Price v Spoor

• Jurisdiction: Australia Federal only
• Judge: Gageler,Kiefel CJ,Gordon JJ.,Edelman J.,Steward J.
• Judgment Date: 23 June 2021
• Neutral Citation: [2021] HCA 20
• Docket Number: B55/2020
• Court: High Court

Matthew Ward Price as Executor of the Estate of Alan Leslie Price (deceased) & Ors

Appellants

and

Christine Claire Spoor as Trustee & Ors

Respondents

[2021] HCA 20

Kiefel CJ, Gageler, Gordon, Edelman and Steward JJ

B55/2020

HIGH COURT OF AUSTRALIA

Limitation of actions — Exclusion by agreement — Where mortgages over land secured loan — Where mortgagors failed to repay loan — Where mortgagees brought proceedings to recover monies owing and possession of land secured by mortgages — Where mortgagors contended mortgagees statute-barred from enforcing rights under mortgages as a result of expiry of relevant time period under Limitation of Actions Act 1974 (Qld) (“Act”) — Where mortgagors contended mortgagees' title under mortgages extinguished by operation of s 24 of Act — Where mortgagees contended that mortgagors agreed not to plead any defence under Act by virtue of cl 24 of mortgages — Whether cl 24 effective to prevent mortgagors from pleading any defence under Act — Whether agreement not to plead any defence under Act unenforceable as contrary to public policy — Whether s 24 of Act operated automatically to extinguish mortgagees' title at expiry of relevant time period — Whether mortgagees' remedy confined to damages for mortgagors' breach of cl 24 of mortgages.

Words and phrases — “action”, “agreement”, “agreement not to plead”, “benefit”, “breach of contract”, “contracting out”, “defeated”, “defence”, “defence of limitation”, “expiry”, “extinguishment of title”, “finality of litigation”, “jurisdiction of the court”, “limitation period”, “limitations defence”, “plea”, “public interest”, “public policy”, “reasonable business person”, “remedy”, “shall not be brought”, “statute-barred”, “statute of limitations”, “statutory bar”, “statutory right”, “waiver”.

Limitation of Actions Act 1974 (Qld), ss 10, 13, 24, 26.

Representation

T Matthews QC with D D Keane and J K Carter for the appellants (instructed by MA Kent & Associates)

N Andreatidis QC with A F Messina and S J Gibson for the respondents (instructed by Mullins Lawyers)

ORDER

Appeal dismissed with costs.

1 Kiefel CJ AND Edelman J. The Limitation of Actions Act 1974 (Qld) (“the Limitation Act”) contains provisions which prescribe the time within which actions founded upon simple contract or for the recovery of land or monies secured by a mortgage over land shall be brought. The principal question on this appeal is whether the parties to a mortgage may agree that the mortgagor will not plead the statutory limitation by way of defence to an action brought by the mortgagee or whether such an agreement is unenforceable as contrary to public policy. A second question concerns the operation of a provision of the Limitation Act respecting extinguishment of title. A third concerns the terms of a clause in the mortgages in question and whether they are effective to prevent the appellants from pleading the statutory time limitation.

2 These questions arose in proceedings brought in 2017 in the Supreme Court of Queensland by the respondents as mortgagees in which they claimed more than $4 million as monies owing under and secured by two mortgages, together with recovery of possession of land the subject of the mortgages.

3 By way of defence and counterclaim, the appellants alleged that the respondents were statute-barred from bringing the action for debt pursuant to ss 10, 13 and 26 of the Limitation Act. The respondents were in consequence said to be barred from enforcing any rights under the mortgages. Two appellants further alleged that the respondents' title under the mortgages had been extinguished. In reply, the respondents relied on cl 24 of each mortgage, which they contended amounted to a covenant on the part of the appellants not to plead a defence of limitation. As a result it was said that the appellants were estopped from pleading it. The respondents might have described the abandonment of reliance on the statutory right which they allege was effected by the agreement as a waiver by the appellants of that right 1.

