Skye Court Pty Ltd v Keith Richard Mason

[2003] NZCA 112

IN THE COURT OF APPEAL OF NEW ZEALAND

CA6/03

BETWEENSKYE COURT PTY LTD

Appellants

ANDKEITH RICHARD MASON AND GLENYS MARGARET MASON

Respondents

Hearing:12 June 2003

Coram:Blanchard  J
Panckhurst J
O'Regan J

Appearances:  M J Dennett for Appellants

G J Thwaite for Respondents

Judgment:18 June 2003 

JUDGMENT OF THE COURT DELIVERED BY BLANCHARD J

[1] This is an appeal from an oral judgment of Laurenson J in the High Court at Auckland delivered on 5 December 2002 dismissing the appellant’s application to strike out one of the respondents’ two causes of action against it in a proceeding commenced on 6 December 2000. The proceeding arose out of the purchase by Mr and Mrs Mason of six residential apartments in Queensland. The cause of action which was the subject of the application alleges a breach by the appellant, acting with two other defendants, of provisions of the Trade Practices Act 1974 of the Commonwealth of Australia (the TPA) or of provisions of the Fair Trading Act 1989 of the State of Queensland (the FTA). The basis for the application was that under those statutes the claim was barred because it had not been commenced “within 3 years after the date on which the cause of action accrued”: s82(2) of the TPA and s99(2) of the FTA which are in the same terms.

[2]       The six contracts were entered into between 20 May 1996 and 31 May 1996 between Mr and Mrs Mason as purchasers and another defendant, Camoola Pty Ltd, the developer of the properties, as vendor.  The appellant, Skye Court Ltd, was the real estate agent through whom the transactions were negotiated.  The lawyers acting for the Masons, McCullough Robertson, are also joined as defendants.  Essentially it is the Masons’ case that the developer, the agent and the law firm acted in concert to mislead them at various stages of the transactions.  It is said that Skye inaccurately and in breach of the TPA and the FTA told the Masons that some of the apartments were a “high return investment”, overstated the true value and expected rental income, failed to tell the Masons about the existence of marketing structures often called “food chains” operating in Queensland and failed to disclose a relationship with McCullough Robertson whom Skye had recommended as lawyers for the Masons.

[3]       The contracts were conditional upon the registration (in New Zealand terminology, the deposit) of relevant subdivision plans by 30 April 1997, a date which was extendable by the vendor in certain circumstances (if there had been inclement weather or action by the local authority delaying the development of the apartments).  It is alleged that in breach of the TPA and FTA McCullough Robertson failed to investigate whether such circumstances had been the cause of delay and failed to advise the Masons after 1 May 1997 that they were entitled to rescind the contracts; and that such deceptive conduct was performed “through another defendant.”  Mr Thwaite said that what is intended by the statement of claim is an allegation that as a result of the various alleged misrepresentations and collusion between Skye and the law firm, the Masons went ahead with and completed the purchases of the six apartments on dates between December 1996 and 8 December 1997, the latter date being just less than three years before the commencement of the proceeding. 

[4]       Laurenson J took the view that this was not a proper case for striking out the claim against Skye.  He considered that evidence and legal argument in light of the facts as determined at trial would be required.  He referred to Ronex Properties Ltd v John Laing Construction Ltd [1982] 3 All ER 961 in which the English Court Appeal held that since a statute of limitation merely barred the plaintiff’s remedy and not the cause of action, and since a limitation defence might be subject to exceptions, a defendant could not obtain an order striking out a claim as disclosing no cause of action merely because the defendant might have a good limitation defence. The Court did, however, qualify that determination by indicating that the defendant could nevertheless “in a very clear case” apply to strike out the claim on the ground that it is frivolous, vexatious and an abuse of the court’s process. Although Laurenson J did not advert in his judgment to that qualification, it is apparent that he did not regard the issue of the accrual of the cause of action and the point at which the three years in the statute began to run as being so clear-cut that it was appropriate to grant a strike out.

[5]       In his submissions to us for Skye, Mr Dennett said that it was established by certain Australian cases that time runs under the TPA and the FTA in a case such as the present from the date on which a purchaser becomes unconditionally bound by the contract and thereby suffers loss or damage.  He accepted that this could not have been before the registration of the last of the subdivision plans and so not before 20 May 1997, but that was well outside the three year period.  In support of this proposition Mr Dennett referred us to passages in the judgments of the members of the High Court of Australia in Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 which do appear to indicate that under s82(2) the cause of action accrues when the loss is suffered and that, in the case of an agreement to purchase property, that happens when the purchaser becomes bound to the property: see the joint judgment of Mason CJ, Dawson, Gaudron and McHugh JJ at 525-527, 530 and 533 and the judgments of Brennan J at 537 and Toohey J at 557.

[6]       Mr Dennett also referred to the decisions of the Federal Court of Australia in Saunders v Glev Franchises Pty Ltd (1996) ATPR 41,515 and of the New South Wales Court of Appeal in Scarcella v Lettice (2000) 51 NSWLR 302 to support his position that the relevant Australian law is plain beyond argument.

[7]       For the Masons, Mr Thwaite deployed several preliminary arguments of no great merit but wisely concentrated in the end on the proposition that upon the particular facts of this case, especially with an allegation of what amounted to collusion between the defendants, the application of the statutory bar is not necessarily straightforward and that the Court should not make any determination on the effect of the Australian law until the facts have been found at trial and expert evidence from an appropriately qualified lawyer has been given.

