MCC Pty Ltd (In Liquidation) v Stilbo Pty Ltd

[2001] TASSC 143

[2001] TASSC 143

CITATION:                 MCC Pty Ltd (In Liquidation) v Stilbo Pty Ltd  [2001] TASSC 143

PARTIES:  MCC PTY LTD (In Liquidation) (ACN 009 519 359)
  v
  STILBO PTY LTD (ACN 009 547 915)

TITLE OF COURT:  ORIGINAL
JURISDICTION:  SUPREME COURT OF TASMANIA
FILE NO/S:  1471/1994
DELIVERED ON:  17 December 2001
DELIVERED AT:  Hobart
HEARING DATES:  10 and 11 October 2001
JUDGMENT OF:  Slicer J
CATCHWORDS:

Equity - Trusts and trustees - Following trust property - In General - Trust property moved between companies - Right of beneficiary to recover - Relationship of company director to the trust - Express trustee - Constructive trustee - Trustee de son tort - Consideration of the available remedies.

Giumelli v Giumelli (1999) 196 CLR 101, applied.

Soar v Ashwell [1893] 2 QB 390; Cohen v Cohen (1929) 42 CLR 91; Taylor v Davies & Ors [1920] AC 636, followed.

Parsons & Anor v McBain [2001] FCA 376, considered.

Limitation Act1974 (Tas), ss9, 24.

Aust Dig Equity [226].

Procedure - Supreme Court procedure - Tasmania - Amendments - Statement of claim - Whether proposed amendments to statement of claim give rise to an action out of time - Joinder of parties - Effect of joinder to the defences of limitation, inordinate delay, acquiescence and laches.

Magna Carta cap4.

Weldon v Neal (1887) 19 QBD 394; Stephens Travel Service International Pty Ltd (Receivers and Managers Appointed) & Ors v Qantas Airways Ltd (1988) 13 NSWLR 331, followed.
Orr v Ford (1989) 167 CLR 316, considered.
Supreme Court Rules2000 (Tas), rr184 and 427.
Aust Dig Procedure [276].

Procedure - Supreme Court procedure - Tasmania - Jurisdiction and generally - Supreme Court Rules - Discretion to set up cause of action otherwise extinguished by statute - Whether rules of court may operate to confer jurisdiction otherwise denied - Validity of Supreme Court Rules 2000 (Tas), r184.

Australia & New Zealand Banking Group Ltd v Larcos (1988) 13 NSWLR 286; Lynch v Keddell (No 2) [1990] 1 Qd R 10; Lynch v Keddell [1985] 2 Qd R 103, referred to.
Supreme Court Rules 2000 (Tas), rr184 and 427.
The Australian Courts Act 1828 (Cth).
Aust Dig Procedure [265].

Limitation of actions - General - Amendment introducing new party - Joinder of parties - Power to amend "subject to terms" - Power to deem date when action commenced against new party - Supreme Court Rules 2000, rr184 and 427 - Limitation by analogy - Prejudice to the defendant due to the effluxion of time - Original pleadings identify fiduciary relationship and breach of relationship between parties - Amendments to pleadings and joinder of parties permit the court to "trace" or "make account" of the trust property.

Australia & New Zealand Banking Group Ltd v Larcos (1988) 13 NSWLR 286; Weldon v Neal (1887) 19 QBD 394; Webster Ltd v Roberts & Anor [1989] Tas R 37; Jones v Bellgrove Properties Ltd [1949] 2 KB 700l; Marshall v London Passenger Transport Board [1936] 3 All ER 83; Renowden v McMullin (1970) 123 CLR 58, followed.
Supreme Court Rules 2000 (Tas), r427.
Limitation Act 1974 (Tas), s9.
Aust Dig Limitation of Action [10].

REPRESENTATION:

Counsel:
             Plaintiff:  A J Abbott
             First defendant:        S B McElwaine
Solicitors:
             Plaintiff:  Toomey Maning & Co
             First defendant:  Shaun McElwaine
Judgment Number:  [2001] TASSC 143
Number of Paragraphs:  92

Serial No 143/2001
File No 1471/1994

MCC PTY LTD (IN LIQUIDATION) (ACN 009 519 359) v
STILBO PTY LTD (ACN 009 547 915)

REASONS FOR JUDGMENT  SLICER J
  17 December 2001

1. The plaintiff corporation MCC Pty Ltd (in liquidation) ("MCC") seeks leave to amend its statement of claim in an action or suit in equity.  Concurrently, it seeks to add additional parties associated with the first defendant, Stilbo Pty Ltd ("Stilbo").  It would be possible to determine the former application in the absence of the second although such would not achieve the outcome sought by MCC since, on the material before the Court, Stilbo is bereft of assets.  A further complication is that amendment of the pleadings would operate so as to bind the parties sought to be joined.  To avoid further complexity, it is preferable to first consider the question of amendment to the pleadings, the resolution of which will more clearly identify the issues raised by joinder.

History

1. Some of the history giving rise to these proceedings has been recounted in Dwyer v Stilbo Pty Ltd A96/1993.  In 1888 Donald Cameron devised his property, which included certain lands, to be left in fee tail.  The lands passed to successive "elder sons" until 1964 when Donald Alastair Cameron predeceased his father, leaving his own son, Donald Edward Cameron, to stand in a line of succession.  As a consequence, the grandfather, Donald Cameron (not the testator), entered into a Deed of Settlement dated 11 August 1979 ("Deed of Settlement"), whereby MCC became the trustee of certain settled property.  The proposed second defendant, Margaret Cecilia Cameron ("Margaret Cameron"), has been, subject to the law of liquidation, at all times a director of MCC and was also a beneficiary under the Deed of Settlement.  Shortly before Donald Cameron's death on 19 December 1979, he leased the property "Fordon" (excluding a messuage) to MCC.  "Fordon" had been the collective name of a number of properties originally subject to the fee tail. 

1. Following the death of Donald Cameron, MCC occupied "Fordon" by virtue of the lease dated 14 December 1979.  Through error, the lease was not registered within the prescribed time and its operation void.  Donald Edward Cameron, the grandson and effective plaintiff (in this action) commenced proceedings (3507/1981) against MCC seeking possession of "Fordon" and mesne profits. The solicitors who had prepared the lease were joined to the action as third parties. 

1. On 24 August 1984, a company, of which the second respondent was a director, was incorporated and by change of name became the defendant, Stilbo.  On 19 September 1984, Margaret Cameron, caused Stilbo to replace MCC as the trustee of the Deed of Settlement.  Property, including "Fordon", vested in MCC, was assigned to Stilbo, and possession delivered subsequently.  Margaret Cameron was the effective controller of both MCC and Stilbo. 

1. By Agreement of Release dated 16 November 1984 ("the Release"), the solicitors who had been joined as third parties in action 3507/1981, agreed to pay to Stilbo the sum of $240,000 in settlement of their liability arising by their conduct of the leasehold transaction.  MCC was a party to the agreement.  The proposed amended pleading in this action, par32, states:

"By an agreement of release executed by the plaintiff on 16 November 1984 made between the plaintiff, Stilbo Pty Ltd and the Third Parties ('the Release'), the plaintiff agreed to settle its claim against the Third Parties by the Third Parties agreeing at the request of the plaintiff to pay to Stilbo Pty Ltd the sum of $240,000.00 plus the legal costs and disbursements of the plaintiff and Donald Edward Cameron associated with proceeding number 3507 of 1981 and the Third Party Notice whether already incurred or to be incurred to be taxed in default of agreement ('the costs')."

1. It may be that the pleading accurately reflects the terms of the Release, but it might not correctly describe the respective rights and interests of MCC and the Third Parties, since it had already assigned its rights and interests to Stilbo.  However, that remains an issue for substantive determination. 

1. On 11 December 1984, Donald Edward Cameron obtained judgment against MCC in action 3507/1981 in the sum of $471,412, for mesne profits arising from its occupation.  On 19 December 1984, Stilbo and Margaret Cameron, delivered possession of "Fordon" to the plaintiff. 

1. MCC was unable to satisfy the demand for payment of the judgment and, on 18 March 1985 was placed in liquidation upon the petition of the effective plaintiff, Donald Edward Cameron.  Mr Rex James Dwyer was appointed as the liquidator ("the liquidator").

1. On 31 October 1985, the proposed defendant, Ladon Pty Ltd ("Ladon") was incorporated.  Margaret Cameron was its director and controlling shareholder. On 19 May 1986, Ladon purchased two farming properties at a combined price of $329,900.  MCC claims that money paid to Stilbo in settlement of action 3507/1981, was used to purchase those properties.

