State of Western Australia v Wardley Australia Ltd

Re: STATE OF WESTERN AUSTRALIA
And: WARDLEY AUSTRALIA LIMITED; WARDLEY AUSTRALIA SECURITIES LIMITED and
LAWRENCE ROBERT CONNELL
No. WA G17 of 1991
FED No. 407
Trade Practices - Federal Jurisdiction - Practice and Procedure
(1991) 13 ATPR 41-130/30 FCR 245/102 ALR 213/21 IPR 321

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Spender(1), Gummow(1) and Lee(1) JJ.

CATCHWORDS

Trade Practices - action to recover the amount of loss or damage suffered by contravention of s. 52 of Trade Practices Act 1974 - limitation upon commencement of action - meaning of expression in sub-s. 82 (2) "date on which the cause of action accrued" - identification of the time at which loss or damage is "suffered" within the meaning of s. 82 where alleged injury is to economic interests of the applicant.

Federal Jurisdiction - conferral of jurisdiction by s. 86 of Trade Practices Act 1974 in respect of matters arising under that Act - relationship between s. 86 and s. 82 - institution of a proceeding under s. 86 invokes jurisdiction in respect of the whole of the matter including claims under s. 82 - power of amendment of that proceeding in respect of claims forming part of that matter.

Practice and Procedure - whether equitable doctrine of concealed fraud applies to purely legal claims which are statute barred - whether applicable to s. 82 of Trade Practices Act 1974 - Rule in Weldon v Neal - whether applicable in Federal Court.

Judiciary Act 1903

Trade Practices Act 1974

Federal Court of Australia Act 1976

Statute Law (Miscellaneous Provisions) Act (No. 2) 1986

Trade Practices Revision Act 1986

Jurisdiction of Courts (Miscellaneous Amendments) Act 1987

The Corporations Law

Federal Court Rules

Limitation Act 1969 (N.S.W.)

Supreme Court Act 1970 (N.S.W.)

Statute of Limitations 1623 (U.K.)

Limitation Act 1980 (U.K.)

Limitation Act 1986 (U.K.)

Latent Damage Act 1986 (U.K.)

Ikin v Same and Lamborghini Tractors of Australia Pty Ltd (1985) ATPR 40-595

S.W.F. Hoists and Industrial Equipment Pty Ltd v State Government Insurance Commission (1990) ATPR 41-045

Collinge v Heywood (1839) 9 Ad and El 633, 112 ER 1352

Commercial Bank of Australia Limited v. Colonial Finance Mortgage Investment and Guarantee Corporation Limited (1906) 4 CLR 57

Jobbins v Capel Court Corporation Limited (1989) 25 FCR 226

Cartledge v E. Jopling and Sons Limited (1963) AC 758

Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc. (1988) 19 FCR 469

Arnotts Limited v Trade Practices Commission (No. 1) (1989) 21 FCR 297

Re Tooth and Co. Ltd (1978) 31 FLR 314

Philip Morris Inc. v Adam P. Brown Male Fashions Pty Ltd (1981) 148 CLR 457

O'Toole v Charles David Pty Ltd (1989) 90 ALR 112, affd. (1990) 171 CLR 232

Fencott v Muller (1983) 152 CLR 570

Sent v Jet Corporation of Australia Proprietary Limited (1986) 160 CLR 540

The Crown v McNeil (1922) 31 CLR 76

Elna Australia Pty Ltd v International Computers (Aust.) Pty Ltd (No. 2) (1987) 16 FCR 410

The Commonwealth v Verwayen (1990) CLR 394

Australian Iron and Steel Ltd v Hoogland (1962) 108 CLR 471

Pedersen v Young (1964) 110 CLR 162

Van Win Pty Ltd v Eleventh Mirontron Pty Ltd (1986) VR 484

Fenech v Sterling (1983) 79 FLR 244; (1984) 4 FCR 372

Tillmanns Butcheries Pty Limited v Australasian Meat Employees' Union (1979) 42 FLR 331

Hawkins v Clayton (1986) 5 NSWLR 109; (1988) 164 CLR 539

Pirelli General Cable Works Ltd v Oscar Faber and Partners (a firm) (1983) 2 AC 1

The Council of the Shire of Sutherland v Heyman (1985) 157 CLR 424

UBAF Ltd v European American Banking Corporation (1984) QB 713

Keen Mar Corporation Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1988) ATPR 40-853

Zoneff v Elcom Credit Union Ltd (1990) ATPR 41-058

Brambles Constructions Pty Ltd v Helmers (1966) 114 CLR 213

Quinn v Llesna Rubber Pty Ltd (1989) VR 347

John Holland (Constructions) Pty Ltd v Jordin (No. 2) (1985) 79 FLR 210

State Government Insurance Commission v Teal (1990) 2 WAR 105

Forster v Outred and Co. (1982) 1 WLR 267

D.W. Moore and Co. Limited v Ferrier (1988) 1 WLR 267

Iron Trade Mutual Insurance Co. Ltd v J.K. Buckenham Ltd (1990) 1 All ER 808

Islander Trucking Ltd v Hogg Robinson and Gardner Mountain (Marine) Ltd (1990) 1 All ER 826

Bell v Peter Browne and Co. (1990) 3 All ER 124

Nocton v Lord Ashburton (1914) AC 932

Deputy Commissioner of Taxation v Zimmerlie (1987) 91 FLR 81

Magman International Pty Limited v Westpac Banking Corporation (1991) ATPR 41-097

Weldon v Neal (1887) 19 QBD 394

Barraud and Abraham (Limited) v Fitzherbert (1915) 34 NZLR 1098

Mitchell v Harris Engineering Company Ltd (1967) 2 QB 703

National Parks and Wildlife Service v Stables Perisher Pty Ltd (1990) 20 NSWLR 573

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589

Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502

Rahme v Commonwealth Bank of Australia (1991) ATPR 41-089

John v Dodwell and Company Limited (1918) AC 563

Thorne v Heard and Marsh (1895) AC 495

Metacel Pty Ltd v Ralph Symonds Ltd (1969) 2 NSWR 201

Bulli Mining Co. v Osborne (1899) AC 351

Gibbs v Guild (1882) 9 QBD 59

Lynn v Bamber (1930) 2 KB 72

Vink v Schering Pty Ltd (1991) ATPR 41-073

Muschinski v Dodds (1985) 160 CLR 583

Stern v McArthur (1988) 165 CLR 489

HEARING

SYDNEY

#DATE 17:7:1991

Counsel and solicitors Mr E.M. Heenan QC and Mr R.E. Cock
for the appellant: instructed by the State Crown Solicitor

Counsel and solicitors Mr J.A. Chaney instructed by Messrs
for the first and second Northmore, Hale, Davy and Leake

Counsel and solicitors Mr D.M.J. Bennett QC and
for the third respondent: Mr M.J. Stevenson instructed by

Messrs Jackson McDonald

ORDER

The appeal be allowed and the order of French J. striking out para. 16 (c) of the Amended Statement of Claim be set aside.

The first, second and third respondents pay the costs of the appellant of the appeal.

Note: Settlement and entry of Orders is dealt with by Order 36 of the Federal Court Rules.

JUDGE1

The Nature of the Proceedings

This is an appeal, by leave, from a decision of a Judge of this Court (French J.) in which his Honour struck out portion of an Amended Statement of Claim. The decision is reported (1991) ATPR 41-095. The appeal raises fundamental questions as to the interpretation and application of the requirement in sub-s. 82 (2) of the Trade Practices Act 1974 ("the Act") that an action under sub-s. 82 (1) may be commenced at any time within three years after the date on which the cause of action accrued.

