Stage Club Ltd v Millers Hotels Pty Ltd

[1981] HCA 71

HIGH COURT OF AUSTRALIA

Gibbs C.J., Murphy, Aickin, Wilson and Brennan JJ.

STAGE CLUB LTD. v. MILLERS HOTELS PTY. LTD.

(1981) 150 CLR 535

16 December 1981

Limitation of Actions

Limitation of Actions—Debt—Confirmation—Acknowledgment—Company's balance sheets—Signature of directors on balance sheets—Whether on behalf of company—Balance sheets signed after date to &hich made up—Whether acknowledgment of debt existing at date of signature—Whether acknowledgment to creditor—Limitation Act 1623 (Imp.) (21 Jac.I.c.16),s. 3—Limitation Act 1969(N.S.W.),s. 54.

Decisions

December 16.
The following written judgments were delivered:-
Gibbs C.J. The respondent, Millers Hotels Pty. Ltd. ("Millers"), was the plaintiff in an action brought against the appellant, The Stage Club Ltd. ("the Stage Club"), in the Supreme Court of New South Wales to recover $27,236.21 money lent by the respondent to the appellant or paid by the respondent at the request of the appellant. The appellant in its defence pleaded that the respondent's claim had been brought more than six years after the cause of action arose and was barred by the provisions of the Limitation Act 1623 (21 Jac. I. c. 16) and of the Limitation Act 1969 (N.S.W.). (at p539)

2. Millers was in 1962 a company that brewed and sold beer. In that year the Stage Club was in the process of establishing itself as a club, and borrowed money from Millers for that purpose and undertook to purchase its requirements of beer from Millers. The debt was evidenced by an unregistered bill of sale. It is not in dispute that as a result of subsequent transactions between the parties $27,236.21 was owing by the Stage Club to Millers at 31 December 1966 and that no part of that debt has since been paid. The present action was commenced on 24 September 1976. There had been, during the year ended 31 December 1965, a reduction by the Stage Club of its indebtedness to Millers, and this may have been effected by a part payment which caused the limitation period to run anew. Whether for that or for some other reason, the parties appear to have been agreed that the claim had not become statute barred at the times when the balance sheets of the Stage Club for the years 1970 and 1971 were signed. Mr. Handley, who appeared for the appellant, informed us that it had been substantially common ground that the appellant failed if the 1970 or the 1971 balance sheet was an acknowledgment of the indebtedness, and succeeded if they were not. He said that nothing turned on any distinction between the two balance sheets. Each of the two balance sheets showed Millers as a secured creditor in the amount of $27,236. The balance sheet as at 31 December 1970 bore a statement, signed by two directors on 5 April 1971, stating that "the accompanying Balance Sheet is drawn up so as to exhibit a true and fair view of the state of the affairs of the company as at December 31, 1970". It also bore a report by the auditor that it was properly drawn up, and a declaration by the secretary that it was to the best of his knowledge and belief correct. It was adopted by an annual general meeting on 4 May 1971. The balance sheet as at 31 December 1971 bore a statement, signed by two directors on 11 May 1972, that it was "drawn up so as to exhibit a true and fair view of the state of the affairs of the Company as at 31 December 1971". It bore also an auditor's report, although no declaration by the secretary appears on the copy which was an exhibit in the proceedings. It was adopted by an annual general meeting on 7 June 1972. (at p540)

3. There is no direct evidence that Millers ever received either of the two balance sheets on which it relies to take the case out of the relevant Statute of Limitations. A search of Millers' records revealed certain balance sheets of the Stage Club, but not those for the years 1970 and 1971. However, Millers had sold its brewery in 1967, and had thereafter been disposing of its hotels, and by the time the action was brought had only one employee. In these circumstances, it would be unsafe to infer from the fact that there was no record that Millers had received the balance sheets that it had never in fact received them. Evidence was given by Mr. Walker, who was employed as a senior officer by Millers from 1958 until 1973, and who for part of that time was Millers' manager. He had become a member of the Stage Club in 1962, and was a director of that company for every year between 1962 and 1973, except for the year commencing with the annual general meeting held in April 1968. It was part of his duty, as an employee of Millers, to watch the interests of that company, but no part of his duty to become a director of the Stage Club. However, he became a director, not only because he was interested in the arts, but also because he had in mind to be in a position to watch Millers' interests. Mr. Walker said that to the best of his memory he saw the balance sheet of the Stage Club before the annual general meeting in each year. He was in fact one of the two directors who signed the balance sheet for 1971. He further said that clubs to which Millers had given financial assistance were required to send balance sheets to Millers, and that if in any of the years that he was a member of the Stage Club he had not received a balance sheet from it, he would have sought to see a copy of the balance sheet. However, he could not say which balance sheets, if any, came into Millers' possession. (at p540)

4. Mr. Handley, for the appellant, was content to present his case on the footing that the matter was governed by the Limitation Act 1969 (N.S.W.). That Act took effect on 1 January 1971. Both balance sheets were signed after that date, but, as will be seen, if the 1970 balance sheet can be regarded as an acknowledgment, it must be treated as an acknowledgment of indebtedness at 31 December 1970 - before the Limitation Act 1969 was in force. If the limitation period had commenced to run from the part payment made in 1965, it is obvious that the respondent must rely on the 1970 balance sheet, since even if the 1971 balance sheet were regarded as being an effective acknowledgment as at 31 December 1971, it is not established at what date in 1965 the payment was made, or when in 1971 the limitation period would have expired. Once the limitation period had expired, the respondent's cause of action would have been extinguished (s. 63 of the Act) and a subsequent acknowledgment would not have revived it. If the question whether the 1970 balance sheet was an effective acknowledgment had to be decided by reference to the law in force on 31 December 1970, different questions would arise from those that fall for decision under the Limitation Act 1969. Before that Act was passed, the law of New South Wales, so far as it is material for present purposes, was laid down by the statute of James I and by s. 1 of Lord Tenterden's Act (9 Geo. IV c. 14) which was applied in New South Wales by the Written Memorandum Act (1834) (4 Wm. IV No. 17). Section 1 of Lord Tenterden's Act provided that no acknowledgment was sufficient to take a case out of the operation of the Statute of Limitations unless it was "made or contained by or in some writing to be signed by the party chargeable thereby". Under this section it was held that an acknowledgment signed by an agent of the debtor was not sufficient; it must be signed by the debtor himself: Hyde v. Johnson (1836) 2 Bing (NC) 776 (132 ER 229) . In England, the signature of an agent was made sufficient to revive a statute barred debt by s. 13 of the Mercantile Law Amendment Act 1856 (19 &20 Vict. c. 97) but that provision was not re-enacted in New South Wales. Mr. Moss, who appeared for the respondent, sought, if necessary, to argue that s. 1 of Lord Tenterden's Act did not apply to a company. It is difficult to see why the word "party" in that section should not include a company, and it may be observed that the word "person" in another section of Lord Tenterden's Act (s.6) has been held to include a company: Hirst v. West Riding Union Banking Co. (1901) 2 KB 560 . The position under the former law in New South Wales would appear to have been that an agent for a company could not give an effective acknowledgment, although it appears that the company itself could have done so by a document properly signed and sealed. In the present case it is unnecessary to decide these questions, since counsel for the appellant accepted that the question whether either balance sheet was an effective acknowledgment was to be decided by reference to the Limitation Act 1969. Under that Act, an acknowledgment given by an agent is sufficient. (at p542)

5. Where, after a limitation period has commenced to run but before it has expired, a person against whom the cause of action lies confirms the cause of action, the time during which the limitation period runs before the date of confirmation does not count in the reckoning of the limitation period for an action on the cause of action by a person having the benefit of the confirmation against a person bound by the confirmation: s. 54(1) of the Limitation Act 1969. By s. 54(2)(a) a person confirms a cause of action if he "acknowledges, to a person having . . . the cause of action, the right or title of the person to whom the acknowledgment is made". By s. 54(4), an acknowledgment for the purposes of s. 54 "must be in writing and signed by the maker", but by force of s. 11(2)(c) a signature by an agent of the maker is a signature of the maker. For the purposes of s. 54 a person has the benefit of a confirmation only if "the confirmation is made to him or to a person through whom he claims" (s. 54(5)) and a person is bound by a confirmation if, inter alia, he is a maker of the confirmation (s. 54(6)(a)). A confirmation made to or by an agent has the same effect as if it were made to or by his principal: s. 11(2)(c). (at p542)

6. The submission made on behalf of the appellant was that neither balance sheet amounted to confirmation of the debt within s. 54 of the Limitation Act 1969 for three reasons: (1) because it was not signed by the Stage Club or by an agent for the Stage Club; (2) because it was not an acknowledgment of a debt subsisting at the time when the balance sheet was signed; and (3) because if the balance sheet did constitute an acknowledgment it was not made to the person having the cause of action, i.e. to Millers. (at p542)

7. The first question for decision is whether the balance sheets were signed by agents of the Stage Club. It may be accepted that the auditors were not agents of the company, and that their signatures on the balance sheets were not sufficient to satisfy s. 54(4): see In re Transplanters (Holding Company) Ltd. (1958) 1 WLR 822; (1958) 2 All ER 711 . The question then is whether the signatures of the directors were sufficient. Mr. Handley submitted that they were not - that the directors did not sign the balance sheets on behalf of the company, but in pursuance of a statutory duty imposed on them by s. 162 of the Companies Act 1961 (N.S.W.), as amended. That section was amended by the Companies (Amendment) Act 1971 (N.S.W.) which was assented to on 15 December 1971. The unamended section was in force when the 1970 balance sheet was signed and presented to the annual general meeting, but the amended section applied to the 1971 balance sheet. However, for present purposes there is no material difference between the provisions in their original and in their amended form. The directors were required to cause to be made out and laid before the company at each annual general meeting a balance sheet, giving a true and fair view of the state of affairs of the company at the end of the relevant period, and the balance sheet was to be accompanied by a statement signed by two directors: see s. 162(3), (11) and (12) in their original form, and s. 162(3) and (10) in the amended form. There is no doubt that the directors signed the balance sheets in pursuance of their duty as directors, but that does not mean that they did not sign as agents for the company. The directors of a company are its agents, and the balance sheet is a statement by the company of the state of its assets and liabilities. The directors who sign a balance sheet do so as agents of the company. (at p543)

