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Spoor v Price QCA 297
SUPREME COURT OF QUEENSLAND
Spoor & Ors v Price & Ors  QCA 297
CHRISTINE CLAIRE SPOOR AND KERRY JOHN SPOOR AS TRUSTEES, MARIANNE PIENING, FREDERICK PIENING, JOYCE HIGGINS, CHERYL THOMPSON, JOYCE MAVIS COOMBER, ANGUS MACQUEEN AND ANGUS MACQUEEN AS TRUSTEE
MATTHEW WARD PRICE AND DANIEL JAMES PRICE AS EXECUTORS OF THE ESTATE OF ALAN LESLIE PRICE (DECEASED)
ALLANNA MERCIA PRICE
JAMES BURNS PRICE
GLADYS ETHEL PRICE BY HER LITIGATION GUARDIAN ERIN ELIZABETH TURNER
Appeal No 5021 of 2019
SC No 8069 of 2017
Court of Appeal
General Civil Appeal
Supreme Court at Brisbane –  QSC 53 (Dalton J)
17 December 2019
4 September 2019
Sofronoff P and Gotterson and Morrison JJA
LIMITATION OF ACTIONS – GENERAL MATTERS – OTHER GENERAL MATTERS – where the parties executed two mortgages over land to secure an advance of $320,000 in 1998 – where the appellants brought proceedings in 2017 against the respondents to recover the monies owing and possession of the land secured by the mortgage – where the respondents denied liability for the amount claimed on the basis that the appellants were statute barred from pursuing the action by operation of sections 10, 13 and 26 of the Limitation of Actions Act 1974 (Qld) – where the appellants argued that the respondents were unable to plead any defence under the Limitation of Actions Act by virtue of clause 24 of each mortgage – where the learned primary judge rejected the respondents’ submission that it was not possible at law to contract out of the provisions of the Limitation of Actions Act – whether an agreement to contract out of the Limitation of Actions Act is void and unenforceable as a matter of public policy – whether an agreement that contracts out of the Limitation of Actions Act was itself subject to the operation of the Limitation of Actions Act
MORTGAGES – MORTGAGE CONTRACT – COVENANTS – OTHER MATTERS – where the parties executed two mortgages over land to secure an advance of $320,000 in 1998 – where the appellants brought proceedings in 2017 against the respondents to recover the monies owing and possession of the land secured by the mortgage – where the respondents denied liability for the amount claimed on the basis that the appellants were statute barred from pursuing the action by operation of sections 10, 13 and 26 of the Limitation of Actions Act 1974 (Qld) – where the appellants argued that the respondents were unable to plead any defence under the Limitation of Actions Act by virtue of clause 24 of each mortgage – where clause 24 of each mortgage provided that “the provisions of all statutes now or hereafter in force whereby or in consequence whereof any or all of the powers rights and remedies of the Mortgagee and the obligations of the Mortgagor hereunder may be curtailed, suspended, postponed, defeated or extinguished shall not apply” – where the learned primary judge found that clause 24 of the mortgages was ambiguous – whether clause 24 of the mortgages was ambiguous – whether clause 24 of the mortgages prevents the pleading of a limitations defence – whether the learned primary judge erred in concluding that, because of the operation of s 24 of the Limitation of Actions Act, the mortgagee’s title to the mortgaged land was extinguished before the proceeding was commenced
Limitation of Actions Act 1974 (Qld), s 10(2)(a), s 13, s 24(1), s 26(1)
Belgravia Nominees Pty Ltd v Lowe Pty Ltd (2017) 51 WAR 341;  WASCA 127, cited
Commonwealth v Verwayen (1990) 170 CLR 394;  HCA 39, considered
Newton, Bellamy & Wolfe v State Government Insurance Office (Qld)  1 Qd R 431, discussed
N Andreatidis QC, with A F Messina, for the appellants
T Matthews QC, with D D Keane, for the respondents
Mullins Lawyers for the appellants
M A Kent & Associates for the respondents
- SOFRONOFF P: I agree with Gotterson JA.
- GOTTERSON JA: In 2017, a proceeding was commenced by the trustees of a small pension fund which is the successor in title, as mortgagee, to Law Partners Mortgages Pty Ltd (“LPM”). The plaintiffs pleaded that on 25 June 1998, the first and second defendants, who were members of the Price family, executed Mortgage 703635657 over land at Minden and Rosewood in favour of LPM. A like plea was made against other members of the Price family, the third and fourth defendants, in respect of Mortgage 702810173 over land at Tallegalla.
- The third defendant died and his interest in the Tallegalla land passed to the fourth defendant. The proceeding against him was discontinued in November 2017.
- The plaintiffs claimed against the first, second and fourth defendants the sum of $4,014,969.22 in respect of monies owing and secured by the mortgages. They also sought recovery of possession of the land at Minden, Rosewood and Tallegalla.
