger for - his Honour’s reasoning in paragraph [76] was, in our submission, flawed because of the error we identified and argue in relation to the construction of clause 24 and his Honour’s consideration of public policy insofar as that can lawfully be allowed. So our criticism as to those reasons hinges on that part of the argument.
KIEFEL CJ: Do you say that there is a different kind of public policy relevant to section 24(1) than there is to section 13?
MR MATTHEWS: Section 24(1) really comes back to Sir Thomas Plumer’s statements in Cholmondeley about those who are indolent in relation to rights to real property and so the policy which might govern the extinguishment of the title of the mortgagee ‑ ‑ ‑
KIEFEL CJ: Arguably section 13 provides a defendant with a benefit by way of defence, but section 24 might not be thought to have a similar operation because it deals with the expiry of title after a period of time has passed, so you might be looking at certainty of title.
MR MATTHEWS: That would be something that the law would require to ensure that possessors and title holders of legal and equitable estates do not sleep on rights in the knowledge of a – knowledge of a breach that entitles them to a possessory title.
KIEFEL CJ: The difficulty is that if one recognises that a defendant, a mortgagor, could disclaim the limitation period for the purposes of section 13, why that would not also operate with respect to the period of limitation in section 24.
MR MATTHEWS: It means the mortgage would stay in the title in perpetuity, in our submission. It would – a period of time ‑ ‑ ‑
KIEFEL CJ: What third parties would be affected by this situation with respect to section 24? Potential purchasers, I suppose.
MR MATTHEWS: Potential purchasers, perhaps local authorities who might wish to, in the absence of payment of municipal rates and the like, exercise their statutory powers to take possession and sell.
KIEFEL CJ: But then in relation to the Torrens system, the mortgage would remain on the register, so ‑ ‑ ‑
MR MATTHEWS: It would remain on the register and ‑ ‑ ‑
KIEFEL CJ: ‑ ‑ ‑ people would be notified of the existence of ‑ ‑ ‑
MR MATTHEWS: Existence of it.
KIEFEL CJ: Of the existence of the interest.
MR MATTHEWS: Yes. Perhaps the answer to that question, your Honour, could be derived from a consideration of Johnson v Moreton, if I can take your Honours to that authority. It is [1980] AC 37, post‑Judicature Act. It commences at page 537 in the joint book of authorities, and the relevant passage is at page 69 of the authorised report, and page 569 of the joint book of authorities commencing at about line F, and it is in the speech of Lord Simon of Glaisdale, where his Lordship said:
The principle which, in my view, emerges from this line of authority is as follows. Where it appears that the mischief which Parliament is seeking to remedy is that a situation exists in which the relations of parties cannot properly be left to private contractual regulation, and Parliament therefore provides for statutory regulation, a party cannot contract out of such statutory regulation (albeit exclusively in his own favour), because so to permit would be to reinstate the mischief which the statute was designed to remedy and to render the statutory provision a dead letter.
GORDON J: So that is, in a sense, the approach adopted by Justice Dalton.
MR MATTHEWS: Yes, it is.
GORDON J: Which was not the subject of challenge – there is not an issue here in relation to section 24.
MR MATTHEWS: Yes.
GORDON J: The question which arises is the impact and interaction between section 13 and section 24.
MR MATTHEWS: Section 24. The other part - our argument goes to the section 13 point, but that is the issue that Justice Dalton’s consideration of section 24 was not the subject of challenge by the respondents in the Court of Appeal.
GAGELER J: If section 24 cannot be contracted out of, then its relationship with section 13 is, on any view, problematic, is it not?
MR MATTHEWS: Yes, your Honour, I accept that.
GAGELER J: Because on one view the position that has been reached in the Court of Appeal is that section 24 is in effect contracted out of through the contract relating to section 13.
MR MATTHEWS: Yes, that is what Justice Gotterson proceeded to determine.
GAGELER J: When we are looking at sections 13 and 24, are we concerned only with the possession claim or did it impact on the money claim?
MR MATTHEWS: We submit it impacts on the money claim as well.
GAGELER J: How?
MR MATTHEWS: The money claim – the cause of action for the money claim arose at the latest on and from 1 April 2001 and to recover the money claim, in our submission, the six‑year limitation period applied, but to rely upon the mortgage as securing that money claim, the period of 12 years was the relevant period of limitation and below, both before the Court of Appeal and Justice Dalton, there was no argument but for clause 24. The respondents were long out of time for either of the causes of action upon which they sued.
STEWARD J: Can I just ask a question ‑ ‑ ‑
MR MATTHEWS: Yes, Justice Steward.
STEWARD J: I think you pleaded sections 10 to 13 and 26 of the Limitation Act.
MR MATTHEWS: We did.
STEWARD J: Which is the one that we should be looking at, in your view? Is it the one dealing specifically with recovering on a mortgage in section 26?
MR MATTHEWS: Yes.
STEWARD J: So it is really a comparison between sections 24 and 26 rather than 13 and 24?
MR MATTHEWS: Yes, your Honour.
STEWARD J: Was there any issue below about the fact that there were different periods of limitation for principal and interest - six years for interest in section 26(5)?
MR MATTHEWS: That was an unresolved issue.
STEWARD J: Is that because it was a summary judgment application?
MR MATTHEWS: It was a summary judgment application, but her Honour Justice Dalton did not embark upon having to determine the interest question separately. That is how the matter was conducted below on the cross-summary judgment applications.
STEWARD J: So there was no issue below that interest might have been still owing and not subject to a limitation – for example, the last six years of interest? There was no issue about that?
MR MATTHEWS: I do not think there is an issue about that. I see my learned friend, Mr Andreatidis, is agreeing.
STEWARD J: All right. Thank you for that.