8. It has been held, in a consistent line of cases in England, that a balance sheet may amount to a sufficient acknowledgment of debts recorded in it, other than debts owed to the persons signing the balance sheet: In re Atlantic and Pacific Fibre Importing and Manufacturing Co. Ltd. (1928) 1 Ch 836 ; In re The Coliseum (Barrow) Ltd. (1930) 2 Ch 44 ; Ledingham v. Bermejo Estancia Co. Ltd. (1947) 1 All ER 749 ; Jones v. Bellgrove Properties Ltd. (1949) 2 KB 700 ; In re Transplanters (Holding Company) Ltd.; In re Gee &Co. (Woolwich) Ltd. (1975) 1 Ch 52 ; In re Compania de Electricidad de la Provincia de Buenos Aires Ltd. (1980) 1 Ch 146 . In Jones v. Bellgrove Properties Ltd. the balance sheet was signed by chartered accountants as agents, as well as by two directors, but in all other cases the balance sheets were signed by directors in the usual way, and the decisions must have been based on the assumption that the directors signed as agents for the company. The matter seems to have been regarded as too clear to warrant discussion, for in only one case, Ledingham v. Bermejo Estancia Co. Ltd. was there any mention of the question of agency, and in that case it was said that it was impossible to say that the directors who made the acknowledgments in the balance sheets had no authority to make them so as to bind the company (1947) 1 All ER, at p 753 . There are no material differences between the statutory provisions under which these cases were decided and those applicable to the present case. The first argument raised by Mr. Handley must in my opinion be rejected. (at p544)

9. The second argument submitted on behalf of the appellant was that each balance sheet acknowledged the existence of the debt as at a date some months before the balance sheet was signed. It was submitted therefore that they did not acknowledge a subsisting debt. Under the law in force before the Limitation Act 1969 was passed it was necessary, in order to take a debt out of the operation of the statute of James I, that a new promise to pay should be capable of being inferred from the acknowledgment. However, an unconditional acknowledgment was held to imply a promise to pay: Hepburn v. McDonnell (1918) 25 CLR 199, at p 209 ; Bucknell v. Commercial Banking Co. of Sydney Ltd. (1937) 58 CLR 155, at pp 164, 172 Under the Limitation Act 1969 it is not necessary that any promise to pay should be expressed or implied. What is necessary is an acknowledgment of the existence of the debt - and according to the submission for the appellant it must be an acknowledgment that the debt is existing at the time when the document containing the acknowledgment is signed. It is clear enough that, under the former law, it was necessary that there should be an admission that the liability still existed at the date of the acknowledgment, for one could not ordinarily imply a promise to pay from a statement that a liability had existed in the past. There had to be the admission of a present obligation to pay: see, for example, Spencer v. Hemmerde (1922) 2 AC 507, at pp 517, 518, 531-532 . Although under the Limitation Act 1969, it is no longer necessary that there should be a promise to pay, it is still necessary, in my opinion, that an acknowledgment should admit or recognize the present existence of a cause of action; in other words, where the claim is for payment of a debt, an acknowledgment, to be sufficient, must recognize the present existence of the debt. I respectfully agree with the statement of Kerr J. in Surrendra Overseas Ltd. v. Sri Lanka (1977) 1 WLR 565, at p 573; (1977) 2 All ER 481, at p 487 , that "To acknowledge a claim, as a matter of ordinary English, signifies an admission that it is due". There is no acknowledgment of a debt unless there is "an admission that there is a debt . . . outstanding and unpaid": Good v. Parry (1963) 2 QB 418, at p 423 . (at p544)

10. The earlier cases in which it was held that a balance sheet may constitute an acknowledgment did not advert to the problem caused by the fact that a balance sheet, which states the position of the company as at the end of an accounting period, will almost inevitably be signed at some later date. The balance sheet may acknowledge that a particular debt was owed as at the end of the relevant financial year, but it may not be signed until months after that date. How, then, can it acknowledge a debt existing at the date of the acknowledgment? Of course in some cases it may be proper to assume that the liability persisted up to the date of signature, as their Lordships pointed out in Consolidated Agencies Ltd. v. Bertram Ltd. (1965) AC 470, at p 485 . However, one cannot draw that inference simply because the statements attached to or submitted with the balance sheet, or the annual report of the company, make no mention of a change in the position regarding the liabilities shown in the balance sheet. I am unable to agree with the view taken by the Court of Appeal in the present case, that the balance sheets acknowledged a debt subsisting at the time of the annual report or general meeting. (at p545)

11. The question whether a balance sheet could constitute an acknowledgment of a liability existing at the date it was signed was first judicially discussed in Consolidated Agencies Ltd. v. Bertram Ltd. where the Judicial Committee answered that question in the negative, so far as it concerned the balance sheets relied on in that case. In In re Gee &Co. (Woolwich) Ltd. (1975) 1 Ch, at pp 66-70 , Brightman J. made a very close analysis of the reasons for that decision, and demonstrated that the Judicial Committee accepted the correctness of the view taken of s. 19(1) of the Indian Limitation Act 1908 by the Indian courts and the leading Indian textbook, and not challenged before their Lordships, that to be effective as an acknowledgment a document must be an acknowledgment of liability existing as at the date of signature. I respectfully agree with Brightman J. that the Judicial Committee did not decide that in English law an acknkowledgment, to be effective, must be of a debt which is actually existing at the date when the acknowledgment is written. Their Lordships assumed that to be the effect of the Indian Act, and decided that the balance sheets did not acknowledge the continued existence, at the date of the signature, of the debt stated therein. Nevertheless, their Lordships did not cast any doubt on the correctness of the assumption on which they proceeded. On the contrary, they referred (1965) AC, at p 484 to the accepted principle that the acknowledgment must be of an existing liability, and suggested (1965) AC, at p 485 that "if the effect of the English Limitation Act is the same as that of the Indian Act, some further consideration may have to be given to the general question whether and in what circumstances balance sheets may operate as acknowledgments of debts comprehended therein". It appears to me that the Indian Limitation Act, although different in form from the English and New South Wales statutes, does not provide any reason for arriving at a result different from that which would be reached in England or New South Wales. (at p546)

12. In In re Gee &Co. (Woolwich) Ltd. (1975) 1 Ch 52 it was argued that the balance sheets were not an effective acknowledgment, because they did not acknowledge the existence of a debt subsisting when they were signed. In reply it was submitted that the signature related back to the date as at which the balance sheet was prepared. Brightman J. accepted the correctness of the English cases to which I have referred, and having explained the decision in Consolidated Agencies Ltd. v. Bertram Ltd. in the way that I have mentioned, held that a balance sheet, if duly signed by the directors, is capable of being an effective acknowledgment of the state of indebtedness as at the date of the balance sheet. This decision was followed by Slade J. in In re Compania de Electricidad (1980) 1 Ch 146 . (at p546)

13. The question whether a balance sheet could amount to an acknowledgment was argued in In re Darling Downs Abattoir and Export Pty. Ltd. (1952) QWN 26 , but Macrossan C.J. did not find it necessary to decide it, since he held that at best the balance sheet in that case was an acknowledgment of the existence of the debt at the end of the accounting period to which it related, and that it did not acknowledge the existence of the debt at any later time within six years before the proceedings were commenced. (at p546)

14. In the United States, it is established, according to the Corpus Juris Secundum (vol. 54, par. 312), that an acknowledgment, in order to be sufficient, must recognize the obligation as a presently subsisting debt. Nevertheless, as the same work laconically records (at par. 314), "A balance sheet on which the debt is listed has been held to be and not to be an acknowledgment of the debt". The more recent decisions appear to favour the view that a balance sheet may consititute a sufficient acknowledgment (see Whale Harbor Spa, Inc. v. Wood (1959) 266 F 2d 953 and cases there cited, and Sebastian Enterprises, Inc. v. Florida First National Bank at Vero Beach (1977) 345 So 2d 827 but no case that I have seen discusses how this conclusion can be reconciled with the rule that the document must acknowledge a presently existing debt. (at p547)

15. In In re Gee &Co. (Woolwich) Ltd. Brightman J. was influenced by the inconvenience that he thought would result if it were necessary that an acknowledgment should recognize the existence of a debt subsisting at the date of signature. He gave the example (1975) 1 Ch, at p 66 of one trader who receives from another a letter dated 14 January confirming the correctness of a running account made up to the previous 31 December, and said that it would be contrary to justice and common sense if this did not constitute an acknowledgment. However, it might be possible in the circumstances suggested to assume that the debt persisted up to the date of signature, and to regard the letter as an acknowledgment, not only that the debt existed at 31 December but also that it still existed at 14 January. (at p547)

16. As I have already indicated, in my opinion one does not acknowledge a debt by admitting that it was due at some time in the past. It is consistent with such an admission that the debt has since been paid. The admission must be that the debt is due at the time when the admission is made. Since by s. 54(4) an acknowledgment must be signed, there can be no acknowledgment for the purposes of the section until the document containing the admission is signed. It seems to me to follow that the document, to be an acknowledgment, must recognize the existence of a debt at the date of signature. Although the signature on each balance sheet relates to the date as at which the balance sheet speaks, that does not mean that a sufficient acknowledgment was made at that date. In the present case, for example, it cannot be said that an acknowledgment was made on 31 December 1970. To say that the balance sheet was signed on 31 December 1970 would be to assert a fiction. When the balance sheet was in fact signed, on 5 April 1971, no admission was made that any debt then existed. The difficulty of relating back the signature is made even more clear in a case in which the limitation period expires after the date to which the signature is related back but before the date on which the balance sheet is signed. The fact that there can then be no effective acknowledgment, the debt having been extinguished, supports the view that the balance sheet cannot be treated as though it had been notionally signed at the earlier date. I should add that it is not necessary that the delivery of the signed document to the creditor should be contemporaneous with the signature. The effect of s. 54 is that an acknowledgment is made only when it is signed (s. 54(4)) and the creditor can only have the benefit of the acknowledgment if it is made to him (s. 54(5)). If it is delivered, it is effective as at the date of signature; if it is never delivered, the creditor never has the benefit of it. A document does not cease to acknowledge a debt existing at the date of signature because it is sent by post and delivered some days after it was signed. (at p548)

17. I should add that notwithstanding the reference in Hipworth v. Mahar (1952) 87 CLR 335, at p 343 , to Blair v. Nugent (1846) 3 Jo &Lat 668, at p 677 , where Sir Edward Sugden spoke of decisions which had proceeded upon "a liberal, but yet a fair and just construction of the statute", I can see no reason why a document which is not an acknowledgment in the ordinary sense should be treated as being an acknowledgment for the purposes of extending the limitation period provided by a statute whose object is to bar stale claims. There seems to me to be nothing unjust or unfair in insisting that the acknowledgment should recognize the existence of a subsisting debt. (at p548)

18. For the reasons I have given, there was, in my opinion, no effective acknowledgment of the debt and Millers' claim is barred. (at p548)

19. Mr. Handley's final submission was that if there was an acknowledgment it was not made to Millers or to Mr. Walker as Millers' agent. There is no doubt either that the balance sheets were delivered to Mr. Walker, or that he was an agent of Millers whose duty it was to watch Millers' interests. Having regard to the evidence that the Stage Club was required to send balance sheets to Millers, and that Mr. Walker was known by the secretary of the club to be "a Millers' person", and to the important part played by Millers in the formation of the club, it seems to me that it was proper to infer that it was intended by the Stage Club that Mr. Walker should receive the balance sheets as agent for Millers as well as in his individual capacity as a shareholder. Having regard to the conclusion that I have reached on the second of the matters raised by Mr. Handley it is unnecessary to discuss this question futher, or to consider the correctness of the view expressed by Slade J. in In re Compania de Electricidad (1980) 1 Ch 146 that a company balance sheet must be regarded as implicitly addressed to (among other persons) those creditors whose debts are referred to in it. (at p548)

20. I would allow the appeal. (at p548)

MURPHY J. I am in substantial agreement with the reasoning of Wilson J. and agree that the appeal should be dismissed. (at p549)

AICKIN J. The facts out of which this appeal arises are set out in the reasons for judgement of my brother Wilson and in those reasons he examines all the relevant authorities. There is no need for me to go over that ground again. (at p549)

2. The critical issue is whether s. 54 of the Limitation Act 1969 (N.S.W.), which came into operation on 1 January 1971, requires that a "confirmation" of a cause of action by acknowledgment in writing must refer to, e.g., a sum of money owing at the date of the acknowledgment, or may refer to a sum of money owing at some earlier date. The critical provisions of s. 54 are:

"(2)For the purposes of this section - (a) a person confirms a cause of action if, but only if, he - (i) acknowledges, to a person having (either solely or with other persons) the cause of action, the right or title of the person to whom the acknowledgment is made; or (ii) makes, to a person having (either solely or with other persons) the cause of action, a payment in respect of the right or title of the person to whom the payment is made; . . . (4) An acknowledgment for the purposes of this section must be in writing and signed by the maker."