- After pleadings had closed, the plaintiffs, on the one hand, and the first and fourth defendants, on the other, applied for summary judgment on 4 September and 19 September 2018 respectively. The applications were heard together on 17 October 2018.
- After receipt of written submissions, the last of which were filed on 5 April 2019, the learned primary judge made orders and delivered reasons for them on 12 April 2019. Judgment was given for the first, second and fourth defendants against the plaintiffs whose application was dismissed. Later, on 15 April 2019, her Honour made orders for the execution by the plaintiffs of releases of the two mortgages. The plaintiffs were ordered to pay the first and fourth defendants’ costs and the second defendant’s costs on the standard basis.
- On 10 May 2019, the unsuccessful plaintiffs filed a notice of appeal to this Court. The parties agree that it is to be taken as appealing against the orders made on both dates. It is convenient in these reasons to refer to the plaintiffs as “the appellants” and to the three defendants as “the respondents”. The respondents filed notices of contention in identical terms in late May 2019.
Basis of the claim
- As the learned primary judge noted, the mortgages were to secure an advance of $320,000 made to all of the respondents and the deceased on 2 July 1998. The secured monies were due to be repaid, but were not repaid, on 2 July 1999. A new agreement was entered into between the parties whereby a lower rate of interest (11.25 per cent) was to apply to the loan and the repayment date was extended to 2 July 2000. Again, the repayment was not paid.
- In November 2000 some of the mortgaged land was sold for $116,157 which was paid to the mortgagee appellants. That reduced the principal by $50,000 once outstanding interest and fees had been deducted.
- Allowing for some other small adjustments, the principal outstanding became $270,000 at 30 April 2001. Thereafter, no further repayments were made.
- The amount for which the appellants sued was the principal outstanding increased after 30 April 2001 by interest accruing on a compounding monthly basis at the rate of 16.25 per cent as provided for in the mortgages. On 28 June 2017, the appellants served notices on the respondents pursuant to s 84 Property Law Act 1974 (Qld) requiring payment of that amount. It was not paid.
- In the Amended Defence and Counterclaim of the First and Fourth Defendants, liability for the amount claimed was denied on the following basis:
“a) the Plaintiffs are statute barred from pursuing the action for debt or enforcement of Mortgage 703635657 or Mortgage 702810173 by operation of sections 10, 13 and 26 of the Limitation of Actions Act 1974 the right of action having accrued no later than 2 July 1999 and the last acknowledgment having occurred on 30 April 2001 any right to recover was statute barred no later than 30 April 2013;
- (b)interest was only payable for the term of each of the Mortgages pursuant to clause 3 of each Mortgage;
- (c)the Plaintiffs are [statute] barred from enforcing any rights under either Mortgage 703635657 or Mortgage 702810173 by operation of sections 10, 13 and 26 of the Limitation of Actions Act 1974.”
The pleading further alleged that, as a consequence, there was no extant debt; that the mortgagee’s right and title under the mortgages had been extinguished; and that neither of the mortgages was a valid or subsisting security. Pleadings to similar effect were made in the Further Amended Defence of the Second Defendant.
- In reply to each defence, reliance was placed on clause 24 of each mortgage by which, it was alleged, the mortgagor covenanted that they would not plead any defence under the Limitation of Actions Act 1974 (Qld) (“Limitations Act”) in a proceeding commenced by the mortgagee to enforce powers, rights and remedies under the mortgage.
Clause 24 and provisions of the Limitations Act
- Clause 7(a) of the Mortgages incorporates provisions contained in a memorandum filed with the Registrar of Titles. Clause 24 of the memorandum provides:
- The Mortgagor covenants with the Mortgage[e] that the provisions of all statutes now or hereafter in force whereby or in consequence whereof any o[r] all of the powers rights and remedies of the Mortgagee and the obligations of the Mortgagor hereunder may be curtailed, suspended, postponed, defeated or extinguished shall not apply hereto and are expressly excluded insofar as this can lawfully be done.”
- The provisions of the Limitations Act which were made relevant for consideration by the pleadings were ss 10(1)(a), 13, 24(1) and 26(1), (4) and (5). Those sections and their respective headings are as follows:
- (a)“10 Actions of contract and tort and certain other actions
- (1)The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose –
- (a)… an action founded on simple contract …
- (b)“13 Actions to recover land
An action shall not be brought by a person to recover land after the expiration of 12 years from the date on which the right of action accrued to the person or, if it first accrued to some person through whom the person claims, to that person.”
(By operation of s 5(5) a right of action to recover land includes a right to enter into possession of the land).