The litigation arises out of allegations by the present appellant, the State of Western Australia ("the State") of contraventions of s. 52 of the Act, and of the commission of the tort of deceit in relation to the execution for the State on 26 October 1987 of a certain instrument ("the Indemnity"). This provided that in consideration of National Australia Bank Limited ("the Bank") granting financial accommodation to a maximum aggregate amount of $150 million to Rothwells Limited ("Rothwells"), the State would hold the Bank indemnified against any net loss which might arise if Rothwells did not satisfy in full its liability under the terms of a bills facility to be granted by the Bank to Rothwells.
On 24 October 1990, that is to say just less than three years after the date of the Indemnity, the State commenced a proceeding in this Court (No. WAG 116 of 1990) against Bond Corporation Holdings Limited ("Bond Corporation"), Wardley Australia Limited, the present first respondent, ("Wardley") and the present third respondent ("Mr Connell"). A separate proceeding was commenced against the present second respondent, Wardley Australia Securities Limited ("Wardley Securities") (No. WAG 118 of 1990). The two proceedings were consolidated on 19 November 1990, and a consolidated Statement of Claim was filed on that day.
Several motions were filed seeking orders striking out various paragraphs in the consolidated Statement of Claim. On 20 December 1990, the State was given leave to file and serve an Amended Statement of Claim by 14 January 1991. This was done. French J. heard various strike out motions on 24 and 29 January 1991, and on 15 February 1991 his Honour delivered detailed reasons for judgment on those applications.
This appeal is brought pursuant to leave granted by French J. The State appeals against an order of his Honour striking out para. 16 (c) of the Amended Statement of Claim filed 14 January 1991. Paragraph 16 (c) was introduced into the pleading more than three years after the execution of the Indemnity for the State on 26 October 1987. Before his Honour, Wardley and Wardley Securities successfully submitted that the introduction of this material raised a new cause of action which was barred by virtue of the three year time limit imposed by sub-s. 82 (2) of the Act because the cause of action was completed with the execution of the Indemnity. On the hearing of the appeal, leave (the grant of which was unopposed by the State) was given to Mr Connell to be joined as third respondent and we heard submissions from his counsel in opposition to the appeal.
The Amended Statement of Claim
It is alleged in the Amended Statement of Claim that the State was induced to execute the Indemnity by and in reliance upon certain representations made on Saturday 24 October 1987 and Sunday 25 October 1987 by Bond Corporation, Wardley and Wardley Securities, and by Mr Connell.
It is alleged (para. 9) that Mr James Yonge was at all material times an officer of Wardley and of Wardley Securities, and that "insofar as is material hereto acted in his said capacities and within his authority as an officer of each of Wardley and of Wardley Securities". The pleading states that on Saturday 24 October 1987, Mr Yonge, Mr Connell, Mr Alan Bond, Director and Chairman of Bond Corporation, and Mr P.G. Beckwith, another officer of Bond Corporation, attended a meeting at the Perth offices of Rothwells with three representatives of the State, Mr D.C. Parker, the then Minister for Minerals and Energy and Minister assisting the Premier concerning Economic Development, Mr J.B. Horgan, then Chairman of the Western Australian Development Corporation, and Mr A.J. Lloyd, then a senior Government advisor.
The State contends (para. 12 (b)) that at this meeting what the pleading describes as "the Wardley Saturday Representations" were made on behalf of the two Wardley companies by Mr Yonge, namely:

"(i) that on the basis inter alia of Rothwells' 1987 audited accounts Rothwells had very substantial net assets and that the problems at Rothwells were not problems of capital deficiency but simply ones of liquidity ('the Wardley Saturday Soundness Representation'); and

(ii) that there were not any substantial amounts of loans by Rothwells to Connell or to companies or partnerships in which Connell had financial interests ('the Wardley Loan Representation')."

The Wardley Saturday Representations were included in the pleading in its original form, and although they have since undergone minor amendment, it is accepted that so far as they are concerned no question arises of failure to observe the time limitation of sub-s. 82 (2) of the Act. The successful strike out application against which this appeal is brought concerned the allegations introduced on 14 January 1991 by para. 16 (c). It is there alleged that in the afternoon of Sunday 25 October 1987, at a meeting of the Budget Sub-Committee of the Government of the State, attended inter alios by Messrs Parker and Lloyd:

"Yonge represented that Rothwells was a sound financial institution which had substantial net assets ('Wardley Sunday Soundness Representation')."

Paragraphs 21, 22, 23, 30 and 31 are in the following terms:

"21 At all material times Rothwells was not a sound financial institution and did not have substantial net assets. 22 Rothwells' 1987 audited accounts portrayed Rothwells as at 30 June 1987 as a sound financial institution which had substantial net assets.

23 At all material times there were substantial amounts of loans by Rothwells to Connell and to companies and partnerships in which Connell had financial interests. . . .

30 The Wardley Saturday Representations and the Wardley Sunday Soundness Representations (sic) were conduct in trade or commerce.

31 By making the Wardley Saturday Representations and the Wardley Sunday Soundness Representations, Wardley and or in the alternative Wardley Securities engaged in conduct that was misleading or deceptive or was likely to mislead or deceive in contravention of Section 52 (1) of the Trade Practices Act in that:

(a) by reason of paragraph 21, the Wardley Saturday Soundness Representation and the Wardley Sunday Soundness Representation were not true, and

(b) by reason of paragraph 23, the Wardley Loan Representation was not true."

In paras. 40-46, the State says that from about 27 October 1987, Rothwells drew down $150 million pursuant to the facility granted by the Bank, and that on or about 17 October 1988, when Rothwells was insolvent, it made a payment of $150 million to the Bank being the sum due pursuant to the facility. It is then alleged that on 3 November 1988 a petition for the winding-up of Rothwells was presented to the Supreme Court of Queensland, and provisional liquidators were appointed. The provisional liquidators contended that Rothwells' payment of $150 million to the Bank on or about 17 October 1988 constituted a voidable preference, and they demanded payment of the $150 million by the Bank. But the Bank and the State denied that there had been a voidable preference. The Bank requested that pursuant to the Indemnity the State indemnify it in respect of the demand by the provisional liquidators (para. 45). The State alleges that a dispute arose between the Bank and the State, the State contending that the payment by Rothwells on or about 17 October 1988 discharged the Indemnity, whilst the Bank contended that the Indemnity remained in full force and effect. Paragraph 47 of the Amended Statement of Claim is as follows:

"47 The dispute between the State and (the Bank) and the claim by the Provisional Liquidators against (the Bank) were reasonably settled between them such that:

(a) on 30 May 1989 the State paid $33 million to Rothwells; and

(b) on 8 December 1989 (the Bank) paid $10.5 million to the State."

Then, in para. 50, the State says that it has suffered loss and damage in the sum of $22.5 million by reason of, inter alia, contraventions of s. 52 of the Act by Wardley and Wardley Securities. An allegation to the same effect is made against Bond Corporation. Mr Connell is said to be liable as a person involved in the contravention of s. 52 by Rothwells, and also to be liable himself in deceit. No allegation in deceit is made against any of the other respondents.

As we have indicated, the primary Judge ordered the striking out of para. 16 (c), in which the Wardley Sunday Soundness Representation was pleaded. The material portion of his Honour's reasons is as follows:

"In my opinion, on the pleaded facts, the State suffered loss at the moment it executed the Indemnity. If the facts are established, it assumed a risk of loss that was very much greater than it had been led to believe was the case on the representations to it. It may be accepted on the pleaded facts that the State was prepared to expose itself to some risk in consideration of the provision of credit to Rothwells by (the Bank). In my opinion, however, the assumption of a significantly greater than represented risk is a compensable loss in the context of s. 82. To so conclude is to say that risk of loss is itself a category of loss. But to say that is not to say anything novel. The area of assessment of damages for personal injuries offers illustrations of that logic. The risk that an injury may in later life cause the onset of a degenerative disease is one example. It is no less logical than the proposition that the loss of a chance of benefit is the loss of a benefit. In a commercial context, the risk must not be negligible or fanciful. It is perhaps most concretely exemplified by the assumption of an immediate legal obligation as is this case. In my opinion, para. 16 (c) of the Amended Statement of Claim does introduce a new cause of action, which is out of time, and should therefore be struck out."

The Indemnity

The Indemnity is a short document of less than two pages. It was in evidence upon the strike out application. The instrument was signed for and on behalf of the State by the then Premier. The consideration moving from the Bank is stated to be the granting by the Bank of financial accommodation to Rothwells to a maximum aggregate amount of $150 million. The Indemnity is stated not to extend to liabilities in respect of bills drawn after 26 October 1989. The undertaking is to hold the Bank indemnified against any "net loss" which might arise if Rothwells does not satisfy in full its liability under the terms of a particular bills facility ("the Facility") to be granted by the Bank to Rothwells in accordance with a letter of offer substantially in the form attached to the Indemnity. Detailed provision is made, as follows, for the calculation of the "net loss":

"In calculating the net loss where the Bank has granted any other facility to the Company, any payment received by the Bank:

(a) from the Company at a time when default has occurred and is continuing under the Facility or any such other facility; or

(b) from a liquidator of the Company in respect of the Facility and any such other facilities shall be applied as between the Facility and those facilities in proportion to the amounts outstanding under them, except that:

(c) the proceeds of the rights issue by the Company referred to in the letter of offer may be applied wholly in or towards discharge of liabilities under the Bills Acceptance/Discounted/Endorsed No. 2 facility referred to in the letter of offer; and

(d) the proceeds of any security held by the Bank may be applied in or towards discharge of any of the monies secured by that security."

The Indemnity concludes as follows:

"It is a condition of this indemnity that before the Bank may make any claim hereunder, it must proceed to the fullest extent of its rights against (Rothwells) (but not any director or officer of (Rothwells)) to obtain payment out of the assets of (Rothwells). The amount of any deficiency remaining after the Bank has received a final distribution in a liquidation of

(Rothwells) may then be the subject of a claim under this indemnity.

This indemnity shall be a continuing security and shall not be affected by the Bank:

(a) granting (Rothwells) any time or other indulgence;

(b) recovering any judgement against

(Rothwells) in respect of its liabilities under the Facility; or

(c) granting any other facility to

(Rothwells), or receiving any payment under the terms of any such facility. I FURTHER UNDERTAKE for and on behalf of the State to pay on demand such sum pursuant to this indemnity as shall be demanded by the Bank to a maximum aggregate amount of $150,000,000.00 if and when demanded by the Bank in writing."