EDELMAN J: Is the effect then, your approach to section 24, that it renders section 26 and section 13 basically a dead letter for the purposes of either an action for recovery or an action to recover a principal sum of money so far as that money is secured by a mortgage and the claim is brought as a real claim?
MR MATTHEWS: Yes, your Honour, we do.
GORDON J: Can I test that? I accept that is your answer, but as a matter of statutory construction is it possible to say that in respect of section 13 that it provides the time period and 24 provides the consequence, the result of the application? My second question is, is that right in relation to 26 when, if, as Justice Gageler put to you, there are public policy questions by reference to title and as the Chief Justice put to you in reference to looking to the title to make sure that third parties have some certainty, that 26 is in effect a provision which identifies that what might be regarded as related actions are themselves subject to the same sort of limitation because they are secured by a mortgage which would be on title?
MR MATTHEWS: Could I answer the second question first?
GORDON J: Certainly.
MR MATTHEWS: I would say yes to that, your Honour, because the foundation is section 13 and if we are held to have contracted out of that the recovery of the land, if you accept our argument based on Paul, we are entitled to plead the statute notwithstanding contracting out and the cause of action that arises from our breach of the covenant is one for damages for breach of the covenant.
And the consequence of the effluxion of the periods in section 26 is that the money and interest claims can only be brought if they are based upon a mortgage which is extant so that under section 24 the period of time is expired; we say that it affects the money claim and the interest claim by precluding them, and we do not believe that the respondents cavil with that proposition if we are correct on either the construction or the public policy argument.
GAGELER J: So, if section 24 has the effect of extinguishing the mortgage after a period of 12 years, you say section 26 has no application because the money is no longer secured by a mortgage?
MR MATTHEWS: That is so.
GAGELER J: Would section 10 have any application in those circumstances? And, if so, which part of section 10 might apply? Potentially it would 10(1)(a) or 10 ‑ ‑ ‑
MR MATTHEWS: 10 – yes.
GAGELER J: I am sorry, go ahead.
MR MATTHEWS: Yes, 10(1)(a) or arguably 10(2), because in the ‑ ‑ ‑
GAGELER J: I am not sure if that is really arguable. Maybe 10(3) would be ‑ ‑ ‑
MR MATTHEWS: If it is a specialty, yes.
GAGELER J: Yes.
MR MATTHEWS: And so you have still got the six and 12 years.
KIEFEL CJ: But, Mr Matthews, section 24 does not extinguish a mortgage. It extinguishes the title of the mortgagee to the land under the mortgage. The mortgage remains in existence for other purposes, does it not?
MR MATTHEWS: In our submission, if the title of the mortgagee – and your Honour will recall that there was Justice Dalton ‑ ‑ ‑
KIEFEL CJ: The mortgagee has an interest in land.
MR MATTHEWS: Has an interest in the land. So, the title is extinguished, the interest in the land is extinguished.
KIEFEL CJ: But that does not mean the mortgage goes. It is still a contract between the parties. So, for the purposes of money sums, it would remain, would it not?
MR MATTHEWS: That would affect the mischief that Parliament has intended by enacting the section, that otherwise mortgages would ‑ ‑ ‑
KIEFEL CJ: They are left to a money claim and not to the title to the land?
MR MATTHEWS: Yes.
KIEFEL CJ: How would that be determined in this case? You have said it has not been – the question of whether they can recover the amounts for principal and interest has not been pursued, because these were summary judgment claims?
MR MATTHEWS: That is so.
KIEFEL CJ: So, that would remain to be determined?
MR MATTHEWS: The way in which the cross‑applications were conducted, at first instance, it has been determined. It is just that the quantum of the money – the interest on the money claimed – had never been determined.
KIEFEL CJ: How was it determined by Justice Dalton? What was owing?
MR MATTHEWS: She determined that she did not have to determine that because she upheld ‑ ‑ ‑
KIEFEL CJ: That means it has not been determined. So, it is something that would – if it comes down to a money claim, it would have to be determined in the Supreme Court.
MR MATTHEWS: It would be because the claim remains extant on the interest – the principal.
GORDON J: In a sense, that may also answer something else that has concerned me, is that this breach of covenant – is a covenant not to plead or rely upon a limitation period insofar as it can lawfully be done. So, if it cannot lawfully be done, there is no breach of covenant. So, in a sense, the answer may very well be that you are left to your money claimed under contract as the Chief Justice as put to you.
MR MATTHEWS: Yes.
GORDON J: That is against you.
MR MATTHEWS: Your Honour, the consequence of it not being able to be lawfully done means that our raising the plea would not be a breach of the covenant because the covenants have no force and effect, it is not enforceable. So, there can be no breach. We invoke the Limitation Act by making the plea in the defence and that would be the end of the matter. The remedies sought would be barred and there would be no action for breach of the covenant because there will be no breach.
Your Honours, in closing, we would submit that the unbroken intention of parliaments – manifested most recently in Queensland by the 1974 Act that is before your Honours – is that private parties cannot be left to regulate privately, the period within which they might commence, or be restrained from commencing, litigation. That mischief is coloured, we submit, in modern times by the recognition that freedom of contract can do disservice to the inequalities of bargaining power – particularly as between lenders and borrowers – and the contemporary acknowledgment that the State, itself, has an interest and an important role in managing access to the Court and litigation in the interests of the public.
We rely upon our written submissions and those in reply. Unless there is any other – I do not why I am extending this invitation – unless there is any other question that any of your Honours have for me, they are our submissions.
KIEFEL CJ: Yes, thank you, Mr Matthews.
MR MATTHEWS: May it please the Court.
KIEFEL CJ: Mr Andreatidis.