- (c)“24 Extinction of title after expiration of period of limitation
- (1)Subject to section 17, subsection (2) of this section and the Real Property Act 1861, where the period of limitation prescribed by this Act within which a person may bring an action to recover land (including a redemption action) has expired, the title of that person to the land shall be extinguished.”
- (d)“26 Actions to recover money secured by mortgage or charge or to recover proceeds of the sale of land
- (1)An action shall not be brought to recover a principal sum of money secured by a mortgage or other charge on property whether real or personal nor to recover proceeds of the sale of land after the expiration of 12 years from the date on which the right to receive the money accrued.
- (4)The provisions of this section do not apply to a foreclosure action in respect of mortgaged land, but the provisions of this Act with respect to an action to recover land apply to such an action.
- (5)An action to recover arrears of interest payable in respect of a sum of money secured by a mortgage or other charge or payable in respect of proceeds of the sale of land or to recover damages in respect of such arrears shall not be brought after the expiration of 6 years from the date on which the interest became due.”
The judgment at first instance
- The learned primary judge noted that despite aspects of the pleadings which it is unnecessary here to mention, the applications before her were conducted on the basis that the respondents had, by clause 24, contracted out of the Limitations Act.
- Her Honour first considered, and then rejected, a submission for the respondents that for public policy reasons, it was not possible at law to contract out of the provisions of the Limitations Act. In doing so, her Honour relied on the enunciation of principle by Mason CJ in Commonwealth v Verwayen in support of contracting out of statutory limitation provisions, the Queensland appellate decisions of Newton, Bellamy & Wolfe v State Government Insurance Office (Qld) and Lindsay v Smith, and a passage from Handford P, Limitation of Actions, 2nd ed, all to that effect.
- Accordingly, in the view of the learned primary judge, there was no reason to doubt the validity of a borrower’s promise in a loan or mortgage document never to raise a limitations defence to an action to recover monies due to the lender. However, her Honour drew a distinction in the case of a promise not to raise a limitations defence in an action to recover possession of land.
- In summary, relying on observations of Mason CJ in Verwayen, the learned primary judge reasoned that a provision such as s 10(1)(a) of the Limitations Act conferred a benefit upon an individual in the nature of a statutory right to plead a certain defence, which could be waived. By contrast, s 24(1) thereof operated to extinguish rights, and not merely to confer a benefit. Hence, her Honour held, it was not open to parties to contract against the operation of that section. Further, here, s 24(1) had operated to extinguish the mortgagee’s title to the mortgaged land before the current proceedings had been commenced. Thus, clause 24 was incapable of altering the extinguishment of that title.
- I note that the learned primary judge did, however, reject a submission for the first and fourth defendants that where s 24(1) had operated to extinguish a mortgagee’s title, it also operated to extinguish all rights of the mortgagee, including personal rights, derived from the mortgage. Such rights, those defendants argued, included the mortgagee’s right to recover monies and the right to rely on clause 24.
- Next, the learned primary judge also rejected a submission for the same defendants that clause 24 was also subject to the operation of the Limitations Act and that the time for reliance upon it had run out. Her Honour considered that, relevantly, time would begin to run from when clause 24 was breached by the pleading of a limitation defence, not from when clause 24 became contractually binding.
- Her Honour then turned to the construction of clause 24. She noted that it does not mention the Limitations Act and that it has two fields of operation, namely, “whereby” and “in consequence whereof”.
- The learned primary judge concluded that clause 24 is, as a whole, ambiguous in that:
“. direct reference to the Limitations Act is avoided;
- five verbs are used, three of which [‘curtailed’, ‘suspended’ and ‘postponed’] are not apt to refer to the Limitations Act;
- one verb, ‘defeated’, is not apt to refer to the direct effect of the Limitations Act but could be used, albeit somewhat imprecisely, to refer to the consequential effect of the mortgagor pleading a limitations defence;
- the verb, ‘curtailed’, which is apt to refer to both the effect of the Limitations Act on the mortgagee’s remedies, and (adopting an imprecise construction) the effect of the mortgagor’s filing a limitations defence, is not the most obvious word to have used, and
- obvious words such as ‘barred’ are not used.”
- With regard to the second and third of these points, her Honour considered that the verbal forms “suspended” and “postponed” were inapt because neither s 10(1)(a) nor s 26(1) operates to suspend or postpone rights and that the verbal forms “extinguished” and “defeated” were inapt because those provisions extinguished or defeated rights only if pleaded. Likewise, for the verbal form “curtailed”. Expanding upon that, she said:
“ When a limitations defence is taken by a mortgagor, the legal result could be described as bringing about a situation where remedies of the mortgagee were defeated or cut short “in consequence” of the Limitations Act. That is, the words “curtailed” and “defeated” might be read as referring to the Limitations Act when the second field of operation of cl 24 (“in consequence whereof”) is considered. Strictly speaking however, the loss of remedy is a consequence of the election to plead the statute, not a consequence of the statute. Thus, to construe the clause as contended for by the plaintiff, the strict meaning of the words used has to be disregarded, and a less precise, more lenient, interpretation adopted.”