It is apparent from that provision that the legislation does not deal expressly with this question. (at p549)

3. There were a few cases in England prior to the passing of the Limitation Act 1939 (U.K.) arising under earlier legislation and dealing with the effect of statements in balance sheets but none of them dealt with the question now arising. After that Act came into operation there were two further cases dealing with the effect of statements in balance sheets. None of the "balance sheet cases" up to and including Jones v. Bellgrove Properties Ltd. (1949) 2 KB 700 expressly dealt with the question whether the debt must be one in existence at the time of the making of the acknowledgment and they throw no light upon it. The view that an acknowledgment must refer to a liability existing at the date of the acknowledgment appears to have arisen in relation to legislation in operation prior to 1939. The Limitation Act 1939 and its 1969 New South Wales counterpart require separate examination. Those cases are discussed by Wilson J. and there is nothing I wish to add to his comments. Neither of the more recent cases deals with the questions of the significance of the date of acknowledgment, the position of the balance sheet of a company and what the 1939 legislation required for an effective acknowledgment. (at p550)

4. In Consolidated Agencies Ltd. v. Bertram Ltd. (1965) AC 470 the Privy Council on an appeal from the Court of Appeal for Eastern Africa considered the provisions of the Limitation Act 1908 (India) which at the relevant time was in force in Tanganyika, whence the appeal came. Their Lordships held that to be effective under that Act an acknowledgment must be expressed to relate to a debt existing at the date of the making of the acknowledgment. (at p550)

5. The Limitation Act 1908 (India) was in a form considerably different from the Limitation Act 1939 (U.K.) and the Limitation Act 1969 (N.S.W.). Section 19 of the Indian Act was as follows:

"(1) Where, before the expiration of the period prescribed for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by some person through whom he derives title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872, oral evidence of its contents shall not be received. Explanation I. - For the purposes of this section an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come, or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than the person entitled to the property or right. Explanation II. - For the purposes of this section, 'signed' means signed either personally or by an agent duly authorised in this behalf."

There was no express provision requiring delivery of the acknowledgment to the creditor, and no requirement of a promise to pay as there had been in English law prior to 1939, but nonetheless the acknowledgment operated from the date of signature. It was suggested in argument before the Privy Council that the acknowledgment must be delivered to someone, not necessarily the creditor, but no authority was cited for that proposition. That point was not discussed by their Lordships and it is not necessary to pursue it now. Their Lordships took the view that under the Indian Act it had been firmly established by Indian courts that the acknowledgment must be of a debt existing at the date of the signature of the document constituting the acknowledgment, and they accepted that view. (at p551)

6. Brightman J., in In re Gee &Co. (Woolwich) Ltd. (1975) 1 Ch 52 , considered the effect of Consolidated Agencies Ltd. v. Bertram Ltd. and pointed out that the present question was not in dispute in the court in Tanganyika or in the Court of Appeal for Eastern Africa, or in the Privy Council. He observed that their Lordships had adopted without comment the view which had been accepted by the Indian courts and applied in Tanganyika. Brightman J. concluded however that the English authorities supported the view that the acknowledgment need not refer to the position at the date it was made, but could be effective as an acknowledgment of a debt owing as at an earlier date. He held that a company's balance sheet, duly signed by the directors of the company at a date later than that as at which the balance sheet was made up, was effective as an acknowledgment of the existence of the debt as at the balance date. That view was accepted by Slade J. in In re Compania de Electricidad (1980) 1 Ch 146 , although he held that for an acknowledgment to be "made" to a creditor it was necessary for it to be received by the creditor, though not necessarily direct from the debtor, and that there was no evidence that a copy of the balance sheet was received by the creditor or his agent. It was therefore of no effect as an acknowledgment. (at p551)

7. We are concerned with legislation different from that applicable in Consolidated Agencies Ltd. v. Bertram Ltd. and in any event we are not bound by the decision of their Lordships. In those circumstances we should consider de novo the question whether the Limitation Act 1969 (N.S.W.) requires that to be effective an acknowledgment must refer to a debt owing at the date of the making of the acknowledgment. It may be observed however that the view which their Lordships took would fit legislation such as the Indian Act which looks at signature and not delivery much more readily than it would fit the Limitation Act 1939 and the New South Wales Act of 1969. (at p551)

8. It seems to me that obvious practical problems would arise in the operation of the New South Wales section if it were regarded as requiring the acknowledgment to be of a debt in existence at the date of its making. Since the acknowledgment must be in writing, it must be delivered to the creditor or his agent in order that it can be said to have been "made" to him. It would however be absurd to make the effectiveness of the acknowledgment depend on personal delivery. Delivery by post would surely be enough, though some days or weeks might well elapse before delivery. The document however will, in the absence of some express provision, speak from the moment of signing and of the position then. Why should it be less effective because it takes a week in transit and on arrival speaks as from a time gone by? Corresponding difficulties arise if the acknowledgment is treated as "made" when it reaches the creditor, for by then the position may have changed by payment or otherwise. The accident of the time it takes for an acknowledgment to reach the creditor is not a likely criterion for the legislature to choose to separate effective from ineffective acknowledgments. A more logical and more probable criterion would be the date to which the document itself refers, whether expressly or impliedly. The contrary view would exclude all statements of a credit balance in a running account as at monthly or quarterly intervals, whether by a bank or a merchant, for inevitably they will speak of the position as at an earlier date, however recent. It may be that computer compiled accounts "instantaneously" transmitted to a print out in the creditor's office may reduce the time gap but, whether small or large, the gap must necessarily remain. (at p552)

9. The view that an acknowledgment should relate to the date to which it expressly or impliedly refers would accommodate ordinary trading and personal arrangements and have an operation which would be certain rather than uncertain. I can find nothing in the present legislation to negative this view. (at p552)

10. I do not regard the reasoning of their Lordships in the Privy Council as applicable to the legislation now in question. I find myself in agreement with the reasons expressed by Brightman J. in In re Gee &Co. (Woolwich) Ltd. (1975) 1 Ch 52 which are equally applicable to the New South Wales Act. (at p552)

11. For those reasons I agree that this appeal should be dismissed. (at p552)

WILSON J. In 1962 the respondent ("Millers") loaned money to the appellant ("the Club"). It is common ground that the amount of $27,236 remains outstanding and unpaid by the Club. On 24 September 1976 Millers instituted proceedings for recovery of this amount plus accrued interest. The Club responded by pleading, inter alia, that the claim was statute barred. Millers asserted that the Club had effectively acknowledged the debt within six years prior to the commencement of the action. In the Supreme Court of New South Wales, Begg J. entered judgment for Millers in the sum of $27,236. He rejected the claim for interest. His decision was upheld by the Court of Appeal (Hope, Hutley and Glass JJ.A.). The Club now appeals as of right to this Court. (at p553)

2. It is common ground that the answer to the question whether the plaintiff's claim is enforceable depends on whether either of the appellant's balance sheets for the years ending 31 December 1970 or 1971 constitute an effective acknowledgment of the debt. The Limitation Act 1969 (N.S.W.) came into operation on 1 January 1971. Prior to that date the relevant law in New South Wales was found in the Statute of James (21 Jac. I. c. 16, s. 3), and Lord Tenterden's Act (9 Geo. IV. c. 14). On one view of the facts the legal effect which in the circumstances attaches to the balance sheet for the year ending 31 December 1970 falls to be determined by reference to the old law. However, notwithstanding some misgivings on the part of Mr. Moss, counsel for the respondent, the case has been argued on the basis that there is no material difference either in fact or law touching the two balance sheets. It will be sufficient to apply the provisions of the 1969 Act ("the Act"). Those provisions, so far as material, read as follows:

"54. (1) Where, after a limitation period fixed by or under this Act for a cause of action commences to run but before the expiration of the limitation period, a person against whom . . . the cause of action lies confirms the cause of action, the time during which the limitation period runs before the date of the confirmation does not count in the reckoning of the limitation period for an action on the cause of action by a person having the benefit of the confirmation against a person bound by the confirmation. (2) For the purposes of this section - (a) a person confirms a cause of action if, but only if, he - (i) acknowledges, to a person having . . . the cause of action, the right or title of the person to whom the acknowledgment is made; or . . . (4) An acknowledgment for the purposes of this section must be in writing and signed by the maker. (5) For the purposes of this section a person has the benefit of a confirmation if, but only if, the confirmation is made to him or to a person through whom he claims. (6) For the purposes of this section a person is bound by a confirmation if, but only if - (a) he is a maker of the confirmation; . . ."