1. This action concerns the attempt by MCC to recover the sum of $240,000, in order to meet the judgment debt of 11 December 1984.

Status of parties

1. MCC was originally controlled by Margaret Cameron.  She was one of three directors, the others being another member of the Cameron family and a professional as company secretary.  It is now controlled by the liquidator, who agreed that for the purpose of this action, to act in a manner permitted by law, at the behest and in the interests of Donald Edward Cameron.  For the purpose of this action and these applications, it is accepted that he is the controller of the company.

1. Stilbo is controlled by Margaret Cameron as a director and sole shareholder.   She also controls Ladon as a director and sole shareholder

1. It is not known whether there exist, or have existed, any contractual arrangements in the form of assignments, deeds of trust and the like between Stilbo and Ladon.

Claim

1. The effective plaintiff claims that he is entitled to recover from MCC the sum of $240,000, plus interest, in part settlement of the judgment obtained against it.  The effective plaintiff claims that the money paid in settlement of the third party proceedings ought to have been paid to MCC and made available in part settlement of his own claim against it.  He claims that the use by Margaret Cameron of her controlling interest in both MCC and Stilbo enabled the money to be diverted, by way of assignment, directly to Stilbo.  He suspects that the money has been further diverted (by loan, assignment or some other means) to Ladon and used in the purchase of the two farming properties.

Action as pleaded

1. This action (1471/1994) was brought by MCC against Stilbo as the repository of the settlement money.  The statement of claim dated 26 August 1994, sets out various events such as the Deed of Settlement, entry of judgment, the trustee status of MCC, the appointment of Stilbo as the replacement trustee and the unsatisfied demand by Donald Edward Cameron for payment.  The claim by MCC is that:

"By reason of the foregoing the plaintiff claims:

AA declaration that it has the right to be exonerated for its liability under the Order dated 11th December 1984 from trust assets held by the defendant.

BA declaration that the defendant is bound to indemnity [sic] the plaintiff for its liability under the said Order.

CSuch further of [sic] other consequential orders so as to effect a payment to Donald Edward Cameron in order to satisfy his claims arising under the Order.

DA declaration that the trust property held by the defendant by reason of the Appointment is subject to the unsatisfied rights of the plaintiff as previous trustee appointed by reason of the Settlement.

ESuch further of [sic] other necessary orders for relief as the Court deems appropriate.

FCosts."

1. Stilbo, by its defence of 12 October 1994, denied or did not admit most of the factual events pleaded, and added the following:

"11The Statement of Claim fails to disclose any cause of action against the Defendant.

12In addition, or in the alternative, if the Statement of Claim discloses a cause of action against the Defendant at law, then such is barred by reason of the provisions of the Limitation Act 1974.

13Alternatively, if the Plaintiff's Statement of Claim discloses a cause of action against the Defendant at law, and such claim requires the intervention of the Supreme Court of Tasmania in equity to found or enforce it, then such Court must act in obedience to the provisions of the Limitation Act 1974 and, in the premises, such claim is barred by reason of the provisions of the Limitation Act 1974.

14In the alternative, if the Statement of Claim discloses a cause of action against the Defendant in equity, then the provisions of the Limitation Act 1974 apply by analogy, and such claim is barred.

15In addition, or in the alternative, if the Statement of Claim discloses a cause of action against the Defendant, then at all material times the Plaintiff was fully aware of the facts relied on as set out in the Statement of Claim and has been guilty of prolonged in-ordinate [sic] and inexcusable delay in bringing this action and seeking the relief claimed in the Statement of Claim and has acquiesced in the matters complained of.

16In the premises, the Plaintiff is barred by laches and/or acquiescence from claiming the relief set out in the Statement of Claim against the Defendant and/or it is inequitable and unjust to grant the Plaintiff the relief sought in the Statement of Claim or any other relief."

No application for summary judgment has been made by Stilbo.

Proposed amendments

1. MCC seeks to substantially amend its statement of claim to more fully set out a detailed sequence of factual material and to specify and particularise discrete causes of action.  The former category causes little difficulty in that it provides greater detail and makes the factual material more readily understandable, although the application has some impact on the existence of a cause of action.  Some of the proposed amendments do no more than add a word to an existing paragraph or correct a date. 

1. I am conscious that Stilbo has pleaded that the original statement of claim does not plead sufficient facts to establish a cause of action.  However, in my opinion the original statement of claim although deficient, contains sufficient material capable of supporting a claim for an equitable remedy and discloses sufficient material concerning the original action, the Deed of Settlement, payment of money and the refusal of Stilbo to make reparation.  It claims the existence of a trust and seeks equitable remedies.  The real issue is the amendment to the pleadings of law which raises questions of prejudice and limitation.  Given my conclusions in relation to those matters, it is appropriate to permit the addition of factual material which is capable of supporting those pleadings.  The amendments which come within this category will be granted.  Pars1 - 33 (except for reference to the term "secondnamed defendant" appearing in pars13, 18 - 19 and 25),  36, 38, 39, 40, B, C, D, E, F, G, Z, ZA and ZB of the draft submitted by MCC will be allowed.

Methodology

1. These three applications are inextricably linked.  While the application to amend the proceedings against Stilbo is separate, its consequence impacts on the application for the joinder of Margaret Cameron and Ladon.  In reality, Stilbo, Margaret Cameron and Ladon are the same persons sought to be sued.  One approach would be to first determine joinder to the action as originally pleaded and then consider the application for amendment.  The other is to determine the issue of amendment in the present action and in the light of any amendments consider the joinder application.  Neither approach is satisfactory since the contention of the three respondents to these applications is that the facts pleaded in the original statement of claim do not establish any cause of action, with the consequence that amendment against Stilbo would prejudice Margaret Cameron and Ladon in the joinder application.  Additional to that complexity is the suggestion that since Stilbo is without assets, amendment of the proceedings against it would, absent joinder, prove to be a futile exercise.  The arguments of counsel, capably made, do not provide a starting point for resolution of the issues.  The methodology used by the Court is that the application to amend the pleadings against Stilbo will first be considered on its merits, and in the light of those amendments, separate consideration will be given to the application for joinder.  Then the question of further amendments, insofar as they concern Margaret Cameron and Ladon, will be considered in the exercise of discretion.  The sequence of reasoning, as disclosed in these reasons, will not be reflected precisely in these reasons of judgment since resolution of a particular point, especially one of law, will impact on a later question.  Nevertheless, that is the methodology which I have attempted to employ.  The Amazonian butterfly is alive and working hard.

Issues identified

1. The amendments to the statement of claim, relating to matters of fact, permit the identification of the following issues:

(1)The proposed amended pleadings as against Stilbo are said to raise new causes of action, if one was ever pleaded, and deprive Stilbo of its claimed defences of limitation, inordinate delay, acquiescence and laches.

(2)Whether the amendments sought against Stilbo ought be determined by reference to those defences or whether they can or ought be determined at trial.

(3)Amendments pertaining to Margaret Cameron and Ladon cannot be considered until the question of joinder is determined.

(4)The effect of joinder precludes, by virtue of the Supreme Court Rules 2000, rr184 and 427, the proposed defendants from relying on limitation and equitable defences and whether joinder is so prejudicial to the proposed defendants that it ought be refused.

NATURE OF PROPOSED AMENDMENTS

Stilbo application

1. Two matters of substance are sought to be pleaded against Stilbo.  The first, par47, concerns liability to account, claiming that Stilbo had actual notice of MCC's "equitable proprietary interest in the Trust Money referred to in paragraph 34" of the proposed amended statement of claim, and is thereby liable to account for such money.  The proposed amendment, par34, pleads the existence of "an equitable charge over and an equitable proprietary interest in the assets of the trust", whilst par35, claims an equitable entitlement to trace the money "into any hands into which it has been paid or property acquired by its application".  If that pleading is permitted, the effect might be the resolution of the whole action and involve Margaret Cameron and Ladon, irrespective of whether they are joined as parties. 

1. The second, par48, states the basis of a right of indemnity.  If the plaintiff's belief that Stilbo has no assets is proved correct, any declaration of a right of indemnity would have no practical effect unless the pleadings in pars34, 35 and 47 permit tracing and recovery through Stilbo.  This issue is relevant to both the questions of limitation and joinder.

Margaret Cameron

1. The matters pleaded as against this respondent are her directorship of Ladon, and receipt of, and directions concerning, the money.  The proposed amended statement of claim asserts the existence of a constructive trust (pars53 - 54), unconscionable conduct (par56), liability to account (par50), and right of indemnity (pars51 - 52 and 57).  The essence of the claim is one of a breach of fiduciary duty (pars13 and 62 - 67).  Two further and discrete causes of action, founded on the doctrines of "trustee de son tort" (pars58 - 60), and breaches of statutory duty required by the Companies (Tasmania) Code are sought to be added.