4 On the hearing of their application for summary judgment or for a strike out of the defences the respondents conceded that if the Limitation Act applied their claims would be defeated. The primary judge (Dalton J) dismissed the application and entered judgment for the appellants 2. The Court of Appeal allowed the appeal from that decision and subsequently gave judgment for the respondents and made other orders 3.

The Limitation Act provisions and their effect

5 Section 10(1)(a) of the Limitation Act in its relevant part provides that:

“(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 …”

6 Section 13 provides:

“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.”

7 The provision which relates to the extinguishment of title upon which the appellants rely is s 24(1), which relevantly provides:

“… where the period of limitation prescribed by this Act within which a person may bring an action to recover land … has expired, the title of that person to the land shall be extinguished.”

8 Section 26 deals with actions to recover money secured by a mortgage or to recover proceeds from the sale of the land.

9 In WorkCover Queensland v Amaca Pty Ltd 4, five members of this Court explained the effect of statutes of limitation by reference to what had been said by Gummow and Kirby JJ in The Commonwealth v Mewett 5. In Mewett, their Honours said that in the case of a statute of limitations in the traditional form a statutory bar does not go to the jurisdiction of the court to entertain the claim but rather to the remedy available, and therefore to the defences which may be pleaded. The cause of action is not extinguished by the statute and unless a defence relying on the statute is pleaded, the statutory bar does not arise for the consideration of the court.

10 What was said in Mewett accords with the reasons of Mason CJ in The Commonwealth v Verwayen 6. Speaking there of then s 5(6) of the Limitation of Actions Act 1958 (Vic) 7 (“the Victorian Limitation Act”), his Honour said that although the terms of that provision are capable of being read as going to the jurisdiction of the court, limitation provisions of this kind have not been held to have that effect. Instead they have been held to bar the remedy but not the right and thereby create a defence to the action which must be pleaded 8. These statements have been applied with approval on a number of occasions in this Court 9.

11 Mason CJ went on to observe 10 that since the right to plead a limitations defence is conferred by statute a contention that the right is susceptible of waiver “hinges on the scope and policy” of the Victorian Limitation Act. The same may be said of the question whether a person may abandon the statutory right to plead a defence of limitation, by agreement.

Public policy

12 In Westfield Management Ltd v AMP Capital Property Nominees Ltd 11 it was accepted that a person upon whom a statute confers a right may waive or renounce that right unless it would be contrary to the statute to do so. Most clearly

this may be the case where the statute contains an express prohibition against “contracting out” of rights or where the statute, properly construed, is inconsistent with a person's power to forgo statutory rights. The joint judgment continued:

“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”.

13 As the Court of Appeal observed 12, a similar approach has been taken by courts in the United Kingdom 13, Canada 14 and New Zealand 15.

14 The appellants rely upon the public interest in the finality of litigation as the policy which the Limitation Act pursues. The finality of litigation, they contend, was the mischief to which the Jacobean statute of 1623 16, which is the origin of statutes such as the Limitation Act, was directed. Tracing the 1623 Act to the Limitation Act of 1974, in Brisbane South Regional Health Authority v Taylor 17, McHugh J said that a motive for the legislature to impose a limitation period was that “the public interest requires that disputes be settled as quickly as possible”; and that a limitation period “represents the legislature's judgment that the welfare of society is best served by causes of action being litigated within the limitation period”.

15 There can be no doubt that a policy of finality of litigation accounts for the provision made by the legislatures for limiting the period within which certain actions should be commenced in the courts. Provisions of this kind are conducive to the orderly administration of justice and are in the public interest, as it may be expected many statutes are. But as Mason CJ explained in Verwayen, the issue

concerning whether a statutory right is capable of waiver 18, or abandonment by other means 19, is not whether the provisions in question are beneficial to the public, but rather whether they are “not for the benefit of any individuals or body of individuals, but for considerations of State” 20. The “critical question”, he said, “is whether the benefit is personal or private or whether it rests upon public policy or expediency” 21

16 Mason CJ concluded 22 that by giving defendants a right to plead the expiry of the relevant time period as a defence, rather than imposing a...