MR ANDREATIDIS: Can I start by giving a brief summary of the respondents’ principal contentions which I will then develop more fully? We agree that there broadly three headings that need to be considered. The first is the proper construction. On that, the respondents submit that a reasonable person would understand – having read clause 24 – that it is directed to a promise by the appellants to not plead the limitations defence. Now, we rely on obviously the entirety of the clause in that regard, but we rely in particular on the words:
provisions of all statutes now . . . in force . . . consequence whereof . . . the powers rights and remedies of the Mortgagee . . . may be . . . defeated –
They are the words that we emphasise in the construction exercise.
On the second aspect, which is the public policy issue, we contend that a provision such as clause 24 is not contrary to the purpose or policy of the Act, and that is reflected by a series of propositions which your Honours are all very familiar with but are necessary for me to repeat because they are important to the development of our propositions. That is that the Limitation Act is procedural. It is not substantive, putting to one side the debate about sections 24 and 26. It does not go to the jurisdiction of the court. It bars the remedy, that is, it gives the defendant a good defence to plead, but it does not extinguish the underlying rights of the plaintiff to bring the claim.
In other words, it confers a choice on the defendant, but the defendant is not in any way obliged to raise the defence. If the defendant does not plead then the question of limitations does not arise. All of those factors, your Honours, we point to as demonstrating that, whilst there is a public interest in the Limitation Act – and there plainly is – Parliament has chosen to implement that policy by conferring a right on individuals and not to meet some broader public need for the benefit of the public.
KIEFEL CJ: Is it correct to say that the limitation period does not arise unless the defence is brought? The defence really has the effect of saying that the plaintiff is unable to bring the proceedings, but if the limitation period remains, the statute still operates. It provides for a limitation period. It just says that the defendant might be able to say that the plaintiff cannot rely upon it.
MR ANDREATIDIS: Yes. So, if it is not pleaded, it does not arise and there is no ‑ ‑ ‑
KIEFEL CJ: It does not arise in the proceedings.
MR ANDREATIDIS: Yes.
KIEFEL CJ: But that may not answer the question for the purpose of section 24.
MR ANDREATIDIS: No, I accept that, your Honour, which is ‑ ‑ ‑
KIEFEL CJ: I will leave you to come to that in your own time.
MR ANDREATIDIS: Which is why I thought I said – and if I did not, my apologies – putting aside the section 24 issue, which may be different.
KIEFEL CJ: Yes. Right, thank you.
MR ANDREATIDIS: Because if that is a substantive provision, then our propositions in relation to the public policy do not apply to that. But I will come to that.
KIEFEL CJ: Thank you.
MR ANDREATIDIS: So, in terms of the choice that is conferred by the legislation ‑ again putting aside section 24 for the moment ‑ that can be – sorry I will start again, I have said that very, very poorly. My apologies. Individuals such as the appellants who are conferred with the choice to plead a limitation defence can be precluded from doing so, whether it be by way of contract, waiver or estoppel.
Now, I think it is clear, based on the terms of the notice of appeal, and the discussion between the appellants and your Honours this morning, that in the context of a contract, the focus is on whether or not you can contract at the beginning of a transaction without a cause of action having accrued, perhaps – or something like that.
Now, in that regard, our principal propositions are, if we are right about the construction of clause 24, then the defendant knows what is being given up. And also regard must be had to the nature of the contract that is being considered. It may well be that in more complicated contractual relationships that are more involved than simply, “I have lent you some money. It is secured on the land. Pay me, otherwise I will sue you for the money”, it may be that something more complicated than that requires consideration, if those circumstances were ever to arise.
As to the third proposition, that only becomes relevant if your Honours agree with the respondents’ construction of clause 24, and if your Honours accept that it is not contrary to the purpose and policy of the Act for there to be a provision such as clause 24.
Our principal position is that the plaintiff is not limited to a claim for damages for breach of the promise. If, however, the respondents are wrong about that, then, in our submission, the appropriate course is to remit the matter back to the Supreme Court. Firstly, because the limitation period for that breach is not yet expired.
Second, whilst it is true that the statement of claim does not plead a breach of the promise, it is raised in the reply, so the appellants are on notice of an allegation of a breach of the promise. And thirdly, the issue of interest was well and truly a live issue, and that is why the Court of Appeal in its orders remitted the matter back to the Supreme Court to determine the question of interest.
STEWARD J: Can I ask, when did interest become owing or due under the contract?
MR ANDREATIDIS: That is a matter that is in dispute between the parties. The respondents’ position is that, on the proper construction, it is due and accrues on a year‑by‑year basis. The appellants have pleaded that on the proper construction of the interest clause, interest payable is limited in a temporal sense to the period of a loan which I think is either one year or two years.
GORDON J: Does it compound and become principal?
MR ANDREATIDIS: I cannot recall whether that ‑ ‑ ‑
STEWARD J: You could ask perhaps one of the members of your team to provide us a reference to the clause of the contract which provides for it to be compounded, interest to compound.
MR ANDREATIDIS: Yes, your Honour.
STEWARD J: I cannot presently find it. And if it does not compound, that may mean that there was interest due and owing in the preceding six years which was not statute‑barred yet.
MR ANDREATIDIS: I see your point, your Honour. Right, yes.
STEWARD J: So, if someone could look into that.
MR ANDREATIDIS: We shall, thank you.
STEWARD J: Thank you.
MR ANDREATIDIS: Now, if I can develop each of those propositions, turning firstly to the threshold issue of construction. I gather your Honours have got a copy in front of you, do I need to take you to it again? Thank you.
I am going to start with the words “may be defeated”, which, in our submission are quite critical to the construction. The word “defeated” is not a term of art. Its natural and ordinary meaning is apt to describe the effect or the consequence of a statutory bar – again putting section 24 to one side for the moment.