Ladon

1. The matters pleaded against Ladon are that it received the money either from Stilbo or Margaret Cameron, and used it in its purchase of the two properties (par44).  Pleadings similar to those sought to be made against the second respondent, namely, liability to account (par76), right of indemnity (par77), constructive trust (pars78 - 81) and "trustee de son tort" (pars82 - 86), are sought by joinder and amendment.

1. The remedies sought by the proposed amendments and joinder are:

"A       Tracing of the Trust Money.

BAn order that the firstnamed defendant account to the plaintiff for the Trust Money.

CA declaration that it has the right to be exonerated for its liability under the Order dated 11^th December 1984 from trust assets held by the firstnamed defendant.

DA declaration that the firstnamed defendant is bound to indemnify the plaintiff for its liability under the said order.

EA declaration that it has the right to payment or discharge out of the trust estate held by the firstnamed defendant the liability incurred under the Order pursuant to section 27(2) of the Trustee Act 1898.

FSuch further or other consequential orders so as to effect a payment to Donald Edward Cameron in order to satisfy his claims arising under the Order.

GA declaration that the trust property held by the firstnamed defendant by reason of the Deed of Appointment is subject to the unsatisfied rights of the plaintiff as previous trustee appointed by reason of the Deed of Settlement.

HAn order that the secondnamed defendant account to the plaintiff for the Trust Money.

IA declaration that the plaintiff has a right of indemnity out of the trust assets held by the secondnamed defendant for the plaintiff's liability arising under the Order.

JA declaration that it has the right to pay or discharge out of the trust estate held by the secondnamed defendant the liability incurred under the Order pursuant to section 27(2) of the Trustee Act 1898.

KA declaration that the Trust Money is held by the secondnamed defendant on trust for the plaintiff.

LAn order that the secondnamed defendant account to the plaintiff as a trustee de son tort for the loss of the Trust Money.

MAn order that the secondnamed defendant pay to the plaintiff the amount found due and owing upon taking the account referred to in paragraph L herein.

NAn account of profits made by the secondnamed defendant from the use of the Trust Money.

OAn order that the secondnamed defendant pay to the plaintiff the amount found due and owing upon taking the account of profits referred to in paragraph N herein.

PAn order that the secondnamed defendant account to the plaintiff for breach of fiduciary duty.

QProfit made by the secondnamed defendant and loss and damage pursuant to section 229(7) of the Companies (Tasmania) Code.

RAn order that the thirdnamed defendant account to the plaintiff for the Trust Money.

SA declaration that it has a right of indemnity out of the trust assets held by the thirdnamed defendant for the plaintiff's liability arising under the Order.

TA declaration that it has the right to pay or discharge out of the trust estate held by the thirdnamed defendant the liability incurred under the Order pursuant to section 27(2) of the Trustee Act 1898.

UA declaration that the Youl Property and D'Antoine Property are held by the thirdnamed defendant upon trust for sale for the plaintiff and the secondnamed defendant in such shares as the Court shall determine.

VAn order that the thirdnamed defendant account to the plaintiff as a trustee de son tort for the loss of the Trust Money.

WAn order that the thirdnamed defendant pay to the plaintiff the amount found due and owing upon taking the account referred to in paragraph V herein.

XAn account of profits made by the thirdnamed defendant from the use of the Trust Money.

YAn order that the thirdnamed defendant pay to the plaintiff the amount found due and owing upon taking the account of profits referred to in paragraph X herein.

ZInterest pursuant to section 165 of the Supreme Court Civil Procedure Act 1932.

ZASuch further or other necessary orders for relief as the Court deems appropriate.

ZBCosts."

1. Donald Edward Cameron has always sought the payment of the settlement money, through MCC, from Stilbo.  The mechanisms, said to have been employed in the location and use of that money have changed, but the known constant has been identified money, provided by an identified source and obtained as a consequence of his action for wrongful possession and mesne profits. 

Delay

Margaret Cameron retained control of MCC until its liquidation on 18 March 1985.  Donald Edward Cameron had no right to control the terms of settlement as between MCC and the third parties or the appointment of Stilbo on 13 August 1984 as the replacement trustee, or its acceptance by the directors on 19 September 1984.  The annual return of MCC for the year ending 30 June 1984 discloses knowledge of the existence of action 3507/1981, and the notes forming part of the accounts state:

"The company acts as trustee of Fordon Estate.  The accounting policies adopted by the company in the preparation of the accounts for the year ended 30th June, 1984 (which are consistent with those of the previous year) reflect the fiduciary nature of the company's responsibility for the assets and liabilities of the trust.  The company's accounts exclude all trust assets, but include all liabilities of the trustee.  No provision has been made in the company's accounts in respect of any shortfall of trust assets available to meet these liabilities because the directors believe they are all recoverable from trust assets."

The balance sheet contains the entry under the heading "CURRENT ASSETS" of:

"…

Right of indemnity from

Fordon Estate  154,076  …"

1. The Deed of Settlement and Release between MCC and the third parties was sealed by MCC on 16 November 1984, two months after it had ceased to act as trustee, and the payment of the settlement money to Stilbo.  MCC had taken no steps to preserve a significant asset which might be needed to meet any claim for indemnity or to meet its own legal obligations.  That question might have warranted investigation by a liquidator.  Following his appointment on 18 March 1985, the liquidator commenced proceedings to examine the directors, but accepting legal advice, he advised on 23 March 1987 that he did not intend to proceed with the investigation.  With hindsight, it might have been preferable for that investigation to have been conducted.  Legal proceedings were commenced on 16 June 1989 by action 643/1989. 

1. The pleadings in those proceedings state the status of the liquidator, the existence and terms of the Deed of Settlement, the judgment obtained by Donald Edward Cameron, the assignment to Stilbo and the non-payment of the money.  They sought:

"a)A declaration that the Defendant is bound to indemnify the Plaintiff for $643,981.03, being the liability as at the 11th June, 1989 and increasing by the amount of $121.68 per day thereafter during which such monies are unpaid, out of the assets of the Settlement.

b)Payment of the amount referred to in paragraph a) hereof or alternatively the like sum as damages for breach of indemnity.

c)Such further or other necessary orders for relief as the Court deems appropriate.

d)Costs."

1. The action 643/1989 Dwyer v Stilbo Pty Ltd (supra), was eventually dismissed on 22 November 1993, and these proceedings (1471/1994) commenced on 26 August 1994.

Nature of proceedings

1. These applications for amendment and joinder require determination by reference to matters pleaded, rather than to whether or not those matters might be found on trial to exist.  It may well be that at trial the evidence might not establish the existence of a claimed trust, breach or remedy.  Where a pleading claims the existence of an equity or trust, the benefit of interpretation ought be afforded to the plaintiff.  It would remain a matter for trial whether the matter pleaded comes within a category which attracts limitation.  In such a case, an amendment ought be permitted, in the knowledge that a plea of limitation can still be made.

1. Likewise, with the issues of joinder, the proposed defendants ought retain the benefit of a limitation plea.  Joinder can be permitted on the basis that the action against those proposed defendants will be deemed to have commenced as and from the date of the application. 

General principles

1. Tasmania remains the only Australian jurisdiction in which the rule in Weldon v Neal (1887) 19 QBD 394, has not been abolished by statute, rule of court, or a combination of both (Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231). Recourse may be had only to the provision of the Limitation Act 1974, s24, or to the traditional rules of equity which did not permit particular classes of persons to avail themselves of the protection of limitation. Many cases cited by counsel in the course of argument, whilst appearing to establish general principle, are dependent upon statutory or rule enactment and do not assist in the resolution of these applications. Those decisions often reflect the knowledge of the courts that the rule in Weldon v Neal (supra), has been abrogated and reflect consideration of judicial discretion rather than overriding principle.

1. Tasmanian decisions relating to the rule stated in Weldon v Neal (supra), have not required consideration of the Supreme Court Rules or their validity and their effect on concurrent applications for amendment and joinder (Wagner & Anor v Ryan & Anor [1999] TASSC 11; Olver v Dix [1999] TASSC 1; Gott & Anor t/as Alpro Welding Fabricators v Commonwealth of Australia [2000] TASSC 86; James v Inghams Enterprises Pty Ltd [2000] TASSC 23; Ritchie & Parker Alfred Green & Co (a firm) & Anor v Gornalle [2000] TASSC 8; Grichting & Anor v Municipality of Meander Valley [2001] TASSC 110; Bolonja v Simmons Wolfhagen [2001] TASSC 131).