The question of agency is dealt with in s. 11(2)(c) of the Act, which provides that "a thing done to or by or suffered by an agent is done to or by or suffered by his principal". (at p553)

3. The material facts may be stated shortly. The balance sheet for 1970 was signed in April 1971 by two directors, certified by the company's auditors, and adopted by the annual general meeting of the company in May 1971. It is common ground that the debt now being sued for was included therein, being described in an item reading "CREDITORS - Secured: Millers Hotels P/L . . . $27,236". The 1971 balance sheet was dealt with in a similar way in 1972. It again showed the debt of $27,236 due to Millers. At all material times a Mr. Walker was a member and director of the Club. He was also the chief executive of Millers. He was present at the annual general meeting in each of the years in question, and in common with the other members present received a copy of the balance sheet. (at p554)

4. Mr. Handley, counsel for the appellant, advances three submissions in support of the view that neither balance sheet was confirmation of the debt within the meaning of that expression in s. 54 of the Act. In the first place, he argues that they were not signed on behalf of the appellant. They were signed by officers of the company and the auditor in performance of statutory obligations which were placed on them personally, and were in the nature of reports by the officers to the members of the company. In the second place, the indebtedness of the appellant to the respondent shown in each balance sheet was the indebtedness as at the 31 December, not the date on which each document was signed. They were therefore essentially historical documents. It was argued that s. 54 requires an acknowledgment of a presently subsisting debt, that is to say, a debt which is subsisting at the date the acknowledgment is signed. In the third place, there was no acknowledgment made to the creditor or its agent. The balance sheets were given to Mr. Walker as a director and member of the Club, and there is no evidence of any intention thereby to communicate them to the creditor. (at p554)

5. Much of the argument of both counsel was devoted to a consideration of a number of English cases and a decision of the Privy Council dealing with balance sheets. It will be helpful to canvass those cases briefly. (at p554)

6. In 1928, in the case of In re Atlantic and Pacific Fibre Importing and Manufacturing Co. Ltd. (1928) 1 Ch 836 Clauson J. held the annual balance sheets to be sufficient acknowledgment of the company's indebtedness to debenture-holders, but no question of the operative date of the acknowledment was raised. The applicable law did not require the acknowledgment to be communicated to the creditor or his agent. (at p554)

7. In re The Coliseum (Barrow) Ltd. (1930) 2 Ch 44 was a case in which Maugham J. was confronted with the question whether an item in respect of outstanding fees due to the directors which appeared in a balance sheet signed by those directors was capable of constituting an acknowledgment. He answered the question in the negative, on the ground that the signature of the directors on the balance sheet could not bind the company, they being disqualified by reason of their interest in the subject-matter. However, Maugham J. remarked, obiter, that he thought that had the balance sheet shown that the company owed a specified sum to a shareholder to whom the document was sent in the usual way there would have been a sufficient acknowledgment within the authorities. As in Atlantic Fibre, there is no discussion of the question of the date to which such an acknowledgment might have been related. (at p555)

8. In Jones v. Bellgrove Properties Ltd. (1949) 2 KB 700 the decision of the Court of Appeal was delivered by Lord Goddard C.J. His Lordship referred to "the special facts of this case". Jones was a shareholder and director of the company. He loaned moneys to the company in 1936 and 1937, and sued in 1947, whereupon the company pleaded the Statute of Limitations. The company had not traded during the years of the war. An annual general meeting was held on 31 December 1946, attended by the plaintiff, and balance sheets for the years 1939 to 1945 were presented and confirmed. They included the item "To sundry creditors 7638.8.10 pounds", were signed by two directors, and also by accountants as agents for the company. No particular creditor was named, but evidence was given that the debt due to Jones was included. Evidence was also given that a director referred to the balance sheets in the presence of the plaintiff, saying "These are the accounts for five or six years. Would you care to look at them?" At first instance, Birkett J. found the debt to have been acknowledged on the date upon which the meeting was held. The Court of Appeal affirmed the decision. Lord Goddard said (1949) 2 KB, at p 704 :
"Whether a document is or is not an acknowledgment must depend on what the document states; and a balance sheet presented to a shareholder creditor at a meeting of the company, as these balance sheets were presented to the plaintiff, fulfils all the requirements of ss. 23 and 24 of the Limitation Act, 1939." (at p555)

9. The next case to be considered is In re Transplanters (Holding Company) Ltd. (1958) 1 WLR 822; (1958) 2 All ER 711 . The applicant was one of two directors of a company in liquidation who was owed money by the company. He relied for acknowledgment on the appearance of the debt in two balance sheets which had each been signed by both directors, and certified by the auditors. Wynn-Parry J. rejected the proof, holding that the auditors did not sign as agents for the company and that because the applicant was interested in the debt his signature as director could not bind the company. Again, this case throws no light on the question of the effective date of any acknowledgment that may be gleaned from a balance sheet. (at p556)

10. In Consolidated Agencies Ltd. v. Bertram Ltd. (1965) AC 470 , the Judicial Committee of the Privy Council (Lords Evershed, Guest and Upjohn) were seized of an appeal from the Court of Appeal for Eastern Africa. Bertram Ltd., having advanced money to the appellant, contended that the balance sheets for the years 1954, 1955, 1956 and 1957, each of which referred to the loans, constituted sufficient acknowledgments within ss. 19 and 20 of the Limitation Act 1908 (India). The Indian Act applied in Tanganyika, where the cause of action arose. The evidence established that the balance sheets referred to were signed in October 1956, November 1957, March or April 1958 and April 1959 respectively. The primary judge rejected the contention, but the Court of Appeal reversed, holding the balance sheets to be effective acknowledgments as at the date of signature. It may be noted that the Limitation Act in question required an acknowledgment to be in writing signed by the party or his agent, but did not require the acknowledgment to be communicated to the creditor. A fresh period of limitation ran from the time when so signed. Their Lordships allowed the appeal. They accepted consistently with the decision of the Court of Appeal, that s. 19 required an acknowledgment of a liability which is existing at the date on which the acknowledgment is signed. However, the balance sheets were not an effective acknowledgment because, being signed in each case many months after the end of the relevant year, they acknowledged a past liability. Referring to Jones v. Bellgrove (1949) 2 KB 700 , their Lordships said (1965) AC, at p 484 :

"Their Lordships consider that this case was rightly decided on its facts. But in their Lordships' view it would not be right to suggest that it can be used as authority for the view that a signature on a balance sheet is in all circumstances an acknowledgment of an existing liability, within the meaning of s. 23(4) of the Limitation Act, 1939. Nor is it possible to suggest that it is an authority for the view that the signature on the balance sheet is an effective acknowledgment within the Act of 1939 of the existence of the debt at the date of signature. No question arose in Jones v. Bellgrove Properties Ltd. as to the precise date to which the acknowledgment related, though Birkett J. had taken as effective the date of the annual general meeting for the reason that this was the date when the liability was acknowledged. In the Court of Appeal this date was accepted without question. So regarded, the case is therefore not inconsistent with the principle that the acknowledgment must be of an existing liability. This principle seems indeed to have been accepted in English law as early as 1849 (see Howcutt v. Bonser (1849) 3 Ex 491 (154 ER 939) ). See also Preston and Newsom, Limitation of Actions, 3rd ed. (1953), p. 240."

Later in their opinion, their Lordships said (1965) AC, at p 485 :

". . . the question has never been properly considered whether a signature on a balance sheet, which must of necessity be made some time after the date to which the balance sheet has been made up, can amount to an acknowledgment of an existing liability. There may be cases where it would be proper to assume that the liability persisted up to the date of signature, which would then be an acknowledgment of an existing liability, though their Lordships venture to think that, if the effect of the English Limitation Act is the same as that of the Indian Act, some further consideration may have to be given to the general question whether and in what circumstances balance sheets may operate as acknowledgments of debts comprehended therein. In any case, their Lordships find it difficult to see in the cases cited any justification for the acknowledgment, consisting of the signature of the balance sheets, being taken to be of the continued existence, at the date of the signature, of the debt stated in the balance sheet."

The appellant naturally relies on this decision to support its second proposition, that to be effective an acknowledgment must be of an existing liability, and that of their nature balance sheets will seldom meet that requirement. However, the decision was not regarded as persuasive in two recent cases in the High Court in England, to which I now turn. (at p557)

11. In re Gee &Co. (Woolwich) Ltd. (1975) 1 Ch 52 was a case in which Brightman J. was required to adjudicate on the partial rejection by the liquidator of the company of a proof of debt on the ground that it was barred by the Limitation Act. It was sought to extract an acknowledgment from the inclusion in the company's balance sheet as at 31 December 1965, signed on 24 November 1966 by the only two directors, and approved by all the shareholders in general meeting on the same date, of an item recording the liability of the company in favour of E's estate. The two directors were trustees of E's estate, but that was held to be no disqualification because the signatures were sanctioned by every member of the company. The decision is instructive for the manner in which Brightman J. dealt with the submission for the creditor that it was not the law that an acknowledgment, to be effective, must be of a present and not a past liability. He expressed himself to be in favour of the proposition, unless otherwise constrained by authority. He said (1975) 1 Ch, at p 66 :

"Suppose that a trader, B, buys his goods from a trader, S, and has a running account with S for his purchases. Suppose that on January 7, 1973, S sends B a half-yearly account made up to December 31, 1972, and requests B to confirm that the account is correct, which B does by a letter signed on January 14, 1973. It would seem quite contrary to justice and to common sense that the letter of January 14 should be incapable of being an effective acknowledgment for the purposes of the statute merely because it acknowledges the liability as at December 31 and not the liability as at January 14."

Having examined the earlier English cases to which I have referred, Brightman J. then made a detailed examination of the record in Bertram's Case (1965) AC 470 , and continued (1975) 1 Ch, at pp 67-68 :

"It will thus be seen that both the trial judge and the Court of Appeal proceeded on the basis that, to take a demand out of the Indian Limitation Act on the ground of acknowledgment, the language of the debtor must amount to an admission of a debt subsisting at the time of the signature of the acknowledgment."

He proceeded to show that in the proceedings before the Judicial Committee neither party challenged this proposition. The respondent filed a written case, but did not appear on the hearing. The learned judge concluded that, the proposition not being a live issue, it was not surprising that their Lordships adopted the interpretation consistently adopted by the Indian courts and expressed as undoubted law in the leading Indian text. Brightman J. continued (1975) 1 Ch, at p 69 :

"It is therefore perfectly apparent that the Judicial Committee were looking at the English cases only to see whether they supported the view of the Court of Appeal for Eastern Africa that the signature of directors on a balance sheet amounted to an acknowledgment of a liability existing at the date of signature. The answer to that question was clearly no. It is true that in the course of discussing the English cases for the purpose which I have indicated, the Judicial Committee added that they were not inconsistent with the principle that an acknowledgment must be of an existing liability, and they added that this principle seemed indeed to have been accepted as early as 1849 in Howcutt v. Bonser (1849) 3 Ex 491 (154 ER 939) ."

He reviewed Howcutt and concluded that the case did not seem to him "to have been necessarily based on the principle that an acknowledgment must be of an existing liability". He then followed "the clear current of English authority", and held that a company's balance sheet, duly signed by the directors, was capable of being an effective acknowledgment of the state of the company's indebtedness. He held the debt to be acknowledged as at the date of the balance sheet, with the result that the cause of action should be deemed to have accrued as at that date. The claim was upheld. (at p559)

12. In the recent case of In re Compania de Electricidad (1980) 1 Ch 146 , the company's balance sheet for the year ended 31 December 1973 referred under current liabilities to "Capital repayments due to shareholders", and to "Unclaimed dividends". Slade J. followed the decision and reasoning of Brightman J. in In re Gee (1975) 1 Ch 52 . He observed that under the English Act of 1939 it was no longer necessary that an acknowledgment should embody any express or even implied promise to pay the debt in question, but stressed the necessity for the acknowledgment to be communicated to the creditor or his agent. In this respect, the judgment is pertinent to Mr. Handley's third proposition. The learned judge said (1980) 1 Ch, at pp 193-194 :

"In my judgment, though no authority has been cited to me which either confirms or rejects such proposition, a written acknowledgment cannot be said to be 'made to' a creditor or his agent, within the meaning of s. 24(2) unless either (a) it is delivered to the creditor or his agent by or with the authority of the debtor or his agent or (b) it is expressly or implicitly addressed to and is actually received by the creditor or his agent. In my judgment, in case (a) it would not matter that the acknowledgment was not, according to its terms, expressly or implicitly addressed to the recipient. In case (b) it would not matter that the acknowledgment reached the hands of the creditor otherwise than by or with the authority of the debtor. In either case, however, it would be necessary that the creditor should actually receive the acknowledgment before he could rely on it.