It follows that before the Bank might make any claim under the Indemnity upon the State, Rothwells would have to have failed to satisfy in full its liability under the Facility and the Bank would have to have proceeded to the fullest extent of its rights against Rothwells to obtain payment out of the assets of Rothwells. The Indemnity plainly contemplated that Rothwells might be in liquidation when the Bank came to pursue its rights and to compute its "net loss"; in those circumstances, the subject of the claim under the Indemnity would be the amount of any deficiency after the final distribution in the liquidation. The State would have a good defence to any claim by the Bank under the Indemnity made before the Bank had proceeded to the fullest extent of its rights against Rothwells.
The Contentions of the Parties
Upon the appeal, counsel for the State submitted that whilst upon execution of this instrument by the State, there occurred "potential for damage", it was not until some time later that the State suffered loss or damage within the sense of sub-s. 82 (1) of the Act. Counsel referred to the distinction between potential and actual damage drawn by Spender J. in Ikin v Same and Lamborghini Tractors of Australia Pty Ltd (1985) ATPR 40-595, at 46,823 and by Von Doussa J. in S.W.F. Hoists and Industrial Equipment Pty Ltd v State Government Insurance Commission (1990) ATPR 41-045 at 51,612. He also relied, by way of analogy, upon the decisions to the effect that the cause of action upon a contract of indemnity does not accrue for the purposes of the Statute of Limitations of 1623 until the plaintiff had been damnified by paying (see Collinge v Heywood (1839) 9 Ad and El 633, 112 ER 1352; Commercial Bank of Australia Limited v Colonial Finance Mortgage Investment and Guarantee Corporation Limited (1906) 4 CLR 57 at 66, 69; O'Donovan, "The Modern Contract of Guarantee", p 453).
For their part, the respondents to the appeal relied upon earlier decisions of this Court, particularly that of the Full Court in Jobbins v Capel Court Corporation Limited (1989) 25 FCR 226, as indicating that the expression in sub-s. 82 (2) of the Act "the date on which the cause of action accrued" is to be understood in the sense given it in English decisions applying statutes of limitations to causes of action in negligence, and, in particular, to actions to recover economic loss. The respondents submitted that the reasoning in those decisions supported the decision reached by the primary Judge to strike out para. 16 (c) and thus the Wardley Sunday Soundness Representation. It will become apparent that we would not accept all the reasoning in Jobbins, though it is unnecessary to consider whether the result in the case was in error.
The Construction of s. 82 of the Act
It is necessary to begin by setting out the terms of s. 82 of the Act. They are as follows:

"82 (1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

(2) An action under sub-section (1) may be commenced at any time within three years after the date on which the cause of action accrued.

(3) Sub-section (1) does not apply in relation to conduct done in contravention of section 52A."

It will be observed that the section uses the terms "an action" and "cause of action", not "matter". The significance of this will become apparent.

In our view, the difficulties to which the present appeal gives rise are questions of statutory interpretation, and are to be resolved by construing s. 82 in its setting among the spectrum of remedies presented by Parts V and VI of the Act.
An interesting contrast in legislative approach may be found in ss. 73 in Division 2 and 74J in Division 2A of Part V of the Act. Jurisdiction in respect of matters arising under ss. 73 and 74J has not been conferred on the Federal Court, but is invested in State courts pursuant to sub-s. 39 (2) of the Judiciary Act 1903.
The relevant parts of s. 73 are as follows:

"73. (1) Where -

(a) a corporation (in this section referred to as the 'supplier') supplies goods, or causes goods to be supplied, to a linked credit provider of the supplier and a consumer enters into a contract with the linked credit provider for the provision of credit in respect of the supply by way of sale, lease, hire or hire-purchase of the goods to the consumer; or

(b) a consumer enters into a contract with a linked credit provider of a corporation (in this section also referred to as the 'supplier') for the provision of credit in respect of the supply by the supplier of goods or services or goods and services, to the consumer, and the consumer suffers loss or damage as a result of misrepresentation, breach of contract, or failure of consideration in relation to the contract, or as a result of a breach of a condition that is implied in the contract by virtue of section 70, 71 or 72 or of a warranty that is implied in the contract by virtue of section 74, the supplier and the linked credit provider are, subject to this section, jointly and severally liable to the consumer for the amount of the loss or damage, and the consumer may recover that amount by action in accordance with this section in a court of competent jurisdiction.

(2) Where -

(a) a corporation (in this section also referred to as the 'supplier') supplies goods, or causes goods to be supplied, to a credit provider who is not a linked credit provider of the supplier;

(b) a consumer enters into a contract with the credit provider for the provision of credit in respect of the supply by way of sale, lease, hire or hire-purchase of the goods to the consumer;

(c) antecedent negotiations in relation to the contract were conducted with the consumer by or on behalf of the supplier;

(d) the credit provider did not take physical possession of the goods before they were delivered to the consumer, or where a consumer enters into a contract with a credit provider for the provision of credit in respect of the supply of services to the consumer by a corporation (in this section also referred to as the 'supplier') of which the credit provider is not a linked credit provider, and the consumer suffers loss or damage as a result of a breach of a condition that is implied in the contract by virtue of section 70, 71 or 72 or of a warranty that is implied in the contract by virtue of section 74, the credit provider is not under any liability to the consumer for the amount of the loss or damage, but the consumer may recover that amount by action in a court of competent jurisdiction against the supplier."

Sub-sections 73 (1) and (2) create both right and remedy. Under s. 73, a person who suffers loss or damage "as a result of" inter alia misrepresentation or breach of an implied condition or warranty may recover the amount of the loss or damage by action. No period of limitation is provided in respect of the time within which the action may be commenced and there is no reference to a day or date on which a cause of action accrues. Although s. 82 provides a right of recovery by action for a person who suffers loss or damage "by" rather than "as a result of" conduct of another, it is, as in s. 73, a right of recovery tied to the amount of the loss or damage suffered.
Section 74J prescribes a time limitation in respect of the enforcement of rights and remedies provided by ss. 74B-74H. Sections 74B, 74C, 74D, 74E, 74F and 74G impose a liability upon a corporation to compensate a consumer or other person who suffers loss or damage "by reason" that goods:

(a) are not reasonably fit for a nominated purpose (s. 74B)

(b) do not correspond with description (s. 74C)

(c) are not of merchantable quality (s. 74D)

(d) do not correspond with sample (s. 74E)

or "by reason" of:

(a) failure to ensure that facilities for the repair of goods were reasonably available at the relevant time (s. 74F)

(b) failure to comply with an express warranty (s. 74G).

In s. 74H, a seller is given a right to be indemnified by a manufacturer in respect of the seller's liability to compensate a consumer for loss or damage suffered.

Section 74J provides as follows:

"74J (1) Subject to this section, an action under a provision of this Division may be commenced at any time within 3 years after the day on which the cause of action accrued.

(2) For the purposes of this section, a cause of action shall be deemed to have accrued -

(a) in the case of an action other than an action under section 74H, on the day on which the consumer or a person who acquired the goods from, or derived title to the goods through or under, the consumer first became aware, or ought reasonably to have become aware -

(i) in the case of an action under section 74B - that the goods were not reasonably fit for the purpose referred to in that section;

(ii) in the case of an action under section 74C - that the goods did not correspond with the description referred to in that section;

(iii) in the case of an action under section 74D - that the goods were not of merchantable quality;

(iv) in the case of an action under section 74E - that the bulk of the goods did not correspond with the sample in quality or the goods had the defect referred to in that section;

(v) in the case of an action under section 74F - that the goods required to be repaired or that the part was required for the goods, as the case may be; or

(vi) in the case of an action under section 74G - of the failure of the corporation to comply with the express warranty referred to in that section; or

(b) in the case of an action under section 74H, on -

(i) the day, or the first day, as the case may be, on which the seller referred to in that section made a payment in respect of, or otherwise discharged in whole or in part, the liability of that seller to the consumer referred to in that section; or

(ii) the day on which a proceeding was instituted by that consumer against that seller in respect of that liability or, if more than one such proceeding was instituted, the day on which the first such proceeding was instituted, whichever was the earlier.

(3) In an action under a provision of this Division, it is a defence if the defendant proves that the action was not commenced within 10 years after the time of the first supply to a consumer of the goods to which the action relates."