We point to statements by this Court and by other courts not – we do not frame it as something that your Honours are bound by. We do not frame it in the context of, “Well, you construe it as you do a piece of legislation”. We point to them to demonstrate the natural and ordinary usage of the word, “defeat”, “defeated”, “defeating”, to make good our proposition that the natural and ordinary meaning of that word does in fact describe how – or the consequence of the Limitation Act. And we also point out the words “may be”, which reflects the policy of the Act. Relevantly, it may have the consequence of defeating if the defendant pleads the limitation period.
We rely on Verwayen in relation to the use of the word “defeated”. If I could ask your Honours to take up the third volume of the joint book, which has the Commonwealth Law Reports cases in it. At page 262 of the joint bundle, can I ask your Honours to please go to page 425 of the report, which is 293 of the joint bundle. In Justice Brennan’s reasons, in the last full paragraph before the quote, about three or four lines up from the quote.
STEWARD J: Which page was that?
MR ANDREATIDIS: I am so sorry, your Honour. Of the report, it is page 425. Of the bundle, it is 293.
STEWARD J: Thank you so much.
MR ANDREATIDIS:
It is merely a right conferred on a defendant to defeat a claim ‑
His Honour, in a similar fashion, over the page in the last full paragraph, three lines down, does something similar. Then at page 504 of the reports, 372 of the joint bundle, Justice McHugh does the same thing in the first full paragraph starting with the word “Accordingly”, towards the end of the paragraph, “It follows, therefore”. Similarly, in Brisbane South Regional Health v Taylor, which is in the joint bundle commencing at 102 ‑ ‑ ‑
EDELMAN J: These authorities you are taking us to are not really for the purposes of authority; they are just to say for the purpose of saying ordinary people can use the word “defeat” and judges are ordinary people.
MR ANDREATIDIS: I am sorry; I did not mean to interrupt your Honour ‑ precisely. And as Justice McHugh, at page 553, the second full paragraph, about one-third of the way down, so seven lines down, is where his Honour uses the expression “defeated”. In footnote 14 of our written submissions we point to other decisions where judges at appellant level jurisdictions and Supreme Court jurisdictions have similarly used the words “defeat, defeated or defeating” or something like that.
If I can move back to the clause, the provisions of all statutes now in force, that directs attention to the provisions within the statute. It requires a consideration of the provisions and you link that, in our submission, to the words “in consequence whereof” and that is the link in language that directs attention to, well, what does it do, and in our submission, that then directs you to one of the other verbs – one of the verbs, I am sorry, in the clause, and we focus on “defeated.
GAGELER J: Then what does the clause do with the provision?
MR ANDREATIDIS: I beg your pardon, your Honour?
GAGELER J: What does clause 24 do with the provision to which it refers?
MR ANDREATIDIS: It requires the reader to look at the provision and work out whether the consequence of the provision is to defeat the powers, rights and remedies of the mortgagee, relevantly.
GAGELER J: Accept that to be so, literally construed it says the provision does not apply. I am just wondering if it can do that as a matter of contract or whether you need to read it as achieving something slightly different from saying that the statute itself has no application.
MR ANDREATIDIS: I am not sure I follow your Honour’s question. My apologies for that.
GAGELER J: Well, there may be a difference between saying the statute does not apply and saying the rights conferred by the statute will not be exercised.
MR ANDREATIDIS: It will be the latter, on our construction, if there is a difference.
GAGELER J: Which requires you to gloss the words a little bit, I think.
MR ANDREATIDIS: Well, yes.
EDELMAN J: It would not just be the latter on your approach, would it? If the intention is to preserve the mortgagee’s rights as far as possible, it may intend to encompass circumstances where the statute itself contemplates that it may be contracted out of; in other words, it may be lawful for parties to exclude statutory rights as opposed to merely excluding the rights that are given under the statute.
MR ANDREATIDIS: Yes, I think that is right.
GORDON J: Does it not require you to go to the statute and work out what are the powers, rights and remedies that are the subject of this statutory regime? It says all or any of the powers rights and remedies of the mortgagor. Put aside the obligations of the mortgagor for the moment.
MR ANDREATIDIS: In our submission, it is the consequence of those provisions on the powers, rights and remedies of the mortgagee.
KIEFEL CJ: The right in question is the right of action to recover land.
MR ANDREATIDIS: Or to sue for the debt.
KIEFEL CJ: But what is missing from clause 24 could perhaps be understood if read in this way – that the provisions of all statutes which have the consequence of defeating – sorry, when one gets down to - the provisions of all statutes whereby in consequence the powers, rights and remedies of the mortgagee hereunder may, if raised by the mortgagor – that is the implication that you need, I think, to potentially overcome the question of whether or not it is directed to a statute operating in its own terms or whether the clause can be said to be intended by the parties to apprehend an action on the part of the mortgagor to take advantage of the statute.
So, that is one view of it. You might need an implication – the question then is whether or not the parties, in a commercial sense, could be understood to have comprehended that what they are there agreeing means that a party will not take advantage of a statute where that is available to them.
MR ANDREATIDIS: Yes. That is certainly part of the submission that is being made and advanced. Drilling down into individual provisions we also assert that is the way it is to be understood. That might become important when one has to dissect the potential difference between section 10 and, perhaps, section 24 – by way of example.
GAGELER J: So, you have to make clause 24 do the work of saying that the parties to the mortgage will not rely upon statutory rights.
MR ANDREATIDIS: If the consequence thereof is to defeat, yes.
EDELMAN J: Do you do that by effectively reading “expired” as meaning has been held to expire, so that section 24 does not have independent operation from provisions such as sections 13 or 26.
MR ANDREATIDIS: If we are going to move into that - it is actually an interesting question how one construes the Act. If section 13 has the consequence of eliminating the title of the mortgagee, and that is the operative mechanism, then the title is lost, and the contract will not have ‑ ‑ ‑
EDELMAN J: If it does not? If section 13 does not have that effect?