[8]       We dispose first of Mr Thwaite’s less convincing arguments.  He said that because, in an earlier argument in the High Court concerning whether New Zealand was forum conveniens, Skye had conceded that the Masons had a good arguable case, the present application was prevented by an issue estoppel.  We reject that proposition.  The concession was made for the limited purpose of a procedural argument directed to a question of jurisdiction, and there was no wider finding by the Court which should bar a strike out application if it otherwise should succeed.

[9]       Secondly, it was asserted that since the applicant for a striking out must accept the facts as pleaded, Skye must accept the pleaded contention that no claim was barred by a limitation period.  The ingenious argument was that, because the issue was one of foreign law, the pleading must for this purpose be taken to be one of fact.  Of similar ilk was a further argument that since a question of foreign law is one of fact which must be proved by evidence, the citation by Mr Dennett of cases not referred to the High Court Judge amounted to an impermissible introduction of new evidence in this Court.  Counsel went so far as to submit also that this Court should not substitute its own findings about Australian law because that would be to differ from the High Court on a question of fact.

[10]     Whilst the existence of a foreign law, statutory or judge made, is a question of fact which must be proved, we do not accept any of these propositions.  A strike out application will not be defeated by pleaded facts which are patently wrong or entirely implausible.  If it is obvious from the other pleaded facts that there is a good limitation defence, it can be of no avail that there has been a formal plea to the contrary in the statement of claim.  And whilst foreign law must be proved as a matter of evidence, it is not always necessary to do so by means of the testimony of an expert witness or the adducing of material through such a witness.  Section 39 of the Evidence Act 1908 permits, and indeed requires, the admission of books of statutes, ordinances or written laws of any country printed or published with the authority of the government of that country or by the printer to such government as “prima facie evidence of such laws”.  And s40 authorises the courts of this country to refer to printed books purporting to contain statutes, ordinances or written laws in force in any country “although not purporting to have been printed or published by authority as aforesaid”, and to refer also to books purporting to contain reports of decisions of courts or judges in such country and textbooks treating of the laws of such country.  Reference may be made “for the purpose of ascertaining the laws in force in such country”.  A New Zealand appellate court is as much entitled to refer to such materials as the court appealed from, whether they have been put before it by counsel or consulted by the members of the court on their own initiative and whether or not the court below has had the opportunity of considering them.  The Privy Council recently commented in Dymocks Franchise Systems (NSW) Pty Ltd v Todd, judgment 7 October 2002, at para 53:

Section 39 of the Evidence Act 1908 is directed to obviating the need for formal proof of written laws etc.  Section 40, on the other hand, states that such materials may (not must) be looked at for the purpose of ascertaining the laws in force in such country.  If that is the purpose of looking at the foreign sources it must be the necessary conclusion that the judge can ascertain and find the law.

But the New Zealand courts and judges are not bound to accept or act on the statements in any such books as evidence of such laws. 

[11]     As Mr Thwaite himself recognised in his exchanges with the Bench, the real question is not whether the court may consult foreign statutory and case law materials, but whether, having done so, it is proper in the particular case, or at the particular stage of the case, for it to make a finding as to the foreign law without first having received evidence from an appropriately qualified lawyer who is able to give expert testimony on the content of the foreign law.  It would not be proper to do so unless the court could be confident that the foreign law is clear in its application to the factual situation before the court.  Special caution is required at a stage when relevant facts remain in dispute.

[12]     We are prepared to assume, for the sake of argument, that a cause of action generally accrues under the TPA and FTA in favour of a purchaser induced by a misrepresentation to enter into a sale and purchase of land at the time when the purchaser becomes unconditionally bound by the contract.  We are doubtful about Mr Thwaite’s submission that time does not run under the statutes until the purchaser discovers that the representation is misleading.  But, as the English Court of Appeal said in Ronex Properties, limitation periods may be subject to exceptions.  Whilst there is no provision which expressly qualifies s82(2) in a case of fraud, we do not at present feel able entirely to dismiss the possibility that an Australian Court might find that it was implicit.  We are also conscious that, in the way the case was put to us from the bar by Mr Thwaite by way of clarification, it is alleged that there was a misrepresentation by McCullough Robertson, in collusion with the other defendants, concerning the extension of the condition date or, putting it another way, a misrepresentation that the plans were all timeously registered.  We accept that it may be arguable that such a representation had a continuing operation until the completion of the last of the transactions on 8 December 1997, and, if so, might possibly have delayed the operation of the time bar. 

[13]     The Australian statutory provisions are significantly different from the comparable provisions in the New Zealand Fair Trading Act 1986, both as the latter stood in 1996-1997 and at the present time.  Without findings of fact in a case which appears to be of some complexity, we consider that Laurenson J was wise not to attempt to determine and apply the relevant Australian law.  The matter is not so clear cut at this preliminary stage that the respondents’ claim can be said to be necessarily frivolous, vexatious or an abuse of process.

[14]     The appeal against the refusal of a strike out order is therefore dismissed.  The appellant, Skye, must pay the respondents’ costs on the appeal of $3,000 together with their reasonable disbursements, including travel and accommodation costs of counsel, to be fixed if necessary by the Registrar.

Solicitors:
Kennedys, Auckland for Appellants
David T Thwaite, Auckland for Respondents