The limitation provision in sub-s. 74J (1) is drawn in the same terms as that contained in sub-s. 82 (2). The action to which sub-s. 74J (1) refers is the right of a consumer to recover the amount of compensation for the loss or damage suffered for which a corporation is made liable by ss. 74B-74G and under s. 74H a seller's right to an order of indemnity against a manufacturer.
The rights provided by ss. 74B-74G to recover the amount of compensation for the loss or damage suffered is not markedly different from that contained in sub-s. 82 (1) which is a right to recover the amount of the loss or damage suffered, and the apparent lack of relevance of potentiality of loss to the accrual of a cause of action for the purposes of sub-s. 74J (1) may be borne in mind when construing sub-s. 82 (2).
By deeming a cause of action to have accrued in the circumstances set out in sub-s. 74J (2), there is an acknowledgment in the Act that but for the deeming provision, a cause of action may not yet have accrued under ss. 74B-74H in such circumstances.
Contrary to the approach taken in Jobbins, supra at 228-229, in our view it is unsafe in the process of statutory construction of s. 82 to turn first to, or to rely too heavily upon, analogies drawn from the interpretation by other courts of statutes of limitation controlling causes of action arising under the general law or other statutes. This particularly is so in circumstances where, in construing those other limitation statutes, the courts have been constrained by the terms thereof to reach, as Lord Reid pointed out in Cartledge v E. Jopling and Sons Limited (1963) AC 758 at 771-772, conclusions running against the grain of the common law, which favours conclusions consistent with common sense and basic fairness. This was one of the decisions applied in Jobbins.
In Jobbins, the statement of claim alleged that on 24 March 1986, the applicant entered into an agreement to invest $60,000 in the production of a film and paid that amount on 9 April 1986, doing so upon allegedly fraudulent misrepresentations as to a guaranteed return upon the investment. It was successfully contended against the applicant that the cause of action pleaded under s. 82 of the Act must have accrued at the latest by 9 April 1986 so that the application had been filed out of time on 14 September 1989; the applicant unsuccessfully sought to repel that proposition on the footing that no loss had been suffered until October 1986, because it was then that the first instalment of the guaranteed return had not been made.
In Jobbins, supra at 228-230, expressions were used such as "a claim under s. 52" and "the wrong with which s. 52 is concerned". It is important to bear in mind that, of itself, s. 52 creates no justiciable liability. In the earlier case of Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc. (1988) 19 FCR 469 at 473-474, the Full Court had said:

"Section 52 is found in Pt V of the Act. Section 52 (1) provides:

'A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.' The term 'corporation' is defined in s 4. By force of s 6, s 52 is given a number of further and distinct operations based not upon the identification of a corporation as the actor involved, but upon engagement by persons, whether or not corporations, in such activities as trade and commerce among the States and with other countries and the use of postal, telegraphic or telephonic services. Section 52 does not purport to create liability, nor does it vest in any party any cause of action in the ordinary sense of that term; rather, s 52 establishes a norm of conduct, and failure, by the corporations and individuals to whom it is addressed in its various operations, to observe that norm has consequences provided for elsewhere in the Act: Brown v Jam Factory Pty Limited (1981) 53 FLR 340 at 348. The consequences are provided for in a range of remedies found principally (but not exclusively - see s 163A) in Pt VI of the Act. The remedies include a declaration (s 163A); injunction (s 80); disclosure of information and publication of corrective advertisements (s 80A); recovery of the amount of loss or damage and prevention or reduction of loss or damage (ss 82, 87); and prohibition of payment or transfer of moneys or other property (s 87A). The class of persons against whom these remedies lie is not limited to those who have engaged in conduct which contravenes, is likely to contravene, s 52 in any one or more of its operations. Thus, for example, an injunction may be granted pursuant to s 80 against those who aid, abet, counsel or procure a person to contravene a provision of Pt IV or Pt V of the Act (s 80 (1) (c)), and the amount of loss or damage to which s 82 refers may be recovered against any person 'involved in the contravention', an expression defined in s 75B. Further, between the particular remedies, there is variation as to the identity of those with standing to seek them from the court. Section 82 is directed solely to those persons who have suffered loss or damage. Sections 80A and 87A confer standing only on the Minister or the Commission. Proceedings for declaration may be instituted by 'a person' and the involvement of the Minister and the Commission are especially provided for:

s 163A. As we have indicated, by s 80 standing to seek injunctive relief is conferred upon 'the Minister, the Commission or any other person'."

The Full Court had gone on to say in that case that what follows from the conjunction between s. 52 and the various remedial provisions in Part VI is not simply the imposition of a duty upon particular individuals in respect of specified conduct coupled with a right to enforce the duty, the right being vested in those individuals to whom the duty was owed. Rather, the legislation has as a primary objective the protection of perceived public interests, something reflected in the complex inter-relation between s. 52 and the provisions of Part VI of the Act.