1. A court of equity ought not construe its doctrines so as to defeat the stated will of parliaments.  The Limitation Act recognises exceptions to its application only for categories already known and understood at the time of its enactment. 

1. The Supreme Court Rules have impacted on the rule in Weldon v Neal (supra), in permitting joinder and a deemed "relating back", and to that extent have modified the rule.  However, r184 recognises the limits to that modification by permitting the Court to deem that the action against the joined parties commences on a date later than that of the original pleadings.

1. In this case, the issue of joinder has two elements.  Firstly, whether in fairness, the proposed parties ought be exposed to the risk of action at all.  That question will be considered in the light of the relationship between each of the parties;  whether they can be construed as being the one entity, human or otherwise;  their nexus with the plaintiff, and the claim that there is no real remedy available to Donald Edward Cameron.  Secondly, if joinder is ordered, whether the new parties would be deprived of any benefit of a plea of limitation with the result of the dismissal of the application.  An example of this issue is that joinder and "relating back" might deprive Ladon of a plea that an action involving an interest in land must be commenced within 12 years (Limitation Act, s4). The general approach which will be taken is that if a particular pleading against Stilbo is susceptible to a plea of limitation as of May 1984, then joinder and "relating back" will be permitted to operate as and from the date of the order. In other areas, the action will be deemed to have commenced as and from the date of the application.

1. That approach attempts to reconcile the rule in Weldon v Neal (supra) with its modification by the Supreme Court Rules.

Validity of Supreme Court Rules

1. Little point will be served if the amendments sought are granted only as against Stilbo, if the plaintiff cannot pursue the claimed assets or benefit to one or either of the proposed parties since it appears that Stilbo is bereft of assets.  It is convenient to consider first whether there is power to join parties other than those misdescribed.  Counsel for the respondents contends that the Supreme Court Rules, r184, is ultra vires, insofar as it seeks to widen the category or circumstances of parties sought to be joined and, in doing so, thereby grant an exercise of power to "relate back" the date of commencement of the action against those parties renders the relevant rule invalid.  The first question ought be considered in the absence of the rule in Weldon v Neal (supra), whilst the second requires consideration of modification of principle and conflict with statute. 

1. The Supreme Court Rules, r184, governing the application for joinder relevantly states:

184 (1)  At any stage of a proceeding and whether or not any relevant limitation period has expired, the Court … either on or without application, may order –

(a)   …

(b)that the name of a person who ought to have been joined as a party or whose presence may be necessary for the Court or judge to adjudicate on and settle all the questions involved in the proceeding be added;  …"

That portion of the rule is within power and neither conflicts with the Limitation Act, or substantially modifies the rule in Weldon v Neal (supra).  The rule replicates the previous Rules of the Supreme Court 1965, O18, r11(e), except that it specifically refers to the limitation period.  

1. The joinder of a new party outside a limitation period does no more than bring that person into the action with the same rights, and procedural obligations as a person already a party.  The added party may then plead a statutory limitation bar, or the equitable defence of laches.  A plea of limitation, although provided by statute, is in the nature of a procedural defence and a party might choose to plead or waive such a defence (Ketteman v Hansell Ltd [1987] 1 AC 190). A plea once made might still be disallowed because of circumstances giving rise to estoppel through waiver or unconscionable conduct (Commonwealth of Australia v Verwayen (1990) 170 CLR 394).

1. The power of judges to enact the rule is clearly afforded by the Supreme Court Civil Procedure Act 1932, s197, (see also The Australian Courts Act 1828;  Charter of Justice Wm IV 1823).

Rule 184 further provides:

"(8)   If an order is made under subrule (1) …

(a)   the originating process is to be amended accordingly; and

…

(d)the proceeding continues as if the new defendant or respondent had originally been made a defendant or respondent. "

The making of that subrule is also within power.  The question becomes whether the combination of the two components of r184 can be used to join a party when the effect is to deprive that party of a limitation defence.  The "relating back" of the time of commencement of action can in many cases deprive a party of the right to plead a bar.

1. A suggested answer might be that since the rule in Weldon v Neal (supra), was one of practice, it can be modified by a rule of court. The problem is that an existing party would be afforded the protection of a limitation bar on an application to amend whilst a party joined would be deprived. Presumably, that is why the primary rule has been altered or abrogated in other jurisdictions (NSW Pt 20, r4, Qld O32, r1, SA O28, r1, WA O21, r5).

1. In the United Kingdom, Rules of Supreme Court 1965, O15, r16 (misjoinder and non-joinder of parties), O20, r5, were made through the authority of the inherent jurisdiction of the Court, and the Supreme Court of Judicature (Consolidation) Act 1925, s99.

1. Rules of Supreme Court 1965 (UK), O20, r5, which provides:

"(1)      Subject to Order 15, rules 6, 7 and 8 and the following provisions of this rule, the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct. 

(2)       Where an application to the Court for leave to make the amendment mentioned in paragraph [sic] (3), (4) or (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so.

(3)       An amendment to correct the name of a party may be allowed under paragraph (2) notwithstanding that it is alleged that the effect of the amendment will be to substitute a new party if the Court is satisfied that the mistake sought to be corrected was a genuine mistake and was not misleading or such as to cause any reasonable doubt as to the identity of the person intending to sue or, as the case may be, intended to be sued.

(4)       An amendment to alter the capacity in which a party sues may be allowed under paragraph (2) if the new capacity is one which that party had at the date of the commencement of the proceedings or has since acquired.

(5)       An amendment may be allowed under paragraph (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment."

has been the subject of challenge.  In Mitchell v Harris Engineering Company Ltd [1967] 2 QB 703, the English Court of Appeal held that O20, r5, was a matter of court practice and procedure and, as such, was within the rule making power conferred by the Supreme Court of Judicature (Consolidation) Act 1925.  In relation to the conflict of the rule with statute, Lord Denning stated at 718:

"The Statute of Limitations does not confer any right on the defendant.  It only imposes a time limit on the plaintiff."

Order 20, r5, was said by the Court to be a removal of the injustice caused by the decision in Davies v Elsby Bros Ltd [1960] 3 All ER 672. The English debate since 1965 has been about the scope of the relevant rules (Evans Constructions Co Ltd v Charrington & Co Ltd [1983] 1 QB 810; Central Insurance Co Ltd v Seacalf Shipping Corporation (1983) 2 Lloyds Rep 25), rather than validity.

1. In Victoria, the position was altered through amendment in 1986, to both statute (Limitation of Actions Act 1958, s34) and Rules of Supreme Court of Victoria, r36.01.  The validity of the combined operation of those measures was not questioned by the High Court in Bridge Shipping Pty Ltd v Grand Shipping SA & Anor (supra).  In that case, Dawson J at 240 believed that there were limits upon the exercise of inherent jurisdiction and by implication that it required the operation of amendment to both statute and rules of court to permit joinder and amendment "out of time".  McHugh J did not specifically address the need for concurrent amendment, but did not criticise the English position whereby change was affected by rules of court alone.  He seemed to approve of the test formulated in Lynch v Keddell (No 2) [1990] 1 Qd R 10 at 259:

"… when an application to join a defendant was made after the expiration of a limitation period, the discretion to order the joinder was to be exercised only in peculiar or special circumstances."

1. New South Wales abrogated the effect of the rule in 1970 through the adoption of the Supreme Court Rules 1970, Pt 20, r4, which gave the court a full discretionary power to allow amendments notwithstanding the expiration of a limitation period. In relation to a claim that the rule was inconsistent with statute (limitation imposed by the Jurisdiction of Courts (Miscellaneous Amendments) Act 1987 (Cth)) in Australia & New Zealand Banking Group Ltd v Larcos (1988) 13 NSWLR 286, Rogers J stated at 295:

"… It was submitted that Pt 20, r4, was invalid to the extent that it was inconsistent with the limitation in s82(2) of the Act. This result would have been demanded by The Constitution, s109, had there truly been an inconsistency. In my view, on the correct characterisation of the rule, there is no inconsistency. The rule accepts fully the dictate of the Commonwealth legislation that proceedings should be commenced within three years from accrual of the cause of action. The rule deals merely with a procedural matter which, as a matter of law, then has an impact on what is to be taken as the date of commencement of proceedings. The two regulatory provisions operate in different fields and are therefore not inconsistent."

