Application of limitation period by analogy to a claim in equity
Published on April 4, 2014 by Adrian O’Dea
On 28 March 2014, Edelman J delivered judgment in the case of Agricultural Land Management Ltd v Jackson [No. 2] [2014] WASC 102.
In Agricultural Land Management, Edelman J considered, amongst other issues, whether the six year limitation period in section 1317K of the Corporations Act should be applied by analogy to an equitable claim for breach of fiduciary duty.
In paragraph 212 of the judgment, Edelman J states:
“There is one qualification, binding upon me, to the principle concerning the application of a statute by analogy. This qualification is that equity will not apply a limitation period by analogy where there are circumstances which make the application of the statute unconscionable. Counsel for Agricultural did not make any submission, nor lead any evidence, that there were any circumstances which might make the application of a six-year period of limitation unconscionable.”
The binding authority to which Edelman J is referring is the Court of Appeal judgment of Hewitt v Henderson [2006] WASCA 233 [25] (Buss JA, with Steytler P and Pullin JA agreeing).
In paragraph 25 of Hewitt v Henderson, Buss JA states:
“In my opinion, the authorities which I have reviewed support the proposition that equity will not apply a limitation period by analogy where there are circumstances which make the application of the statute unconscionable. The learned Judge was therefore correct in deciding not to disallow the amendments on the basis asserted by the appellant. It is inappropriate, in these proceedings, to determine whether equity retains a broader discretion as to whether the statute should apply; for example, by reference to any exceptions that are allowed in the law of laches, as La Forest J held in KM, at 332 – 333, and with whom Kirby P, in Williams, appears to have agreed”.
In the New South Wales case of Mathas v Slater; Donnybrook Properties v Simpson [2009] NSWSC 1397, Rein J also indicated what His Honour saw as the proposition supported by the authorities on this issue. At paragraph 105 of his judgment Rein J states:
“There are authorities which make it clear that a Court of Equity will not apply the analogy if “having regard to all of the circumstances it is against conscience or unjust to do so”: see Young, Croft and Smith, On Equity (2009) Thomson Reuters/Lawbook Co. at 17.300 and see Duke Group Ltd (in liq) v Alamain Investments Ltd [2003] SASC 415 at [113], [114] and [135], Trevorrow v State of South Australia (No 5) (2007) 98 SASR 136 at 332 – 335 and see also, in respect of response to reliance on the Limitation Act, Hawkins v Clayton (1988) 164 CLR 539 at 590 – 591.”
Rein J’s decision was approved (albeit by way of obiter) in the appeal decision of Simpson v Donnybrook Properties Pty Ltd [2010] NSWCA 229 at paragraph 106 where Young JA (with whom MacFarlan and Hodgson JA agreed) states:
“In my view the primary Judge, in dealing with a claim in equity, was entitled to take this view”.
There have been a number of other cases in recent years which have considered this issue (see for example the judgment of Brereton J, In the Matter of Auzhair Supplies Pty Ltd (in liq) [2013] NSWSC 1), and some practitioners continue to debate whether equity retains a discretion when applying statutory or common law limitation periods by analogy, and the parameters and scope of that discretion.