MR ANDREATIDIS: If it does not, then it is same with the debt claim – it is preserved. The lynchpin for that is the way Justice Gotterson construed the operation of – I think it was section – the terminology in 13 or 24 – reading them together, his Honour, as I recall, the logic was when you look at the contract it says you cannot plead the limitations period. You then go to – I should stop going off my limited memory.
So the starting point in his Honour’s rationale was you start with clause 24. If it has the effect contended for by the respondents, then it feeds into the language in section 24, which therefore extends the limitation period that otherwise applies, and his Honour concluded with the concurrence of the other two justices that that is lawful and can be done and consistent with the language in the Act.
EDELMAN J: How do you fit that with the words of section 24?
MR ANDREATIDIS: It is the use of the words “where the period of limitation prescribed by this Act . . . has expired”. Their Honours interpreted the words “has expired” in the context of clause 24 and reasoned that the limitation period has not expired, therefore the limitation or the extinguishment of title in 24 is never engaged ‑ ‑ ‑
EDELMAN J: So it has effectively been held to expire by an action that has had a successful limitation plea – has been met by a successful limitation plea?
MR ANDREATIDIS: Putting aside clause 24 in that construction ‑ ‑ ‑
EDELMAN J: Yes.
MR ANDREATIDIS: Yes.
EDELMAN J: That is the only way you can make 24 fit with 13 - by reading “expired” as effectively has been held to expire?
MR ANDREATIDIS: Yes.
GAGELER J: So that means 24 has no automatic operation. It requires proceedings that have resulted in judgment to be triggered, does it?
MR ANDREATIDIS: On the construction of the Court of Appeal, yes.
GAGELER J: What about your construction?
MR ANDREATIDIS: Well, it is in our favour, so I am sticking with it.
GAGELER J: Do you have anything else?
MR ANDREATIDIS: No, I do not. But it is important to recall that in this case there are two distinct claims. There is the money claim and, in our submission, the money claim does not run into the difficulty of section 24 ‑ ‑ ‑
GORDON J: Does it run into 26?
MR ANDREATIDIS: No, it does not, your Honour. In this regard, if I could adopt what the Chief Justice said in the exchange with our learned friend and submit that that is plainly right, if I can be so bold, section 24, whilst the title may have been extinguished, and if the consequence of that is that the mortgage gets removed from the Torrens title register, the mortgage document as a contract subsists if we are right about the operation of clause 24 and section 10 of the Act otherwise.
EDELMAN J: That is the effect of Brisbane City Council v Amos, is it?
MR ANDREATIDIS: Yes.
KIEFEL CJ: If the matter went back for determination of the claim for damages for breach of the contractual provisions for payment of principal and interest, does that mean that section 26 could arguably be raised in those further proceedings?
MR ANDREATIDIS: To extinguish the title or just the debt?
KIEFEL CJ: No, section 26, to extinguish the debt.
MR ANDREATIDIS: In our submission, that is not the proper construction of section 26 if ‑ ‑ ‑
GORDON J: See, one way to read section 26 is as I put to your learned friend and that was that you read it as a provision which sits alongside 24 dealing with extinguishment of title and so it says where I am seeking to recover a principal sum of money secured by a mortgage or other charge on property, then those circumstances are not subject to the limitation period, which leaves open the claim under section 10 as being alive at least as well to, in effect, two potential avenues open.
MR ANDREATIDIS: Yes. I see that as a point in favour of the respondents.
GORDON J: I see. The reason why I put that to you is because 26 then deals with foreclosure actions, it is dealing with right to foreclose on the property. It is dealing with what I will call debt recovery actions by reference to the property as distinct from reference to the contract, being the mortgage document absent security against properties by way of execution.
MR ANDREATIDIS: I think that is right, your Honour. Sorry, I should not say, I think. I accept the force of that. If title has been extinguished, then whatever rights the mortgagee would ordinarily have in connection to that is lost if it has nothing but – I should not say nothing – but if nevertheless the debt claim persists, then it can do what one ordinarily does with a debt claim. If it is successful, you can then go off and register the judgment and do all those type of things, but none of that will be precluded by section 26 because as a contract and as a promise to repay the debt and interest, whether it be compound or otherwise, that promise subsists if we are right about the construction of clause 24, and we ‑ ‑ ‑
GORDON J: Just so I can finish off that, that arises because even on your construction of clause 24, you have brought the action under section 10 for the debt claim within time.
MR ANDREATIDIS: Yes. Well, is that the right way to put it, within time, or within the framework of the promise for it not to be the limitation period ‑ ‑ ‑
GORDON J: Thank you, that is a better way of putting it.
MR ANDREATIDIS: That is a better way? Thank you.
GAGELER J: Which provision of section 10 is engaged in those circumstances?
MR ANDREATIDIS: Subsection (1)(a).
GAGELER J: A simple contract?
MR ANDREATIDIS: Yes.
EDELMAN J: Subsection (1)(a) picks up claims for debt.
MR ANDREATIDIS: Yes.
EDELMAN J: The personal claim would be a claim for a debt, whether it is brought under section 10 or section – or whether it is subject to section 10 or section 26(1).
MR ANDREATIDIS: Yes.
EDELMAN J: You say that the promise or the waiver would bite at least in relation to the personal claim, irrespective of the operation of section 24 in relation to the real claim?
MR ANDREATIDIS: I wish I could make submissions that brilliantly. Yes, thank you.
EDELMAN J: If you are wrong about section 24’s construction that “has expired” means has been held to expire, and so “has expired” just does operate as a substantive rule of law independently of section 13 other than just picking up the number – the 12‑year period, is there any work left for section 13 to do in the whole scheme of the Act other than just simply to supply a number for the purposes of section 24?