1. The Supreme Court Rules, r184, does not purport to amend or invalidate an act of parliament. The particular rule does not purport to alter the class of actions defined in the Limitation Act.  It seeks to alter an existing rule of practice in such a manner that a party is deemed to have been joined at an earlier time.  It might permit joinder subject to certain conditions (Ayscough v Bullar (1889) 41 Ch D 341, Webster Ltd v Roberts & Anor [1989] Tas R 37). It might regulate practice and procedure in a manner which ultimately affects substantive rights, but a possible consequence is not the basis for determining the operation and characterisation of the rule.

In my opinion, r184, is within power, and is not inconsistent with the provisions of the Limitation Act.

Scope of rule

1. Validity does not determine effect.  Here the issues of amendment and joinder are inextricably linked.  Rule 427 which provides:

"(1)     At any time before judgment, the Court or a judge may grant leave to a party to amend any process or pleading in such a manner and on such terms as may be just.

(2)      Subject to subrule (3), the pleadings may be amended as necessary for the purpose of determining the real questions in controversy between the parties."

contains no reference to limitation periods as do comparable provisions elsewhere.  It contains no term "whether or not any limitation period has expired" as appears in r184.  Absent any special order an amendment to a pleading dates back to the time when the pleading was originally made (Baldry v Jackson [1976] 2 NSWLR 415, Australia & New Zealand Banking Group Ltd v Larcos (supra)). The power to amend "subject to terms" (Webster Ltd v Roberts & Anor (supra)), might preserve an amendment which offends a limitation period by deeming the operation of the amendment to commence as and from a date later than the original pleadings.  Accepting that the judges have power to abrogate the rule of practice in Weldon v Neal (supra), by rules of court, the Supreme Court Rules do not purport to do so.

1. Although r184 is remedial and ought be given a beneficial interpretation (Bridge Shipping Pty Ltd v Grand Shipping SA & Anor (supra), McHugh J at 306 - 307), and has been so construed in the United Kingdom (Evans Constructions Co Ltd v Charrington & Co Ltd (supra)), New South Wales (Lloyd Steel Co (Aust) Pty Ltd v Jade Shipping SA (1985) 1 NSWLR 212) and Queensland (Lynch v Keddell (No 2) (supra), Grotherr v Maritime Timbers Pty Ltd [1991] 2 Qd R 128), it cannot operate in a manner inconsistent with the power to amend. The operation of r184, absent significant amendment to r427, cannot of itself operate to abrogate or modify the rule of Weldon v Neal (supra) in Tasmania.  When no issue of limitation arises, rr181(1) and (8)(d) can properly operate within an ordinary exercise of judicial discretion.  They might even operate in a manner which excludes a limitation bar if it relates back to the original unamended pleadings.  But they do not operate to permit a party to amend pleadings against an original defendant at the same time as it joins a party who becomes subject to those pleadings, if the combination of those two procedural steps vitiates the rule in Weldon v Neal (supra).  To interpret the Supreme Court Rules in this way would be to produce unfairness and anomaly.  An amendment against an original party which affects limitation would be subject to the constraints of Weldon v Neal (supra), while the contemporaneous joinder of a new party would be permitted without those constraints.  Joinder of a party contrary to a rule of practice is not a mere irregularity (Liff v Peasley [1980] 1 All ER 623).

1. The rule in Weldon v Neal (supra) remains a rule of practice within this jurisdiction and while it remains, governs the practice and procedure of joinder. 

Conclusion

(1)Supreme Court Rules, rr184(1)(b) and (8)(d), are within power and thereby valid.

(2)Supreme Court Rules, r427, is valid, but remains subject to a rule of practice (Weldon v Neal (supra)). 

(3)Amendment to r427, so as to abrogate the rule in Weldon v Neal (supra) would be within power.

(4)Exercise of power under r184(1), absent amendment to statute or r427, does not extend to an order which is inconsistent with the Limitation Act.

(5)The power to impose terms provided for in r427, permits joinder of a party at a deemed time different to the original pleading provided that the "deemed" time is not inconsistent with the Limitation Act.

General approach

1. It is now necessary to consider the question of the amendments sought against Stilbo, since their resolution will assist in the determination of joinder, subject to terms, of the remaining respondents.  In a case where no limitation is said to exist, irrespective of when an amendment is made, an amendment which relates back to 1994 would not prejudice the other proposed parties.  They would still have the right to plead limitation, irrespective of the date of the amended pleadings.  In cases where the original plea of limitation is as valid now as it was in 1994, different considerations might arise. 

1. It is appropriate that amendments sought against Stilbo be first determined and the issue of joinder separately considered, since issues of effect and prejudice can be determined in the knowledge that their joinder would make them susceptible to the amended statement of claim.

Cause of action against Stilbo

1. It is possible to discern a cause of action against Stilbo in the original pleadings.  I do not conclude that the original pleadings of Stilbo in its defence of October 1995 (pars12 - 16) would have been unsuccessful.  But Stilbo has made no attempt to have the statement of claim struck out with the subsequent application for summary judgment. The original pleadings do not persuade this Court that these amendments, which give effect to the original claim for remedy, ought not be made.

Limitation against Stilbo

1. If the original pleading of limitation was valid as of August 1994, then the amendments would not prevent the defence being re-pleaded.

1. MCC contends that the provisions of the Limitation Act, s24(1), apply in the circumstances of this case and that no plea of limitation can succeed, irrespective of whether the relevant date is August 1994 or, by reason of a claim of prejudice, as of the date of the granting of an amendment. If an amendment, made in 2001, operates as if the pleading was formulated as of August 1994, then the validity of the issue of limitation raised by the Limitation Act remains the same.  Stilbo would still be permitted to raise the issue which, if valid, would bar the claim made, as if pleaded in 1994.  If the contention is not upheld then, irrespective of when the matter was in fact pleaded (as distinct from a deemed date), any amendment would not prejudice the defendant.

1. The Limitation Act, ss9 and 24, relevantly provides:

"Claims in equity

9     This Division does not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief, except in so far as any provision thereof may be applied by analogy in like manner as the corresponding enactment repealed by, or ceasing to have effect in this State by virtue of, this Act has heretofore been applied.

…

Limitation of actions in respect of trust properties

24 (1)     No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action –

(a)     …

(b)to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use.

(2)   Subject to subsection (1), an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of 6 years from the date on which the right of action accrued."

1. It is said that Stilbo and Margaret Cameron have been at all times express trustees of the money payable to MCC.  If such is not found to be the case on the evidence at trial, then both, so the argument is put, remain constructive trustees since neither was, or is, a stranger to the relationship.  It is further said that the pleading claiming remedy against a "trustee de son tort" is a claim against an express trustee (Soar v Ashwell [1893] 2 QB 390 at 398 and 405, Cohen v Cohen (1929) 42 CLR 91, Taylor v Davies & Ors [1920] AC 636 at 651), and not susceptible to limitation. It is said that since Stilbo and Margaret Cameron were both in a fiduciary relationship with MCC, neither can be regarded as a stranger to that trust. Further, that since Margaret Cameron had the power to remove the money from Stilbo, she retains power in the nature of a proprietary interest and is thereby deprived of the limitation bar.

1. The respondents contend that the Limitation Act, s9, does not exclude the limitation of equitable actions "by analogy", in that the existence of an express trust operates in the same manner as a contract and that s9 excludes only certain forms of equity. If such be tenable, then the issue can be pleaded and determined at trial.

1. The question of whether the test applied in Soar v Ashwell (supra), was disallowed by the Privy Council in Taylor v Davies & Ors (supra), ought not be considered on this application and remain an issue at trial. 

1. Given that the original pleadings raise the issues of equitable relief and the existence of a trust, it can be said that the proposed amendments do no more than provide completeness.  The pleadings as to "tracing" and "making of an account" are vehicles or devices to enable the Court to properly examine whether the money still exists in an identifiable form, or has been transformed into shares or realty.  The amendments ought be allowed against Stilbo insofar as they relate to questions of equity and trust.

General principles of equity

1. It is now possible to consider the application for joinder in the light of the amended pleadings and to determine whether the proposed defendants can, or ought be joined as parties and, if so, whether any conditions ought be imposed in order to preserve existing rights.  In order to do so, it is first necessary to consider some general principles of equity.