- In view of the ambiguity, the learned primary judge applied the contra proferentem rule of construction against the mortgagee. Her Honour said:
“ In this case, the mortgage documents were prepared by the mortgagee, a law firm which engaged in the business of mortgage lending. Clause 24 works only to the benefit of that party, the mortgagee. The plaintiffs contend that it has a very unusual effect, very much to the detriment of the defendants. The clause could have expressed so that it clearly excluded the operation of the Limitations Act. Instead it used ambiguous words and on a strict construction does not favour the plaintiff.
 In all the circumstances, construing the clause contra proferentem, I am not prepared to construe the clause as referring to the Limitation of Actions Act.”
- The learned primary judge gave judgment against the appellants on the claim to recover possession on the basis that s 24(1) of the Limitations Act had operated to extinguish the mortgagee’s title to the subject lands before the proceeding was commenced. Her Honour further held that on her construction of clause 24, it did not operate to prevent the respondents from raising defences based on ss 10(1)(a) and 26(1) of the Limitations Act to the money claim.
The grounds of contention
- The respondents contend that the decision of the learned primary judge should be affirmed on two other grounds. I propose to consider them before discussing the grounds of appeal.
- The grounds of contention are:
“1. The learned trial Judge should have found:
- (a)that an agreement to contract out of the Limitation of Actions Act 1974 (Qld) made before a cause of action has arisen is void and unenforceable as a matter of public policy; and
- (b)that if clause 24 of the mortgages had the effect contended for by the Appellant it was void and unenforceable.
- Further and in the alternative, if a party could contract out of the operation of the Limitation of Actions Act 1974 (Qld) that contract itself was subject to the operation of the Limitation of Actions Act 1974 (Qld) and being part of the Mortgage Contract was incapable of enforcement the cause of action having arisen no later than 30 April 2001 the Limitation Period had expired for the Mortgage which included clause 24.”
- Respondents’ submissions: In written submissions, the respondents sought to limit the authority of Verwayen and the Queensland decisions to which the learned primary judge referred, to contracting out of pleading a limitations defence to a cause of action once it had accrued. Those cases did not concern contracting out prior to the accrual of a cause of action. It was submitted that contracting out in that circumstance is void.
- In support of this submission, the respondents relied on decisions of several courts in the United States of America. In Hirtler v Hirtler the Supreme Court of Utah in 1977 observed:
“Although there is a conflict of authority, the majority of jurisdictions hold an agreement contained in an original obligation never to assert the statute of limitations violates the public policy of the statute and is invalid. Statutes of limitations are not designed exclusively for the benefit of individuals but also for the public good. These statutes of repose are intended to prevent the revival and enforcement of stale demands; against which it may be difficult to defend, because of lapse of time, fading of memory, and possible loss of documents. If effect were given to a waiver of the statute of limitations contained in a contract, such a stipulation would be inserted in every promissory note and similar instrument as a matter of routine. The door would be open to the very abuses the statute was intended to prevent, and the result would be an annihilation of the statute.”
Their Honours noted that the view they preferred had support in leading texts.
- Later, in 2004, the Appellate Court of Connecticut in Haggerty v Williams, citing Hirtler, said:
“Of the two schools of thought on the issue, we agree with the majority position that ‘a stipulation contained in a written instrument, waiving the defence of the statute of limitations permanently, as to any breach of contract that might occur in the future, is void and unenforceable as contrary to public policy’.”
- The respondents submitted that factors such as those identified by the Supreme Court of Utah reflected why, in Australia, contracting out before a cause of action had arisen ought to be regarded as being against public policy.
- Appellants’ submissions: The appellants submitted that the law in the United States had no role to play in determining the law in Australia. The decisions relied on by the respondents were inconsistent with the approach adopted in Australia and should not be followed.
- Discussion: There appears to be no Australian authority in which separate consideration has been given to whether a contractual provision not to plead a limitations defence entered into for consideration before a cause of action to which it might be pleaded has arisen, is void as against public policy. However, judicial observations at the highest level in this country suggest that such a provision is not, for that reason, void.
- In Verwayen, s 5(6) of the Limitation of Actions Act 1958 (Vic) was relevant. It provided that no cause of action for damages for personal injury shall be brought after the expiration of three years after the cause of action accrued. As the learned primary judge set out in her reasons, Mason CJ there made the following observations:
“Undoubtedly, some statutory rights are capable of being extinguished by the person for whose benefit they have been conferred … However, some statutory rights may also operate as a condition precedent to a court’s jurisdiction … More importantly, some rights may be conferred for reasons of public policy so as to preclude contracting out or abandonment by the individual concerned … It is therefore necessary to examine the relevant statutory provision in this case in order to ascertain whether it is susceptible to extinguishment in this way.