Section 82 is one of the provisions of the Act which creates both right and remedy; see Arnotts Limited v Trade Practices Commission (No. 1) (1989) 21 FCR 297 at 303-304. It is an example of what has been called "double function" legislation; see Aitken, "Jurisdiction, Liability and 'Double Function' Legislation", (1990) 19 Fed L Rev 31. The section postulates a person who (i) suffers loss or damage, (ii) by conduct of another person, (iii) which is done in contravention of a provision of Part IV or Part V of the Act. It confers a right to recover "the amount of the loss or damage". The right is exercisable by action not only against the person whose conduct contravened the Act, but against any person "involved in the contravention". That latter class of person is defined in s. 75B. Thus, any particular contravention of a provision of Parts IV or V may give rise to causes of action vested in various persons to recover from various defendants, "the amount of the loss or damage" the plaintiff has suffered "by" the conduct in contravention of the legislation.
But of itself, s. 82 is insufficient to render justiciable in a Court exercising federal jurisdiction the controversy in which complaint is made of invasion of the rights we have described, and remedies under Part VI are sought in relation thereto. Conferral of jurisdiction is effected by s. 86.
Section 86 of the Act
Jurisdiction is conferred on the Federal Court by s. 86 of the Act in a defined manner. There is no general grant of jurisdiction with respect to civil matters arising under the Act (cf. The Corporations Law sub-s. 42 (3)). In the form it takes after the Jurisdiction of Courts (Miscellaneous Amendments) Act 1987, s. 86 confers jurisdiction on the Federal Court "in any matter arising under the Act in respect of which a civil proceeding" has been instituted under Part VI of the Act, and that jurisdiction in some respects is exclusive.
The jurisdiction invested in the several courts of the States within the limits of their several jurisdictions is defined in a different manner. Pursuant to sub-s. 86 (2) of the Act, State courts are invested with jurisdiction with respect to any "matter" arising under Division 1 or 1A of Part V of the Act in respect of which a civil proceeding is instituted by a person other than the Minister or the Commission.
A separate conferral of jurisdiction upon the Federal Court is contained in s. 163A of the Act, pursuant to which the Court has jurisdiction to hear and determine a proceeding seeking, in relation to a matter arising under the Act, a declaration in relation to the operation or effect of any provision in the Act other than Division 2, 2A or 3 of Part V or the validity of an act being done, proposed to be done or purporting to be have been done under the Act, or an order by way of or in the nature of prohibition certiorari mandamus. Despite the terms used in it, s. 163A is to be read as conferring jurisdiction with respect to "matters" in the constitutional sense: Re Tooth and Co. Ltd (1978) 31 FLR 314 at 320; Philip Morris Inc. v Adam P. Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 506-507.
For the purposes of sub-s. 76 (ii) of the Constitution, "matters" which "arise under a law made by the Parliament" involve entire controversies identifiable as justiciable subject matters involving rights and obligations formulated in the law in question (see O'Toole v Charles David Pty Ltd (1989) 90 ALR 112 at 158, affd. (1990) 171 CLR 232). The function of the judicial power of the Commonwealth identified in ss. 71 and 78 of the Constitution is to quell such controversies: Fencott v Muller (1983) 152 CLR 570 per Mason, Murphy, Brennan and Deane JJ. at 608.
Constituent elements of the matters in respect of which jurisdiction is conferred on this Court by s. 86 or s. 163A will be found in the factual base identified in the proceedings instituted under Part VI of the Act or under s. 163A of the Act. The elements of the matters in respect of which each of the courts of the States is invested with federal jurisdiction will be found in the factual base defined in the civil proceedings instituted in that court.
Sections 82 and 87 of the Act, which, as we have indicated, provide statutory rights for persons to obtain certain remedies, have a bearing on the nature of the "matter" in respect of which jurisdiction is conferred by s. 86. But neither s. 82 nor s. 87 confines the concept of "matter" in respect of which jurisdiction is conferred by s. 86 to the controversy as to the right to obtain merely the particular relief provided by ss. 82 and 87.
The federal jurisdiction conferred or invested is jurisdiction to determine all claims and issues comprising the whole of the matter arising under the Act. The jurisdiction conferred on this Court thus is one to determine the whole of the controversy before it, including accrued or pendent claims, and the controversy is defined by a factual base or sub-stratum. It is federal jurisdiction in this inclusive sense which becomes exercisable upon the institution of proceedings in this Court. The Court is not seized of jurisdiction simply in respect of the "cause of action" referred to in s. 82. And the content of the "matter" may be more than the "action" of which s. 82 speaks.
This concept of "matter" must be kept in mind when construing the provisions of ss. 82 and 87 of the Act, so far as those sections provide periods of limitation in respect of what are called "causes of action". This is something to which we return later in these reasons, particularly when dealing with the so-called rule in Weldon v Neal.
The Nature of the Limitation in sub-s. 82 (2) of the Act
The substantive element of s. 82 contains concepts which, at common law, would be encompassed by the terms "causation", "remoteness" and "measure of damages". Sub-section 82 (2) directs attention to concepts of "causation" by fixing the period within which an action may be commenced by reference to "the date on which the cause of action accrued" and thus to the suffering of the loss or damage "by" conduct contravening the statute. The use of the preposition "by" indicates the requirement for some sufficient cause or reason which links the conduct with the suffering of loss or damage, the amount of which is recoverable as the measure of damages. As has been pointed out in Mr Aitken's article, "'Loss or Damage' Under Section 82 of the Trade Practices Act" (1989) 1 Bond ULR 107 at 108-109, the term "loss or damage" is used twice in sub-s. 82 (1), and in different senses, first to identify the damage which is the gist of the action, and then, in association with the term "amount", to identify the quantum or measure of the damages which is recoverable in the action. This is a distinction not always observed in the decisions dealing with the limitation provision in sub-s. 82 (2).
In a general sense, the effect of sub-s. 82 (2) may be described as the prescription of a time limitation: Sent v Jet Corporation of Australia Proprietary Limited (1986) 160 CLR 540 at 542. But there is a distinction between the operation of a statute of limitation, properly so called, which prevents the enforcement of rights of action independently existing, and a time limitation imposing a condition which is the essence of a new right: The Crown v McNeil (1922) 31 CLR 76 at 96, 100-101. It is for a defendant to plead a statute of limitation against an independent right but when a limitation is annexed by a particular statute to the right which it creates it is for the plaintiff to allege that the action was brought within time; cf. Elna Australia Pty Ltd v International Computers (Aust.) Pty Ltd (No. 2) (1987) 16 FCR 410 at 415. If the jurisdiction of a court to entertain proceedings is conditioned in this way on commencement of proceedings within a specified time, the defendant cannot by a purported waiver confer jurisdiction of the court: The Commonwealth v Verwayen (1990) 170 CLR 394 at 425, per Brennan J.
However, it is necessary when dealing with s. 82 to bear in mind its double operation, to which we have referred above, as dealing both with right and remedy. In our view, in stating that an action under sub-s. (1) may be commenced at any time within the three year time limit specified in sub-s. 82 (2), that latter provision is to be regarded as having a procedural character. That is to say, sub-s. 82 (2) is a condition of the remedy rather than an element in the right and a prerequisite to jurisdiction which cannot be waived. It follows that it is for a defendant to assert non-compliance, rather than for a plaintiff to assert compliance with sub-s. 82 (2) as an element of the cause of action.
The need for compliance with sub-s. 82 (2) may be waived by the defendant and an estoppel may prevent the defendant denying such a waiver. If the defendant fails to plead the limitation, this may be taken as a waiver of the need for compliance with sub-s. 82 (2). The authorities bearing upon the general principles involved are discussed by Windeyer J. in Australian Iron and Steel Ltd v Hoogland (1962) 108 CLR 471 at 488-489 and in Pedersen v Young (1964) 110 CLR 162 at 169. The first of these passages was adopted by Brennan J. and McHugh J. in The Commonwealth v Verwayen, supra at 425-426, 497-499; see also the remarks of Gaudron J. at 486-487.
The cause of action referred to in sub-s. 82 (2) is constituted by every fact it would be necessary for the plaintiff to prove in order to support its right to recover the amount of its loss or damage and the relevant question is at what time did all those facts exist; cf. Van Win Pty Ltd v Eleventh Mirontron Pty Ltd (1986) VR 484 at 488. Where the conduct complained of contravened s. 52, the cause of action under s. 82 will accrue upon the occurrence of the misleading or deceptive conduct and the suffering by the injured party of loss or damage "by" that conduct. The remedy then is given to recover "the amount" of that loss or damage from the person whose conduct contravened s. 52, or from any person involved in that contravention.
In the present case, Wardley and Wardley Securities contend that the relevant loss or damage was suffered by the State upon execution of the Indemnity on 26 October 1987. They support the holding of the primary Judge that if the facts pleaded in the Amended Statement of Claim as to the falsity of the representations upon which the State acted in executing the Indemnity are established, the State assumed on 26 October 1987 "a risk of loss" which was much greater than it had been led to believe was the case when the representations were made. So much may be readily conceded. But if the terms of the Indemnity given by the State are kept in mind, it is difficult, with respect, to see how in any practical and realistic sense one could say that on 26 October 1987 the State had suffered loss or damage, the amount of which was forthwith recoverable by action under s. 82.
Counsel for Mr Connell, supporting the other respondents, submitted that to fix the amount of the loss or damage in an action brought forthwith by the State, the Court would have valued the extent to which the contingent liability of the State arising immediately under the Indemnity exceeded the contingent liability of the State as it otherwise would then have existed had the representations been true, rather than false. That is perhaps to say that upon executing the Indemnity, the State was likely to suffer loss or damage, and that the Court would be obliged in an action then brought under s. 82 to put a value upon that likelihood coming to pass as an event. It is no doubt true that in various areas of the common law the courts value such things as the loss of a chance of a benefit and the likely suffering of a loss. But that is not to say that s. 82 has to be construed in like fashion. Then it was submitted that although the action might be commenced forthwith, the assessment of the quantum of damages would be adjourned to await "precise" assessment as events unfolded and the Indemnity was called in accordance with its terms. It would be an odd statutory construction which required the taking of such steps.
As we have said, s. 82 is properly to be understood only in its place in the spectrum of remedies given by Part VI of the Act and in light of the conferral of jurisdiction by s. 86 in respect of "matters". At the one extreme, and contrary to general equitable principles governing the use of injunctions to restrain repeated or apprehended infringement of legal rights, the power of the Court to grant an injunction restraining a person from engaging in conduct which contravenes a provision of Part IV or Part V of the Act may be exercised whether or not there is an imminent danger of substantial damage to any person if the defendant engages in the conduct in question: para. 80 (4) (c).
On the other hand, whether or not any application is made under s. 80 or s. 82, the Court may, pursuant to s. 87 (1A), on the application of a person who has suffered "or is likely to suffer" loss or damage by conduct of another person engaged in contravention of a provision of Part V make such order as it thinks appropriate, if the Court considers that the order will compensate the person who made the application in whole or part for the loss or damage, or will prevent or reduce the loss or damage which is suffered or is "likely to be suffered" by the applicant.
It follows that the cause of action under sub-s. 87 (1A) may accrue as soon as loss or damage is likely to be suffered. This means that the time bar in sub-s. 87 (1CA) upon applications under sub-s. 87 (1A) may, in a given case, have a different operation to that in sub-s. 82 (2).
Sub-section 87 (1CA) was introduced by the Statute Law (Miscellaneous Provisions) Act (No. 2) 1986. That statute also substituted sub-s. 87 (1C) in its present form, making it clear that an application may be made under sub-s. 87 (1A) in relation to a contravention of Part V, although no other proceeding under Part VI has been instituted in relation to that contravention. The effect of this was to reverse the result in Sent v Jet Corporation of Australia Proprietary Limited, supra, which in turn had reversed the Full Court decision in Fenech v Sterling (1984) 4 FCR 372, that even though it then lacked any explicit time bar, sub-s. 87 (1A) had an operation independent of s. 82. These changes have to be borne in mind when considering earlier decisions construing sub-s. 82 (2) without reference to the presence in sub-s. 87 (1A) of the additional words "or likely to be suffered". (It may also be noted that in its original form as introduced by the Trade Practices Revision Act 1986, sub-s. 87 (1C) dealt only with contraventions of s. 52A, stating that applications may be made "at any time within 2 years after the alleged contravention occurred" (emphasis supplied). Sub-section 87 (1CA), which replaced this provision, uses the term "cause of action", as s. 82 has done since 1974.)
The Present Case
In the present case, it would have prevented or reduced the loss or damage likely to be suffered by the State if immediately after the entry into the Indemnity the State had obtained an order of the description in para. 87 (2) (a), declaring the Indemnity to have been void ab initio. A perusal of sub-s. 87 (2) suggests other less stringent forms of relief that would have been immediately available. Declaratory relief under s. 163A might also have been appropriate. It is unnecessary for the purposes of the present appeal to determine precisely what is meant in s. 87 by the expression "likely to be suffered" and it is presently impossible to determine whether the State was so placed forthwith on 26 October 1987. However, the expression in question should at least mean "a real chance or possibility" that loss or damage be suffered; cf. in relation to sub-s. 45D (1) Tillmanns Butcheries Pty Limited v Australasian Meat Industry Employees' Union (1979) 42 FLR 331 at 346-348 per Deane J.
What is important is that a distinction is drawn in the provisions in Part VI between the suffering of loss or damage, the amount of which is recoverable, and the likelihood of such loss or damage which at that earlier stage may be prevented, or at least reduced, by one or other of the specialised remedies provided in s. 87. Potential or likely damage is not actual damage which has already been suffered. This not a case where an applicant has been misled into purchasing property, the true value of which at the time of the transaction was less than the price paid. The applicant in such a case has suffered loss or damage forthwith upon completion of the sale, because what has been acquired is, to put it colloquially, "a lemon".
In our view, the mere assumption of an executory and contingent legal obligation, the future performance of which is likely to be more onerous than would have been the case had the representations in reliance upon which the obligation was assumed been true rather than false, is not the suffering of loss or damage the amount of which is forthwith recoverable by action under s. 82. At that stage, the cause of action will not have accrued, may never accrue, and will not accrue whilst the suffering of the loss or damage remains a likelihood rather than a reality.
Upon such an analysis, the present appeal should be allowed. It is strictly unnecessary to fix the time at which time began to run against the State under sub-s. 82 (2) in its action against Wardley and Wardley Securities. Certainly, it was later than 14 January 1988, three years before para. 16 (c) was introduced into the Amended Statement of Claim. But in response to the very full arguments which the Court received, we should say something upon the subject.
"Suffers Loss or Damage"
In many of the applications brought under s. 82, the injury for which damages are sought will be injury to the economic and intangible interests of the applicant, rather than to the person or tangible property of the applicant. In cases of economic loss, authorities dealing with injury to interests in tangible property will not necessarily be of immediate assistance; as McHugh J.A. pointed out in Hawkins v Clayton (1986) 5 NSWLR 109 at 143, cases where the sole damage is economic loss are in a different category.
Where the interest infringed is the physical integrity of property, then it may be appropriate in deciding when the cause of action accrued to look to the time when the physical damage occurs, even though the claim is for economic loss arising from the physical damage. In Jobbins, supra at 228-229, the Full Court referred to Pirelli General Cable Works Ltd v Oscar Faber and Partners (a firm) (1983) 2 AC 1 as throwing light upon the construction of sub-s. 82 (2). That case was concerned with economic loss referable to a latent structural defect in a building. In one sense, the loss was sustained as soon as the defect came into existence, because the owner then had something inherently less valuable than a defect free chimney. But, as Gaudron J. explained in Hawkins v Clayton (1988) 164 CLR 539 at 599-560, the cause of action was held by the House of Lords not to have accrued until the physical damage became patent with the appearance of cracks.
Further, as her Honour also pointed out, with reference to what had been said by Deane J. in The Council of the Shire of Sutherland v Heyman (1985) 157 CLR 424 at 502-505, where the economic interest of the plaintiff which is injured by the negligence of the defendant is the value of property acquired by the plaintiff, it may be appropriate to speak of the cause of action for economic loss sustained by reason of a latent defect as accruing when the physical damage is manifest, because it is only then that the actual diminution in market value occurs. Deane J. spoke again to the same effect in Hawkins v Clayton, supra at 587-588.