A company's balance sheet must in my judgment be regarded as implicitly addressed to (among other persons) those creditors whose debts are referred to in it. It follows that . . . an effective 'acknowledgment' of a debt must be said to have been 'made' by the company to any creditor who can establish by appropriate evidence that (i) he has actually received, from whatever source, a copy of a balance sheet of the company, signed by directors of the company and referring to 'sundry creditors'; (ii) he is one of the 'sundry creditors' so referred to. In such circumstances the balance sheet of the company would constitute an effective acknowledgment of the relevant debt, not as at the date on which it was actually signed by the directors or received by the creditor, but as at the date of the balance sheet, being the date to which the signature of the directors related; and the cause of action would be deemed to have accrued at that date . . ." (at p560)

13. Another case to which the Court's attention was drawn was the case of Wilson v. Walton and Kirkdale Permanent Building Society (1903) 19 TLR 408 . The society entered into possession of a property as mortgagee and received the rents for a period in excess of twelve years, the relevant period of limitation. The mortgagor sued, and relied for acknowledgment on the fact that the mortgage and amount outstanding had been included in balance sheets of the society signed by the auditors. They had not been delivered to the mortgagor. Walton J. held that the statements in the balance sheets amounted to acknowledgments, signed by the auditors who were the agents of the society appointed for the purpose. However the lack of communication to the mortgagor was fatal, and his claim was barred. There is no reference in the judgment to the operative date of the acknowledgment, had it been effective. (at p560)

14. The subject of acknowledgments has received consideration in three cases in this Court. In Hepburn v. McDonnell (1918) 25 CLR 199 , and in Bucknell v. Commercial Banking Co. of Sydney Ltd. (1937) 58 CLR 155 the Court was concerned with appeals from the Supreme Court of New South Wales. In each case the question was whether a letter written by the debtor to the creditor constituted an acknowledgment under the rules of law and construction associated with the Statute of James and Lord Tenterden's Act. In both cases there is the recognition that under the old law the extension of liability resulted from the existence of a new promise to pay the debt which was either explicit or implicit in the admission of the debt: see per Isaacs J. in Hepburn (1918) 25 CLR, at pp 207-209 ; per Dixon J. in Bucknell (1937) 58 CLR, at p 163 ; and cf. Spencer v. Hemmerde (1922) 2 AC 507 . Both Isaacs J. and Dixon J. make it clear that the precise extent of the acknowledgment will depend on the circumstances, the admission of the debt and the consequent implied promise being capable of qualification or condition. In other words, the "liability is revived only according to the tenor of the promise" (per Dixon J. in Bucknell (1937) 58 CLR, at p 163 ), thereby allowing considerable flexibility in the application of the doctrine to particular circumstances. (at p561)

15. In Hipworth v. Mahar (1952) 87 CLR 335 the Court was concerned with the construction of s. 304 of the Property Law Act 1928 (Vict.), which provided to the effect that time runs anew from the date of "an acknowledgment given in writing signed by the person by whom the money is payable or his agent to the person entitled thereto or his agent". The debtor submitted a proposal for the adjustment of his debts pursuant to the Farmers Debts Adjustment Act 1935 (Vict.). The Act required the authority receiving the proposal to send a copy of it to the creditors concerned. The sole question in the case was whether the requirement that an acknowledgment be given to the creditor was satisfied. The Court held that admissions contained in the proposal must be regarded as made with the intention that they be communicated to the creditors concerned, and that the proposal was therefore a sufficient acknowledgment. As in the earlier cases, the Court favoured a broad approach. Their Honours said (1952) 87 CLR, at p 341 :

"There appears to be no clearly decisive authority on the question in England or Australia or New Zealand. In Ireland a broad view of what fulfils the requirements of the statute seems to have been taken".

The Court cited (1952) 87 CLR, at p 343 with approval a passage from the speech of Sir Edward Sugden L.C. in Blair v. Nugent (1846) 3 Jo &Lat 668, at p 677 as follows:
"The next question is whether it is an acknowledgment to the person entitled thereto or his agent. The cases show that the Court has not, in that respect, restricted itself within narrow limits. If it be made in a schedule, affidavit or answer, it is sufficient, although it may be said that in these cases it is made to the Court and not to the party. The decisions are, I think, right. They proceed upon a liberal, but yet a fair and just construction of the statute." (at p561)

16. I now address myself to the three propositions on which the case for the appellant rests. The first objection is that the balance sheets were not signed by the debtor company or its agent. It appears that the balance sheet for the year ending 31 December 1971 was signed by Mr. Walker in the capacity of a director of the Club, thereby raising the question of personal disqualification referred to in In re The Coliseum (1930) 2 Ch 44 and In re Transplanters (1958) 1 WLR 822; (1958) 2 All ER 711 . If Millers was obliged to rely solely on this particular balance sheet to answer the defence based on the Act it would be necessary to consider whether the signature of the other director was sufficient to satisfy the requirement in s. 54(4) that the acknowledgment "be signed by the maker". However, as I have said, it is common ground that if either of the two balance sheets answers the description of an acknowledgment within the meaning of s. 54 Millers is entitled to succeed. Mr. Walker's signature does not appear on the earlier balance sheet. As I understand it, Mr. Handley takes a different point. He relies on s. 162(12) of the Companies Act 1961 (N.S.W.), as it existed prior to its amendment in 1971, which requires that every balance sheet shall be accompanied by a statement signed "on behalf of the directors" by two directors of the company. The statement is signed, not on behalf of the company, but on behalf of the directors. But in my opinion this provision does not deny the collective agency of the board of directors in the management of the company. It merely prescribes the procedure by which the board will discharge its responsibility in relation to the balance sheet, without undermining in any way the character of the document, when signed, as the company's document. I can see no reason in the present case to doubt that the balance sheets were written documents signed by the Club's agent. Such a conclusion is consistent with every one of the balance sheet cases determined in England during the present century, for in none of those cases is there any suggestion that the signature of directors does not bind the company save where a particular director is disqualified by interest. (at p562)

17. This is not a case where Millers can rely on the signature of the auditor, because there is nothing to show that he has signed otherwise than in his statutory character. (at p562)

18. The second proposition for the appellant focusses on a point of great importance, and, if I may say so, of corresponding difficulty. The question whether, to be an effective confirmation of a debt, the writing must acknowledge that there is a presently subsisting debt at the date on which it is signed, has not previously called for authoritative pronouncement in Australia. I have already described the somewhat confused state of judicial opinion in relation to the Indian and English law. (at p562)

19. The problem does not arise, in the circumstances of this case, if the approach of Begg J. and the Court of Appeal can be supported. The learned trial judge accepted the general statement of the law laid down by the Privy Council in Bertram's Case (1965) AC 470 , but went on to find the present case to be much more akin to the Court of Appeal decision in Jones v. Bellgrove (1949) 2 KB 700 . He held that the adoption of the balance sheets at the general meetings in the presence of Mr. Walker was in each case an acknowledgment of a debt existing at the date of the meeting. The Court of Appeal considered that having regard to the nature of the debt, the balance sheet operated as an acknowledgment of an existing debt at the time of signature and at any later time when the company uses its balance sheet to show its financial position. (at p563)

20. With respect, I do not think that the issue can be resolved in this way. A balance sheet is essentially an historical document, recording the financial affairs of the company as at the date which it bears. Section 162(12) of the Companies Act requires the balance sheet to be accompanied by a statement affirming that it exhibits a true and fair view of the state of affairs of the company as at the end of the period to which the accounts relate. Unless something is added to that statement to declare the position as it stands at the date when the statement is signed, I am unable to see how the balance sheet can be said to acknowledge a liability existing at the date when the directors sign the statement or at the date when the general meeting adopts it (cf. Bertram's Case (1965) AC, at p 485 ). I would not have thought that merely verbal statements could produce that result. The circumstances in Jones v. Bellgrove which led their Lordships in the Privy Council in Bertram's Case to say that they thought the case to have been rightly decided do not clearly emerge from the reports of that case. In the absence of anything in the balance sheet itself or the written statement of the directors which acknowledges the debt as existing at the date of the meeting of shareholders, it would appear that the circumstances attending the presentation of the accounts at the meeting were thought to be sufficient. (at p563)

21. I return to Mr. Handley's proposition. Is it the law that an acknowledgment must be of a present debt? I must confess that I commence my consideration of the problem with the same pre-disposition as did Brightman J. in In re Gee (1975) 1 Ch 52 . Justice and common sense seem to combine in opposition to such a rule, as is demonstrated by the example which the learned judge gave. I do not think that the development of the law during the nineteenth century supplies any particular guidance. There was much emphasis in the old law, stemming from Tanner v. Smart (1827) 6 B &C 603 (108 ER 573) , that to be effective an acknowledgment of a debt must convey, either expressly or impliedly, a promise to pay, and that it is this promise that grounds the extension of liability. The requirement of a promise to pay may be thought necessarily to import an acknowledgment of a presently existing debt, and perhaps the point was taken for granted. Certainly it does not appear to have required specific judicial attention in England prior to 1975; with reference to Howcutt v. Bonser (1849) 3 Ex 491 (154 ER 939) to which the Privy Council referred in Bertram, I would respectfully agree with the comments of Brightman J. in In re Gee (1975) 1 Ch, at p 69 which I have already cited. The learned authors of Preston and Newsom on Limitation of Actions, 3rd ed., (1953), p. 240, assert that "the acknowledgment must be that there is an existing debt", but cite no direct authority other than Howcutt v. Bonser. A reference is made to Hervey v. Wynn (1905) 22 TLR 93 , but in my opinion the decision in this case does not advance the precise point. (at p564)

22. It is established that after the enactment of the Limitation Act 1939 it was no longer necessary in England to look for a promise to pay: Preston and Newsom, p. 227; and cf. In re Compania de Electricidad (1980) 1 Ch, at p 193 . From that time it has been sufficient to inquire whether the document in question constitutes an acknowledgment within the meaning of the Act. The same is true, in my opinion, of the position in New South Wales with the coming into operation of the Limitation Act 1969. (at p564)

23. It is natural, of course, to accord the greatest respect to the decision of their Lordships in Bertram (1965) AC 470 , and that case has given me cause for anxious consideration. It is true, as Brightman J. has pointed out in In re Gee, that the respondent did not appear. The proposition that to be effective an acknowledgment must refer to a liability existing at the time when the document is signed had been accepted by both the primary judge and the Court of Appeal for Eastern Africa, and was not in issue in the Privy Council. However, as their Lordships emphasized, this was the construction which prima facie flowed from s. 19 of the Indian Limitation Act, and had been adopted consistently by the Indian courts. Reference was made also to an unequivocal affirmation of the rule in these terms in Rustomji on the Law of Limitation (5th ed.) I, p. 297. Section 19, so far as relevant, provided that where, before the period of limitation expired, an acknowledgment of liability is made, "a fresh period of limitation shall be computed from the time when the acknowledgment was so signed." The emphasis on the date of the signature of the acknowledgment may well dictate a conclusion that the liability must be existing at that date. (at p565)