Although the terms of [the relevant limitation provision] are such that it is susceptible of being read as going to the existence of the jurisdiction of a court to hear and determine an action of the kind described, limitation provisions similarly expressed have not been held to limit the jurisdiction of courts. Instead, they have been held to bar the remedy but not the right and thus create a defence to the action which must be pleaded …
On the footing that the right to plead the statute as a defence is a right conferred by statute, the respondent’s contention that the right is capable of waiver hinges on the scope and policy of the particular statute … The issue is not whether the relevant provisions are beneficial to the public, but whether they are ‘dictated by public policy’ and enacted ‘not for the benefit of any individuals or body of individuals, but for considerations of State’. Although, in one sense, all statutes give effect to some public policy … the critical question is whether the benefit is personal or private or whether it rests upon public policy or expediency …
In this case there is the public policy that there should be finality in civil litigation. However, the Parliament has seen fit to implement this policy, not by imposing a jurisdictional restriction, but by conferring on defendants a right to plead as a defence the expiry of the relevant time period. In these circumstances and having regard to the nature of the statutory defence, I conclude that the purpose of the statute is to confer a benefit upon persons as individuals rather than to meet some public need which must be satisfied to the exclusion of the right of access of individuals to the courts. On that basis, it is possible to ‘contract out’ of the statutory provisions, and it is equally possible to deprive them of effect by other means such as waiver. Put differently, the provisions are procedural rather than substantive in nature, which suggests that they are capable of waiver ...”
- In the same case, Brennan J said of the “right” created by s 5(6), that it was introduced solely for the benefit of a defendant who must plead it before it is effective and who may waive it. Consistently with this, French CJ, Crennan, Keifel and Bell JJ in Westfield Management Ltd v AMP Capital Property Nominees Ltd more recently said:
“… a person upon whom a statute confers a right may waive or renounce his or her rights unless it would be contrary to the statute to do so. It will be contrary to the statute where the statute contains an express prohibition against ‘contracting out’ of rights. In addition, the provisions of a statute, read as a whole, might be inconsistent with a power, on the part of a person, to forego statutory rights. It is the policy of the law that contractual arrangements will not be enforced where they operate to defeat or circumvent a statutory purpose or policy according to which statutory rights are conferred in the public interest, rather than for the benefit of an individual alone. The courts will treat such arrangements as ineffective or void, even in the absence of a breach of a norm of conduct or other requirement expressed or necessarily implicit in the statutory text.”
- As both Mason CJ and Brennan J expressed it, what is conferred by a limitations statute is a right on a defendant to plead as a defence the expiry of a limitation period. The right is conferred on a defendant as an individual. As such, an individual may contract for consideration not to exercise the right, or to waive it, as a defendant.
- There is, as Mason CJ recognised, a public policy that there should be finality in civil litigation. However, the legislature has not adopted a course of implementing the policy by excluding individuals from access to the courts once a stated period of time has elapsed after a cause of action has accrued. To the contrary, the policy has been implemented by permitting such access but conferring a right on a defendant to plead a limitations defence.
- Significantly, the legislation which implements the policy does not expressly prohibit an individual from contracting in any one of a number of ways with effect that a right to plead a limitations defence would never arise or, if it did, it would not be exercised. Such ways could include contracting to the effect that statutory provisions, in which such rights are sourced, are not to apply to the contract. Nor is there any basis, in my view, for implying such a prohibition into the legislation. Thus, it may be inferred that, from the legislature’s perspective, it is compatible with public policy that an individual have complementary rights to choose not to become entitled in the first place to plead limitations defences or, if so entitled, to choose to not plead them.
- That latter inference derives some support in the enactment in certain jurisdictions, notably New Zealand on the one hand, and Western Australia, Alberta and Ontario on the other, of amendments to limitations statutes to provide clearly that “contracting out” of limitation defences or extension of limitation periods by agreement respectively is permitted. It is unlikely that such amendments would have been made had “contracting out” or extension by agreement been perceived in those jurisdictions as being inconsistent with public policy.
- Finally, I note that in addition to the passage from Professor Handford’s text, Professor Dal Pont in his text, Law of Limitation, states to similar effect:
“That the law allows parties via contract to abbreviate the length of a limitation period for some or all of the incidents of their relationship makes its logical for the law to likewise allow parties, by contract, to disclaim reliance on a limitation period, whether generally or for a specified period.”
- For these reasons, I do not accept the respondents’ first contention.