MR ANDREATIDIS: It supplies the number for 24 and – I will just check. It certainly supplies the number for 24, and that is where it finishes in this context, yes.
EDELMAN J: So that is all it would do then?
MR ANDREATIDIS: Yes, thank you. Continuing with the proper construction of clause 24, I have already emphasised several times the importance of the words “consequence whereof”. In our submission, that should be construed as it is a means by which the power, right and remedy is defeated, picking up the words of what the Court of Appeal said at paragraph [60] of the reasons of Justice Gotterson. So the plea arises as a consequence of the statutory bars that are within the Act. Without the Limitations Act, there is no limitations defence to plead.
As to the proposition that strong words are needed, in our submission either clause 24 operates in a manner in which we are contending, or it does not. The concept of strong words, which our learned friends rely on from the decision of this Court in Equitable Life Assurance v Bogie is very different. I will take you to the passages in a moment.
That case involved a different statute in the context of a different contractual relationship. Critically, in our submission, the Act in question did not exist at the time the contract was entered into. Here the Limitation Act was in existence. The other important thing arising out of Equitable Life Assurance is that the policy reflected by the Act in that case was in the interests of the general public and, therefore, was not one that was capable of being contracted out of and was put as being absolute and incapable of being bargained away.
Then I make good each of those propositions. In terms of the Act and the contract being different, that is picked up the headnote, that it did not exist at the time of the contract and that the provision was drafted by reference to American legislation and American concepts. Both of those appear at the joint bundle page 407 in the judgment of Justice O’Connor. Would you like the report reference, your Honours, or is the joint bundle reference sufficient? I am told it is 911.
KIEFEL CJ: Thank you.
MR ANDREATIDIS: The question of the policy of the Act being one that was in the interests of the general public, that arises in several locations - in Chief Justice Griffith’s judgment at page 389 of the joint bundle, which is page 803 of the report, the last paragraph of the Chief Justice’s judgment. Justice Barton said the same thing.
GORDON J: What page was that?
KIEFEL CJ: I am sorry, what number in the report?
MR ANDREATIDIS: Page 803.
GORDON J: I do not think it can be that. Maybe it is another number.
KIEFEL CJ: I think it is another ‑ ‑ ‑
MR ANDREATIDIS: I have the wrong decision, sorry. My junior tells me it is 893. I am sorry, it is a 9, I just cannot read the print. I am just blind, even with my glasses. Then page 392 of the bundle, which is ‑ ‑ ‑
KIEFEL CJ: That kind of language – accepting that a statutory provision for the benefit of the assured can be waived, that language and what is said in Verwayen is really taken up in Westfield Management, is it not, where the joint judgment says that:
contractual arrangements will not be enforced where they operate to defeat or circumvent a statutory purpose or policy according to which statutory rights are conferred in the public interest, rather than for the benefit of an individual alone –
which recognises that it would be otherwise where it is for the benefit of an individual – that is paragraph 46.
MR ANDREATIDIS: Yes, we accept that, your Honour. But the distinction we wish to draw is that in the Bogie decision, the relevant statute was one for the public benefit. Our ultimate submission is that the Limitations Act is conferred for the benefit of individuals – accepting that there is a public benefit of policy behind the Act – and I will take your Honours ‑ ‑ ‑
GORDON J: Is that right? I thought you had agreed with this earlier that at least some of the provisions have been described – including 24 – as being exceptions to that view.
MR ANDREATIDIS: Yes. Sorry, I am using shorthand. I am excluding section 24.
GORDON J: I see, I apologise.
MR ANDREATIDIS: No, no, no, I should have been clearer than that, your Honour, I am sorry. I accept that there is an issue with section 24, depending on how one construes the operation in the manner that we have already had the exchange about.
GORDON J: There are a number of Queensland Law Reform Commission reports that describe them as exceptions to that general principle.
MR ANDREATIDIS: Yes.
GORDON J: That is, as not procedural and not just individual focused.
MR ANDREATIDIS: If your Honours conclude that, then that affects the possession claim but not the debt claim.
EDELMAN J: What would the remedy then be in this Court, or the order?
MR ANDREATIDIS: In the scenario where clause 24 operates in the manner in which we assert and is not contrary to public policy?
EDELMAN J: Yes.
MR ANDREATIDIS: The appeal is dismissed.
EDELMAN J: No, sorry, if clause 24 operates as a substantive rule but it is not contrary to public policy and does not affect section 24 of the Limitation Act so that you ‑ ‑ ‑
MR ANDREATIDIS: You will lose the ‑ ‑ ‑
EDELMAN J: So that you lose the possession claim but you would retain a personal claim.
MR ANDREATIDIS: The appeal will be dismissed but it still needs to go back to the Supreme Court Trial Division for the interest issue to be ‑ ‑ ‑
EDELMAN J: Yes.
MR ANDREATIDIS: ‑ ‑ ‑dealt with as per the Court of Appeal’s order.
GAGELER J: But there is an order for possession that could not stand, could it?
MR ANDREATIDIS: That is so, yes. Yes, that is right.
GAGELER J: Dealing with clause 24 – and just going to the last two lines of clause 24 – when it says, relevantly, that certain provisions shall not apply, you have to have those words read as “shall not be relied upon”, do you not?
MR ANDREATIDIS: Yes, yes, and expressly exclude in a similar vein “shall not apply” ‑ ‑ ‑
GAGELER J: Why would we read them that way?
MR ANDREATIDIS: In our submission it is the effect of the words that are used in the clause. That is what they mean.
EDELMAN J: It would be a very limited group of statutes which would permit the parties by contract to provide that the provisions do not apply rather than that they cannot be relied upon.
MR ANDREATIDIS: Yes.