24. In this respect the Indian Act is in different terms to both the United Kingdom Act and the New South Wales Act. There is no reference in either Act to the date of the signature. In the former Act, the phrase in s. 23(4) is "the date of the acknowledgment"; in the latter, "the date of the confirmation" (s.54(1)). In my opinion, these phrases are ambiguous. I draw no distinction between them. The phrase can refer to the date on which the acknowledgment or confirmation is made, that is, the date on which the writing is signed. Alternatively, it can refer to the date to which the acknowledgment or confirmation relates, that is, the date as at which the liability is acknowledged to exist. I do not find the question to have been authoritatively answered in any previous case, although the line of cases holding that the entry of a liability in a balance sheet is capable of constituting an acknowledgment is persuasive of a conclusion against the Club because a balance sheet is of its nature an historical document. (at p565)

25. But Mr. Handley claims, so far as the Act is concerned, that it is clearly impossible to construe s. 54 as encompassing an acknowledgment which relates to a past liability. He relies for this contention on a feature of the legislation which distinguishes it from the United Kingdom Act, namely, a requirement that the acknowledgment must be made before the expiry of the period of limitation and that on such expiry the cause of action is extinguished (ss. 54, 63). He postulates a case where the six years runs out between the date to which the balance sheet refers and the date on which it is signed, and argues that the delivery to the creditor of the signed balance sheet would operate to revive a cause of action which had already been extinguished by operation of the Act. I do not think that this would be the result in such a case. Clearly, there cannot be an acknowledgment of a debt after the right and title to that debt is extinguished. Section 54 makes it clear that the cause of action must be confirmed "before the expiration of the limitation period". A distinction is to be drawn between the date of signature of the written acknowledgment, and the date to which the confirmation relates. The acknowledgment is made on the day when the writing is signed by the maker. It confirms the existence at a prior date of a cause of action, but it cannot operate to revive a cause of action which is already extingushed. On the expiration of the time limit prescribed by the Act, the cause of action ceases to exist. (at p565)

26. I am unable to find any reason, either in principle or relevant authority, or, indeed, in terms of expediency, to favour the view that to be effective a writing must acknowledge a liability which is presently subsisting at the date on which the writing is signed. Having regard to the multiplicity of circumstances that may arise, such a view is arbitrary and unnecessarily restrictive. It would be a rule which performed no useful purpose. (at p566)

27. In my opinion, therefore, the Act on its proper construction yields the conclusion that an acknowledgment may refer to a liability which existed on a date prior to the date on which the acknowledgment is signed. (at p566)

28. The effect of such an acknowledgment is that "the time during which the limitation period runs before the date of the confirmation does not count" (s. 54(1)). I would construe the phrase "before the date of the confirmation" as a reference to the date to which the confirmation relates. The result not only accords with common sense and justice, but it reflects that flexibility in approach which has characterized the decisions on this area of the law both in the English courts and in this Court. (at p566)

29. The third proposition advanced for the appellant is that there has been no acknowledgment to the creditor or his agent. Again, this is an area where flexibility in approach is evident: see Hipworth v. Mahar (1952) 87 CLR 335 , and In re Compania de Electricidad (1980) 1 Ch 146 . Mr. Handley argues that the balance sheets were given to Mr. Walker in his capacity as a member of the Club, and not as agent for Millers. In my opinion, it clearly emerges from the cases which I have reviewed that the absence of an intention on the part of the debtor to communicate to the creditor or his agent is immaterial so long as the document is actually delivered to him. In any event, in my opinion there was sufficient evidence before Begg J. to support the findings of fact which he made in this regard, and which support the conclusion that the delivery of the balance sheets to Mr. Walker was a communication to Millers. (at p566)

30. It follows from these reasons that in my opinion the Club has failed to make out its case. Although I have differed from the Supreme Court on the effective date of the acknowledgment, that difference is not material to the result. (at p566)

31. I would therefore dismiss the appeal. (at p566)

BRENNAN J. The appellant ("the Club") is a company limited by guarantee incorporated under the Companies Act 1936 (N.S.W.). In 1962 it borrowed the equivalent of $27,236.21 from the respondent ("Millers"). Millers sued the Club for moneys lent in an action commenced in the Supreme Court of New South Wales by the filing of a statement of claim on 24 September 1976. The statement of claim was amended on 7 February 1977. Paragraph 2 of the amended statement of claim reads as follows:
"The Plaintiff's claim is for $41,399.45, made up of $27,236.21 being the amount advanced by the Plaintiff to the Defendant as a loan and being the amount recognised by the Defendant as due to the Plaintiff as stated in its Balance Sheet as at 31st December, 1971, a copy of which is annexed hereto and marked with the letter "A". It was a term of the loan agreement between the Plaintiff and the Defendant that the Defendant would pay interest at 8% per annum and the sum $14,163.24 is now due and owing." (at p567)

2. The Club pleaded that Millers' claim was brought more than six years after its cause of action arose, and set up and relied upon the provisions of the Limitation Act 1623 (21 Jac. I. c. 16) and the Limitation Act 1969 (N.S.W.) as a bar to the bringing of the claim. By its reply, Millers relied "upon an implied promise to pay arising by way of acknowledgment or alternatively a confirmation within the meaning of s. 54 of the Limitation Act 1969." Particulars were given. Millers relied on acknowledgments said to be contained in the Club's balance sheets as at 31 December 1970 and 31 December 1971, and on certain other alleged acknowledgments upon which reliance is no longer placed. (at p567)

3. The action was heard before Begg J. It appeared that the Club had applied to Millers, which was then carrying on business as a brewing company, for a loan. Millers made the loan. The executive of Millers with whom the Club dealt was a Mr. Walker, who became and remained a member of the Club. In his evidence at the trial, the secretary of the Club (Mr. Harbutt) described Mr. Walker as "a Millers' person", and Mr. Walker asserted that it was part of his duty to watch Millers' interests. Except for one year, Mr. Walker was elected a director of the Club each year between 1962 and 1973. Mr. Walker gave evidence that, as a member of the Club, he saw its annual balance sheets. He was unable to say which if any of them came into the possession of Millers, though he asserted that if he had not received a copy of any balance sheet, he - as a Millers employee - would have sought a copy. From this evidence Begg J. inferred that Millers "received yearly knowledge of the contents of the balance sheets" and his Honour also found that those balance sheets had been adopted each year by the Club at its annual general meeting. Begg J., finding that Mr. Walker was "the agent for" Millers, held:

"For the purposes of a confirmation under s. 54 of the Limitation Act, an acknowledgment to Mr. Walker was in my opinion an acknowledgment to the plaintiffs, he being their agent (See s. 11 (2)(c))."

Section 11 (2)(c) of the Limitation Act 1969 ("the Act") provides that, for the purposes of the Act, "a thing done to or by or suffered by an agent is done to or by or suffered by his principal". (at p568)

4. Begg J. ordered that judgment be entered for $27,236.21, the principal sum claimed, together with costs. An appeal to the Court of Appeal was unsuccessful. Hutley J.A., with whose reasons Hope and Glass JJ.A. agreed, referred to the evidence of Mr. Harbutt that he would give balance sheets to Mr. Walker "as a director or as a member of the Club," and said that "it is proper to conclude that the balance sheets of the appellant reached Walker in his capacity as manager of (Millers) within a reasonable time either before or after the holding of the annual meeting." His Honour expressed the view that, if the balance sheet for the year ended 31 December 1970 could function as an acknowledgment, confirmation within the relevant time had taken place. That balance sheet contained these entries:
"CREDITORS - Secured
Millers Hotels P/L 27,236 Bill of Sale CREDITORS - Deferred Millers Hotels P/L 10,327" The 1971 balance sheet contained similar entries. (at p568)

5. The Club's memorandum and articles of association were in evidence. They provide that the financial year of the Club ends on 31 December (art. 47), and that the board of directors are bound to prepare a balance sheet as at that date each year and to lay it before the annual general meeting of the Club together with an income and expenditure account, a report of the board, and an auditor's report (art. 50). The business of the annual general meeting is, inter alia, "to receive and consider the report of the board the income and expenditure account, the balance sheet and the report of the auditors to elect directors and an auditor or auditors. . . ." (art. 30). The auditors are under a duty to make a report to the members on the accounts examined by them and to state in that report whether the balance sheet has been properly drawn up so as to exhibit a true and correct view of the company's affairs (art. 51 referring to the Companies Act 1936 (N.S.W.), s. 115). Article 50 (c) provides:

"A copy of the balance sheet, auditors' report, and income and expenditure account accompanied by a copy of the report of the board shall be posted to every member other than honorary members at least seven (7) clear days before the date of the general meeting at which the said accounts and reports are to be presented."

Apart from the articles, ss. 162 and 164 of the Companies Act 1961 (N.S.W.) contain provisions to a like effect. (at p569)

6. The question for determination on this appeal is whether either of the balance sheets for the years ended 31 December 1970 and 31 December 1971 was a confirmation effective under s. 54 of the Act to extend the limitation period fixed by the Act for the cause of action on which Millers sued, that is, for moneys lent. Millers did not seek to prove that the money advanced to the Club was secured by a bill of sale (as the entry in the 1970 balance sheet suggests) or that the obligation to repay was deferred or othewise affected by express contract. Millers sued in assumpsit for the debt arising from the lending of money, and it recovered judgment upon that cause of action. Although interest was claimed, Begg J. was not satisfied that there was any period fixed by s. 14(1)(a) of the Act for an action for moneys lent is "six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom he claims". (at p569)

7. The cause of action upon which Millers recovered judgment accrued to it when the moneys were lent (Norton v. Ellam (1837) 2 M &W 461, at p 464; (150 ER 839, at p 840) ). That was in 1962. Unless the limitation period was extended under s. 54, the limitation period fixed by the Act had therefore expired before the present action was commenced. Section 63(1) of the Act provides:

"Subject to subsection (2)," (which is not material to these proceedings) "on the expiration of a limitation period fixed by or under this Act for a cause of action to recover any debt damages or other money, the right and title of the person formerly having the cause of action to the debt damages or other money is, as against the person against whom the cause of action formerly lay and as against his successors, extinguished."