- This contention is, in my view, misconceived and cannot succeed. Firstly, as the learned primary judge held, it incorrectly assimilates the incidence of a contractual obligation with the accrual of a cause of action for breach of it.
- Secondly, as it is elaborated in written submissions, the contention also incorrectly assimilates a breach of contract by the mortgagor in failing to pay outstanding monies by the due date with a breach of contract in pleading Limitations Act defences. Each of these breaches is capable of giving rise to separate and distinct causes of action. Thus, if as the respondents contend, the Limitations Act does apply to clause 24 itself, then it will have application to it only when that clause itself is breached.
- I would add that the observations of McPherson J in Newton, Bellamy & Wolfe to which the respondents refer do not articulate a considered view that where an agreement is made not to plead limitation defences, the Limitations Act applies to the agreement with effect that any time limit set by that Act begins to run from when the agreement is made. His Honour was there concerned to explain why he would modify an injunction that had been made which, on its face, would prevent a defendant from pleading a limitation defence to a particular cause of action to which the defendant had not agreed not to plead it.
The grounds of appeal
- There are five grounds of appeal set out in the notice of appeal, the first of which was not pursued. The live grounds are as follows:
“(b) The learned primary judge erred in concluding that a mortgagee under a Torrens system mortgage has something which can be described as a title in respect of its statutory interest in land (reasons for decision at ).
- (c)The learned primary judge erred in concluding that, because of the operation of s 24 of the Limitation of Actions Act 1974 (Qld), the mortgagee's title to the mortgaged land was extinguished before the proceeding was commenced (reasons for decision at ,  and ).
- (d)The learned primary judge erred in concluding that clause 24 of the mortgages was ambiguous (reasons for decision at ).
- (e)The learned primary judge erred in concluding that cl 24 of the mortgages does not prevent the pleading of a limitations defence (reasons for decision at ).”
- I propose to consider Grounds (d) and (e) first. They may be considered together since the conclusion challenged in Ground (e) follows from the conclusion as to ambiguity challenged in Ground (d).
Grounds (d) and (e)
- Appellants’ submissions: The appellants accept that the verbal forms “suspended”, “postponed” and “extinguished” are inapt to refer to the Limitations Act. However, they argued that that was of no consequence because the verbal forms “curtailed” and “defeated” were apt to do so.
- As to the first of them, the appellants contended that the verb “curtailed” has, as one of its ordinary and natural meanings, “to cut off”. It is a meaning that the learned primary judge had overlooked. The pleading of a limitations defence has the consequence of being a complete answer to a plaintiff’s claim. In that way, here, by virtue of the pleaded limitation defences, the appellants would be “cut off” from recovering monies payable and from otherwise enforcing legal remedies. In that way, their claims were curtailed.
- With respect to the second of them, the appellants submitted that the verbal form “defeated”, according to ordinary usage, is apt to describe the effect upon a legal right to which an available limitations defence is pleaded. Moreover, it is not uncommon for judges to use that term to describe the effect of such defences.
- Thus, the appellants further submitted, clause 24 is not ambiguous in its potential application to the Limitations Act. Hence, occasion for the application of the contra proferentem rule does not arise.
- Respondent’s submissions: The respondents submitted that, at the very least, clause 24 is ambiguous as a whole. As worded, the clause provides that statutes “shall not apply hereto and are expressly excluded”. There is no covenant by the mortgagor not to rely on any rights, statutory or otherwise.
- As to “curtailed” the respondent submitted that, relevantly, the definition in the Macquarie Dictionary 2nd ed is “cut off a part of”, not “cut off”. A limitations defence does not cut off part of a legal right.
- With regard to “defeated”, the respondents argued that the Limitations Act does not defeat the powers, rights or remedies of a party. It does not operate unless pleaded and then operates to “bar” a remedy.
- Thus, neither of these words is, it was submitted, apt to have the effect contended for by the appellants. To the extent that it could arguably have a meaning that gave it that effect, it is ambiguous and hence it is appropriate to apply the contra proferentem rule.
- Discussion: I agree with the learned primary judge that “suspended”, “postponed” and “extinguished” are inapt to describe the effect of provisions such as ss 10(1)(a), 13 and 26(1) of the Limitations Act. When they apply, they do not operate, directly or indirectly, to suspend, postpone or extinguish the right of action to which the provision applies. The appellants accept as much.
- That those verbal forms are themselves inapt has no consequence for the construction or application of clause 24 if either of the other two verbal forms in it is apt to describe the effect of such provisions. I turn first to consider “defeated”.
- The verb “defeat” is not a term of art with an ascertained legal meaning. Like many words, it has a range of meanings according to ordinary usage. That it may have such a range does not have the consequence that its use in the context of clause 24 is necessarily ambiguous. If one of its ordinary meanings is plainly the meaning it is intended to have, then that is the meaning it has.