1. The English legal system has long recognised the need for the prompt commencement and prosecution of actions (Magna Carta cap4).  The requirement of time limitation first appeared with the enactment of the statute, Limitation Act 1623 (Imp), probably as a reflection of the then prevailing religious attitude towards usury (see generally Preston & Newson Limitation of Actions, 3rd ed, 1953 and Brunyate Limitation of Actions in Equity, Stevens and Sons, Limited, London, 1932). The statute and its immediate successors were enacted at a time when the courts of equity were developing a range of remedies distinct from the common law courts and separate from many of the enactments of parliament.  Some of the remedies available in equity were designed to assist in the conduct of common law cases and some were substantive in their own right.  Over time the distinctions between remedy and equitable right became intermixed, often within the same doctrine.  Accordingly, the interaction between statutes of limitation and equitable doctrine varied according to the characteristics of the particular form of equity.  Some of these distinctions were recognised in early Tasmanian legislation, Limitation of Actions Act 1836 (6 Wm IV No 16), Limitation of Actions Act 1875 (39 Vict No 1).  Some became refined (Mercantile Law Act 1935), and some survive to this day (Limitation Act).  Many of these distinctions remain confusing and are still capable of producing inconsistent or paradoxical results. 

1. In order to resolve the issues raised by these applications, it is necessary to identify the nature of each matter pleaded and its equitable form.

The following brief analysis is restricted to the issues raised in this case. 

1. By the 19^th Century, equitable suits could be defined according to five categories:

(1)       Suits for equitable assistance

Equity would come to the aid of a common law suitor who had no recourse to certain mechanisms or procedures to further his cause.  It would assist in the process of discovery, variation of the terms of an agreement, disclosure and the like.  It provided a means for the proper conduct of an action outside of its own jurisdiction.  However, a court of equity would not grant assistance if it was futile to do so.  There was no purpose in obliging discovery in the prosecution of a common law claim if that action would, nevertheless, fail by reason of a statute of limitations.  In that respect, equity recognised and gave effect to any limitation period. 

(2)       Suits to enforce legal rights

A person might have legal rights, but be unable to enforce them because of procedures or lack of remedy.  Equity would provide enforcement in suits for account (other than suits against persons in a fiduciary relationship), suits for damages analogous to deceit, recovery of money paid under a mistake, and other suits analogous to actions for money had and received.  Since these suits were the enforcement of common law rights, equity applied the limitation statutes as part of the substantive law governing such rights.

(3)       Suits solely within the equity jurisdiction, but which were analogous to actions of law

Most of these disappeared with the death of the last woman married before 1883. 

(4)       Claims to recover arrears of property or annuities

Courts of equity would directly apply the statute or act by analogy to such statute.

(5)Cases in which courts of equity were acting by analogy to statute, such as transactions involving fraud, undue influence, or suits for specific performance and enforcing a constructive trust

A plea of laches was always permitted in suits in equity.  In many of these cases, application or otherwise of limitation depended on findings of concealment, possession of property, knowledge and the like.  Trustees holding under an instrument, or controlling or managing property, fiduciary agents and "trustees de son tort" were debarred from pleading limitation.  The test, in part, depended on the status or nature of the person with advantage since such persons should not be afforded by equity, a right to defeat equity by recourse to law.

1. The last category became more difficult to identify because of the different doctrines within equity concerning remedy or remedial devices (categories 1 and 5), and substantive or integral rights (categories 2 - 4).  Adding to that complexity was the development of the "fiction" of a constructive trust which at one time was regarded as a remedy (a trust was constructed as a consequence of the remedy obtained), and at another as having existence in its own right (see generally Scott Law of Trusts, 4th ed, 1989 at 464.4;  Parsons & Anor v McBain [2001] FCA 376; Giumelli v Giumelli (1999) 196 CLR 101).

1. Following the enactment of the Supreme Court of Judicature Act 1873 (Imp), the distinctions became blurred, but the themes remained identifiable (Pilmer & Ors v Duke Group Ltd (In liq) & Ors (2001) 180 ALR 249; Lynch A, Equitable compensation for breach of fiduciary duty:  Causation and contribution - The High Court dodges a fusion fallacy in Pilmer, (2001) Australian Bar Review, Vol  21, 173).  However, since actions in relation to legal and equitable rights and remedies can co-exist (Stephens Travel Service International Pty Ltd (Receivers and Managers Appointed) & Ors v Qantas Airways Ltd (1988) 13 NSWLR 331), their intermingling makes it difficult to discern their precise interrelationship with limitation statutes.

1. In this Century, the categories have been, to a degree, simplified.  Express trustees or persons controlling or managing property for another (true trustees) are disbarred from pleading limitation. That category excludes mortgages, charges and constructive trusts, but includes fiduciary agents and "trustees de son tort". An action involving a claim for indemnity is likewise outside the operation of a limitation statute (Life Association of Scotland v Siddall & Ors 3 De G F & J 58; [1861 - 73] All ER Rep 892). Application of the principles to an ordinary person or entity who, by reason of circumstance (fiction), becomes a trustee for certain purposes, can be said to be a device to obtain a remedy, that is, it is a remedy or device by which a person can recover property or benefit, present or future, to which that person is entitled. The fiction is to create the status of, or relationship with, a "cestui que trust".  As to the nature of such a "constructive" trust, Gleeson CJ, McHugh, Gummow and Callinan JJ, in their joint judgment in Giumelli v Giumelli (supra), said at 112:

"A constructive trust of this nature is a remedial response to the claim to equitable intervention made out by the plaintiff. It obliges the holder of the legal title to surrender the property in question, thereby bringing about a determination of the rights and titles of the parties.

The term 'constructive trust' is used in various senses when identifying a remedy provided by a court of equity. The trust institution usually involves both the holding of property by the trustee and a personal liability to account in a suit for breach of trust for the discharge of the trustee's duties. However, some constructive trusts create or recognise no proprietary interest. Rather there is the imposition of a personal liability to account in the same manner as that of an express trustee. An example of a constructive trust in this sense is the imposition of personal liability upon one 'who dishonestly procures or assists in a breach of trust or fiduciary obligation' by a trustee or other fiduciary.

In the present case, the constructive trust is proprietary in nature. It attaches to the Dwellingup property. Such a trust does not necessarily impose upon the holder of the legal title the various administrative duties and fiduciary obligations which attend the settlement of property to be held by a trustee upon an express trust for successive interests. Rather, the order made by the Full Court is akin to orders for conveyance made by Lord Westbury LC in Dillwyn v Llewelyn (1862) 4 De G F & J 517 at 523 [ER 1285 at 1287] and, more recently, by McPherson J in Riches v Hogben [1985] 2 QD R 292 at 302.

In these cases, the equity which founded the relief obtained was found in an assumption as to the future acquisition of ownership of property which had been induced by representations upon which there had been detrimental reliance by the plaintiff. This is a well recognised variety of estoppel as understood in equity and may found relief which requires the taking of active steps by the defendant."

1. The current position would appear to be that such a trust exists in its own right and does not come into existence at the time of pronouncement of remedy (Parsons & Anor v McBain (supra);  In re Sharpe (a bankrupt);  ex parte Trustee of the Bankrupt's Property v The Bankrupt [1980] 1 WLR 219). Its existence creates a proprietary interest in property. Whether a pleading of the existence of a "constructive" trust is susceptible to a plea of limitation will depend on matters such as the existence of a duty to disclose (Taylor v Davies & Ors (supra)) knowledge, nature of the relationship and the like. 

1. Some of the above distinctions and categories are recognised in the Limitation Act.  The Limitation Act does not apply or is modified in relation to certain actions (s8), certain forms of equitable relief except those applied by analogy, s9 (see Cohen v Cohen (supra)), or certain circumstances involving adverse possession, s13, disability, Pt III, Div 1, and fraud and mistake, Pt III, Div 3. Relevant to these applications is s24(1), which provides:

"No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action -

(a)   …

(b)   to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use. …"

1. The provision is said to apply to property, that is, the proceeds of the settlement or its value if assigned, the land purchased or other property acquired with those proceeds, or the money received as the proceeds of settlement which have been converted by Margaret Cameron for her own use.  Stilbo is said to be an express trustee, by virtue of its status as the successor to MCC.  Margaret Cameron is said to be an express trustee, both by reason of her position as the controlling director of both Stilbo and Ladon, and her own status as the receiver of the money.  Ladon is said to be a trustee, by construct, by its receipt of the money and its possession of land which is the proceeds of that money.  

Application of principle to the pleadings

1. Whether the evidence at trial establishes sufficient basis for the Court to find the existence of one of the categories of trust already identified is not a matter requiring determination in these interlocutory proceedings.  Whether any limitation plea argued at trial will be applied is a matter which can only be determined at trial (Dwyer v Stilbo Pty Ltd (supra)).

1. The following causes, suits or matters are pleaded:

(1)       Liability to account

This is a vehicle or device provided by equity in the form of discovery.  The doctrine is remedial and has no independent existence, but remains ancillary to another cause or suit.  Whether it is subject to limitation depends on whether the ultimate cause of action is itself subject to a bar.