More significantly for present purposes, in Hawkins v Clayton Gaudron J. added, supra at 601:

"So too, if the interest infringed is an interest in recouping moneys advanced it may be appropriate to fix the time of accrual of the cause of action when recoupment becomes impossible rather than at the time when the antecedent right to recoup should have come into existence, . . ."

See also to similar effect the remarks of Ackner L.J. in UBAF Ltd v European American Banking Corporation (1984) QB 713 at 725. In the present case, the interest allegedly infringed was that of the State in being answerable to calls on the Indemnity, but only on the footing that the representation as to the soundness of Rothwells was true not false when the Indemnity was given. The first call on the Indemnity which is pleaded is that in para. 45 to which we have earlier referred.

We were pressed on the appeal with what had been said on this subject by Pincus J. in Keen Mar Corporation Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1988) ATPR 40-853 at 49,193-49,196. We express no view as to the correctness of that decision. But, as is apparent, his Honour was speaking before the High Court decision in Hawkins v Clayton, supra. Consistent with what has been said by Gaudron J. in that case, is the view that where the applicant under s. 82 complains of the issue of an insurance policy which does not extend to all the risks as represented to the applicant, the cause of action does not accrue whilst the contingency has not occurred and it is open to the insured to take out further insurance; see also SWF Hoists and Industrial Equipment Pty Ltd v State Government Insurance Commission (1990) ATPR 41-045 at 51,612; Zoneff v Elcom Credit Union Ltd (1990) ATPR 41-058 at 51,746.
In Van Win Pty Ltd v Eleventh Mirontron Pty Ltd, supra, a negligence case, the owner of a house sued in 1977 the relevant council for the negligent issue in 1976 of a building permit for the house. In 1984 the council joined a firm of consulting engineers to which it had referred the plans for the house before issuing the certificate. The Victorian Full Court held that the claim against the engineers did not disclose a cause of action because the council had not yet suffered any damage as a result of the negligence pleaded against it. The council's cause of action against the engineers might never crystallise; it might win the case against it brought by the plaintiff or the case might be discontinued. See also Brambles Constructions Pty Ltd v Helmers (1966) 114 CLR 213 at 221; Quinn v Llesna Rubber Pty Ltd (1989) VR 347; John Holland (Constructions) Pty Ltd v Jordin (No. 2) (1985) 79 FLR 210; State Government Insurance Commission v Teal (1990) 2 WAR 105.
In our view, the cause of action brought by the State, on the pleading as it stands, crystallised at the earliest when the Bank, as detailed in para. 45 of the Amended Statement of Claim, requested the State to indemnify it in respect of the demand made upon the Bank by the provisional liquidators of Rothwells. No date is specified, but it was between November 1988 and May 1989.
The English Decisions
However, strong reliance in reaching a contrary conclusion was placed by the respondents upon the reasoning in the English Court of Appeal in Forster v Outred and Co. (1982) 1 WLR 86. In that decision, the plaintiff contended that her solicitors had advised her negligently in relation to a transaction whereby she gave a third party mortgage over her land in support of borrowing by her son from the mortgagee. The Court of Appeal held that actual loss (as distinct from prospective loss) was suffered by the plaintiff when she executed the mortgage, not when the mortgagee later attempted to enforce the security. Upon execution of the mortgage, the property was encumbered to the extent of the contingent liability of the plaintiff in respect of the borrowing by her son, and it was not to the point that at that stage her liability had not matured into a quantified financial loss.
This decision has been successfully relied upon in England by other solicitors to meet claims against them for professional negligence and by insurance brokers whose conduct has resulted in the failure of their clients to obtain valid and effective insurance: D.W. Moore and Co. Limited v Ferrier (1988) 1 WLR 267; Iron Trade Mutual Insurance Co. Ltd v J.K. Buckenham Ltd (1990) 1 All ER 808 at 819-820; Islander Trucking Ltd v Hogg Robinson and Gardner Mountain (Marine) Ltd (1990) 1 All ER 826; Bell v Peter Browne and Co. (1990) 3 All ER 124. In these cases, not only did the unsuccessful plaintiffs not sustain in cash terms their loss from the negligent acts or omissions of the solicitors or brokers until much later, but they were not aware until then of the facts necessary for the making of a case against their solicitors or brokers.
In 1984, The Law Reform Committee presented to the British Parliament its Twenty-Fourth Report, which dealt with latent damage. In para. 2.8 of that Report, the Committee, after discussing cases such as Forster v Outred and Co. (supra) said that as a result of those developments, many would argue that the balance in certain cases had been shifted too far in favour of defendants. The result was enactment of the Latent Damage Act 1986 (U.K.), which inserted s. 14A into the Limitation Act 1980 (U.K.). This had the effect that in cases such as Forster v Outred and Co., supra, the starting date for the reckoning of the period of limitation for the action in negligence would be the earliest date on which the plaintiff first had both the knowledge required for the bringing of an action for damages in respect of the relevant damage and had a right to bring such an action.
The reasoning in the English decisions has not escaped criticism. The cases are discussed most recently in Mr Mullany's article, "Limitation of Actions and Latent Damage - An Australian Perspective" (1991) 54 MLR 216 at 238-242. The English position has been put as follows by Mr Duncan Wallace QC ("Anns Beyond Repair", (1991) 107 LQR 228 at 246):

"The history of (the English limitation) legislation since 1939 represents a series of ad hoc (and in total now complicated) retreats under pressure from the principle, apparently dearly held, that accrual of the cause of action as the starting date in contract and tort should over-ride any considerations of discoverability, or of absence of fault on the part of the plaintiff in delaying the start of proceedings."

In Forster v Outred and Co. (supra) both Stephenson L.J. and Dunn L.J. relied upon Nocton v Lord Ashburton (1914) AC 932 as affording guidance as to when actual damages suffered by a client who has been negligently advised by his solicitor. In particular, Stephenson L.J. said (supra at 96):

"As I read what is said of the judgment of the Court of Appeal, they held that the statute was a complete answer to the principal claim, the claim for the 65,000 pounds and interest thereon; and they must have held that that was statute-barred because they regarded actual damage as having been suffered by Lord Ashburton at the time when he was negligently advised by Mr Nocton to make the advance."