EDELMAN J: So, it might have very, very limited operation to that tiny sphere of statutes where the statute permits express contracting out of the policy rights or remedies that are contained in the statute.
MR ANDREATIDIS: I had not thought about that, your Honour, but that – I understand what you are putting to me, that may well be right but the proposition we are advancing that regardless of what other limited statutes may be captured by this clause, the Limitation Act definitely is, in our submission.
GAGELER J: So, if there is that category of statutes that can be contracted out in the literal sense of saying this statute shall not apply to this contractual arrangement, clause 24 has work to do in relation to those statutes. Why should we gloss the language and give it a broader operation?
MR ANDREATIDIS: Well, in our submission, it is not a gloss that stretches it too far having regard to the language that we are relying in particular. We think the lynchpin is the word “defeated” – sorry, I said “think” again. In our submission, “defeated” is the lynchpin of the operation of the clause and if you are against us on the ordinary usage of that then we lose, the respondents lose and the reason for that is that it describes, in our submission, the consequence of the operation of the Limitations Act which otherwise would defeat the powers, rights and remedies of our clients, the mortgagee. That is how we construe the clause. I am reminded that we also emphasise the “inconsequence” aspect of the clause, thank you.
If I can now turn to the policy issue. The Chief Justice has mentioned Westfield Management, which is in the bundle, commencing at page 409, and there is a clause at paragraph 46. It sets out the approach that one has to take in assessing whether or not a contractual provision is contrary to public policy. It is the third aspect of the approach that we understand our learned friends to be emphasising, so I will start with that.
Now, what I will do is identify a series of propositions which arise out of a number of cases, and then I am going to take your Honours to those cases to emphasise the aspects that we are reliant on to make good those propositions. Starting with the – again, putting aside, potentially, section 24, it bars the remedy, not the right, it does not impose jurisdictional restrictions on the court, it is a choice conferred on a defendant. The defendant cannot be compelled to plead the limitations defence. It is a benefit conferred on individuals, rather than to meet some public need for the benefit of the public. If it is not pleaded, it does not arise for consideration.
There are references in, I think, from memory, it is just in Verwayen about - sorry, not just in Verwayen, there are references to the ability to contract out of, which we rely on also. If I can start with Brisbane City Council v Amos, that commences in the joint bundle at page 64, and could I take your Honours to paragraph 7.
KIEFEL CJ: Sorry, which paragraph was that?
MR ANDREATIDIS: Paragraph 7, your Honour. I have put this to your Honours before and I will repeat it. The propositions I am taking your Honours to are matters that we know your Honours are familiar with. We are emphasising them because they are important for the development of our proposition. So, paragraph 7. We also rely on paragraph 40 of the judgment of Justice Gageler.
EDELMAN J: That is in relation to sections 13 and 26 but not in relation to section 24?
MR ANDREATIDIS: Yes. Well, depending on how one construes section 24.
EDELMAN J: Well, section 24 does not contain the words “an action shall not be brought”.
MR ANDREATIDIS: True, yes, thank you. Except, your Honour, that section 13 sets the time limit for section 24 which does have the “shall not” language.
EDELMAN J: Yes, but that still comes back to the basic question of whether section 24 is doing anything more than just picking up the time limit from section 13 or whether it is picking up other aspects of it.
MR ANDREATIDIS: Yes. So in paragraph 40 of Justice Gageler’s reasons, it is everything on page 613 of the report up to the end of the first sentence over the page, and then we also rely upon what Justice Keane said at paragraph 49, but at page 616, three lines down from the sentence:
It has, for example, long been settled ‑ ‑ ‑
GORDON J: There Justice Keane recognises, I think, that 26 operates as actions to enforce rights against the property, about which the debt was secured.
MR ANDREATIDIS: I do not have any further submissions to make about 26, your Honour.
GORDON J: Thank you.
KIEFEL CJ: Could I take you back to section 24?
MR ANDREATIDIS: Of course. Yes, your Honour.
KIEFEL CJ: Would you contend that section 24(1) assumes that the period of limitation applies, that is, it runs? It has to because – to expire.
MR ANDREATIDIS: Yes.
KIEFEL CJ: So that in a situation where, on one view of section 13, a person might contract out of the benefit given by section 13, it would simply be the case that the assumption on which section 24(1) is based, namely, that the limitation period applies, is available and runs, it would not apply, it just would not. It would not bite.
MR ANDREATIDIS: That is how I understand Justice Gotterson’s reasoning in the Court of Appeal, yes.
EDELMAN J: The sort of work that section 24 would be doing then, in that circumstance, would be to say, well, once the limitation period for the purposes of section 13 has been held to expire one needs to, effectively, clear the title for the benefit of third parties as well for the benefit of avoiding caveats being placed on the title and so on.
MR ANDREATIDIS: Yes.
GAGELER J: That would involve the contract having the operation of not simply saying the right conferred by section 13 will not be relied upon, but saying section 13 itself will have no application, I think.
MR ANDREATIDIS: At the risk of sounding the opposite of learned, I do not see the distinction in the work to be performed by section 13 as opposed to section 13 as a whole. In our submission, it – we are either right about the clause engaging in that way, or, if it does not, then it does not matter, we are wrong.
KIEFEL CJ: Do you have any further submissions, Mr Andreatidis?
MR ANDREATIDIS: In relation ‑ ‑ ‑
KIEFEL CJ: I just want to have a time estimate, that is all.
MR ANDREATIDIS: I do not think I will be more - subject to how much more I have to explain things, because of my own inadequacies, I do not think I will be more than 15, 20 minutes.
KIEFEL CJ: Well, the Court might now adjourn until 2.15.
AT 12.43 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.15 PM:
KIEFEL CJ: Yes, Mr Andreatidis.