Section 63(1) distinguishes the Act from the Limitation Act of 1623. The Act extinguishes substantive rights which, under the old law, might have been revived after the expiry of the limitation period. Under the old law, the survival of the original cause of action was essential to support an acknowledgment which, by judicial dispensation, extended the statutory limitation period though it had already expired, and allowed a creditor to sue for a debt if the debtor had acknowledged liability within six years before the bringing of the action. In Spencer v. Hemmerde (1922) 2 AC 507 Lord Sumner, observing that the terms of an acknowledgment must not be so limited or conditioned as to negative "the technical implication of a new assumpsit to call the old one out of abeyance", explained how the implication of the new assumpsit might be reconciled with the absolute terms of the statute 21 Jac. I. c. 16, s. 3. He preferred (1922) 2 AC, at p 535 the school of thought which said - "that the original loan and the subsequent promise formed one continuing transaction; that the creditor had made the loan once and for all, while the debtor had not finished promising as long as he went on promising, and therefore his assumpsit was still in being till within six years of the action. The explanation wears an aspect of unreality, but at least it hangs together, and explains why the only practical point now is the unconditioned and uncontrolled character of the acknowledgment, and not its intention in truth or its novelty as a fresh cause of action in law." (at p570)

8. In Bucknell v. Commercial Banking Co. of Sydney Ltd. (1937) 58 CLR 155 , Dixon J. adopted the explanation given in Spencer v. Hemmerde of the rules of law and construction governing the revival by acknowledgment of debts against which time has run under 21 Jac. I. c. 16, s. 3. His Honour said (1937) 58 CLR, at p 164 :
". . . although a document relied upon as an acknowledgment contains no express promise, it may effect a revival of the debtor's liability if there is found in it a distinct admission of the debt. The law implies from an acknowledgment of the existence of the liability a promise to discharge it. Words clearly acknowledging that the writer is liable suffice to raise the implication." (at p570)

9. Under the Act, there can be no new assumpsit, no implied promise to discharge a liability, after the expiry of the limitation period. The liability is gone, the right of the creditor extinguished. Although an acknowledgment prior to the expiry of the limitation period, if made in conformity with s. 54, extends the limitation period, no revival of the cause of action is possible after the period expires. (at p570)

10. In the present case, where the cause of action accrued before the commencement of the Act, it appears to have been assumed that an acknowledgment by the Club prior to the commencement of the Act on 1 January 1971 would be effective to extend the period of limitation and thus delay or prevent the extinction of the cause of action under s. 63 of the Act. It is not necessary to determine the validity of this assumption if neither the 1970 nor the 1971 balance sheet is an acknowledgment conforming to the requirements of s. 54 of the Act, for they are the only possible acknowledgments which might have confirmed the cause of action within six years prior to the commencement of the action. The case was fought on the common ground that Millers should succeed if the balance sheets were effective acknowledgments of its cause of action, and that Millers should fail if they were not. The auditor's report with respect to the 1970 balance sheet was signed in March 1971, the directors' report in April 1971 and the balance sheet was adopted at the annual general meeting held in May 1971. The auditor's report with respect to the 1971 balance sheet was signed in April 1972, the directors' report in May 1972, and the balance sheet was adopted at the annual general meeting held in June 1972. In each case, the balance sheet was attached to the Club's annual return lodged in the Office of the Corporate Affairs Commission shortly after the respective annual general meetings were held. The sufficiency of those balance sheets to confirm Millers' cause of action depends upon the meaning and operation of s. 54 of the Act. (at p571)

11. Section 54 provides, inter alia, as follows:

"(1) Where, after a limitation period fixed by or under this Act for a cause of action commences to run but before the expiration of the limitation period, a person against whom (either solely or with other persons) the cause of action lies confirms the cause of action, the time during which the limitation period runs before the date of the confirmation does not count in the reckoning of the limitation period for an action on the cause of action by a person having the benefit of the confirmation against a person bound by the confirmation." (2) For the purposes of this section - (a) a person confirms a cause of action if, but only if, he - (i) acknowledges, to a person having (either solely or with the other persons) the cause of action, the right or title of the person to whom the acknowledgment is made; or (ii) makes, to a person having (either solely or with other persons) the cause of action, a payment in respect of the right or title of the person to whom the payment is made; (b) . . . (c) . . . (3) . . . (4) An acknowledgment for the purposes of this section must be in writing and signed by the maker. (5) For the purposes of this section a person has the benefit of a confirmation if, but only if, the confirmation is made to him or to a person through whom he claims. (6) For the purposes of this section a person is bound by a confirmation if, but only if - (a) he is a maker of the confirmation; (b) . . . (c) . . . (d) . . . (e) . . .

(7) . . .". (at p572)

12. Section 54 is similar to but not identical with s. 23 of the Limitation Act 1939 (U.K.) ("the 1939 Act"). In my view, the differences between the provisions and their respective operations require caution in the use to be made of decisions on the 1939 Act in construing s. 54 of the Act. In the first place, s. 63 of the Act has no counterpart in the 1939 Act. An acknowledgment under s. 23(4) of the 1939 Act may be made at any time and, when made, the right of action to recover the debt is deemed to have accrued on and not before the date of the acknowledgment. Whereas the Act extinguishes the cause of action on the expiry of the limitation period, under the 1939 Act the right of recovery is barred but it may be revived by acknowledgment. Lord Goddard C.J. explained the operation of the 1939 Act in Jones v. Bellgrove Properties Ltd (1949) 2 KB 700, at p 704 :

"That statute does not extinguish debts: it merely bars the right to recover them after the lapse of the specified time from the accrual of the cause of action. If a claim is made for payment of a debt many years after it has been incurred, there may be difficulty in proving that the debt ever was in fact incurred or that it has not already been paid and so forth. That is why the law bars the right of action after a certain period has elapsed from the accrual of the cause of action, but then if there is an acknowledgment of the debt within the terms of ss. 23 and 24 of the Act, the right shall be deemed to have accrued on and not before the date of that acknowledgment."

An effective acknowledgment under the 1939 Act is not necessarily an acknowledgment of a creditor's right to recover the debt at the date of the acknowledgment: an acknowledgment of a creditor's suspended right, after the expiry of the limitation period, is effective to revive it. The Act, on the other hand, requires an acknowledgment to be made during the time when the creditor's right to recover is unaffected by the limitation period. (at p572)

13. Secondly, the two Acts prescribe different matters as the subject of the acknowledgment. Section 54(2)(a)(i) of the Act requires an acknowledgment of the right or title of the person having the cause of action - and that is, of course, a cause of action which is not barred. Section 23(4) of the 1939 Act requires an acknowledgment of "the claim", a term which appears to refer to "any debt or other liquidated pecuniary claim, or any claim to the personal estate of a deceased person or to any share or interest therein" the right to recover which has accrued. (at p572)

14. Thirdly, s. 54(2)(a)(i) of the Act requires that an acknowledgment be made "to a person having . . . the cause of action". Section 24(2) of the 1939 Act requires the acknowledgment to be made "to the person . . . whose title or claim is being acknowledged". Both statutes require that the acknowledgment be in writing signed by the maker (s. 54(4) of the Act; s. 24(1) of the 1939 Act), and in this respect they follow Lord Tenterden's Act (9 Geo. IV c. 14,s. 1). (at p573)

15. Apart from authority, I would construe s. 54 as requiring that a debtor, when he signs an acknowledgment, should acknowledge a present liability. An acknowledgment which confirms a cause of action for the purpose of s. 54(1) must be in writing signed by the debtor and it must acknowledge the right or title of the person "having the cause of action". The title to be acknowledged by the debtor is the creditor's entitlement to the debt; the right to be acknowledged is his right to recover the debt which, ex hypothesi, is not statute barred. An acknowledgment of a liability subsisting at an earlier time is not an acknowledgment of the right and title of a person "having" a cause of action, but an acknowledgment of that person's having had a cause of action. Section 54 does not work easily with respect to the assignment of debts unless the acknowledgment is expressed to relate to a present right or entitlement. The section provides (sub-s. (5)) for the assignee of a debt to have the benefit of an acknowledgment made to the assignor when he was the creditor entitled to the debt. But if an instrument is expressed as an acknowledgment of a debt subsisting at an earlier time, an acknowledgment made to the person who had been the creditor at the time to which the acknowledgment relates, and who had assigned the debt to another, would not be an acknowledgment made to a person "having the cause of action" to be confirmed. And an acknowledgment made to the assignee of the creditor would not be made to the person who, at the time to which the acknowledgment relates, had the cause of action. In neither case would the acknowledgment be a confirmation of a cause of action for the purposes of s. 54(1). (at p573)

16. Whether the written instrument is an acknowledgment of a creditor's present right or title depends upon its terms. No doubt it is not effective as a confirmation until it is "made to" the creditor (s. 45(5)), but the terms of the instrument, not the time of its communication to the creditor, determine whether it is an acknowledgment complying with the requirements of s. 54(2)(a)(i). If, being an acknowledgment of the creditor's present right or title to the debt, it is an acknowledgment complying with the requirements of s. 54(2)(a)(i) when it is "signed by the maker", it does not lose the character of an acknowledgment by delay in communication. (at p573)

17. Such an acknowledgment must be made to the creditor before it is effective as a confirmation for the purposes of s. 54(1), but it is not possible to fulfil that requirement before the instrument is signed. The "date of the confirmation" for the purposes of s. 54(1) is not necessarily the date when the acknowlegment is communicated to the creditor, but it can be no earlier than the date when the acknowledgment is signed if s. 54 requires an acknowledgment of a subsisting liability. Does the weight of authority establish that an acknowledgment of a liability subsisting at an earlier time fulfils the requirements of s. 54(2)(a)(i)? (at p574)

18. If "acknowledgment" in s. 54 follows the meaning of the term under the old law, it means an acknowlegment of a subsisting liability. Under the old law, when a promise to pay was implied from the acknowledgment, contemporaneity of the debt with the promise to pay was essential to the theory by which the effect of 21 Jac. I. c. 16, s. 3 was modified. The requirement of an acknowledgment of a subsisting liability was reflected in what was said in judgments of authority: Hepburn v. McDonnell (1918) 25 CLR 199, at p 210 ; Spencer v. Hemmerde (1922) 2 AC, at pp 517-518 ; Bucknell v. Commercial Banking Co. of Sydney Ltd. (1937) 58 CLR, at p 165 ; Hipworth v. Mahar (1952) 87 CLR 335, at p 344 ; Consolidated Agencies Ltd. v. Bertram Ltd. (1965) AC 470, at p 484 ; Motor Terms Co. Pty. Ltd. v. Liberty Insurance Ltd. (1967) 116 CLR 177, at pp 186, 188, 193, 199 . In the English balance sheet cases before Consolidated Agencies there may have been some thought that an entry disclosing a debt owing at the balance date could be construed as an admission that the liability is subsisting at some later date, but Consolidated Agencies put that notion to rest. There the Privy Council held that a balance sheet, signed after the balance date, is not an acknowledgment of a subsisting liability at the time of the signature. Their Lordships were construing s. 19 of the Indian Limitation Act 1908, in force in Tanganyika by virtue of a Tanganyikan Ordinance. The Indian Act was not in the same terms as the 1939 Act, and the Judicial Committee, holding that the Indian Act required acknowledgment of a subsisting liability, denied that the English cases established that a balance sheet is such an acknowledgment. Lord Guest, delivering their Lordships' reasons, said (1965) AC, at p 485 :
"In any case, their Lordships find it difficult to see in the cases cited any justification for the acknowledgment, consisting of the signature of the balance sheets, being taken to be of the continued existence, at the date of the signature, of the debt stated in the balance sheet." (at p574)