However, as is pointed out in the learned Note (1982) 98 LQR 514 at 515-516:

"The full judgments of Cozens-Hardy M.R., Farwell and Hamilton L.JJ. are available in the Record presented to the House of Lords. It is clear that the only point considered with reference to limitation was whether there was concealed fraud. No point was taken as to accrual of damage, and with all respect, one wonders how it could have been relevant. At that time it was believed that the cause of action against solicitors for negligence was founded solely on contract and hence accrues from breach."

In our view, that criticism is unanswerable. Further criticisms of the decision are found in the article by Mr Hewitt, "Professional Negligence: Latent Economic Damage and Limitation" (1984) The Law Society's Gazette 3333.

Nevertheless, Forster v Outred and Co. (supra) and later authorities which follow it were applied in the Supreme Court of Queensland in Deputy Commissioner of Taxation v Zimmerlie (1987) 91 FLR 81; that case is notable also for the reliance (at 84) in an action brought against a solicitor in tort, upon the reasoning in Nocton v Lord Ashburton (supra). The English decision was also relied upon in the Full Court of this Court in Jobbins v Capel Court Corporation Limited (1989) 25 FCR 226. However, in Magman International Pty Limited v Westpac Banking Corporation (1991) ATPR 41-097, Sheppard J., whilst bound by Jobbins, said (at 52,550):

"During the argument there was some discussion whether Forster's case ought to be followed in Australia. I confess to having some misgivings about its under-lying reasoning. If one analyses its facts, it may be said that the plaintiff acted to her detriment by reducing the value of her interest in the property when she entered into the mortgage. But in truth and reality she had not then lost anything. Only when the son defaulted and became bankrupt was the plaintiff bound to repay his indebtedness to the company. If he had repaid it, she would never have been called upon to pay anything and the value of her interest in the property would have remained undiminished. If this view were correct, her loss arose, not at the time of the entry into the mortgage, but at the time of the son's default."

We respectfully agree with those remarks. The point of immediate significance is that we would not regard Forster's Case as an appropriate guide for the construction of sub-s. 82 (2) of the Act, whatever outcome may await its use in Australia in support of submissions that certain actions in negligence are statute barred.

The conclusion we have reached that the inclusion in the Amended Statement of Claim of the cause of action based on the Wardley Sunday Soundness Representation did not involve the commencement of that action outside the three years mentioned in sub-s. 82 (2) of the Act, makes it unnecessary to determine certain further (and detailed) submissions which were put in support of the appeal. However, we should deal with them briefly.
The Rule in Weldon v Neal
Order 13 rule 2 sub-rule (1) of the Federal Court Rules provides:

"The Court may, at any stage of any proceeding, on application by any party or of its own motion, order that any document in the proceeding may be amended, or that any party have leave to amend any document in the proceeding, in either case in such manner as the Court thinks fit."

The decision of the English Court of Appeal in Weldon v Neal (1887) 19 QBD 394 is authority for the proposition that even after the more liberal practice as to amendments introduced with the adoption of new rules of court with the coming of the Judicature system, a plaintiff should not be allowed to amend by setting up fresh claims in respect of causes of action which, since the date of issue of the writ, have become barred by the Jacobean Statute of Limitations. Australian authorities which apply this reasoning in the setting of various rules of Court in the State Supreme Courts are collected in Zoneff v Elcom Credit Union Ltd, supra at 51,746-51,747.

It was urged for the State that the so-called rule in Weldon v Neal is no more than a rule of practice, and that on its proper construction, Order 13 rule 2 of the Rules of this Court confers a discretion to amend which is unfettered. It was further submitted that in any event it would be open for the Court to impose a condition upon the amendment, such that so much of the proceeding as related to the cause of action introduced by the amendment made on 14 January 1991 should be deemed to have commenced on that date.
The primary judge, after referring to the authorities, held that Order 13 rule 2 did not "displace" the rule in Weldon v Neal. His Honour also said that, in any event, the formulation of a rule of court which would authorise amendments which introduced out of time new causes of action under s. 82 would raise a question as to the power of this Court by rule to extend the time limit prescribed by the Parliament.
We have earlier in these reasons indicated our view that the three year time limit specified in sub-s. 82 (2) of the Act is to be regarded as having a procedural character, being a condition of the remedy rather than an element in the right, and that the need for compliance with that time limit is something which may be waived by a respondent.
Section 59 of the Federal Court of Australia Act 1976 confers upon the Judges of the Court a rule making power in relation to the practice and procedure to be followed in the Court. But, as Professor Enid Campbell points out in her work "Rules of Court", 1985, pp 89-92, with reference to authority including Barraud and Abraham (Limited) v Fitzherbert (1915) 34 NZLR 1098, and Mitchell v Harris Engineering Company Ltd (1967) 2 QB 703 at 720, for the purposes of the presumption against retroactivity, statutes of limitation are to be regarded as affecting substantive rights. A rule making power may not be relied upon as authorising variation of limitation periods prescribed by statute, except where the power to do so has been conferred by the legislature in express terms.
An express power is conferred by Pt. 20 r. 4 (1) of the Rules of the Supreme Court of New South Wales which derives its force from s. 122 of the Supreme Court Act 1970 (N.S.W.). Such a power is not found in terms of Order 13 rule 2 of the Rules of this Court. Accordingly, at first blush, it would appear that Order 13 rule 2 could not have been relied upon so as to prevent an amendment, the making of which introduced a fresh cause of action against Wardley and Wardley Securities, in such a way that those respondents could not successfully raise against that cause of action the time limitation found in sub-s. 82 (2) of the Act. But that is not all that is to be said on the subject.
We have referred to the significance of the conferral of jurisdiction upon this Court by s. 86 of the Act, in terms of "matters". The term "matter" is rooted in Chapter III of the Constitution and has no precise or immediate counterpart in the general law, as Gleeson C.J. explained in National Parks and Wildlife Service v Stables Perisher Pty Ltd (1990) 20 NSWLR 573 at 578-580.
In stipulating in sub-s. 82 (2) that the action under s. 82 may be commenced at any time within three years after the date on which the cause of action accrued, the legislature does not purport to limit the nature of the matter in respect of which jurisdiction is conferred by s. 86. In our view, it is sufficient to meet the limitation provision of s. 82 (2) of the Act for a proceeding to be instituted in respect of a matter arising under the Act, the substance of which is defined by a factual base which would encompass conduct said to be in contravention of the provisions of Part IV or Part V of the Act. Once the Court is seized of jurisdiction in such a "matter", the conduct of the proceeding, including its pleading, is a matter of procedure placed under the control of the procedural rules of the Court.
A related concept in the general law to that expressed in the last paragraph may sustain rules of court (such as those in Pt. 20 r. 4 (5) of the New South Wales Supreme Court Rules, Pt. 21 r. 5 of the Rules of the Supreme Court of Western Australia, and Pt. 20 r. 5 of the Rules of the Supreme Court 1986 (Eng.)) which expressly allow amendment to a writ or pleading, notwithstanding that the effect of the amendment will be to add or substitute a new cause of action. The new cause of action must arise out of the same facts or substantially the same facts as a cause of action in respect of which relief has been already claimed in the action by the party applying for leave to make the amendment.
Further, a conceptual analogue in the general law may be found in the doctrine of res judicata or cause of action estoppel, which prevents a party to a proceeding the subject of litigation and adjudication, bringing forward in subsequent litigation any part of that matter that may have been omitted from that party's case in the original litigation: see Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 per Gibbs C.J., Mason and Aickin JJ. at 597 et seq and Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 per Deane, Toohey and Gaudron JJ. at 507 et seq; Rahme v Commonwealth Bank of Australia (1991) ATPR 41-089.
The question of whether a proceeding which is on foot in this Court has been commenced in respect of a matter which encompasses a particular claim for the recovery under s. 82 of the amount of loss or damage suffered by conduct done in contravention of s. 52 of the Act, is to be answered by consideration of the factual basis sought to be established in that proceeding. Here, the proceeding commenced by the State makes a claim against Wardley and Wardley Securities for such loss or damage, and the nature of the controversy giving rise to that claim involves conduct of the parties, including Wardley and Wardley Securities, leading up to the execution of the Deed of Indemnity for the State on 26 October 1987.
Such conduct may involve inseverable contributing causes to the suffering of the amount of the loss or damage. In such circumstances, the controversy will include the elements which contributed to the suffering of the loss. The present proceeding in this Court was instituted in respect of that matter within the time provided by sub-s. 82 (2) of the Act and amendment of the Statement of Claim further to identify the particular contraventions from which stem claims which are elements in that matter will not involve any further application of the limitation period in question.
As we have said, Order 13 rule 2 of the Federal Court Rules does not refer specifically to the effect of statutory limitation provisions upon the Court's discretion to allow amendments to pleadings. But for the purposes of this case, it is unnecessary for the rule to do so. The power to control amendment provided by that rule is broad enough to ensure that amendments are restricted to those which reflect causes of action which provide claims in the matter over which the Court obtained jurisdiction upon the institution of the proceeding in question.
Accordingly, had it been necessary so to decide, we would have held that the primary Judge had the necessary power to allow the amendment in question to plead the Wardley Sunday Soundness Representation.
Remaining Submissions
In Van Win Pty Ltd v Eleventh Mirontron Pty Ltd (1986) VR 484 at 487, the Victorian Full Court said that whilst if there was a very clear defence under a statute of limitations the defendant might seek to strike out the statement of claim, nevertheless ordinarily it was contrary to proper practice to accede to such an application before a defence had been filed. The force of what was there said bears upon consideration of the remaining two grounds relied upon by the appellant in the present appeal.
The first of these submissions sought to deal with the unfairness that would otherwise occur if the three year limitation referred to in sub-s. 82 (2) of the Act expired before the person who had suffered loss or damage by reason of contravention of the Act appreciated or should reasonably have appreciated the existence of the facts giving rise to the cause of action. To that end, it was submitted that the expression in sub-s. 82 (2) "within 3 years after the date on which the cause of action accrued" should be construed so as to exclude any period during which the contravention in question effectively precluded the institution of the action. Reliance was placed, by analogy, upon the reasoning of Deane J. in Hawkins v Clayton, supra at 590, in dealing with s. 14 of the Limitation Act 1969 (N.S.W.).