MR ANDREATIDIS: Thank you, your Honours. Prior to the break I had identified a number of propositions on the public policy point. Continuing with that concept, can I give your Honours a reference without asking you to go to the case now, the WorkCover Queensland v AMACA Case, which is in the joint bundle commencing at page 429 of the bundle. Could I ask your Honours to take a note of paragraphs 30 and 31, please.
GORDON J: What are they a proposition for?
MR ANDREATIDIS: The procedural nature of the Limitations Act, those ‑ ‑ ‑
GORDON J: Thank you.
KIEFEL CJ: That is fairly well established, is it not?
MR ANDREATIDIS: Yes.
KIEFEL CJ: Well, at least most provisions - query section 24.
MR ANDREATIDIS: Yes. From Verwayen the only additional proposition that I wish to take your Honours to in a bit of detail is where the Justices identified that the rights conferred by the Limitations Act - and again I confine it to those where it is accepted to be procedural – are a personal right rather than for the general public.
So that is at page 273 of the joint bundle and page 405 of the report, Chief Justice Mason in the last full paragraph, the second‑last paragraph on the page, from the words “The issue is not” to the bottom of the page and over 406, the first sentence; at page 426 of the report in the reasons of Justice Brennan, the second full paragraph “As the right created . . . solely for the benefit of a defendant”, and also the last paragraph on that page; at page 456 of the report in Justice Dawson’s reasons, the first full paragraph starting with the words “It is commonly said”.
Can we also invite your Honours to make a note of, for later, the extract of the House of Lords decision which commences – or the discussion of it commences at the bottom of page 456 of Ketteman v Hansel Properties. Justice Gaudron at page 486 of the report almost all the way to the bottom, three or four lines up, the sentence starting “A statutory right”.
GORDON J: Sorry, I missed that bit of 486. Did you want the whole page of 486?
MR ANDREATIDIS: No, I am so sorry, your Honour. The very – the bottom of the page.
GORDON J: I see, from “The general principle”, thank you.
MR ANDREATIDIS: Yes. But, in particular, from the – it is four lines up from the bottom of the page.
GORDON J: Thank you.
MR ANDREATIDIS: And over. They are all the references I wish to draw your Honours’ attention to specifically. Can I also mention, without taking you specifically to the case, the Full Court of Queensland decision of Newton v State Government Insurance Office [1986] 1 Qd R 431. That was an additional case that we indicated would be referred to. From page 432, for a number of pages, Acting Chief Justice Andrews and Justice Derrington go through the history of cases up till that point in time in relation to contracting out of the Limitations Act, and we invite your Honours to read that.
GAGELER J: For what purpose?
MR ANDREATIDIS: For the proposition that it is not contrary to the policy of the Act to contract out of the Act because the discussion by their Honours is specifically in relation to a bundle of cases where the issue was, is there a contract to prevent a defendant from pleading? There is what we submit is a useful discussion of that series of cases which identifies, in our submission, the state of the law, at least up to the Full Court of the Supreme Court level in relation to the right to contract out of the Limitations Act. That is all I wish to say about the policy issue.
Still in Newton, could we also ask your Honours to make a note of what Justice McPherson said at the bottom of page 445, over to page 446, where in our submission his Honour has made clear that a plaintiff faced with a defendant who pleads a limitation defence contrary to an agreement has the option of suing for damages for the breach or for affirming the contract and relying on it in answer to the defence.
When I introduced the respondents’ case, I identified the respondents’ attitude to the third aspect, which is what we would call the remedy aspect. I do not think there is anything – sorry, there is nothing further for me to add in addition to what I identified in the summary, or that we have put in writing.
On the question of interest, your Honour asked where that could be found in the respondents’ further material ‑ in a mortgage at page 40. It is item (ix), and you turn over the page and that is where the compounding nature of the interest is identified. The default provision starts at page 49 of the document and the relevant aspect of that to note is at page 51 under the subclause (u) over to the top of page 17 which identifies, in effect, if there is a default you have to pay the higher interest rate.
STEWARD J: So, when did interest fall due under the contract?
MR ANDREATIDIS: I will get someone to check that.
STEWARD J: Thank you.
MR ANDREATIDIS: Sorry, I forgot to check that, I am sorry, your Honour. The rates themselves are at page 74 and, I am sorry, I am going to have to ask you to look at the decision of Justice Dalton at paragraph [3] where her Honour identifies the new lower rate of interest in the amended agreement and that is because the amended agreement does not form part of the bundle but her Honour refers to it in the recital of the facts.
GAGELER J: I note this is a registered mortgage, does that have any bearing on the operation of section 24 of the Act?
MR ANDREATIDIS: I do not think – no, your Honour. The answer to the question the operation of 24 depends on that interaction between the
provisions that we spoke about earlier, if the effect of the Act is that the mortgagee’s interest has ended in the land, then the fact of registration becomes just a procedural thing where the ‑ ‑ ‑
EDELMAN J: It gets removed from the register.
MR ANDREATIDIS: Yes, thank you, your Honour, yes. Other than identifying when interest is to be paid from or becomes payable, I am instructed that it is the first day of every month, clause 2 of the reference schedule which, I am hoping, is at page 74 of the further material. They are our submissions, your Honours.
KIEFEL CJ: Yes, thank you. Do you have anything in reply?
MR MATTHEWS: Your Honour, no, we have nothing in oral reply. We rely on our written reply submissions.
KIEFEL CJ: Thank you. The Court reserves its decision in this matter and adjourns to 9.45 am tomorrow.
AT 2.28 PM THE MATTER WAS ADJOURNED
Key Legal Topics
Areas of Law
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Equity & Trusts
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Civil Procedure
Legal Concepts
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Fiduciary Duty
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Remedies
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Costs
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Appeal
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