(2)       Right of indemnity

This is an equitable right giving rise to remedy and is not dependent upon another suit or action.  It is not subject to the provisions of the Limitation Act.  However, its effect is remedial since discovery without further remedy is ineffectual.

(3)       Liability to discover

This is a remedy dependent on the existence of a substantive right of action in law or equity and comes within the same category as (1). 

(4)       Constructive trust

Whether this form of suit or action is subject to a plea of limitation depends on the nature of the trust established by evidence at trial.  Its status will depend on findings as to the relationship of the parties, knowledge, concealment, nexus of transactions and the like.  It might give rise to a proprietary interest in land said to have been purchased with the proceeds of settlement (Parsons & Anor v McBain (supra)).  On the basis of the pleadings and the material placed before this Court, it can be regarded as an equitable suit in its own right and not subject to limitation. As Bowen LJ said in Soar v Ashwell (supra) at 398 and 405:

"In the case of In re Sharpe [1892] 1 Ch 154, recently before the Court of Appeal, the principle was applied to the case of directors of a company who had improperly parted with the assets of a company. 'Where money', says Fry, LJ, 'has found its way into the hands of a trustee or other person against whom this Court gives the same relief as against a trustee, there the trustee, or the person in a fiduciary position, cannot set up the Statute of Limitations or the analogy of the Statute of Limitations as an answer to the demand for money which was in his hands'.

…

'… That responsibility may no doubt be extended in equity to those who are not properly trustees, if they are found either making themselves trustees de son tort, or actually participating in any fraudulent conduct of the trustee to the injury of the cestui que trust.  But, on the other hand, strangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers - transactions perhaps of which a Court of Equity may disapprove - unless those agents receive or become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest or fraudulent design on the part of the trustees.'  These words seem to me to define, as accurately as is perhaps possible, the difference between an express and constructive trustee.  A stranger to the trust, who receives the trust money with notice of the trust, or knowingly assists the actual trustee in a fraudulent and dishonest disposition of the trust property, is a constructive trustee.  The trust may be clear, may be declared in a written instrument, and may be in that sense express, but the stranger is not expressly appointed a trustee.  He becomes bound by the trust by the construction which the law puts upon his dealings with the trust property."

(5)       "Trustee de son tort"

This is a suit in equity in its own right and is not subject to a plea of limitation.  Its existence will be determined by findings as to control and whether a person or entity has acted as a trustee.

(6)       Breach of fiduciary duty

The success of this cause or suit will depend on findings of fact in the same way as category (4).  Its validity and exemption from a plea of limitation will depend on issues as to whether there is found to be a duty to disclose (Taylor v Davies & Ors (supra)), retirement as a director (Dimos v Dikeakos Nominees Pty Ltd (1996) 149 ALR 113), failure to account (Soar v Ashwell (supra)), the existence of concurrent legal and equitable rights and remedies (Stephens Travel Service International Pty Ltd (Receivers and Managers Appointed) & Ors v Qantas Airways Ltd (supra)), and the like. 

(7)       Breach of the Companies (Tasmania) Code ("the Code")

The Code, ss229(3), (7) and 229A, expresses duty couched in terms of equity, but the remedy remains that of a consequence for a breach of statutory duty.  It is subject to limitation and the amendment ought be refused (Central Electricity Generating Board v Halifax Corporation [1962] 3 All ER 915, Cutrona v Harnischfeger of Australia Pty Ltd [1977] VR 306).

1. Even if the above analysis be wrong, the proposed amendment ought be rejected.  No existing pleading raises, even by implication, any issue of statutory duty.  It is a completely new cause of action which, if allowed, would preclude any plea of limitation existing as of 1994.  Even if it is accepted that Margaret Cameron owes a continuing duty, as a director, not subject to limitation, it is clear that she owed duties to MCC, Stilbo and Ladon.  Her action in relation to one company might be to the detriment of another.  The detriment to MCC is said to have occurred on the date on which the money was paid to either Stilbo or herself.  If, by her action, she deprived Stilbo of an entitlement, the issue remains one between herself and Stilbo, or at least the other director.  There was no ongoing duty to MCC once she had caused detriment or at least beyond the date of liquidation (Lord Corporation Pty Ltd v Green (1991) 22 NSWLR 532), or at least her power or duties were suspended (McAusland v Deputy Commissioner of Taxation (1993) 118 ALR 577, cf retirement Dimos v Dikeakos Nominees Pty Ltd (supra)).  It may be that some form of fiduciary duty remains after liquidation of a nature "not to … take advantage, at the expense of the company, of knowledge or information obtained as a director before that liquidation" (Lord Corporation Pty Ltd v Green (supra) at 543 - 544), but the pleadings and material provided in support of these applications, suggest no special or concealed knowledge on her part as a director. Doubtless, she had a great deal of knowledge gained through her position as a director of Stilbo, but the fact that the settlement money had not been paid to MCC was known to all concerned before the date of liquidation on 18 March 1984. The action against Ladon, based on the Code, s229(7), is one for debt and is subject to the Limitation Act (Central Electricity Generating Board v Halifax Corporation (supra)), and on any basis, discretionary or otherwise, ought be rejected.  Further, the proposed amendments add unnecessary complexity to the suit or action.  Either the money or proceeds thereof exist or they do not.  It was either used by a trustee for the purchase of identifiable property or it was not.  Stilbo owed no "corporate" duty to MCC and Margaret Cameron, in the absence of a finding that she was a trustee "in persona", owed no such duty.  If the action or suit against her personally fails, it is difficult to see how it could succeed against her as a director.

The applications for amendment and joinder ought be dismissed as a consequence of law and exercise of discretion. 

(8)       In addition, contained within the pleadings, is a plea for the application of the aid or device of the doctrine of "tracing" (In re Diplock;  Diplock v Wintle [1948] 1 Ch 465), a remedy in equity wider than the remedy at common law (Sinclair v Brougham & Anor [1914] AC 398), and it comes within the same category as (1) and (3).

Stilbo amendments

1. There remains one issue of principle of equity which governs amendments which seek to expand or strengthen an action or suit already pleaded.  The principle relates to the third purpose said to be served by the Limitation Act, namely, the protection of defendants from being confronted with claims in situations where, because of the passage of time, evidence may be difficult, or even impossible to obtain (Jones v Bellgrove Properties Ltd [1949] 2 KB 700, and generally see Amendments and Limitations:  The Rule in Weldon v Neal (1980) 54 ALJ 643). The principles relate to both questions of fact (Marshall v London Passenger Transport Board [1936] 3 All ER 83, Dornan v J W Ellis & Co Ltd [1962] 1 QB 583, Robinson & Ors v Unicos Property Corporation Ltd [1962] 1 WLR 520) and legal category (Kingston Earthworks Pty Ltd v Iles (1997) 6 Tas R 433; O'Grady v Botany Wools (Australia) (1964) 64 SR (NSW) 359; Renowden v McMullin (1970) 123 CLR 584). The plaintiff's original pleadings sought the aid of equity, albeit that they were deficient in fact and law. In law, many of the amendments sought are not (on the pleadings) subject to limitation as stated in Weldon v Neal (supra), but some come within the ambit of other discretionary principles.  It is possible to discern a cause of action or suit against Stilbo in the original pleadings, and one ought not conclude that the original defence of 12 October 1994 would have been unsuccessful.  The original pleadings raised the issue of whether Stilbo was at all times an express trustee of funds payable to MCC, or at least was and remains a constructive trustee since it was not a stranger to the relationship.  The original pleadings raised the issue of whether Stilbo was in a fiduciary relationship with MCC, and that its acquiescence in the disposition of the settlement money was a breach of that relationship.  The original pleadings raised the issues of equitable relief and the existence of a trust, and it can be said that the amendments do no more than provide the vehicles of "tracing" and "making of account" which, if granted themselves, do no more than permit the Court to properly examine whether the money exists in an identifiable form or has been transformed into realty or some other form.  The proposed amended pleadings relating to additional facts, do no more than provide completeness to that process (see generally Ritchie & Parker Alfred Green & Co (a firm) & Anor v Gornalle (supra)).

Summary

1. In the circumstances of this case, my analysis is that the issue of limitation depends, in relation to some of the pleadings, on findings of fact as to knowledge, relationship and the like.  Three of the matters pleaded are remedial only and attach to the primary suit or action as methods of discovery or disclosure.  At least one of the matters pleaded ("trustee de son tort"), is a suit in its own right and not subject to limitation.  The pleading of statutory duty is subject to limitation. 

1. The following precis is not intended to be other than statements of principle applicable to the circumstances of this case.