Therefore, it was submitted, the action upon the Wardley Sunday Soundness Representation was properly instituted within time, because it was brought within three years of 14 January 1988 and the State certainly had not properly appreciated its position in the period between the execution of the Indemnity in October 1987 and that date several months later. We would not wish to foreclose the acceptance of a submission in the terms indicated as to the proper construction of sub-s. 82 (2). We say this being conscious that Sheppard J. also left the matter open in Magman International Pty Limited v Westpac Banking Corporation, supra. However, in our view, before ruling upon such a submission, it would be proper for the Court to have before it both a defence relying upon sub-s. 82 (2), and a reply seeking to meet that defence on this ground. Without a solid footing in the pleadings, the treatment of the argument becomes an exercise in the hypothetical.
The same is true of the second of the further submissions put by the State. In Fenech v Sterling (1983) 79 FLR 244, reversed on other grounds (1984) 4 FCR 372, Davies J. held inapplicable to s. 82 what was submitted was the equitable principle that in an action based on fraud, time does not run while the injured person remains ignorant of the fraud. The point was not argued in Jobbins v Capel Court Corporation Limited (1989) 25 FCR 226 at 229-230. In Fenech, Davies J. referred to what was said in The Crown v McNeil (1922) 31 CLR 76 at 96-97, 100-101, and said, supra at 262:

"Section 82 (2) states in specific terms a period within which a proceeding to which it applies may be brought. Section 82 (2) is not a general limitation enactment, it is a provision dealing specifically with a cause of action which the statute created. Section 82 (2) makes no such exemption for a cause of action based on fraud or deceit as is made in s 55 of the Limitation Act 1969 (NSW) or s 27 of the Limitation of Actions Act 1958 (Vic). It is clear in its terms and I think it must be given effect."

The State sought to challenge that conclusion. The causes of action against Wardley and Wardley Securities do not rely upon fraud. Nor, the Court was told by counsel, did the State contend that the existence of the causes of action was fraudulently concealed from the State by Wardley or Wardley Securities. Fraud is one of the causes of action alleged against Mr Connell. Counsel submitted that the State would wish to make out a case that the consequences of Mr Connell's fraud in some way were visited upon Wardley and Wardley Securities so as to make the equitable doctrine applicable to them, and thereby provide a reply to any reliance by Wardley and Wardley Securities upon the time limitation provision in sub-s. 82 (2). In that regard, the Court was taken by counsel for the State to John v Dodwell and Company Limited (1918) AC 563 and by counsel for Wardley and Wardley Securities to Thorne v Heard and Marsh (1895) AC 495. Plainly, it would be necessary for the Court to understand in a precise sense how it was alleged that Wardley and Wardley Securities were relevantly party or privy to the fraud of Mr Connell. In the absence of any pleading raising the issue which the State sought to propound, it would not be practicable for the Court on this appeal to rule on the matter.
If, as we have indicated, sub-s. 82 (2) is a condition of the remedy given by s. 82 and may be waived by the respondent, then there is no reason in principle why, on equitable grounds, whether founded in estoppel or fraud or otherwise, the defendant cannot be obliged to waive reliance upon the condition. But what is put forward is a particular equitable doctrine.
It is necessary to keep in mind the nature of the equitable jurisdiction as to concealed fraud. The doctrine applies in two main classes of case, first, when the action is one alleging fraud or fraud is an element in the cause of action (in which case time does not run until discovery of the fraud) and secondly, where the cause of action is one which does not involve fraud but the existence of the cause of action is fraudulently concealed by the defendant (in which case time does not run until both discovery of the concealment and ascertainment of the existence of the cause of action). The matter is fully explained by the judgments in the New South Wales Court of Appeal in Metacel Pty Ltd v Ralph Symonds Ltd (1969) 2 NSWR 201, where the High Court judgments in The Crown v McNeil (1922) 31 CLR 76, the Privy Council decision in the New South Wales appeal in Bulli Coal Mining Co. v Osborne (1899) AC 351, and the post-Judicature English decisions, including Gibbs v Guild (1882) 9 QBD 59 and Lynn v Bamber (1930) 2 KB 72, are closely analysed.
The equitable doctrine of concealed fraud does not operate to prevent a defendant to a purely legal claim, not being a claim also cognisable in the concurrent jurisdiction of an equity court, from pleading the Statute of Limitations. In Metacel, supra at 204, Sugerman J.A. indicated that he would not follow McCardie J.'s decision in Lynn v Bamber, supra. The Court also indicated that where, before the introduction of the Judicature system, there was a claim for a legal remedy (e.g. damages) for invasion of a legal right (e.g. an action in tort) and the claim was not one in which equity would exercise concurrent jurisdiction (as it would in fraud cases) the Statute of Limitations would be left to take its course. In such a case, there was no conflict between law and equity because both followed the statute. Hence, the non sequitur in saying that in such a case concealed fraud might now be set up in answer to a plea of the limitation statute.
In 1936, the contrary views of McCardie J. in Lynn v Bamber, supra, drew some anxious comment in para. 22 of the Fifth Interim Report of the Law Revision Committee which dealt with statutes of limitation; see also the cautious treatment of the subject by D. Bruce Ross, "Concealed Fraud and the Statute of Limitations", (1930) 4 ALJ 174. The result was a recommendation by the Committee (since embodied in the British legislation) that in all cases in which the statutes of limitation apply, or are applied by analogy, (a) where a cause of action is founded on fraud, committed by the defendant or his agent or some person through whom he claims, or (b) where a cause of action unconnected with fraud is fraudulently concealed from the plaintiff by the defendant or his agent or some person through whom he claims, the right of the plaintiff to sue should be deemed to have first accrued at the time when the plaintiff discovered such fraud, or could with reasonable diligence have discovered it. The New South Wales and Victorian legislation, to which Davies J. referred in Fenech v Sterling, supra, expresses the same policy. We were told that there was no such legislation in Western Australia. (No question arose on this appeal as to whether, consistently with the scope of s. 82 of the Act, there remained room for the operation of s. 79 of the Judiciary Act 1903, to pick up any State limitation statute; see Vink v Schering Pty Ltd (1991) ATPR 41-073.)
But the question for us is whether there is room for the application of this particular equitable doctrine to defeat reliance upon a limitation provision contained within the statute conferring the cause of action. The equitable doctrine is expressed in terms of claims arising under the general law, whether they might be characterised as legal or equitable. It is not couched in terms which extend to claims created purely by statute. In such cases, the statute has to be given its full effect including any engrafted time limitation of whatever character. That, in our view, is what follows from the decision of the High Court in The Crown v McNeil, supra.
But that may not be the end of the matter. In our view, as we have indicated, s. 82 of the Act provides for the three year period as a condition of the remedy, and that condition is something which may be waived by the respondent. Accordingly, whether by equitable estoppel or other sufficient equitable grounds, it may be that the respondent cannot be heard to deny that the condition has been waived. Hence, the notion of unconscientious reliance upon a legal right, referred to by Deane J. in Muschinski v Dodds (1985) 160 CLR 583 at 619-620, and in Hawkins v Clayton, supra at 590, and by Deane and Dawson JJ. in Stern v McArthur (1988) 165 CLR 489 at 526-527, may have a role to play. So also may the various strands of the reasoning in the judgments in The Commonwealth v Verwayen, supra. But, in our view, the result contended for by the State cannot be reached simply by incorporation of the very specific doctrine as to concealed fraud. The question is one that would fall for consideration only in terms of pleaded facts. There are, of course, no such materials before us.
Conclusion
We would allow the appeal and set aside the order striking out para. 16 (c) of the Amended Statement of Claim. The first, second and third respondents should pay the appellant's costs of the appeal.

[1991] FCA 407

17 JULY 1991