19. In In re Gee &Co.(Woolwich) Ltd. (1975) 1 Ch 52 , however, Brightman J. held that the 1939 Act did not require the acknowledgment of a subsisting liability, and he decided that case on the footing that the 1939 Act was satisfied if there were an acknowledgment in a signed balance sheet of the state of the company's indebtedness at the date of the balance sheet. Brightman J. held that the current of English authority had accepted that an acknowledgment of a debt owing at the balance date and entered in a balance sheet was a sufficient acknowledgment for the purposes of the 1939 Act, and that the Privy Council case was concerned with the different requirements of the Indian Act. His Lordship was attracted by what he saw as the commercial utility of the view that an acknowledgment of liability at an earlier time is sufficient. He said (1975) 1 Ch,at p66 :
"Suppose that a trader, B, buys his goods from a trader, S, and has a running account with S for his purchases. Suppose that on January 7, 1973, S sends B a half-yearly account made up to December 31, 1972, and requests B to confirm that the account is correct, which B does by a letter signed on January 14, 1973. It would seem quite contrary to justice and to common sense that the letter of January 14 should be incapable of being an effective acknowledgment for the purposes of the statute merely because it acknowledges the liability as at December 31 and not the liability as at January 14." (at p575)

20. Of course, there can be no inconvenience where there is a real account stated, for on the striking of a balance a fresh right accrues to the creditor to be paid the sum agreed and no acknowledgment is required to extend a limitation period: Ashby v. James (1843) 11 M&W 542 (152 ER 920) . Nor is there any inconvenience if the debtor signs an instrument acknowledging a liability at an earlier date where it is proper to assume that the liability persists up to the date of signature so that the acknowledgment is, in its context, an acknowledgment of an existing liability (see Consolidated Agencies (1965) AC, at p 485 ; Maniram v. Seth Rupchand (1906) LR 33 Ind App 165 ). But where there is no real account stated, and no acknowledgment which can be construed as an acknowledgment of a subsisting liability, it may be thought that there is commercial inconvenience in denying to an admission of an earlier liability the character of an acknowledgment which extends the limitation period. However that may be, there is a difference between an admission "I owed you so much last year", "last week" or "yesterday" and "I owe you so much now". I do not understand the former statement to acknowledge the right or title of a person to a debt, for it does not acknowledge that the debt has not been discharged when the acknowledgment is made. Section 54 is not concerned with evidence of an element in a creditor's cause of action; it requires his right or title to the debt to be acknowledged. (at p576)

21. Slade J. in In re Compania de Electricidad (1980) 1 Ch 146, at p 194 followed the same approach as Brightman J., without elaborating his reasons for holding that a balance sheet could constitute an acknowledgment of a debt as at the date of the balance sheet, that being "the date to which the signature of the directors related". It is neither necessary nor appropriate to consider the construction placed by the English cases on the 1939 Act, nor is it necessary to determine whether the English cases are consistent with the views expressed in the Privy Council. But it is clear that none of these cases is authority to settle the construction of s. 54 of the Act so far as it relates to the terms of an acknowledgment. Accordingly, I would hold that a balance sheet acknowledgment of a debt is not an acknowledgment for the purposes of s.54, unless the terms of the particular instrument signed by the debtor show the balance sheet to contain an acknowledgment of liability to the creditor subsisting when that instrument is signed. (at p576)

22. In the Court of Appeal, Hutley J.A. found that the 1970 balance sheet operated as an acknowledgment of a subsisting debt "at the balance sheet to show its financial position." With respect, if a balance sheet is an acknowledgment of a subsisting debt after the balance date, it must be because a subsequent statement refers to or incorporates an entry in the balance sheet as part of the terms of the acknowledgment then made. Neither the terms of the directors' report nor the adoption of the balance sheet at the annual general meeting acknowledged a contemporaneous subsisting debt. In Jones v. Bellgrove Properties Ltd. (1949) 2 KB 700 , a case which was said by Lord Goddard C.J. to be "based on the special facts", his Lordship held that a company's balance sheet, handed by one director-shareholder to the only other shareholder at an annual general meeting of the company, was an acknowledgment by the company to the latter shareholder of a subsisting debt at the time of the annual general meeting. The accountants who signed the accounts were held to be the company's agents to do so. If this case was rightly decided on its facts, as Lord Guest said it was in Consolidated Agencies (1965) AC, at p 484 nevertheless, as his Lordship added:

" . . . it would not be right to suggest that it can be used as authority for the view that a signature on a balance sheet is in all circumstances an acknowledgment of an existing liability, within the meaning of s. 23(4) of the Limitation Act, 1939. Nor is it possible to suggest that it is an authority for the view that the signature on the balance sheet is an effective acknowledgment within the Act of 1939 of the existence of the debt at the date of signature." (at p577)

23. The decision in Jones v. Bellgrove Properties Ltd. provides no acceptable foundation in law, and the terms of the directors' report and the evidence of the adoption of the balance sheet provide no acceptable foundation in fact, for finding that the Club's 1970 and 1971 balance sheets acknowledged a subsisting debt to Millers on the dates when the relevant directors' reports were signed or on the dates when the respective balance sheets were adopted. Nor is there any foundation upon which to find that either balance sheet was an acknowledgment made to the creditor, Millers. The phrase "made to" is not defined, but the alternatives stated by Slade J. in In re Compania de Electricidad (1980) 1 Ch, at p 193 seem to exhaust the possibilities. It is not possible to predicate of an acknowledgment that it is made to a creditor unless - "(a) it is delivered to the creditor or his agent by or with the authority of the debtor or his agent or (b) it is expressly or implicitly addressed to and is actually received by the creditor or his agent." (at p577)

24. In either event, the debtor intends that the creditor receive an acknowledgment. However, with respect to Slade J., I do not share his Lordship's view that a balance sheet must be regarded as implicitly addressed to creditors whose debts are referred to in it. When a company refers to its balance sheet in making a statement about its financial position to its creditors, and furnishes them with a copy of it, it is the statement made which gives a character to the balance sheet and the entries therein - whether as a warranty, an acknowledgment of a cause of action or an admission of an element in a cause of action. But it is a different thing to say that a company intends a balance sheet attached to its directors' report to come into the hands of the creditors whose debts are reflected in it and to be an acknowledgment of those debts. A balance sheet covered by an auditor's report and the directors' report in the usual form is not addressed, in the first instance, to creditors but to the company in general meeting. (at p577)

25. In the present case, neither the articles of the Club nor the provisions of the Companies Act 1961 (N.S.W.) confer a right on any person who is not a member of the company to have access to the balance sheet before the meeting at which it is adopted. Mr. Walker received his copies of the balance sheets as a member before they were adopted by the annual general meeting. Millers had no right then to receive them, and it cannot be said that Millers did then receive them. The circumstance that Mr. Walker was an employee of Millers and looked after its interest gives no foundation for inferring that the circulation of the directors' report and balance sheet to the members of the Club was or was intended by the Club to be a communication of the balance sheet to Millers. (at p578)

26. After the balance sheet and income and expenditure accounts of the Club were adopted at the 1971 and 1972 annual general meetings, the Club was under an obligation to attach them to its annual return which it was bound to lodge with the Corporate Affairs Commission (Companies Act 1961 (N.S.W.) s. 159, reg. 6 and form 49). No doubt the purpose of statutory provisions requiring the filing of financial information available for public inspection is to enable persons dealing with or investing in a company to have access to relevant information, as Cooke J. pointed out in Scott Group Ltd. v. McFarlane (1978) 1 NZLR 553, at p 581 . But it does not follow that a company which lodges its balance sheet with the Commission so as to make it available for public inspection intends thereby to make an acknowledgment of liability to each of the creditors whose debts are comprehended in its balance sheet. (at p578)

27. It is not necessary, however, that an acknowledgment of liability be communicated directly to a creditor. If the acknowledgment is intended to be communicated to the particular creditor or to the debtor's creditors generally by the means adopted, and it is communicated to the particular creditor by those means, that is sufficient. That appears to be consistent with what Sir Edward Sugden L.C. (as he then was) decided in Blair v. Nugent (1846) 3 Jo &Lat 668 . In that case, the executors and trustees of a debtor's estate, being sued by one of two creditors for the recovery of moneys jointly advanced by them to the deceased debtor, filed an answer admitting the debt. The joint creditor, who had been joined as a co-defendant in the suit, was held entitled in subsequent proceedings, to rely upon the admission in the answer as an acknowledgment, for "he was a party to the suit; and the bill was filed to raise the whole demand, to a part of which he was entitled." (1846) 3 Jo &Lat, at p 677 That case was referred to in Hipworth v. Mahar (1952) 87 CLR 335 where s. 304 of the Property Law Act 1928 (Vict.) was considered. There, a debtor who set out the statute barred debt in a proposal for adjustment of debts filed with an official was held to have "given to" his creditors an acknowledgment. The official was required to communicate the proposal to all creditors. After reviewing authorities relating to a requirement for communication of acknowledgment under other statutes, Dixon C.J., Webb and Fullagar JJ. said (1952) 87 CLR, at p 344 :
"The reasons stated in the authorities are not very clear, but the reasons are not far to seek. The admission is not made directly to the creditor, but it is made with the intention that it shall be communicated to the creditor and for the purpose of enabling a compromise of rights as between all creditors. Having that intention and that purpose, it is fairly and properly regarded as a statement made to each and every creditor; 'I admit to you that I owe you so much, and I inform you that I owe so much to so many other creditors'. This view represents, as Sir Edward Sugden said, 'a fair and just construction of the statute' (1846) 3 Jo. &Lat. 668 at 677." (at p579)

28. An acknowledgment is "made to" a creditor by his debtor if the debtor adopts some means, direct or indirect, with the intention of communicating the acknowledgment thereby to the particular creditor or to his creditors generally; but it is not sufficient to furnish a document containing the acknowledgment to a third party without intending that that acknowledgment be communicated to the particular creditor or to creditors generally. A public right of access to an acknowledgment lodged with the Corporate Affairs Commission without more does not give rise to an inference that the debtor intended that acknowledgment to be communicated to any who have or might exercise that right of access. There is no evidence that the Club intended to communicate to Millers an acknowledgment of its liability, either by sending a copy of its balance sheet to Mr. Walker as a member of the Club or by lodging its annual return with the Corporate Affairs Commission. (at p579)

29. It follows that neither balance sheet was an acknowledgment made by the Club to Millers of Millers' right or title to the cause of action upon which it sued. Millers' debt was extinguished by virtue of s. 63, and the action ought to have been dismissed. (at p579)

30. The appeal should be allowed with costs, the judgment of the Court of Appeal set aside and in lieu thereof the appeal from the judgment of Begg J. should be allowed with costs and the action dismissed with costs. (at p579)

Orders

Appeal dismissed with costs.