Cause	Category	Limitation
Liability to account	Remedial	Attaches to suit or action.  Barred if primary action is subject to limitation.
Tracing	Remedial	Remedial device.  Dependent on suit or action.
Right of indemnity	Remedial	Dependent on nature.
Constructive trust	Suit or action	Dependent on nature. Limitation Act, s24.
"Trustee de son tort"	Equitable suit	Not subject to limitation.  Subject to laches.
Breach of fiduciary duty	Suit or action	Dependent on nature.
Unconscionability	Suit or action	In this case attaches to fiduciary duty.
Breach of statutory duty	Action only	Subject to limitation.

Exercise of discretion

1. Delay

These proceedings were commenced on 26 August 1994, following the dismissal of the previous action (Dwyer v Stilbo Pty Ltd (supra)) on 22 November 1993.  Since that date the matter has proceeded through various interlocutory stages although it cannot be said that the solicitors advanced their clients' cause with a degree of vigour.  Nevertheless, the issues raised by the defence of 12 October 1994, namely, limitation and failure to plead a cause of action remained, until the present application, the same.

1. On 14 June 2000, MCC (the plaintiff), changed its solicitors and thereafter the action has been conducted with due diligence.  The central issue, namely, accountability on the part of the proposed second defendant, both personally and through the companies which she controls, remains the same as that raised in the original pleadings.  Similarly, the basis of the claim has always been one grounded in equity.  The plaintiff, by these amendments, seeks the aid of other vehicles of statute (company law), and developments in the doctrines of equity (unconscionability and the like), but they are different manifestations of its central contention and the remedy sought, that of restitution of money, paid in settlement of the original proceedings, controlled by another.  Delay might have rendered resolution more complex, but time has not obscured the claim.  Nor can it be said that Margaret Cameron has been unaware of the action against her.  Neither Stilbo nor Ladon through their controlling directors can properly claim that they are taken by surprise.  The same can be said of the remedies sought.  Three options suggest themselves:

(1)the second defendant has retained the money either personally, or through a corporate or trust entity;

(2)the money has been dissipated through personal expenditure; and/or

(3)the money has been used to purchase identified property.

1. If the money still exists in specie or through purchase and if the plaintiff is successful then a remedy is available.  If it has been dissipated and there is judgment against the proposed second defendant personally, then her continued accountability, in the absence of identified sums of money or property, is a result of her decisions made over a period of time.  Delay has permitted her to postpone accountability (assuming eventual success on the part of the plaintiff), but that delay is, in part, a consequence of her failure to disclose details of the disposition of the money claimed by the plaintiff.

Laches

1. As to the claim of laches, a question must be whether Margaret Cameron, either personally or through her companies, was lulled into a sense of security and acted to her detriment.  That issue will depend on findings as to the progress of proceedings, her awareness, and actions taken by her which might have been a result of her belief that the matter had, for all intents and purposes, been concluded (Orr v Ford (1989) 167 CLR 316). That ought remain an issue for the trial.

Prejudice - Margaret Cameron and Ladon

1. Assuming that Stilbo has not retained the money or used it to purchase identified property, then it might be possible to use these proceedings against it as a vehicle for tracing the money.  Such a course would involve Margaret Cameron and, presumably, Ladon.  If the search was productive and assuming the application of the Limitation Act, s24, it would be open for the plaintiff to commence fresh proceedings against them, a consequence of which would be contrary to the principles of modern litigation.

1. Given that Margaret Cameron is the controller of, and nexus between, Stilbo and Ladon, neither she nor Ladon can claim absence of knowledge of the claim or are in the position of a party who, many years after an event, is met with an action which it would find impossible to meet.  In many cases records have been destroyed or lost, material witnesses unavailable and any capacity to prepare a defence lost.  The factors of prejudice and delay already discussed in relation to Stilbo have no greater import in relation to Margaret Cameron or Ladon.  The plea of laches already considered, remains dependent on evidence, especially her knowledge and response.  She would remain involved in the action through the action against Stilbo, irrespective of whether she was joined as a party in her own right.  It would be inappropriate to permit a default or uncontested judgment to be entered against Stilbo simply by reason of the transference or assignment of an asset. 

1. Any pleas of limitation available to Stilbo would be available to either of the proposed parties.

Limitation - Stilbo

1. If the original pleading of limitation is valid as of August 1994, then the amendments would not prevent repleading.  The plaintiff contends that the amendments do no more than restate the original cause in proper form.  If that contention is correct, then a bar of limitation has no effect, irrespective of the date of pleading.  If the bar be effective, then, except for a claim of continuing duty, it will operate, in the circumstances of this case, irrespective of whether the pleading was originally made in August 1994, or retrospectively amended by an order made in 2001.

Limitation - Margaret Cameron and Ladon

1. If the contention of MCC is correct, neither Margaret Cameron nor Ladon has lost the benefit of a plea of limitation since the claim for remedy is not subject to the Limitation Act.  In such a case, MCC will not be prejudiced if the deemed date of commencement of the amended pleadings is the date of the application.  If the contention of the respondents is correct, then joinder in 2001 accompanied by permitted amendments on terms that the pleadings operate as of 2001, will not deprive them of any limitation defence arising between 1994 and 2001. 

1. The Court has power to permit amendment on terms (Supreme Court Rules, r427; . Lynch v Keddell [1985] 2 Qd R 103; Lynch v Keddell (No 2) (supra);  Webster Ltd v Roberts & Anor (supra)), and those terms preserve any limitation rights possessed by Cameron and Ladon.

Conclusion

1. The amendments sought as against Stilbo will be allowed.  The application for joinder as against Margaret Cameron and Ladon will be granted on terms.  The application for amendment of the statement of claim as against Margaret Cameron and Ladon will be granted on terms.

1. All suits brought and remedies sought against Margaret Cameron and Ladon, except two, will be deemed to have commenced as and from 18 May 2001, the date of the application.  The remedies of tracing and duty to account, being remedial, are deemed to commence as and from 26 August 1994, the date of the commencement of the action.  Limitation defences will remain available to Margaret Cameron and Ladon.  The remedies of discovery and accountability will permit MCC to ascertain the course of dealings of the money and its ultimate disposition or placement.  Amendments against Stilbo are deemed to have commenced as and from the date of the original statement of claim.

1. The following table indicates the differing determinations made in relation to the particular pleadings:

Cause of action	Party	Paragraph	Determination	Operation
Liability to account	Stilbo Cameron Ladon	par47 par50 par76.	Granted Granted Granted	26 August 1994 26 August 1994 26 August 1994
Remedy of tracing	Stilbo Cameron Ladon	par35, Remedy A par35, Remedy A par35, Remedy A	Granted Granted Granted	26 August 1994 26 August 1994 26 August 1994
Right of indemnity	Stilbo Cameron Ladon	pars34, 48 - 49 pars 51 - 52 par77	Granted Granted Granted	26 August 1994 18 May 2001 18 May 2001
Constructive trust	Cameron Ladon	pars53 - 57 pars78 - 81	Granted Granted	18 May 2001 18 May 2001
"Trustee de son tort"	Cameron Ladon	pars58 - 61 pars82 - 87	Granted Granted	18 May 2001 18 May 2001
Unconscionable conduct	Cameron Ladon	par56 par80	Granted Granted	18 May 2001 18 May 2001
Breach of fiduciary duty	Cameron	pars62 - 67	Granted	18 May 2001
Breach of statutory duty	Cameron	pars69 - 75	Refused	Not applicable

Orders

1. (1)       The statement of claim against the defendant Stilbo be amended in the terms of the draft document filed on 4 October 2001, with the exception of paragraphs 69 - 75.

(2)       Margaret Cameron be joined as a party to the action.

(3)       Ladon be joined as a party to the action.

(4)The statement of claim against the second and third defendants be amended in the terms of the draft document filed on 4 October 2001, with the exception of paragraphs 69 - 75.

(5)The amendments allowed by order 4 are allowed on terms that:

(a)paragraphs 35, 50, 52 and 76, and remedy A are deemed to have been made on 26 August 1994;

(b)paragraphs 51, 53 - 68 and 77 - 86 are deemed to have been made on 18 May 2001.

(6)There be liberty to apply as to the time within which the defendants be permitted to serve their respective defences.

(7)There be liberty to apply generally.

1. I have not fixed a commencing date for the statement of claim (paragraphs 1 - 46) as against the second and third defendants.  I do not believe that anything is dependent on this, but in the event that any counsel discerns significance, liberty to apply in the terms of Order 7, to permit further submissions and amendment to the terms of these orders, will be afforded.