- Further, clause 24 is drafted in a way that a statutory provision to which it applies is one “whereby” or “in consequence whereof” powers, rights and remedies “may be defeated”. Thus, the statutory provision must be a means by which a given result occurs, that it is to say, the power, right or remedy is defeated, in order for it to fall within the clause.
- I do not share the view of the learned primary judge that clause 24 requires that the “direct effect” of the statutory provision be to defeat the power, right or remedy in the sense that the provision self-operates to do so. The active voice “defeats” which might arguably have favoured such a requirement, is not used in the clause.
- It is the past participle “defeated” in the passive voice that is used in clause 24 to describe the requisite result, namely, that the power, right or remedy may be defeated. In that way, the clause accommodates conduct by the mortgagor to trigger the operation of the statutory provision with the result that the mortgagee’s power, right or remedy might be defeated. As well, the words “may be”, rather than the word “is”, are used to describe the result. Those words have a flexibility that comprehends a decision on the part of the mortgagor whether or not to plead a statutory provision in order for the mortgagee’s power, right or remedy to be defeated by operation of the provision.
- There are instances at the highest judicial level in Australia where the effect of a limitations provision when pleaded has been described as “to defeat” a cause of action. For example, in Verwayen, Brennan J observed:
“The next question is whether the defence of s. 5(6) was waived, that is to say, abandoned so that it was beyond the capacity of the Commonwealth thereafter to defeat the plaintiff’s claim by invoking s. 5(6).”
In the same case, McHugh J said:
“It follows, therefore, that, if the Commonwealth can rely on the Limitation Act to defeat the plaintiff’s action, he will suffer detriment.”
- These statements are, to my mind, illustrations that according to ordinary usage, the word “defeat” aptly describes the effect of limitation provisions. A more recent illustration is to be found in the decision of the Court of Appeal of Western Australia in Belgravia Nominees Pty Ltd v Lowe Pty Ltd. In setting out principles established by a number of other cases, the Court included as one of them, the following:
“(f) however, in a case in which a defendant indicates an intention to plead a limitation defence to a cause of action barred by statute at the time it is proposed to be added by amendment, the court will disallow the amendment if there is no doubt that such a defence would defeat the claim.”
- I infer from these references that their Honours considered that a limitation provision was the means whereby the cause of action was defeated, notwithstanding that it was for a defendant to plead it for that to happen. In other words, they did not consider that a need for the provision to be triggered by a pleading of it has the consequence that the provision is not the means by which the cause of action is defeated.
- Unlike the learned primary judge, I have, therefore, concluded that clause 24, according to its terms, does apply to provisions in the Limitations Act by which the enforcement of a right, power or remedy of the mortgagee might be defended by the mortgagor and thereby defeated. Relevantly, those provisions include ss 10(1)(a), 13 and 26(1).
- Having regard to this conclusion, it is unnecessary for me to consider whether “curtail” has a like operation in order to decide these grounds of appeal. I would, however, express my doubt that it does. That is because of the connotation the word has of severance, rather than of termination.
- For these reasons, Grounds (d) and (e) have been made out, in my view.
Grounds (b) and (c)
- Before turning to the submissions on these grounds, I note that the appellants have not challenged the decision at first instance insofar as the learned primary judge held that it was not open to parties by a provision such as clause 24 to contract against the operation of s 24(1) of the Limitations Act as such. It is therefore not necessary for this Court to consider that issue.
- Appellants’ submissions: The appellants submitted that s 24(1) has no application in the present case because they, as mortgagee, did not hold title to the mortgaged lands. Each mortgage constitutes an interest in the land but is not a title to the land within the meaning of s 24(1).
- To the extent that the learned primary judge relied on the decision of the New South Wales Court of Appeal in Perpetual Trustees Victoria Ltd v English, the appellants further submitted, firstly, that the passage cited does not support a proposition that a registered mortgage confers title in the land and, secondly, that the decision of the same court in Provident Capital Ltd v Printy, referred to in Perpetual Trustees, does not support it either.
- Respondents’ submissions: The respondents submitted that it is clear from both ss 5(5) and 24 of the Limitations Act that the latter is to apply to Torrens system land. Further, the full effect of what the New South Wales Court of Appeal said in Perpetual Trustees is that a registered mortgage of Torrens system land has an indefeasible title thereto.
- The learned primary judge was therefore correct to conclude that s 24(1) had operated to extinguish the appellants’ title as mortgagee of the mortgaged lands.
- Discussion: The word “title” is not defined for the purposes of the Limitations Act. However, the word “land” is defined in s 5(1) to include “any legal or equitable estate or interest therein”. It follows, in my view, that the word “title” in s 24(1) is apt to include the title that a mortgagee has to its interest as a registered mortgagee of land. The decisions of the New South Wales Court of Appeal to which the parties referred, are of no real assistance in construing the scope of the word “title” in this particular context.
- It is significant that an extinguishment effected by the operation of s 24(1) is predicated upon the limitation period prescribed by the Act within which a person may bring an action to recover land, having itself expired. The word “expire” is not defined for the purposes of the Limitations Act. It is section 13 that is relevant in this context. It provides that an action shall not be brought by a person to recover land after the expiration of 12 years from the date on which the right of action accrued.
- It follows that the appellants’ titles as mortgagee will have been extinguished under s 24(1) only if the s 13 period of limitation has expired in respect of them. In my view, it has not in this case. That is because, consistently with these reasons and as it was open to the parties to agree, clause 24 has at all times operated to exclude s 13 from applying to the mortgages. Thus, as between mortgagor and mortgagee, the period of limitation prescribed by s 13 has never applied and hence has never expired.
- For these reasons, I would reject Ground (b), but uphold Ground (c).
- Since three of the grounds of appeal have succeeded, I would allow the appeal and set aside the orders made on 12 and 15 April 2019.
- At the hearing of the appeal, it was agreed that the parties would be invited to make submissions as to the form of further orders consistent with these reasons and as to costs.
- I would propose the following orders:
- Allow the appeal.
- Set aside the orders made on 12 and 15 April 2019.
- Order that the parties make submissions in writing, not to exceed five pages, as to the form of further orders consistent with these reasons and as to costs, such submissions to be filed and served on or before 28 January 2020.
- MORRISON JA: I have read the reasons of Gotterson JA and agree with those reasons and the orders his Honour proposes.
AB 2 65-69.
AB 2 71-75.
AB 2 50-52, 516-517.
AB 1 20-21.
AB 1 1-5.
At Reasons .
At paragraph 5: AB 35-36.
Ibid paragraphs 5(d), (e). The extinguishment allegation depended upon the operation of s 24(1) Limitation of Actions Act 1974 to that effect.
AB 1 40-43 at paragraphs 5-7.
Paragraph 2(c): AB 1 45 and paragraph 1(c): AB 1 47, 48.
At Reasons , .
(1990) 170 CLR 394 at 404-406.
 1 Qd R 431.
 1 Qd R 610.
At p 79.
Reasons , .
Respondent’s Amended Outline of Submissions (“ROS”) paragraph 36.
566 P.2d 1231.
Per Maughan J (Ellett CJ, Crockett, Wilkins and Hall JJ concurring).
Williston on Contracts (3rd ed) para 183 and Corbin on Contracts para 218.
84 Conn App 675.
ROS paragraphs 39, 40.
 HCA 54; (2012) 247 CLR 129 at 143-144.
Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd  2 All ER 871 at 893.
Tolofson v Jensen  3 SCR 1022 at 1073.
Auckland Harbour Board v Kaihe  NZLR 68 at 87-88.
Limitation Act 2010 (NZ) s 41.
Limitation Act 2005 (WA) s 45.
Limitations Act, RSA 2000, c L-12, s 7; Limitations Act SO 2002, c 24, s 22.
ROS paragraph 30.
At p 446.
Appellants’ Amended Outline of Submissions (“AOS”) paragraph 37.
AOS paragraphs 15-17.
AOS paragraphs 21, 22.
AOS paragraph 25.
AOS paragraph 28.
ROS paragraph 9, 11.
ROS paragraphs 13-16.
ROS paragraph 20.
ROS paragraphs 22, 23.
 WASCA 127; (2017) 51 WAR 341.
AOS paragraph 29.
 NSWCA 32 at .
 NSWCA 131 at .
AOS paragraphs 32-34.
ROS paragraphs 26, 27.
|Event||Citation or File||Date||Notes|
|Primary Judgment|| QSC 53||12 Apr 2019||Plaintiffs' application for summary judgment or alternatively strike-out of the defence dismissed; defendants' application for summary judgment granted (judgment for the defendants): Dalton J.|
|Appeal Determined (QCA)|| QCA 297 (2019) 3 QR 176||17 Dec 2019||Appeal allowed; orders set aside: Sofronoff P and Gotterson and Morrison JJA.|
|Special Leave Granted (HCA)|| HCATrans 142||11 Sep 2020||Special leave granted: Kiefel CJ and Nettle J.|
|HCA Transcript|| HCATrans 36||04 Mar 2021||Appeal heard; decision reserved: Kiefel CJ, Gageler, Gordon, Edelman and Steward JJ.|
|HCA Judgment|| HCA 20; (2021) 95 ALJR 607||23 Jun 2021||Appeal dismissed with costs: Kiefel CJ, Gageler, Gordon, Edelman and Steward JJ.|